N-30D 1 edg8120.txt ALLIANCE VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN SMALL CAP VALUE PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2002 Investment Products Offered o Are Not FDIC Insured o May Lose Value o Are Not Bank Guaranteed ALLIANCEBERNSTEIN SMALL CAP VALUE PORTFOLIO TEN LARGEST HOLDINGS June 30, 2002 (unaudited) Alliance Variable Products Series Fund _______________________________________________________________________________ PERCENT OF COMPANY U.S. $ VALUE NET ASSETS ------------------------------------------------------------------------------- Hughes Supply, Inc. $ 1,481,700 2.1% Fidelity National Financial, Inc. 1,436,536 2.0 SEACOR SMIT, Inc. 1,330,535 1.9 Pulte Homes, Inc. 1,299,048 1.8 KB HOME 1,298,052 1.8 Standard Pacific Corp. 1,269,896 1.8 PACCAR, Inc. 1,251,798 1.8 Crompton Corp. 1,226,550 1.7 Mack-Cali Realty Corp. 1,195,100 1.7 Avalonbay Communities, Inc. 1,186,180 1.7 $12,975,395 18.3% 1 ALLIANCEBERNSTEIN SMALL CAP VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2002 (unaudited) Alliance Variable Products Series Fund _______________________________________________________________________________ U.S. $ Company Shares Value ------------------------------------------------------------------------------- COMMON STOCKS-92.3% FINANCIAL-21.7% MAJOR REGIONAL BANKS-8.2% BancorpSouth, Inc. 28,000 $565,600 Bank of Hawaii Corp. 34,500 966,000 Hibernia Corp. Cl.A 56,300 1,114,177 Huntington Bancshares, Inc. 49,900 969,058 Popular, Inc. 12,000 404,160 UnionBanCal Corp. 23,400 1,096,290 Whitney Holding Corp. 22,000 676,280 ------------ 5,791,565 PROPERTY - CASUALTY INSURANCE-2.0% Fidelity National Financial, Inc. 45,460 1,436,536 REAL ESTATE INVESTMENT TRUST-9.3% Arden Realty, Inc. 40,700 1,157,915 Avalonbay Communities, Inc. 25,400 1,186,180 Duke Realty Investments, Inc. 36,400 1,053,780 Liberty Property Trust 25,900 906,500 Mack-Cali Realty Corp. 34,000 1,195,100 Post Properties, Inc. 37,100 1,118,936 ------------ 6,618,411 SAVINGS AND LOAN-2.2% Commercial Federal Corp. 22,700 658,300 Washington Federal, Inc. 36,450 920,727 ------------ 1,579,027 ------------ 15,425,539 NON-FINANCIAL-11.7% BUILDING MATERIALS - CEMENT-1.6% Texas Industries, Inc. 35,000 1,102,150 BUILDING MATERIAL - HEAT/PLUMBING/AIR-2.1% Hughes Supply, Inc. 33,000 1,481,700 HOME BUILDING-5.2% Centex Corp. 19,600 1,132,684 KB HOME 25,200 1,298,052 Pulte Homes, Inc. 22,600 1,299,048 ------------ 3,729,784 MISCELLANEOUS BUILDING-2.8% Harsco Corp. 19,600 735,000 Standard Pacific Corp. 36,200 1,269,896 ------------ 2,004,896 ------------ 8,318,530 CAPITAL EQUIPMENT-11.4% AUTO TRUCKS - PARTS-4.1% BorgWarner, Inc. 5,000 288,800 Eaton Corp. 7,000 509,250 Modine Manufacturing Co. 35,000 $860,300 PACCAR, Inc. 28,200 1,251,798 ------------ 2,910,148 ELECTRICAL EQUIPMENT-1.6% Cooper Industries, Ltd. Cl.A 28,000 1,100,400 MACHINERY-4.6% Kennametal, Inc. 30,900 1,130,940 Lincoln Electric Holdings, Inc. 39,000 1,049,100 Terex Corp. (a) 49,500 1,113,255 ------------ 3,293,295 MISCELLANEOUS CAPITAL GOODS-1.1% Parker-Hannifin Corp. 16,000 764,640 ------------ 8,068,483 UTILITIES-9.4% ELECTRIC COMPANIES-9.4% Consolidated Edison, Inc. 1,600 66,800 Northeast Utilities 39,900 750,519 NSTAR 20,100 900,078 OGE Energy Corp. 50,100 1,145,286 PNM Resources, Inc. 44,200 1,069,640 Puget Energy, Inc. 55,800 1,152,270 Reliant Resources, Inc. (a) 53,000 463,750 Sierra Pacific Resources (a) 41,800 326,040 Wisconsin Energy Corp. 1,800 45,486 WPS Resources Corp. 18,500 755,355 ------------ 6,675,224 TELEPHONE-0.0% WorldCom, Inc. - WorldCom Group (a) (b) 215,000 19,350 ------------ 6,694,574 TECHNOLOGY-8.9% COMMUNICATION - EQUIP. MFRS.