-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FJNjIWQbTRGknQFqkuornJlLpW/gdj20cj79HFEA6VjCL38ZgC2Ynn2g6nhQ7VQn YCStw+LbZp53TEDussq5Hw== 0000936772-03-000078.txt : 20030221 0000936772-03-000078.hdr.sgml : 20030221 20030220203445 ACCESSION NUMBER: 0000936772-03-000078 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030221 EFFECTIVENESS DATE: 20030221 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE VARIABLE PRODUCTS SERIES FUND INC CENTRAL INDEX KEY: 0000825316 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05398 FILM NUMBER: 03575011 BUSINESS ADDRESS: STREET 1: 500 PLAZA DRIVE STREET 2: 1345 AVENUE OF THE AMERICAS 31ST FL CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 2013194105 MAIL ADDRESS: STREET 1: ALLIANCE CAPITAL MANGEMENT LP STREET 2: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 N-30D 1 edg8789.txt ALLIANCE ------------------- VARIABLE PRODUCTS ------------------- SERIES FUND ------------------- ALLIANCEBERNSTEIN ------------------- INTERNATIONAL VALUE ------------------- PORTFOLIO ------------------- ANNUAL REPORT DECEMBER 31, 2002 Investment Products Offered --------------------------- > Are Not FDIC Insured > May Lose Value > Are Not Bank Guaranteed --------------------------- ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO Alliance Variable Products Series Fund ================================================================================ LETTER TO INVESTORS January 22, 2003 Dear Investor: The following is an update of Alliance Variable Products Series Fund AllianceBernstein International Value Portfolio (the "Portfolio") for the annual reporting period ended December 31, 2002. INVESTMENT OBJECTIVE AND POLICIES The Portfolio seeks long-term growth of capital. The Portfolio will invest primarily in a diversified portfolio of foreign equity securities. The portfolio's investment policies emphasize investment in companies that are determined by Alliance to be undervalued, using the fundamental value approach of Alliance's Bernstein unit ("Bernstein"). In selecting securities for the Portfolio, Bernstein uses its fundamental research to identify companies whose long-term earnings power is not reflected in the current market price of their securities. In order to hedge a portion of currency risk, the Portfolio may from time to time invest in currency futures contracts or currency forward contracts. INVESTMENT RESULTS Periods Ended December 31, 2002 Total Returns Since 1 Year Inception* ---------- ------------- AllianceBernstein International Value Portfolio -5.15% -3.93% MSCI EAFE Index -15.66% -16.97% Total returns are based on net asset value (NAV) performance for Class A shares and reflect reinvestment of dividends and/or capital gains distributions in additional shares. Total return does not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. These figures do not reflect insurance company separate account or annuity contract charges, which would reduce total return to a contract owner. Past performance does not guarantee future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. * The Portfolio's inception date is 5/10/01. The Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index is a market capitalization-weighted index that measures stock performance in 21 countries in Europe, Australasia and the Far East. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including AllianceBernstein International Value Portfolio. Even though the Portfolio and its benchmark, the MSCI EAFE Index, produced negative returns for the 12-month period ended December 31, 2002, the Portfolio outperformed its benchmark. The Portfolio's outperformance was driven primarily by strong stock selection. While the majority of relative outperformance for the year was driven by favorable stock selection across nearly all sectors, it was particularly strong within financials and cyclicals. Within financials, the Portfolio's emphasis during most of the year on retail oriented banks with dominant market positions and strong balance sheets, such as ANZ Bank and Allied Irish Banks, contributed to its outperformance. Sector allocations also contributed to the Portfolio's positive returns for the year, primarily because of its underweight positions in telecommunications and technology. MARKET OVERVIEW The annual period under review has been a difficult one for all markets. Expectations for corporate earnings were revised downward, as a steady flow of negative news undermined investor confidence. In the U.S., productivity growth slowed and consumer confidence fell sharply, while in Europe business sentiment also declined. During the past 12 months, investors worried that the sluggish global economy would exert a strongly negative effect on corporate profits. There was concern that corporate governance at many companies was failing to ensure that companies acted in their shareholders' interest, and that geopolitical risks were rising sharply, including the possibility of a U.S. war with Iraq. As investors became increasingly risk-averse, bonds rallied strongly. With the fall in the equity market and the rally in bonds, the equity risk premium soared. Even with the rise in equities in the fourth quarter of 2002, the equity premium remains high. One intriguing question remains in place however, and it is whether the recently uncovered accounting problems in the U.S. and resulting crisis of confidence could be the catalyst that reverses the long period of underperformance prior to this year by foreign markets, relative to the U.S. MARKET OUTLOOK Opportunities continue to look favorable in overseas markets. After a long string of gains, the U.S. dollar weakened materially in 2002, adding to returns of non U.S. stocks for U.S. based investors. We continue to expect stronger relative