-----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, Jg+Hl0el7a8tHre5YHq+irXWXQFGn8XRFwdofdvWqqsYvve2UsMYfRdPuB1seZWn xeTWiQPQt/4GoKuTkyj3Fw== 0000936772-03-000090.txt : 20030221 0000936772-03-000090.hdr.sgml : 20030221 20030221142945 ACCESSION NUMBER: 0000936772-03-000090 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: 03575786 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 edg8786.txt ALLIANCE ------------------------- VARIABLE PRODUCTS ------------------------- SERIES FUND ------------------------- GROWTH & INCOME PORTFOLIO ------------------------- ANNUAL REPORT DECEMBER 31, 2002 Investment Products Offered --------------------------- > Are Not FDIC Insured > May Lose Value > Are Not Bank Guaranteed --------------------------- GROWTH & INCOME PORTFOLIO Alliance Variable Products Series Fund ================================================================================ LETTER TO INVESTORS January 16, 2003 Dear Investor: The following is an update of Alliance Variable Products Series Fund Alliance Growth & Income Portfolio (the "Portfolio") for the annual reporting period ended December 31, 2002. INVESTMENT OBJECTIVE AND POLICIES The Portfolio seeks reasonable current income and reasonable opportunities for appreciation through investments primarily in dividend-paying common stocks of good quality. - -------------------------------------------------------------------------------- INVESTMENT RESULTS Periods Ended December 31, 2002 Total Returns Since 1 Year 5 Years Inception* ====== ======= ========== Alliance Growth & Income Portfolio -22.05% 3.70% 10.31% Russell 1000 Value Index -15.52% 1.16% 11.80% 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 1/14/91. The unmanaged Russell 1000 Value Index contains those securities in the Russell 1000 Index with a less-than-average growth orientation. The unmanaged Russell 1000 Index is comprised of the 1000 largest capitalized companies that are traded in the United States. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including Alliance Growth & Income Portfolio. - -------------------------------------------------------------------------------- In the wake of 2001's September 11th tragedies, world stock prices continued to wither in 2002 under the weight of a severe escalation and re-assessment of geopolitical and global economic risk. Heightened investor uncertainty catalyzed a dramatic preference shift away from risky assets (stocks) to safe assets (government bonds). Against the backdrop of a hostile global stock market environment, the Portfolio's performance for the 12-month period ended December 31, 2002 was in line with major market benchmarks, losing 22.05%, while the Standard & Poor's (S&P) 500 Stock Index returned -22.09%. Over the same time period, the Portfolio underperformed its benchmark, the Russell 1000 Value Index, which returned -15.52% The Portfolio's underperformance over the 12-month period was a result of poor stock picking. Selecting individual securities for purchase, rather than relying on broad sector calls, has historically been the hallmark of the Portfolio's investment process. Over the past year, a number of investments we believed to have better-than-average fundamental prospects performed poorly, such as Dynegy, Household International, Solectron, Sanmina and Tyco. In many cases, these disappointing investments were in companies that depended on capital access from the equity and debt markets to grow. These companies were particularly compromised in 2002 as the capital markets re-priced risk and generally became more reluctant to lend money to businesses. As the costs and availability of credit became more onerous, some of our investments were unable to execute their business plans and deliver the type of fundamental performance we expected of them. MARKET REVIEW Based on 2002 mutual fund flows, many investors reacted to disappointing performance and heightened uncertainty by selling their investments. In this tumultuous economic environment, we believe the collective anxiety of investors is high by historical measures. Investors' aversion or preference for risky assets can be systematically measured by comparing the expected returns of stocks and bonds--the difference being the equity risk premium. In today's market, investors' concern about geopolitical and global economic risk, and corporate earnings and the quality of corporate management, have conspired to undermine confidence in equities, as evidenced by high equity risk premiums. Assuming economic Armageddon is not at the front doorstep--and we do not believe it is--investors' intense aversion to loss has increased the expected return on stocks and sharply lowered the expected return on bonds. Said another way, stock valuations are cheap relative to the long-term earnings power of corporations and, over time, low equity valuation has proven to be a fairly effective predictor of positive performance. Over the past 12 months, corporate and economic news flow has not been supportive of investor confidence. 