-2.9% Andrew Corp. (a) 74,500 1,111,540 Tellabs, Inc. (a) 157,000 973,400 ------------ 2,084,940 COMPUTER/INSTRUMENTATION-1.3% Adaptec, Inc. (a) 122,100 963,369 MISCELLANEOUS INDUSTRIAL TECHNOLOGY-3.2% Arrow Electronics, Inc. (a) 21,000 435,750 Avnet, Inc. (a) 22,000 483,780 Solectron Corp. (a) 107,400 660,510 Tech Data Corp. (a) 17,500 662,375 ------------ 2,242,415 SEMICONDUCTORS-1.5% KEMET Corp. (a) 58,700 1,048,382 ------------ 6,339,106 2 Alliance Variable Products Series Fund _______________________________________________________________________________ Shares or Principal Amount Company (000) U.S. $ Value ------------------------------------------------------------------------------- COMMODITIES-7.8% CHEMICALS-4.5% Crompton Corp. 96,200 $1,226,550 Cytec Industries, Inc. (a) 35,500 1,116,120 FMC Corp. (a) 27,400 826,658 ------------ 3,169,328 MISCELLANEOUS METALS-1.6% Reliance Steel & Aluminum Co. 37,200 1,134,600 PAPER-1.7% MeadWestvaco Corp. 34,660 1,163,190 Temple-Inland, Inc. 700 40,502 ------------ 1,203,692 ------------ 5,507,620 CONSUMER CYCLICALS-7.1% AUTOS & AUTO PARTS-3.6% Dana Corp. 27,000 500,310 Genuine Parts Co. 20,300 707,861 Group 1 Automotive, Inc. (a) 30,000 1,144,500 Lear Corp. (a) 5,000 231,250 ------------ 2,583,921 MISCELLANEOUS CONSUMER CYCLICALS-1.6% Brunswick Corp. 39,000 1,092,000 TEXTILES/SHOES - APPAREL MFG.-1.9% Jones Apparel Group, Inc. (a) 29,700 1,113,750 V. F. Corp. 6,500 254,865 ------------ 1,368,615 ------------ 5,044,536 ENERGY-5.7% COAL-1.4% Peabody Energy Corp. 37,000 1,047,100 OILS - INTEGRATED DOMESTIC-4.3% Amerada Hess Corp. 13,400 1,105,500 Kerr-McGee Corp. 15,800 846,090 Valero Energy Corp. 29,000 1,085,180 ------------ 3,036,770 ------------ 4,083,870 CONSUMER STAPLES-3.8% FOODS-2.8% Corn Products International, Inc. 32,500 $1,011,400 Smithfield Foods, Inc. (a) 52,000 964,600 ------------ 1,976,000 RETAIL STORES - FOOD-1.0% SUPERVALU, Inc. 30,000 735,900 ------------ 2,711,900 CONSUMER GROWTH-2.9% ENTERTAINMENT-1.3% Royal Caribbean Cruises, Ltd. 47,300 922,350 HOSPITAL SUPPLIES-0.1% Beckman Coulter, Inc. 1,600 79,840 PUBLISHING-1.5% The Readers Digest Association, Inc. 56,500 1,058,245 ------------ 2,060,435 SERVICES-1.9% MISCELLANEOUS INDUSTRIAL TRANSPORTATION-1.9% SEACOR SMIT, Inc. (a) 28,100 1,330,535 Total Common Stocks (cost $65,510,487) 65,585,128 SHORT-TERM INVESTMENT-7.6% TIME DEPOSIT-7.6% State Street Euro Dollar 1.25%, 7/01/02 (cost $5,362,000) $ 5,362 5,362,000 TOTAL INVESTMENTS-99.9% (cost $70,872,487) 70,947,128 Other assets less liabilities-0.1% 100,361 NET ASSETS-100% $71,047,489 (a) Non-income producing security. (b) Security exempt from Registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to certain qualified buyers. At June 30, 2002, the aggregate market value of this security amounted to $19,350 or .03% of net assets. See Notes to Financial Statements. 3 ALLIANCEBERNSTEIN SMALL CAP VALUE PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2002 (unaudited) Alliance Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $70,872,487) $70,947,128 Cash 894 Dividends and interest receivable 143,650 Total assets 71,091,672 LIABILITIES Advisory fee payable 42,851 Distribution fee payable 1,332 Total liabilities 44,183 NET ASSETS $71,047,489 COMPOSITION OF NET ASSETS Capital stock, at par $ 6,012 Additional paid-in capital 69,374,957 Undistributed net investment income 275,899 Accumulated net realized gain on investments 1,315,980 Net unrealized appreciation of investments 74,641 $71,047,489 Class A Shares Net assets $62,921,636 Shares of capital stock outstanding 5,325,669 Net asset value per share $ 11.81 Class B Shares Net assets $ 8,125,853 Shares of capital stock outstanding 686,690 Net asset value per share $ 11.83 See Notes to Financial Statements. 4 ALLIANCEBERNSTEIN SMALL CAP VALUE PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2002 (unaudited) Alliance Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $240) $ 504,471 Interest 26,254 Total investment income 530,725 EXPENSES Advisory fee 228,432 Distribution fee - Class B 3,115 Administrative 34,500 Custodian 29,322 Audit and legal 21,720 Printing 8,507 Directors' fees 1,810 Transfer agency 543 Miscellaneous 3,077 Total expenses 331,026 Less: expenses waived and reimbursed (see Note B) (84,041) Net expenses 246,985 Net investment income 283,740 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investment transactions 1,329,583 Net change in unrealized appreciation/depreciation of investments (1,242,537) Net gain on investments 87,046 NET INCREASE IN NET ASSETS FROM OPERATIONS $ 370,786 See Notes to Financial Statements. 