performance from foreign markets as compared to the U.S. This follows a period of 1 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO Alliance Variable Products Series Fund ================================================================================ underperformance by EAFE markets, which can be largely explained by the strength of the dollar and the extended weakness of the Japanese market. Even with the market changes so far this year, EAFE remains very attractively valued relative to the U.S. market. Emotionally driven short-term overreactions by investors have opened up opportunities in a number of other areas. Concerns about economic growth led to attractive valuations in many cyclicals, and we have increased the Portfolio's exposure to this area. Similarly, the extended decline in the global stock markets increased investor aversion to the recent volatility in equity markets, offering opportunities in capital market-sensitive areas such as banks and insurance. Industries with significant exposure to the capital markets are offering compelling opportunities for value investors. We are seeing attractive valuations for a number of insurance companies, which are exposed to equity prices primarily through their investment portfolios, as well as banks that have significant investment-banking businesses. We have added companies to the Portfolio that we believe are in a position to deliver strong results, regardless of whether the pace of economic growth remains sluggish or accelerates modestly. Our research has also led us to gradually reduce the Portfolio's underweighting of technology and telecommunications during the past 12 months. Specifically, we established a major position in the U.K.-based wireless company Vodafone, which positively contributed to the Portfolio's performance. This purchase represents the Portfolio's first holding since inception within the distressed telecommunications sector. Our research suggests there is the potential for sizable gains in some of the strongest telecommunications companies as the industry remains under pressure and consolidates. The Portfolio continues to have characteristics typical of a deep value strategy. It consists of a group of very high quality companies with strong growth potential. Overall, this is not a market where there are compelling mispricings between styles or sectors. Instead, the Portfolio's emphasis on stock selection has enabled us to buy companies whose businesses and products offer the potential for rapid increases in profitability at extremely attractive valuations. We appreciate your investment in AllianceBernstein International Value Portfolio and look forward to reporting further investment progress in the coming period. Sincerely, /s/ Andrew S. Adelson Andrew S. Adelson Vice President and Portfolio Manager /s/ Kevin F. Simms Kevin F. Simms Vice President and Portfolio Manager 2 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO Alliance Variable Products Series Fund ================================================================================ PERFORMANCE UPDATE ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO GROWTH OF A $10,000 INVESTMENT 5/31/01* - 12/31/02 [THE FOLLOWING TABLE WAS DEPICTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL.] AllianceBernstein International Value Portfolio: $9,362 MSCI EAFE Index: $6,645 AllianceBernstein International MSCI EAFE Value Portfolio Index 5/31/01* 10000 10000 12/31/01 9870 7879 12/31/02 9362 6645 Past performance is no guarantee of future results. This chart illustrates the total value of an assumed $10,000 investment in the Portfolio (from 5/31/01* to 12/31/02) as compared to the performance of an appropriate broad-based index. The Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index is a market capitalization-weighted index that measures stock performance in 21 countries in Europe, Australasia and the Far East. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including AllianceBernstein International Value Portfolio. - -------------------------------------------------------------------------------- * Since closest month-end after Portfolio's inception date of 5/10/01. 3 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO TEN LARGEST HOLDINGS December 31, 2002 Alliance Variable Products Series Fund ================================================================================ - -------------------------------------------------------------------------------- COMPANY U.S. $ VALUE PERCENT OF NET ASSETS - -------------------------------------------------------------------------------- BNP Paribas, SA $ 1,751,003 4.3% - -------------------------------------------------------------------------------- Nissan Motor Co., Ltd. 1,660,812 4.1 - -------------------------------------------------------------------------------- DSM NV 1,633,184 4.0 - -------------------------------------------------------------------------------- Bank of Nova Scotia 1,537,531 3.8 - -------------------------------------------------------------------------------- Canon, Inc. 1,505,557 3.7 - -------------------------------------------------------------------------------- Safeway Plc 1,386,632 3.4 - -------------------------------------------------------------------------------- Societe Generale 1,322,368 3.3 - -------------------------------------------------------------------------------- Vodafone Group Plc 1,288,690 3.2 - -------------------------------------------------------------------------------- Takefuji Corp. 1,245,874 3.1 - -------------------------------------------------------------------------------- Eni S.p.A 1,191,585 2.9 ----------- ---- - -------------------------------------------------------------------------------- $14,523,236 35.8% - -------------------------------------------------------------------------------- SECTOR