1 GROWTH & INCOME PORTFOLIO Alliance Variable Products Series Fund ================================================================================ Given the intensity and resources available to those focused on uncovering scandal to sell newspapers and drive viewer ratings, we are somewhat encouraged by the relative lack of new information on the topic of corporate impropriety in the second half of 2002. The dearth of new revelation lends some hope to our belief that the accounting transgressions that surfaced this past year were isolated incidences and not part of a broader, more systemic corporate problem. As the issue exhausts itself, hopefully corporate America's strengths will become more visible. For example, we see significant balance sheet progress being made. Corporate debt is barely growing, companies are being restructured, profits and retained earnings are improving, the debt-service burden of the corporate sector is declining and leverage is moderating. Corporations are generating more cash than they are consuming, and balance sheet liquidity is rapidly improving. While initiatives to shore up balance sheets go largely unnoticed, concern about profit growth still prevails. To be sure, performance has been weaker than many had hoped. We caution investors that there are a number of external influences that might be skewing profit reports in a more conservative direction, thereby potentially understating the true economic state of businesses. First, many managers are trying to get out in front of the earnings-quality debate by assuring accurate earnings reporting and accounting practices. Second, at these low valuations, we are not surprised that many CEO's are tempted to aggressively restructure operations to come out of 2002 conservatively positioned for success in 2003. While it is nearly impossible to assess just how important these influences might be with regards to current profit disappointment, it probably will have a conservative effect on reported earnings. MARKET OUTLOOK We believe short-term risk aversion creates long-term opportunity--particularly in equities whose valuation is relatively more dependent on future earnings over the long-term. As compelling opportunities materialize in distressed subsets of the market, we are willing to take on more risk versus the Russell 1000 Value Index. Our fundamental work suggests attractive opportunity has materialized in the pharmaceuticals, technology and financial sectors. After careful analysis and reflection, we leave the fiscal year confident that our philosophy and processes are still relevant and functioning properly. As always, we continue to adhere to our philosophy, which has served us well over time, and implement our fundamental process in a highly disciplined and systematic fashion. We believe the Portfolio is well positioned for a more stable investment environment, which we see supported by slowly improving fundamentals and low interest rates. We appreciate your investment in Alliance Growth & Income Portfolio and look forward to reporting further investment progress in the coming period. Sincerely, /s/ Paul Rissman Paul Rissman Vice President and Portfolio Manager /s/ Paul Rissman Frank Caruso Vice President and Portfolio Manager 2 GROWTH & INCOME PORTFOLIO Alliance Variable Products Series Fund ================================================================================ PERFORMANCE UPDATE ALLIANCE GROWTH & INCOME PORTFOLIO GROWTH OF A $10,000 INVESTMENT 12/31/92-12/31/02 [THE FOLLOWING WAS DEPICTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL.] Alliance Growth & Russell 1000 Income Portfolio Value Index - ------------------------------------------------------------------------------- 12/31/92 10000 10000 12/31/93 11169 11807 12/31/94 11130 11573 12/31/95 15109 16013 12/31/96 18749 19478 12/31/97 24148 26330 12/31/98 29193 30446 12/31/99 32512 32683 12/31/00 37028 34974 12/31/01 37161 33019 12/31/02 28967 27895 Alliance Growth & Income Portfolio: $28,967 Russell 1000 Value Index: $27,895 Past performance is no guarantee of future results. This chart illustrates the total value of an assumed $10,000 investment in the Portfolio (from 12/31/92 to 12/31/02) as compared to the performance of an appropriate broad-based index. The unmanaged Russell 1000 Value Index contains those securities in the Russell 1000 Index with a less-than-average growth orientation. The unmanaged Russell 1000 Index is comprised of the 1000 largest capitalized companies that are traded in the United States. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including Alliance Growth & Income Portfolio. 