5 ALLIANCEBERNSTEIN SMALL CAP VALUE PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS Alliance Variable Products Series Fund _______________________________________________________________________________ Six Months Ended May 1, 2001(a) June 30, 2002 to December 31, (unaudited) 2001 ---------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 283,740 $ 106,886 Net realized gain on investment transactions 1,329,583 41,276 Net change in unrealized appreciation/ depreciation of investments (1,242,537) 1,317,178 Net increase in net assets from operations 370,786 1,465,340 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM Net investment income Class A (104,340) -0- Class B (10,387) -0- Net realized gain on investments Class A (49,686) -0- Class B (5,193) -0- CAPITAL STOCK TRANSACTIONS Net increase 49,424,262 19,956,707 Total increase 49,625,442 21,422,047 NET ASSETS Beginning of period 21,422,047 -0- End of period (including undistributed net investment income of $275,899 and $106,886, respectively) $ 71,047,489 $ 21,422,047 (a) Commencement of operations. See Notes to Financial Statements. 6 ALLIANCEBERNSTEIN SMALL CAP VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2002 (unaudited) Alliance Variable Products Series Fund _______________________________________________________________________________ NOTE A: Significant Accounting Policies The AllianceBernstein Small Cap Value Portfolio (the "Portfolio") is a series of Alliance Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek long-term growth of capital. The Fund was incorporated in the State of Maryland on November 17, 1987, as an open-end series investment company. The Fund offers nineteen separately managed pools of assets which have differing investment objectives and policies. The Portfolio commenced operations on May 1, 2001. The Portfolio offers Class A and Class B shares. Both classes of shares have identical voting, dividend, liquidating and other rights, except that Class B shares bear a distribution expense and have exclusive voting rights with respect to the Class B distribution plan. The Portfolio offers and sells its shares only to separate accounts of certain life insurance companies for the purpose of funding variable annuity contracts and variable life insurance policies. Sales are made without a sales charge at the Portfolio's net asset value per share. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Portfolio. 1. Security Valuation Portfolio securities traded on a national securities exchange or on a foreign securities exchange (other than foreign securities exchanges whose operations are similar to those of the United States over-the-counter market) or on The Nasdaq Stock Market, Inc., are generally valued at the last reported sales price or if no sale occurred, at the mean of the closing bid and asked price on that day. Readily marketable securities traded in the over-the-counter market, securities listed on a foreign securities exchange whose operations are similar to the U.S. over-the-counter market, and securities listed on a national securities exchange whose primary market is believed to be over-the-counter (but excluding securities traded on The Nasdaq Stock Market, Inc.) are valued at the mean of the current bid and asked price. U.S. government and fixed income securities which mature in 60 days or less are valued at amortized cost, unless this method does not represent fair value. Securities for which current market quotations are not readily available are valued at their fair value as determined in good faith by, or in accordance with procedures adopted by, the Board of Directors. Fixed income securities may be valued on the basis of prices obtained from a pricing service when such prices are believed to reflect the fair market value of such securities. 