DIVERSIFICATION December 31, 2002 ================================================================================ - -------------------------------------------------------------------------------- SECTOR U.S. $ VALUE PERCENT OF NET ASSETS - -------------------------------------------------------------------------------- Finance $12,829,882 31.7% - -------------------------------------------------------------------------------- Capital Equipment 5,087,063 12.6 - -------------------------------------------------------------------------------- Consumer Cyclical 5,078,429 12.5 - -------------------------------------------------------------------------------- Construction 4,257,262 10.5 - -------------------------------------------------------------------------------- Industrial Commodities 3,585,208 8.8 - -------------------------------------------------------------------------------- Energy 2,315,969 5.7 - -------------------------------------------------------------------------------- Technology/Electronics 1,505,558 3.7 - -------------------------------------------------------------------------------- Telecommunications 1,288,690 3.2 - -------------------------------------------------------------------------------- Industrial 770,633 1.9 - -------------------------------------------------------------------------------- Consumer Staples 618,643 1.5 - -------------------------------------------------------------------------------- Resources 156,127 0.4 - -------------------------------------------------------------------------------- Services 82,636 0.2 ----------- ----- - -------------------------------------------------------------------------------- Total Investments* 37,576,100 92.7 - -------------------------------------------------------------------------------- Cash and receivables, net of liabilities 2,948,158 7.3 ----------- ----- - -------------------------------------------------------------------------------- Net Assets $40,524,258 100.0% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- * Excludes short-term obligations. 4 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS December 31, 2002 Alliance Variable Products Series Fund ================================================================================ Company Shares U.S. $ Value - -------------------------------------------------------------------------------- COMMON STOCKS-92.7% AUSTRALIA-1.9% Australia and New Zealand Banking Group, Ltd. .................... 78,800 $ 769,381 ---------- BRAZIL-1.9% Petroleo Brasileiro, SA (ADR) ............................... 59,700 782,500 ---------- CANADA-7.6% Bank of Nova Scotia ....................... 46,123 1,537,531 Canadian National Railway Co. .................................... 2,000 82,636 Magna International, Inc. Cl.A ................................... 16,039 894,192 Royal Bank of Canada ...................... 5,700 208,739 Talisman Energy, Inc. ..................... 9,500 341,884 ---------- 3,064,982 ---------- FRANCE-18.3% Arcelor (a) ............................... 95,539 1,174,247 Assurances Generales de France (AGF) ........................ 32,600 1,090,585 BNP Paribas, SA ........................... 43,000 1,751,003 Compagnie de Saint Gobain ................. 35,400 1,037,986 PSA Peugoet Citroen ....................... 25,150 1,024,924 Societe Generale .......................... 22,720 1,322,368 ---------- 7,401,113 ---------- GERMANY-5.3% AMB Generali Holding AG ................... 4,850 264,584 Hannover Rueckversicherungs-AG (a) .............. 7,950 202,593 Heidelberger Zement AG .................... 15,900 591,938 Volkswagen AG ............................. 29,500 1,074,739 ---------- 2,133,854 ---------- HONG KONG-0.4% The Wharf (Holdings), Ltd. ................ 96,000 181,572 ---------- IRELAND-4.9% Allied Irish Banks Plc .................... 62,266 854,102 Bank of Ireland ........................... 109,900 1,128,318 ---------- 1,982,420 ---------- ITALY-2.9% Eni S.p.A ................................. 75,000 1,191,585 ---------- JAPAN-15.1% Canon, Inc. ............................... 40,000 1,505,557 Honda Motor Co., Ltd. ..................... 29,500 1,090,476 Nippon Meat Packers, Inc. ................. 62,000 618,643 Nissan Motor Co., Ltd. .................... 213,000 1,660,812 Takefuji Corp. ............................ 21,600 1,245,874 ---------- 6,121,362 ---------- MEXICO-1.5% Cemex, SA de CV (ADR) ..................... 28,906 620,577 ---------- NETHERLANDS-4.0% DSM NV .................................... 35,900 1,633,184 ---------- SOUTH AFRICA-0.4% Sappi, Ltd. (ADR) ......................... 11,700 156,127 ---------- SOUTH KOREA-0.9% Kookmin Credit Card Co., Ltd. (a) ............................... 15,600 380,119 ---------- SPAIN-2.3% Grupo Dragados, SA ........................ 55,100 936,090 ---------- SWEDEN-5.3% Autoliv, Inc. (ADR) ....................... 11,500 236,111 Electrolux AB Cl.A ........................ 70,700 1,118,156 Svenska Cellulosa AB Cl.B ................. 23,000 777,778 ---------- 2,132,045 ---------- TAIWAN-1.9% Compal Electronics, Inc. (GDR) .................................. 148,860 770,633 ---------- UNITED KINGDOM-18.1% Aviva Plc ................................. 101,000 720,139 George Wimpey Plc ......................... 52,800 226,051 Lloyds TSB Group Plc ...................... 64,000 459,416 Persimmon Plc ............................. 31,700 217,350 Royal & Sun Alliance Insurance Group Plc .................... 302,850 588,580 Royal Bank of Scotland Group .................................. 12,800 306,552 Safeway Plc ............................... 404,000 1,386,632 Six Continents ............................ 133,500 1,078,639 Vodafone Group Plc ........................ 