3 GROWTH & INCOME PORTFOLIO TEN LARGEST HOLDINGS December 31, 2002 Alliance Variable Products Series Fund ================================================================================ - -------------------------------------------------------------------------------- COMPANY U.S. $ VALUE PERCENT OF NET ASSETS - -------------------------------------------------------------------------------- Citigroup, Inc. $ 70,380,000 4.6% - -------------------------------------------------------------------------------- American International Group, Inc. 57,850,000 3.8 - -------------------------------------------------------------------------------- Wyeth 56,100,000 3.7 - -------------------------------------------------------------------------------- J.P. Morgan Chase & Co. 55,478,400 3.6 - -------------------------------------------------------------------------------- Comcast Corp. Cl.A 53,352,475 3.5 - -------------------------------------------------------------------------------- Union Pacific Corp. 49,392,750 3.2 - -------------------------------------------------------------------------------- Pfizer, Inc. 48,912,000 3.2 - -------------------------------------------------------------------------------- Fannie Mae 45,031,000 3.0 - -------------------------------------------------------------------------------- Conocophillips 43,551,000 2.9 - -------------------------------------------------------------------------------- Bank One Corp. 42,032,500 2.8 ------------ ---- - -------------------------------------------------------------------------------- $522,080,125 34.3% - -------------------------------------------------------------------------------- 4 GROWTH & INCOME PORTFOLIO PORTFOLIO OF INVESTMENTS December 31, 2002 Alliance Variable Products Series Fund ================================================================================ Company Shares U.S. $ Value - -------------------------------------------------------------------------------- COMMON STOCKS-98.4% FINANCE-28.6% BANKING - MONEY CENTER-3.6% J.P. Morgan Chase & Co. ..................... 2,311,600 $ 55,478,400 ------------ BANKING - REGIONAL-4.4% Bank of America Corp. ....................... 360,000 25,045,200 Bank One Corp. .............................. 1,150,000 42,032,500 ------------ 67,077,700 ------------ BROKERAGE & MONEY MANAGEMENT-3.1% Merrill Lynch & Co., Inc. ................... 600,000 22,770,000 Morgan Stanley .............................. 600,000 23,952,000 ------------ 46,722,000 ------------ INSURANCE-5.4% ACE, Ltd. (Bermuda) ......................... 850,000 24,939,000 American International Group, Inc. .......... 1,000,000 57,850,000 ------------ 82,789,000 ------------ MORTGAGE BANKING-5.9% Fannie Mae .................................. 700,000 45,031,000 Federal Home Loan Mortgage Corp. ............ 300,000 17,715,000 PMI Group, Inc. ............................. 550,000 16,522,000 Washington Mutual, Inc. ..................... 300,000 10,359,000 ------------ 89,627,000 ------------ MISCELLANEOUS-6.2% Citigroup, Inc. ............................. 2,000,000 70,380,000 MBNA Corp. .................................. 1,250,000 23,775,000 ------------ 94,155,000 ------------ 435,849,100 ------------ HEALTH CARE-13.5% DRUGS-8.5% Pfizer, Inc. ................................ 1,600,000 48,912,000 Schering-Plough Corp. ....................... 1,100,000 24,420,000 Wyeth ....................................... 1,500,000 56,100,000 ------------ 129,432,000 ------------ MEDICAL SERVICES-5.0% Cardinal Health, Inc. ....................... 150,000 8,878,500 HCA, Inc. ................................... 760,000 31,540,000 Tenet Healthcare Corp. (a) ................. 700,000 11,480,000 WellPoint Health Networks, Inc. (a) ......... 339,300 24,144,588 ------------ 76,043,088 ------------ 205,475,088 ------------ ENERGY-12.1% DOMESTIC INTEGRATED-0.8% Occidental Petroleum Corp. .................. 450,000 12,802,500 ------------ DOMESTIC PRODUCERS-1.8% Kerr-McGee Corp. ............................ 600,000 26,580,000 ------------ INTERNATIONAL-5.8% BP Plc (ADR) (United Kingdom) ............... 769,300 31,272,045 ChevronTexaco Corp. ......................... 435,000 28,918,800 Exxon Mobil Corp. ........................... 825,000 28,825,500 ------------ 89,016,345 ------------ OIL SERVICE-0.8% Transocean Sedco Forex, Inc. ................ 500,000 11,600,000 ------------ MISCELLANEOUS-2.9% Conocophillips .............................. 900,000 43,551,000 ------------ 183,549,845 ------------ TECHNOLOGY-11.7% COMMUNICATION EQUIPMENT-2.3% Juniper Networks, Inc. (a) ................. 4,316,600 29,352,880 Lucent Technologies, Inc. (a) ............... 4,000,000 5,040,000 ------------ 34,392,880 ------------ COMPUTER SERVICES-2.1% First Data Corp. ............................ 925,000 32,754,250 ------------ CONTRACT MANUFACTURING-1.0% Sanmina Corp. (a) ........................... 1,250,000 5,612,500 Solectron Corp. (a) ......................... 2,500,000 8,875,000 ------------ 14,487,500 ------------ SEMI-CONDUCTOR COMPONENTS-4.9% Altera Corp. (a) ............................ 2,250,000 27,765,000 Intersil Corp. Cl.A (a) ..................... 775,000 10,803,500 Marvell Technology Group, Ltd. (Bermuda) (a) 1,075,000 20,274,500 Maxim Integrated Products ................... 250,000 8,260,000 Micron Technology, Inc. (a) ................. 800,000 7,792,000 ------------ 74,895,000 ------------ SOFTWARE-1.4% Veritas Software Corp. (a) ................. 1,400,000 21,868,000 ------------ 178,397,630 ------------ CONSUMER SERVICES-8.9% BROADCASTING & CABLE-6.4% AOL Time Warner (a) ......................... 500,000 6,550,000 Comcast Corp. Cl.A (a) ...................... 1,617,500 38,124,475 Comcast Corp. Special Cl.A (a) .............. 