2. Currency Translation Assets and liabilities denominated in foreign currencies and commitments under forward exchange currency contracts are translated into U.S. dollars at the mean of the quoted bid and asked price of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated at the rates of exchange prevailing when such securities were acquired or sold. Income and expenses are translated at rates of exchange prevailing when accrued. Net realized gains and losses on foreign currency transactions represent foreign exchange gains and losses from sales and maturities of securities and forward exchange currency contracts, holdings of foreign currencies, exchange gains and losses realized between the trade and settlement dates on investment transactions, and the difference between the amounts of interest, dividends and foreign withholding tax reclaims recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains and losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of net unrealized appreciation or depreciation of investments and foreign currency denominated assets and liabilities. 3. Taxes It is the Portfolio's policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its investment company taxable income and net realized gains, if any, to shareholders. Therefore, no provisions for federal income or excise taxes are required. 4. Investment Income and Investment Transactions Dividend income is recorded on the ex-dividend date. Interest income is accrued daily. Investment transactions are accounted for on the date securities are purchased or sold. The Portfolio amortizes premiums and accretes discounts as adjustments to interest income. Investment gains and losses are determined on the identified cost basis. 5. Income and Expenses Expenses attributable to a single portfolio are charged to that portfolio. Expenses of the Fund are charged to each portfolio in proportion to net assets. All income earned and expenses incurred by a portfolio with multi-class 7 Alliance Variable Products Series Fund _______________________________________________________________________________ shares outstanding are borne on a pro-rata basis by each outstanding class of shares, based on the proportionate interest in the portfolio represented by the net assets of such class, except that the portfolio's Class B shares bear the distribution fees. 6. Dividends and Distributions The Portfolio declares and distributes dividends and distributions from net investment income and net realized gains, respectively, if any, at least annually. Income dividends and capital gains distributions to shareholders are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with accounting principles generally accepted in the United States. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification. NOTE B: Advisory Fee and Other Transactions with Affiliates Under the terms of an investment advisory agreement, the Portfolio pays Alliance Capital Management L.P. (the "Adviser"), an investment advisory fee at an annualized rate of 1% of the Portfolio's average daily net assets. Pursuant to the advisory agreement, the Portfolio paid $34,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2002. Prior to May 1, 2002, the Adviser agreed to waive its fee and to reimburse the additional operating expenses to the extent necessary to limit total operating expenses on an annual basis to .95% and 1.20% of the average daily net assets for Class A and Class B shares, respectively. Effective May 1, 2002, the Adviser agreed to waive its fee and to reimburse the additional operating expenses to the extent necessary to limit total operating expenses on an annual basis to 1.20% and 1.45% of the average daily net assets for Class A and Class B shares, respectively. Any expense waivers or reimbursements are accrued daily and paid monthly. For the six months ended June 30, 2002 the Adviser waived fees in the amount of $34,500 and reimbursed additional expenses in the amount of $49,541. Brokerage commissions paid on investment transactions for the six months ended June 30, 2002, amounted to $95,516, of which $53,128 was paid to Sanford C. Bernstein & Co. LLC, an affiliate of the Adviser. The Portfolio compensates Alliance Global Investor Services, Inc., a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Portfolio. Such compensation amounted to $543 for the six months ended June 30, 2002. NOTE C: Distribution Plan The Portfolio has adopted a Plan for Class B shares pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Plan"). Under the Plan, the Portfolio pays distribution and servicing fees to the Distributor at an annual rate of up to .50% of the Portfolio's average daily net assets attributable to