707,000 1,288,690 Whitbread Plc ............................. 69,000 600,810 Wolseley Plc .............................. 53,100 445,697 ---------- 7,318,556 ---------- Total Common Stocks (cost $39,110,434) ..................... 37,576,100 ---------- 5 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) Alliance Variable Products Series Fund ================================================================================ Principal Amount Company (000) U.S. $ Value - -------------------------------------------------------------------------------- SHORT-TERM INVESTMENT-6.6% TIME DEPOSIT-6.6% State Street Euro Dollar 0.75%, 1/01/03 (cost $2,655,000) ...................... $ 2,655 $ 2,655,000 ----------- TOTAL INVESTMENTS-99.3% (cost $41,765,434) ..................... 40,231,100 Other assets less liabilities-0.7% ....................... 293,158 ----------- NET ASSETS-100% ........................... $40,524,258 =========== FINANCIAL FUTURES CONTRACTS (b)
Value at Number of Expiration Original December 31, Unrealized Type Contracts Position Month Value 2002 Depreciation - ----------------- ---------- ---------- ------------ ------------- ------------ ------------ EURO STOXX 50 55 Long Mar 2003 $1,415,144 $1,381,344 $ (33,800) JPY TOPIX INDX 3 Long Mar 2003 215,038 210,803 (4,235) ---------- ---------- --------- $1,630,182 $1,592,147 $ (38,035) ========== ========== =========
- -------------------------------------------------------------------------------- (a) Non-income producing security. (b) A portion of the foreign cash (in the amount of US $180,866) included in the statement of assets and liabilities has been segregated as collateral for the futures transactions outstanding at December 31, 2002. Glossary of Terms: ADR - American Depositary Receipt GDR - Global Depositary Receipt See Notes to Financial Statements. 6 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES December 31, 2002 Alliance Variable Products Series Fund ================================================================================ ASSETS Investments in securities, at value (cost $41,765,434) ...................... $ 40,231,100 Cash ........................................................................ 931 Foreign cash, at value (cost $347,849) ...................................... 353,831 Dividends and interest receivable ........................................... 139,244 Receivable for capital stock sold ........................................... 246,496 Receivable due from Adviser ................................................. 26,280 ------------ Total assets ................................................................ 40,997,882 ------------ LIABILITIES Payable for investment securities purchased ................................. 364,260 Payable for capital stock redeemed .......................................... 86,397 Accrued expenses ............................................................ 22,967 ------------ Total liabilities ........................................................... 473,624 ------------ NET ASSETS ..................................................................... $ 40,524,258 ============ COMPOSITION OF NET ASSETS Capital stock, at par ....................................................... $ 4,340 Additional paid-in capital .................................................. 42,263,279 Undistributed net investment income ......................................... 230,838 Accumulated net realized loss on investment and foreign currency transactions (410,502) Net unrealized depreciation of investments and foreign currency denominated assets and liabilities .................................................... (1,563,697) ------------ $ 40,524,258 ============ Class A Shares Net assets .................................................................. $ 14,391,249 ============ Shares of capital stock outstanding ......................................... 1,538,999 ============ Net asset value per share ................................................... $ 9.35 ============ Class B Shares Net assets .................................................................. $ 26,133,009 ============ Shares of capital stock outstanding ......................................... 2,801,476 ============ Net asset value per share ................................................... $ 9.33 ============
- -------------------------------------------------------------------------------- See Notes to Financial Statements. 7 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO STATEMENT OF OPERATIONS Year Ended December 31, 2002 Alliance Variable Products Series Fund ================================================================================ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $58,696) ........................ $ 487,790 Interest .................................................................... 19,252 ------------ Total investment income ..................................................... 507,042 ------------ EXPENSES Advisory fee ................................................................ 211,798 Distribution fee--Class B ................................................... 28,836 Custodian ................................................................... 88,217 Administrative .............................................................. 69,000 Audit and legal ............................................................. 59,896 Printing .................................................................... 22,995 Directors' fees and expenses ................................................ 4,380 Transfer agency ............................................................. 947 Miscellaneous ............................................................... 13,322 ------------ Total expenses .............................................................. 