675,000 15,228,000 Cox Communications, Inc. Cl.A (a) ........... 375,000 10,650,000 Viacom, Inc. Cl.B (a) ....................... 675,000 27,513,000 ------------ 98,065,475 ------------ ENTERTAINMENT & LEISURE-2.5% Carnival Corp. .............................. 1,000,000 24,950,000 Harley-Davidson, Inc. ....................... 285,000 13,167,000 ------------ 38,117,000 ------------ 136,182,475 ------------ 5 GROWTH & INCOME PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) Alliance Variable Products Series Fund ================================================================================ Company Shares U.S. $ Value - ------------------------------------------------------------------------------- UTILITIES-7.0% ELECTRIC & GAS UTILITY-3.3% Ameren Corp. ............................ 300,000 $ 12,471,000 Constellation Energy Group .............. 450,000 12,519,000 Edison International (a) ................ 1,033,800 12,250,530 Entergy Corp. ........................... 300,000 13,677,000 --------------- 50,917,530 --------------- TELEPHONE UTILITIES-3.7% AT&T Corp. .............................. 961,300 25,099,543 SBC Communications, Inc. ................ 600,000 16,266,000 Sprint Corp. ............................ 1,000,000 14,480,000 --------------- 55,845,543 --------------- 106,763,073 --------------- CONSUMER STAPLES-6.6% BEVERAGES-1.6% Anheuser-Busch Cos., Inc. ............... 500,000 24,200,000 --------------- COSMETICS-1.8% Avon Products, Inc. ..................... 500,000 26,935,000 --------------- RETAIL - FOOD & DRUG-0.8% Kroger Co. (a) .......................... 800,000 12,360,000 --------------- TOBACCO-2.4% Loews Corp. Carolina Group .............. 640,200 12,976,854 Philip Morris Cos., Inc. ................ 600,000 24,318,000 --------------- 37,294,854 --------------- 100,789,854 --------------- TRANSPORTATION-4.2% RAILROADS-4.2% Burlington Northern Santa Fe Corp. ...... 550,000 14,305,500 Union Pacific Corp. ..................... 825,000 49,392,750 --------------- 63,698,250 --------------- Shares or Principal Amount Company (000) U.S. $ Value - ------------------------------------------------------------------------------- CAPITAL GOODS-2.4% ELECTRICAL EQUIPMENT-0.4% Johnson Controls, Inc. .................. 75,000 6,012,750 --------------- MISCELLANEOUS-2.0% United Technologies Corp. ............... 500,000 30,970,000 --------------- 36,982,750 --------------- BASIC INDUSTRY-2.2% CHEMICALS-2.2% E.I. du Pont de Nemours & Co. ........... 575,000 24,380,000 Lyondell Chemical Co. ................... 750,000 9,480,000 --------------- 33,860,000 --------------- MULTI-INDUSTRY COMPANY-0.8% Tyco International, Ltd. ................ 665,000 11,358,200 --------------- AEROSPACE & DEFENSE-0.4% AEROSPACE-0.4% Goodrich Corp. .......................... 350,000 6,412,000 --------------- Total Common Stocks (cost $1,640,667,659) 1,499,318,265 --------------- SHORT-TERM INVESTMENT-2.0% TIME DEPOSIT-2.0% State Street Euro Dollar 0.75%, 1/02/03 (cost $30,460,000) ................... $ 30,460 30,460,000 --------------- TOTAL INVESTMENTS-100.4% (cost $1,671,127,659) ................ 1,529,778,265 Other assets less liabilities (b)-(0.4%) ............... (5,424,891) --------------- NET ASSETS-100% ......................... $ 1,524,353,374 =============== - -------------------------------------------------------------------------------- (a) Non-income producing security. (b) Includes cash collateral received of $49,738,600 for securities on loan as of December 31, 2002 (see Note F). The lending agent invested the cash in a short-term investment as follows: Current Yield Shares Value ------- ---------- ----------- UBS Private Money Market Fund, LLC 1.46% 49,738,600 $49,738,600 Glossary: ADR - American Depositary Receipt See Notes to Financial Statements. 6 GROWTH & INCOME PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES December 31, 2002 Alliance Variable Products Series Fund ================================================================================ ASSETS Investments in securities, at value (cost $1,671,127,659) ............. $ 1,529,778,265(a) Cash .................................................................. 251 Collateral held for securities loaned ................................. 49,738,600 Dividends and interest receivable ..................................... 1,866,113 Receivable for capital stock sold ..................................... 1,652,715 --------------- Total assets .......................................................... 1,583,035,944 --------------- LIABILITIES Payable for collateral received on securities loaned .................. 49,738,600 Payable for capital stock redeemed .................................... 7,344,475 Advisory fee payable .................................................. 830,522 Payable for investment securities purchased ........................... 215,254 Accrued expenses ...................................................... 553,719 --------------- Total liabilities ..................................................... 