the Class B shares. The fees are accrued daily and paid monthly. The Board of Directors currently limit payments under the Plan to .25% of the Portfolio's average daily net assets attributable to Class B shares. The Plan provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Portfolio is not obligated under the Plan to pay any distribution and servicing fees in excess of the amounts set forth above. The purpose of the payments to the Distributor under the Plan is to compensate the Distributor for its distribution services with respect to the sale of the Portfolio's shares. Since the Distributor's compensation is not directly tied to its expenses, the amount of compensation received by it under the Plan during any year may be more or less than its actual expenses. For this reason, the Plan is characterized by the staff of the Commission as being of the "compensation" variety. In the event that the Plan is terminated or not continued, no distribution and servicing fees (other than current amounts accrued but not yet paid) would be owed by the Portfolio to the Distributor. The Plan also provides that the Adviser may use its own resources to finance the distribution of the Portfolio's shares. 8 ALLIANCEBERNSTEIN SMALL CAP VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) Alliance Variable Products Series Fund _______________________________________________________________________________ NOTE D: Investment Transactions Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2002, were as follows: Purchases: Stocks and debt obligations $51,150,563 U.S. government and agencies -0- Sales: Stocks and debt obligations $ 6,995,372 U.S. government and agencies -0- At June 30, 2002, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes. Accordingly, gross unrealized appreciation and unrealized depreciation are as follows: Gross unrealized appreciation $ 3,826,750 Gross unrealized depreciation (3,752,109) Net unrealized appreciation $ 74,641 1. Forward Exchange Currency Contracts The Portfolio may enter into forward exchange currency contracts to hedge exposure to changes in foreign currency exchange rates on foreign portfolio holdings, to hedge certain firm purchase and sales commitments denominated in foreign currencies and for investment purposes. A forward exchange currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. The Portfolio may enter into contracts to deliver or receive foreign currency it will receive from or require for its normal investment activities. It may also use contracts in a manner intended to protect foreign currency denominated securities from declines in value due to unfavorable exchange rate movements. The gain or loss arising from the difference between the original contracts and the closing of such contracts is included in realized gains or losses from foreign currency transactions. Fluctuations in the value of forward exchange currency contracts are recorded for financial reporting purposes as unrealized gains or losses by the Portfolio. The Portfolio's custodian will place and maintain cash not available for investment or other liquid assets in a separate account of the Portfolio having an approximate value equal to the aggregate amount of the Portfolio's commitments under forward exchange currency contracts entered into with respect to position hedges. Risks may arise from the potential inability of a counterparty to meet the terms of a contract and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The face or contract amount, in U.S. dollars, reflects the total exposure the Portfolio has in that particular currency contract. At June 30, 2002, the Portfolio had no outstanding forward exchange currency contracts. 