499,391 Less: expenses waived and reimbursed (see Note B) ........................... (218,956) ------------ Net expenses ................................................................ 280,435 ------------ Net investment income ....................................................... 226,607 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS Net realized gain (loss) on: Investment transactions ................................................... (91,155) Futures contracts ......................................................... (283,579) Foreign currency transactions ............................................. 8,460 Net change in unrealized appreciation/depreciation of: Investments ............................................................... (1,722,172) Futures ................................................................... (47,634) Foreign currency denominated assets and liabilities ....................... 7,719 ------------ Net loss on investment and foreign currency transactions .................... (2,128,361) ------------ NET DECREASE IN NET ASSETS FROM OPERATIONS ..................................... $ (1,901,754) ============
- -------------------------------------------------------------------------------- See Notes to Financial Statements. 8 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS Alliance Variable Products Series Fund ================================================================================
Year Ended May 10, 2001(a) December 31, to December 31, 2002 2001 ============== ============== INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income ............................................... $ 226,607 $ 6,084 Net realized loss on investment and foreign currency transactions ... (366,274) (21,884) Net change in unrealized appreciation/depreciation of investments and foreign currency denominated assets and liabilities ............... (1,762,087) 198,390 -------------- -------------- Net increase (decrease) in net assets from operations ............... (1,901,754) 182,590 DIVIDENDS TO SHAREHOLDERS FROM Net investment income Class A ........................................................... (12,481) -0- Class B ........................................................... (11,716) -0- CAPITAL STOCK TRANSACTIONS Net increase ........................................................ 36,708,436 5,559,183 -------------- -------------- Total increase ...................................................... 34,782,485 5,741,773 NET ASSETS Beginning of period ................................................. 5,741,773 -0- -------------- -------------- End of period (including undistributed net investment income of $230,838 and $19,968, respectively) .............................. $ 40,524,258 $ 5,741,773 ============== ==============
- -------------------------------------------------------------------------------- (a) Commencement of operations. See Notes to Financial Statements. 9 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS December 31, 2002 Alliance Variable Products Series Fund ================================================================================ NOTE A: Significant Accounting Policies The AllianceBernstein International 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 Portfolio commenced operations on May 10, 2001. 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 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 prices 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 prices. 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 prices of such currencies against the U.S. dollar. Purchases and sales of portfolio investments are translated into U.S. dollars at the rates of exchange prevailing when such securities were acquired or sold. Income and expenses are translated into U.S. dollars at rates of exchange prevailing when accrued. Net realized gain or loss on foreign currency transactions represents foreign exchange gains and losses from sales and maturities of foreign fixed income investments and foreign currency exchange contracts, holding of foreign currencies, currency gains or losses realized between the trade and settlement dates on foreign investment transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes 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 10 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. During the current fiscal year, permanent differences, primarily due to foreign currency transactions, resulted in a net increase in undistributed net investment income and an increase in accumulated net realized loss on investment transactions. This reclassification had no effect on net assets. - -------------------------------------------------------------------------------- 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. Such fee is accrued daily and paid monthly. 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 year ended December 31, 2002, the Adviser waived fees in the amount of $149,956. Pursuant to the terms of the investment advisory agreement, the Portfolio has agreed to reimburse the Adviser for the cost of providing the Portfolio with certain legal and accounting services. Because of the Adviser's agreement to limit total operating expenses as described above, the Adviser waived reimbursement for such services in the amount of $69,000 for the year ended December 31, 2002. Brokerage commissions paid on investment transactions for the year ended December 31, 2002, amounted to $65,592, of which $3,988 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 $947 for the year ended December 31, 2002. - -------------------------------------------------------------------------------- NOTE C: Distribution Plan The Portfolio has adopted a Distribution