58,682,570 --------------- NET ASSETS ............................................................... $ 1,524,353,374 =============== COMPOSITION OF NET ASSETS Capital stock, at par ................................................. $ 92,228 Additional paid-in capital ............................................ 1,948,275,677 Undistributed net investment income ................................... 15,859,112 Accumulated net realized loss on investment transactions .............. (298,524,249) Net unrealized depreciation of investments ............................ (141,349,394) --------------- $ 1,524,353,374 =============== Class A Shares Net assets ............................................................ $ 456,401,721 =============== Shares of capital stock outstanding ................................... 27,466,929 =============== Net asset value per share ............................................. $ 16.62 =============== Class B Shares Net assets ............................................................ $ 1,067,951,653 =============== Shares of capital stock outstanding ................................... 64,761,507 =============== Net asset value per share ............................................. $ 16.49 ===============
- -------------------------------------------------------------------------------- (a) Includes securities on loan with a value of $47,901,875 (see Note F). See Notes to Financial Statements. 7 GROWTH & INCOME PORTFOLIO STATEMENT OF OPERATIONS Year Ended December 31, 2002 Alliance Variable Products Series Fund ================================================================================ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $140,822) .................. $ 28,781,822 Interest ............................................................... 999,759 ------------- Total investment income ................................................ 29,781,581 ------------- EXPENSES Advisory fee ........................................................... 10,145,603 Distribution fee--Class B .............................................. 2,637,856 Custodian .............................................................. 385,075 Audit and legal ........................................................ 184,681 Printing ............................................................... 176,221 Administrative ......................................................... 69,000 Transfer agency ........................................................ 947 Directors' fees and expenses ........................................... 1,056 Miscellaneous .......................................................... 100,562 ------------- Total expenses ......................................................... 13,701,001 ------------- Net investment income .................................................. 16,080,580 ------------- REALIZED AND UNREALIZED LOSS ON INVESTMENT TRANSACTIONS Net realized loss on investment transactions ........................... (263,159,269) Net change in unrealized appreciation/depreciation of investments ...... (180,481,515) ------------- Net loss on investment transactions .................................... (443,640,784) ------------- NET DECREASE IN NET ASSETS FROM OPERATIONS ................................ $(427,560,204) =============
- -------------------------------------------------------------------------------- See Notes to Financial Statements. 8 GROWTH & INCOME PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS Alliance Variable Products Series Fund ================================================================================
Year Ended Year Ended December 31, December 31, 2002 2001 =============== =============== INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income ......................................................... $ 16,080,580 $ 9,491,801 Net realized gain (loss) on investment transactions ........................... (263,159,269) 24,298,080 Net change in unrealized appreciation/depreciation of investments ............. (180,481,515) (40,616,232) --------------- --------------- Net decrease in net assets from operations .................................... (427,560,204) (6,826,351) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM Net investment income Class A ..................................................................... (3,650,674) (3,814,813) Class B ..................................................................... (5,894,113) (2,140,696) Net realized gain on investment transactions Class A ..................................................................... (18,762,071) (28,040,271) Class B ..................................................................... (36,231,462) (16,582,157) CAPITAL STOCK TRANSACTIONS Net increase .................................................................. 453,336,029 872,234,137 --------------- --------------- Total increase (decrease) ..................................................... (38,762,495) 814,829,849 NET ASSETS Beginning of period ........................................................... 1,563,115,869 748,286,020 --------------- --------------- End of period (including undistributed net investment income of $15,859,112 and $9,338,625, respectively) ..................................... $ 1,524,353,374 $ 1,563,115,869 =============== ===============