2. Option Transactions For hedging and investment purposes, the Portfolio may purchase and write call options and purchase put options on U.S. securities that are traded on U.S. securities exchanges and over-the-counter markets. The risk associated with purchasing an option is that the Portfolio pays a premium whether or not the option is exercised. Additionally, the Portfolio bears the risk of loss of premium and change in market value should the counterparty not perform under the contract. Put and call options purchased are accounted for in the same manner as portfolio securities. The cost of securities acquired through the exercise of call options is increased by premiums paid. The proceeds from securities sold through the exercise of put options are decreased by the premiums paid. When the Portfolio writes an option, the premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from which written options expire unexercised are recorded by the Portfolio on the expiration date as realized gains from written options. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium received is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium received is added to the proceeds from the sale of the underlying security or currency in determining whether the Portfolio has realized a gain or loss. In writ- 9 Alliance Variable Products Series Fund _______________________________________________________________________________ ing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. The Portfolio had no transactions in options written for the six months ended June 30, 2002. NOTE E: Distributions to Shareholders As of December 31, 2001, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $ 155,041 Undistributed long-term capital gains 3,571 Accumulated earnings 158,612 Unrealized appreciation/(depreciation) 1,304,663(a) Total accumulated earnings/(deficit) $1,463,275 (a) The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales and return of capital adjustments from real estate investment trusts. NOTE F: Capital Stock There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B shares. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT ------------------------------ --------------------------- Six Months Six Months Ended May 2, 2001(a) Ended May 2, 2001(a) June 30, 2002 to December 31 June 30, 2002 to December 31 (unaudited) 2001 (unaudited) 2001 --------------- -------------- ------------- ------------- Class A Shares sold 3,782,755 2,280,632 $ 45,517,399 $23,617,224 Shares issued in reinvestment of dividends and distributions 12,954 -0- 154,025 -0- Shares redeemed (355,695) (394,977) (4,301,914) (3,986,904) Net increase 3,440,014 1,885,655 $ 41,369,510 $19,630,320) Six Months Six Months Ended May 1, 2001(b) Ended May 1, 2001(b) June 30, 2002 to December 31 June 30, 2002 to December 31 (unaudited) 2001 (unaudited) 2001 --------------- -------------- ------------- ------------- Class B Shares sold 881,250 33,145 $10,830,812 $350,796 Shares issued in reinvestment of dividends and distributions 1,307 -0- 15,580 -0- Shares redeemed (226,740) (2,272) (2,791,640) (24,409) Net increase 655,817 30,873 $ 8,054,752 $326,387 NOTE G: Concentration of Risk Investing in securities of foreign companies or foreign governments involves special risks which include changes in foreign exchange rates and the possibility of future political and economic developments which could adversely affect the value of such securities. Moreover, securities of many foreign companies or foreign governments and their markets may be less liquid and their prices more volatile than those of comparable United States companies or of the United States government (a) Commencement of distribution. (b) Commencement of operations. 10 ALLIANCEBERNSTEIN SMALL CAP VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) Alliance Variable Products Series Fund _______________________________________________________________________________ NOTE H:Bank Borrowing A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $750 million revolving credit facility (the "Facility") intended to provide short-term financing if necessary, subject to certain restrictions in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in the miscellaneous expenses in the statement of operations. The Portfolio did not utilize the Facility during the six months ended June 30, 2002. 