Plan (the "Plan") for Class B shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Plan, the Portfolio pays distribution and servicing fees to Alliance Fund Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary of the Adviser, at an annual rate of up to .50 of 1% 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 limits payments under the Plan to ..25 of 1% 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 Class B 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 Securities and Exchange 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 11 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) Alliance Variable Products Series Fund ================================================================================ 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. - -------------------------------------------------------------------------------- NOTE D: Investment Transactions Purchases and sales of investment securities (excluding short-term investments) for the year ended December 31, 2002, were as follows: Purchases: Stocks and debt obligations .............................. $38,279,717 U.S. government and agencies ............................. -0- Sales: Stocks and debt obligations .............................. $ 3,788,677 U.S. government and agencies ............................. -0- At December 31, 2002, the cost of investments for federal income tax purposes was $41,789,842. Gross unrealized appreciation and unrealized depreciation are as follows: Gross unrealized appreciation ........................... $ 1,480,731 Gross unrealized depreciation ........................... (3,039,473) ----------- Net unrealized depreciation ............................. $(1,558,742) =========== 1. Financial Futures Contracts The Portfolio may buy or sell financial futures contracts for the purpose of hedging its portfolio against adverse affects of anticipated movements in the market. The Portfolio bears the market risk that arises from changes in the value of these financial instruments and the imperfect correlation between movements in the price of the futures contracts and movements in the price of the securities hedged or used for cover. At the time the Portfolio enters into a futures contract, the Portfolio deposits and maintains as collateral an initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as variation margin and are recorded by the Portfolio as unrealized gains or losses. Risks may arise from the potential inability of a counterparty to meet the terms of a contract. When the contract is closed, the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the time it was closed. 2. Forward Exchange Currency Contracts The Portfolio may enter into forward exchange currency contracts to hedge its exposure to changes in foreign currency exchange rates on its 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 on 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 net realized gain or loss on foreign currency transactions. Fluctuations in the value of outstanding 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 a value at least 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 December 31, 2002, the Portfolio had no outstanding forward exchange currency contracts. 12 Alliance Variable Products Series Fund ================================================================================ 3. Option Transactions For hedging and investment purposes, the Portfolio may purchase and write call options and purchase put options on U.S. securities and foreign currencies 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 writing 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 year ended December 31, 2002. - -------------------------------------------------------------------------------- NOTE E: Distributions to Shareholders The tax character of distributions paid during the fiscal years ended December 31, 2002 and December 31, 2001 were as follows: 2002 2001 ========== ========== Distributions paid from: Ordinary income ................................... $ 24,197 $ -0- ---------- ---------- Total distributions paid ............................. $ 24,197 $ -0- ---------- ---------- As of December 31, 2002, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income ........................... $ 230,659 Accumulated capital and other losses .................... (386,094)(a) Unrealized appreciation/(depreciation) .................. (1,587,926)(b) ----------- Total accumulated earnings/(deficit) .................... $(1,743,361) =========== - -------------------------------------------------------------------------------- (a) On December 31, 2002, the Portfolio had a net capital loss carryforward of $164,056 of which $4,117 will expire in the year 2009 and $159,939 will expire in the year 2010. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. Net capital losses incurred after October 31, and within the taxable year are deemed to arise on the first business day of the Portfolio's next taxable year. For the year ended December 31, 2002, the Portfolio deferred to January 1, 2003, post October capital losses of $222,038. (b) The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains/losses on certain derivative instruments. 13 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) Alliance Variable Products Series Fund ================================================================================ 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 ----------------------------------- ----------------------------------- Year Ended May 10, 2001 (a) Year Ended May 10, 2001 (a) December 31, to December 31, December 31, to December 31, 2002 2001 2002 2001 ================ ================ ================ ================ Class A Shares sold ................. 