- -------------------------------------------------------------------------------- See Notes to Financial Statements. 9 GROWTH & INCOME PORTFOLIO NOTES TO FINANCIAL STATEMENTS December 31, 2002 Alliance Variable Products Series Fund ================================================================================ NOTE A: Significant Accounting Policies The Growth & Income Portfolio (the "Portfolio") is a series of Alliance Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek reasonable current income and reasonable opportunity for appreciation through investments primarily in dividend-paying, common stocks of good quality. 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 securities 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 10 Alliance Variable Products Series Fund ================================================================================ portfolio in proportion to net assets. All income earned and expenses incurred by a portfolio with multi-class 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 tax character of distributions, resulted in a net decrease in undistributed net investment income and a corresponding decrease in accumulated net realized loss on investments. 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 annual rate of .625 of 1% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. During the year ended December 31, 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. Expense waivers/reimbursements, if any, are accrued daily and paid monthly. For the year ended December 31, 2002, the Portfolio received no such waivers/reimbursements. 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. For the year ended December 31, 2002, this reimbursement to the Adviser amounted to $69,000. Brokerage commissions paid on investment transactions for the year ended December 31, 2002 amounted to $5,089,476, of which $318,196 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 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. 11 GROWTH & INCOME 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 year ended December 31, 2002, were as follows: Purchases: Stocks and debt obligations ...................................................................... $ 1,550,831,008 U.S. government and agencies ..................................................................... -0- Sales: Stocks and debt obligations ............................................................... $ 1,069,643,302 U.S. government and agencies ..................................................................... -0- At December 31, 2002, the cost of investments for federal income tax purposes was $1,693,502,377. Accordingly, gross unrealized appreciation and unrealized depreciation are as follows: Gross unrealized appreciation .................................................................... $ 64,243,118 Gross unrealized depreciation .................................................................... (227,967,230) --------------- Net unrealized depreciation ...................................................................... $ (163,724,112) ===============
1. 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. 2. 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 writ- 12 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 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 ..................... $ 9,560,093 $13,089,780 Net long-term capital gains ......... 54,978,227 37,488,157 ----------- ----------- Total taxable distributions ............ 64,538,320 50,577,937 ----------- ----------- Total distributions paid ............... $64,538,320 $50,577,937 =========== =========== As of December 31, 2002, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income ....................... $ 15,859,112 Accumulated capital and other losses ................ (276,149,531)(a) Unrealized appreciation/(depreciation) .............. (163,724,112)(b) ------------- Total accumulated earnings/(deficit) ................ $(424,014,531) ============= (a) On December 31, 2002, the Portfolio had a net capital loss carryforward of $229,142,961 all of which 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 $47,006,570. (b) The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales. - -------------------------------------------------------------------------------- NOTE F: Securities Lending The Portfolio has entered into a securities lending agreement with UBS/PaineWebber, Inc. (the "Lending Agent"). Under the terms of the agreement, the Lending Agent, on behalf of the Portfolio, administers the lending of portfolio securities to certain broker-dealers. In return, the Portfolio receives fee income from the lending transactions or it retains a portion of interest on the investment of any cash received as collateral. The Portfolio also continues to receive dividends or interest on the securities loaned. Unrealized gain or loss in the value of the securities loaned that may occur during the term of the loan will