11 ALLIANCEBERNSTEIN SMALL CAP VALUE PORTFOLIO FINANCIAL HIGHLIGHTS Alliance Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period CLASS A ------------------------------- Six Months May 2, Ended 2001(a) to June 30, 2002 December 31, (unaudited) 2001 -------------- ----------- Net asset value, beginning of period $11.18 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (b)(c) .07 .14 Net realized and unrealized gain on investment transactions .59 .04 Net increase in net asset value from operations .66 1.18 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.02) -0- Distributions from net realized gains (.01) -0- Total dividends and distributions (.03) -0- Net asset value, end of period $11.81 $11.18 TOTAL RETURN Total investment return based on net asset value (d) 5.91% 11.80% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $62,921 $ 21,076 Ratio to average net assets of: Expenses, net of waivers and reimbursements (e) 1.06% .95% Expenses, before waivers and reimbursements (e) 1.44% 2.65% Net investment income (c)(e) 1.25% 1.99% Portfolio turnover rate 16% 12% See footnote summary on page 13. 12 Alliance Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period CLASS B -------------------------- Six Months May 1, Ended 2001(f) to June 30, 2002 December 31, (unaudited) 2001 -------------- ----------- Net asset value, beginning of period $11.20 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (b)(c) .05 .11 Net realized and unrealized gain on investment transactions .61 1.09 Net increase in net asset value from operations .66 1.20 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.02) -0- Distributions from net realized gains (.01) -0- Total dividends and distributions (.03) -0- Net asset value, end of period $11.83 $11.20 TOTAL RETURN Total investment return based on net asset value (d) 5.89% 12.00% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $8,126 $346 Ratio to average net assets of: Expenses, net of waivers and reimbursements (e) 1.38% 1.20% Expenses, before waivers and reimbursements (e) 1.64% 3.17% Net investment income (c)(e) 1.02% 2.17% Portfolio turnover rate 16% 12% (a) Commencement of distribution. (b) Based on average shares outstanding. (c) Net of expenses reimbursed or waived by the Adviser. (d) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. (e) Annualized. (f) Commencement of operations. 13 ALLIANCEBERNSTEIN SMALL CAP VALUE PORTFOLIO Alliance Variable Products Series Fund _______________________________________________________________________________ BOARD OF DIRECTORS John D. Carifa, Chairman and President Ruth Block (1) David H. Dievler (1) John H. Dobkin (1) William H. Foulk, Jr. (1) Clifford L. Michel (1) Donald J. Robinson (1) OFFICERS Kathleen A. Corbet, Senior Vice President Alfred L. Harrison, Senior Vice President Andrew S. Adelson, Vice President Andrew Aran, Vice President Bruce K. Aronow, Vice President Edward Baker, Vice President Thomas J. Bardong, Vice President Matthew Bloom, Vice President Mark H. Breedon, Vice President Russell Brody, Vice President Kenneth T. Carty, Vice President Frank Caruso, Vice President John F. Chiodi, Vice President Paul J. DeNoon, Vice President Joseph C. Dona, Vice President Gregory Dube, Vice President Marilyn G. Fedak, Vice President Jane Mack Gould, Vice President David A. Kruth, Vice President Alan E. Levi, Vice President Michael Levy, Vice President Gerald T. Malone, Vice President Andrew Moloff, Vice President Michael Mon, Vice President Daniel Nordby, Vice President Raymond J. Papera, Vice President Douglas J. Peebles, Vice President Jeffrey S. Phlegar, Vice President Daniel G. Pine, Vice President Steven Pisarkiewicz, Vice President Michael J. Reilly, Vice President John Ricciardi, Vice President Paul C. Rissman, Vice President Kevin F. Simms, Vice President Michael A. Snyder, Vice President Annie Tsao, Vice President Jean Van De Walle, Vice President Richard A. Winge, Vice President Sandra Yeager, Vice President Edmund P. Bergan, Jr., Secretary Mark D. Gersten, Treasurer & Chief Financial Officer Thomas Manley, Controller CUSTODIAN State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 DISTRIBUTOR Alliance Fund Distributors, Inc. 1345 Avenue of the Americas New York, NY 10105 INDEPENDENT AUDITORS Ernst & Young LLP 5 Times Square New York, NY 10036 LEGAL COUNSEL Seward & Kissel One Battery Park Plaza New York, NY 10004 TRANSFER AGENT Alliance Global Investor Services, Inc. P.O. Box 1520 Secaucus, NJ 07096-1520 Toll-free 1-(800) 221-5672 (1) Member of the Audit Committee. 14