2,153,269 534,207 $ 20,639,995 $ 5,054,653 Shares issued in reinvestment of dividends ............. 1,136 -0- 12,481 -0- Shares redeemed ............. (1,011,732) (137,881) (9,235,236) (1,246,108) ---------------- ---------------- ---------------- ---------------- Net increase ................ 1,142,673 396,326 $ 11,417,240 $ 3,808,545 ================ ================ ================ ================ Year Ended August 15, 2001(b) Year Ended August 15, 2001(b) December 31, to December 31, December 31, to December 31, 2002 2001 2002 2001 ================ ================ ================ ================ Class B Shares sold ................. 4,278,977 188,151 $ 40,702,331 $ 1,778,002 Shares issued in reinvestment of dividends ............. 1,068 -0- 11,717 -0- Shares redeemed ............. (1,663,844) (2,876) (15,422,852) (27,364) ---------------- ---------------- ---------------- ---------------- Net increase ................ 2,616,201 185,275 $ 25,291,196 $ 1,750,638 ================ ================ ================ ================
- -------------------------------------------------------------------------------- (a) Commencement of operations. (b) Commencement of distribution. - -------------------------------------------------------------------------------- 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. - -------------------------------------------------------------------------------- NOTE H: Joint Credit Facility 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 year ended December 31, 2002. 14 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO FINANCIAL HIGHLIGHTS Alliance Variable Products Series Fund ================================================================================ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
------------------------------ ------------------------------ CLASS A CLASS B ------------------------------ ------------------------------ Year May 10, Year August 15, Ended 2001(a) to Ended 2001(b) to December 31, December 31, December 31, December 31, 2002 2001 2002 2001 ============= ============= ============= ============= Net asset value, beginning of period ...... $ 9.87 $ 10.00 $ 9.87 $ 10.25 ------------- ------------- ------------- ------------- Income From Investment Operations Net investment income (c)(d) .............. .13 .04 .08 .01 Net realized and unrealized loss on investment and foreign currency transactions ........................... (.64) (.17) (.61) (.39) ------------- ------------- ------------- ------------- Net decrease in net asset value from operations ............................. (.51) (.13) (.53) (.38) ------------- ------------- ------------- ------------- Less: Dividends Dividends from net investment income ...... (.01) -0- (.01) -0- ------------- ------------- ------------- ------------- Total dividends ........................... (.01) -0- (.01) -0- ------------- ------------- ------------- ------------- Net asset value, end of period ............ $ 9.35 $ 9.87 $ 9.33 $ 9.87 ============= ============= ============= ============= Total Return Total investment return based on net asset value (e) .................... (5.15)% (1.30)% (5.36)% (3.71)% Ratios/Supplemental Data Net assets, end of period (000's omitted) . $ 14,391 $ 3,913 $ 26,133 $ 1,828 Ratio to average net assets of: Expenses, net of waivers and reimbursements ....................... 1.17% .95%(f) 1.44% 1.20%(f) Expenses, before waivers and reimbursements ....................... 2.20% 8.41%(f) 2.47% 9.31%(f) Net investment income (d) ................. 1.30% .59%(f) .86% .17%(f) Portfolio turnover rate ................... 19% 22% 19% 22%
- -------------------------------------------------------------------------------- (a) Commencement of operations. (b) Commencement of distributions. (c) Based on average shares outstanding. (d) Net of expenses reimbursed or waived by the Adviser. (e) 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 Return does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Total investment return calculated for a period of less than one year is not annualized. (f) Annualized. 15 REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS Alliance Variable Products Series Fund ================================================================================ To the Shareholders and Board of Directors AllianceBernstein International Value Portfolio Alliance Variable Products Series Fund, Inc. We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of the AllianceBernstein International Value Portfolio (the "Portfolio"), (one of the portfolios constituting the Alliance Variable Products Series Fund, Inc.) as of December 31, 2002, and the related statement of operations for the year then ended, and the statement of changes in net assets and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2002, by correspondence with the custodian and others. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the AllianceBernstein International Value Portfolio of the Alliance Variable Products Series Fund, Inc. at December 31, 2002, and the results of its operations for the year then ended, the changes in its net assets and the financial highlights for each of the indicated periods, in conformity with accounting principles generally accepted in the United States. /s/ Ernst & Young LLP New York, New York February 3, 2003 16 ALLIANCEBERNSTEIN INTERNATIONAL 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) 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. 17 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO Alliance Variable Products Series Fund ================================================================================ MANAGEMENT OF THE FUND Board of Directors Information The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund's Directors is set forth below.