be reflected in the accounts of the Portfolio. All loans are continuously secured by collateral exceeding the value of the securities loaned. All collateral consists of either cash or U.S. Government securities. The Lending Agent invests the cash collateral received in an eligible money market vehicle in accordance with the investment restrictions of the Portfolio. The Lending Agent will indemnify the Portfolio for any loss resulting from a borrower's failure to return a loaned security when due. As of December 31, 2002, the Portfolio had loaned securities with a value of $47,901,875 and received cash collateral of $49,738,600 which was invested in a money market fund as included in the footnotes to the accompanying portfolio of investments. For the year ended December 31, 2002, the Portfolio earned fee income of $83,128 which is included in the interest income in the accompanying statement of operations. 13 GROWTH & INCOME PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) Alliance Variable Products Series Fund ================================================================================ NOTE G: 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 Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, 2002 2001 2002 2001 ============ ============ ============= ============= Class A Shares sold ................................ 5,460,821 11,560,257 $ 106,480,252 $ 263,768,912 Shares issued in connection with acquisition of Brinson Series Trust Growth & Income Portfolio ............................... -0- 689,257 -0- 14,906,477 Shares issued in reinvestment of dividends and distributions ............. 1,176,522 1,347,508 22,412,745 31,855,085 Shares redeemed ............................ (9,569,370) (8,962,586) (178,686,522) (199,854,703) ----------- ----------- ------------- ------------- Net increase (decrease) .................... (2,932,027) 4,634,436 $ (49,793,525) $ 110,675,771 =========== =========== ============= ============= Class B Shares sold ................................ 30,976,887 34,800,614 $ 611,740,824 $ 782,912,514 Shares issued in connection with acquisition of Brinson Series Trust Growth & Income Portfolio ............................... -0- 366,713 -0- 7,888,640 Shares issued in reinvestment of dividends and distributions ............. 2,225,334 796,040 42,125,575 18,722,853 Shares redeemed ............................ (8,811,877) (2,172,479) (150,736,845) (47,965,641) ----------- ----------- ------------- ------------- Net increase ............................... 24,390,344 33,790,888 $ 503,129,554 $ 761,558,366 =========== =========== ============= =============
- -------------------------------------------------------------------------------- NOTE H: 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 I: 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. - -------------------------------------------------------------------------------- NOTE J: Acquisition of Brinson Series Trust Growth & Income Portfolio On October 26, 2001, the Portfolio acquired all of the assets and liabilities of the Brinson Series Trust Growth & Income Portfolio pursuant to a plan of reorganization approved by the shareholders of Brinson Series Trust Growth & Income Portfolio on March 1, 2001. The acquisition was accomplished by a tax-free exchange of 1,055,970 shares of the Portfolio for 2,191,984 shares of Brinson Series Trust Growth & Income Portfolio on October 26, 2001. The aggregate net assets of the Portfolio and Brinson Series Trust Growth & Income Portfolio immediately before the acquisition were $1,310,505,175 and $22,795,117 (including $863,296 of net unrealized depreciation of investments), respectively. Immediately after the acquisition the combined net assets of the Portfolio amounted to $1,333,300,292. 14 GROWTH & INCOME PORTFOLIO FINANCIAL HIGHLIGHTS Alliance Variable Products Series Fund ================================================================================ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
==================================================================== CLASS A ==================================================================== Year Ended December 31, ==================================================================== 2002 2001 2000 1999 1998 ======== ======== ======== ======== ======== Net asset value, beginning of period ................ $ 22.16 $ 23.15 $ 21.79 $ 21.84 $ 19.93 -------- -------- -------- -------- -------- Income From Investment Operations Net investment income (a) ........................... .22 .21 .22 .16 .22 Net realized and unrealized gain (loss) on investment transactions ..................................... (5.01) (.05) 2.75 2.25 3.81 -------- -------- -------- -------- -------- Net increase (decrease) in net asset value from operations ....................................... (4.79) .16 2.97 2.41 4.03 -------- -------- -------- -------- -------- Less: Dividends and Distributions Dividends from net investment income ................ (.12) (.14) (.14) (.18) (.16) Distributions from net realized gain on investment transactions ..................................... (.63) (1.01) (1.47) (2.28) (1.96) -------- -------- -------- -------- -------- Total dividends and distributions ................... (.75) (1.15) (1.61) (2.46) (2.12) -------- -------- -------- -------- -------- Net asset value, end of period ...................... $ 16.62 $ 22.16 $ 23.15 $ 21.79 $ 21.84 ======== ======== ======== ======== ======== Total Return Total investment return based on net asset value (b) (22.05)% 0.36% 13.89% 11.37% 20.89% Ratios/Supplemental Data Net assets, end of period (000's omitted) ........... $456,402 $673,722 $596,547 $522,163 $381,614 Ratio to average net assets of: Expenses ......................................... .68% .67% .69% .71% .73% Net investment income ............................ 1.15% .95% 1.01% .75% 1.07% Portfolio turnover rate ............................. 69% 80% 74% 46% 79%
- -------------------------------------------------------------------------------- See footnote summary on page 16. 15 GROWTH & INCOME PORTFOLIO FINANCIAL HIGHLIGHTS (continued) Alliance Variable Products Series Fund ================================================================================ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
========================================================== CLASS B ========================================================== June 1, 1999(c) Year Ended December 31, to ====================================== December 31, 2002 2001 2000 1999 ========== ======== ======== =============== Net asset value, beginning of period ............................. $ 22.03 $ 23.06 $ 21.76 $21.37 ---------- -------- -------- ------ Income From Investment Operations Net investment income (a) ........................................ .17 .16 .18 .07 Net realized and unrealized gain (loss) on investment transactions (4.98) (.05) 2.73 .32 ---------- -------- -------- ------ Net increase (decrease) in net asset value from operations ....... (4.81) .11 2.91 .39 ---------- -------- -------- ------ Less: Dividends and Distributions Dividends from net investment income ............................. (.10) (.13) (.14) -0- Distributions from net realized gain on investment transactions .. (.63) (1.01) (1.47) -0- ---------- -------- -------- ------ Total dividends and distributions ................................ (.73) (1.14) (1.61) -0- ---------- -------- -------- ------ Net asset value, end of period ................................... $ 16.49 $ 22.03 $ 23.06 $21.76 ========== ======== ======== ====== Total Return Total investment return based on net asset value (b) ............. (22.26)% 0.15% 13.59% 1.83% Ratios/Supplemental Data Net assets, end of period (000's omitted) ........................ $1,067,952 $889,394 $151,739 $7,993 Ratio to average net assets of: Expenses ...................................................... .93% .92% .95% .97%(d) Net investment income ......................................... .91% .75% .85% .55%(d) Portfolio turnover rate .......................................... 69% 80% 74% 46%
- -------------------------------------------------------------------------------- (a) Based on average shares outstanding. (b) 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. (c) Commencement of distribution. (d) Annualized. 16 REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS Alliance Variable Products Series Fund ================================================================================ To the Shareholders and Board of Directors Growth & Income Portfolio Alliance Variable Products Series Fund, Inc. We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of the Growth & Income 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, the statement of changes in net assets for each of the two years in the period then ended, 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 audits. 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 Growth & Income 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 for each of the two years in the period then ended, 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 17 GROWTH & INCOME 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. 18 GROWTH & INCOME 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 a 114 None 1345 Avenue of the Americas Director of Alliance Capital Management New York, NY 10105 Corporation ("ACMC"), with which he has been (13) 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 Manager of 2 Sound View Drive Barrett Associates, Inc., a registered Greenwich, CT 06830 investment adviser, with which he had been (13) 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.
19 GROWTH & INCOME 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. 20 GROWTH & INCOME 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. Frank Caruso, 46 Vice President Senior Vice President of Shields/ACMC, with which he has been associated since prior to 1998. Paul C. Rissman, 46 Vice President Executive Vice President of ACMC, with which he has been associated 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 Financial Officer President of AFD, with which he 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. 21 -----END PRIVACY-ENHANCED MESSAGE-----