PORTFOLIOS IN FUND OTHER NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS ADDRESS, OCCUPATION(S) OVERSEEN BY HELD BY (YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR - ------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTOR John D. Carifa,** 57 President, Chief Operating Officer and 114 None 1345 Avenue of the Americas a Director of Alliance Capital Management New York, NY 10105 Corporation ("ACMC"), with which he has (13) been associated since prior to 1998. DISINTERESTED DIRECTORS Ruth Block, #+, 72 Formerly an Executive Vice President and 93 None P.O. Box 4623 Chief Insurance Officer of The Equitable Stamford, CT 06903 Life Assurance Society of the United States; (11) Chairman and Chief Executive Officer of Evlico; formerly a Director of Avon, BP Amoco Corporation (oil and gas), Ecolab Incorporated (specialty chemicals), Tandem Financial Group, and Donaldson Lufkin & Jenrette Securities Corporation. David H. Dievler, #+, 73 Independent consultant. Until December 98 None P.O. Box 167 1994 he was Senior Vice President of ACMC Spring Lake, NJ 07762 responsible for mutual fund administration. (13) Prior to joining ACMC in 1984 he was Chief Financial Officer of Eberstadt Asset Management since 1968. Prior to that he was a Senior Manager at Price Waterhouse & Co. Member of American Institute of Certified Public Accountants since 1953. John H. Dobkin, #+, 60 Consultant. He was formerly a Senior Advisor 94 None P.O. Box 12 from June 1999 - June 2000 and President Annandale, NY 12504 of Historic Hudson Valley (December 1989 - (11) May 1999). Previously, Director of the National Academy of Design and during 1988-92, he was Director and Chairman of the Audit Committee of ACMC. William H. Foulk, Jr., #+, 70 Investment adviser and an independent 110 None Suite 100 consultant. He was formerly Senior 2 Sound View Drive Manager of Barrett Associates, Inc., a Greenwich, CT 06830 registered investment adviser, with which (13) he had been associated since prior to 1998. He was formerly Deputy Comptroller of the State of New York and, prior thereto, Chief Investment Officer of the New York Bank for Savings.
18 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO Alliance Variable Products Series Fund ================================================================================
PORTFOLIOS IN FUND OTHER NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS ADDRESS, OCCUPATION(S) OVERSEEN BY HELD BY (YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR - ------------------------------------------------------------------------------------------------------------------- DISINTERESTED DIRECTORS (continued) Clifford L. Michel, #+, 63 Senior Counsel of the law firm of Cahill 93 Placer Dome Inc. 15 St. Bernard's Road Gordon & Reindel since February 2001 Gladstone, NJ 07934 and a partner of that firm for more than (11) twenty-five years prior thereto. He is President and Chief Executive Officer of Wenonah Development Company (investments) and a Director of Placer Dome Inc. (mining). Donald J. Robinson, #+, 68 Senior Counsel to the law firm of Orrick, 92 None 98 Hell's Peak Road Herrington & Sutcliffe since prior to 1998. Weston, VT 05161 Formerly a senior partner and a member (7) of the Executive Committee of that firm. He was also a member and Chairman of the Municipal Securities Rulemaking Board and Trustee of the Museum of the City of New York.
- -------------------------------------------------------------------------------- * There is no stated term of office for the Directors. ** Mr. Carifa is an "interested director", as defined in the 1940 Act, due to his position as President and Chief Operating Officer of ACMC, the Fund's investment adviser. # Member of the Audit Committee. + Member of the Nominating Committee. 19 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO Alliance Variable Products Series Fund ================================================================================ Officer Information Certain information concerning the Fund's Officers is listed below.
NAME, ADDRESS* POSITION(S) HELD PRINCIPAL OCCUPATION AND AGE WITH FUND DURING PAST 5 YEARS** - ------------------------------------------------------------------------------------------------------------------------------------ John D. Carifa, 57 Chairman & President See biography above. Andrew S. Adelson, 47 Vice President Chief Investment Officer of International Value Equities and Executive Vice President of ACMC since October 2000. Prior thereto, he was Chief Investment Officer of International Investment Management Services at Sanford C. Bernstein & Co., Inc. ("Bernstein") since prior to 1998. Kevin F. Simms, 36 Vice President Senior Vice President and Director of Research for International Value and Global Value Equities at ACMC since October 2000. Prior thereto, he was a research analyst at Bernstein since prior to 1998. Edmund P. Bergan, Jr., 52 Secretary Senior Vice President and the General Counsel of Alliance Fund Distributors, Inc. ("AFD") and Alliance Global Investor Services Inc. ("AGIS"), with which he has been associated since prior to 1998. Mark D. Gersten, 52 Treasurer and Chief Senior Vice President of AGIS and Vice President of AFD, with which he Financial Officer has been associated since prior to 1998. Thomas R. Manley, 51 Controller Vice President of ACMC, with which he has been associated since prior to 1998.
- -------------------------------------------------------------------------------- * The address for each of the Fund's Officers is 1345 Avenue of the Americas, New York, NY 10105. ** ACMC, AFD, and AGIS are affiliates of the Fund. The Fund's Statement of Additional Information (SAI) has additional information about the Fund's Directors and Officers and is available without charge upon request. Contact your financial representative or Alliance Capital at 800-227-4618 for a free prospectus or SAI. 20 (This page left intentionally blank.) -----END PRIVACY-ENHANCED MESSAGE-----