N-CSR 1 edg9267.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-05398 AllianceBernstein Variable Products Series Fund, Inc. (Exact name of registrant as specified in charter) 1345 Avenue of the Americas, New York, New York 10105 (Address of principal executive offices) (Zip code) Edmund P. Bergan, Jr. Alliance Capital Management, L.P. 1345 Avenue of the Americas New York, New York 10105 (Name and address of agent for service) Registrant?s telephone number, including area code: (800) 221-5672 Date of fiscal year end: December 31, 2003 Date of reporting period: June 30, 2003 ITEM 1. REPORTS TO STOCKHOLDERS. ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN U.S. GOVERNMENT/ HIGH GRADE SECURITIES PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2003 INVESTMENT PRODUCTS OFFERED o ARE NOT FDIC INSURED o MAY LOSE VALUE o ARE NOT BANK GUARANTEED U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2003 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE U.S. GOVERNMENT/AGENCY OBLIGATIONS-62.0% FEDERAL AGENCIES-39.1% Federal Home Loan Mortgage Corp. 4.50%, 7/15/18 $ 3,795 $3,874,460 5.00%, 12/15/18 1,750 1,807,421 5.00%, 7/15/33 2,045 2,078,231 5.50%, 7/15/33 3,225 3,327,797 6.00%, 12/01/32 6,595 6,839,624 Federal National Mortgage Association 2.50%, 6/15/08 3,775 3,761,255 2.875%, 5/19/08 1,190 1,195,248 4.50%, 7/25/18 1,985 2,025,319 5.00%, 8/25/33 4,825 4,883,807 5.00%, 9/25/33 5,515 5,559,809 5.50%, 7/25/18 3,735 3,879,731 6.00%, 7/25/18 5,140 5,366,479 6.00%, 7/25/33 4,840 5,030,575 6.50%, 10/01/28 191 199,334 6.50%, 1/01/29 564 589,022 6.50%, 7/01/29 243 254,092 6.50%, 8/01/29 216 225,062 6.50%, 9/01/29 233 242,959 6.50%, 11/01/29 7 7,714 6.50%, 5/01/31 218 227,508 6.50%, 8/01/31 959 999,768 6.50%, 10/01/31 224 233,972 6.50%, 11/01/31 185 192,907 6.50%, 2/01/32 203 211,425 6.50%, 3/01/32 628 655,035 6.50%, 4/01/32 27 28,157 6.50%, 5/01/32 15 15,293 6.50%, 7/01/32 541 564,517 6.50%, 8/01/32 607 633,267 6.50%, 12/01/32 795 829,564 6.50%, 1/01/33 793 827,364 6.50%, 9/25/33 1,935 2,016,634 7.50%, 1/01/30 34 35,810 7.50%, 1/01/31 49 51,897 7.50%, 12/01/31 38 40,339 7.50%, 2/01/32 30 31,451 7.50%, 9/01/32 1,612 1,713,418 Government National Mortgage Association 5.50%, 8/15/33 4,080 4,234,273 6.50%, 2/15/32 443 465,483 6.50%, 7/15/33 5,260 5,524,641 ------------ 70,680,662 U.S. TREASURY SECURITIES-22.9% U.S. Treasury Bonds 0.00%, 11/15/21 7,140 2,918,139 5.375%, 2/15/31 5,559 6,261,480 6.625%, 2/15/27 300 386,192 U.S. Treasury Notes 1.125%, 6/30/05 3,630 3,617,524 2.00%, 5/15/06 3,460 3,497,846 2.25%, 7/31/04 16,470 16,688,112 2.625%, 5/15/08 5,765 5,819,502 3.625%, 5/15/13 2,160 2,177,552 ------------ 41,366,347 Total U.S. Government/Agency Obligations (cost $111,382,228) 112,047,009 CORPORATE DEBT OBLIGATIONS-26.1% AEROSPACE/DEFENSE-0.1% Northrop Grumman Corp. 7.125%, 2/15/11 210 251,944 AUTOMOTIVE-1.9% DaimlerChrysler NA Holdings Corp. 4.75%, 1/15/08 465 477,479 Ford Motor Credit Co. 7.375%, 10/28/09 1,375 1,443,610 General Motors Acceptance Corp. 6.875%, 9/15/11 945 949,624 8.00%, 11/01/31 170 167,258 General Motors Corp. 8.375%, 7/15/33 475 468,445 ------------ 3,506,416 BANKING-5.3% Bank of America Corp. 6.25%, 4/15/12 590 684,687 Barclays Bank Plc 8.55%, 6/15/49 (a) 365 468,514 Citicorp 6.375%, 11/15/08 625 719,319 Citigroup, Inc. 7.25%, 10/01/10 1,110 1,346,848 Great Western Financial Trust II 8.206%, 2/01/27 630 726,154 GreenPoint Financial Corp. 3.20%, 6/06/08 (a) 435 432,188 HSBC Capital Funding LP 10.176%, 12/31/49 (a)(b) 285 449,265 ING Capital Funding Trust III 8.439%, 12/29/49 385 481,375 J.P. Morgan Chase & Co. 3.625%, 5/01/08 770 793,309 6.75%, 2/01/11 595 699,410 1 U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE M&T Bank Corp. 3.85%, 4/01/13 (b) $ 215 $ 219,624 National City Corp. 3.20%, 4/01/08 225 227,538 RBS Capital Trust I 4.709%, 12/29/49 (b) 815 817,512 U.S. Bank NA 6.375%, 8/01/11 700 818,473 Unicredito Italiano Capital Trust 9.20%, 10/29/49 (a) 575 740,644 ------------ 9,624,860 BROADCASTING/MEDIA-2.0% AOL Time Warner, Inc. 7.70%, 5/01/32 475 556,641 Clear Channel Communications, Inc. 4.25%, 5/15/09 275 278,868 4.625%, 1/15/08 350 367,358 Liberty Media Corp. 5.70%, 5/15/13 470 478,841 News America, Inc. 6.55%, 3/15/33 (a) 475 506,964 Time Warner Entertainment Co. 8.375%, 3/15/23 1,085 1,371,900 ------------ 3,560,572 BUILDING/REAL ESTATE-0.5% EOP Operating LP 5.875%, 1/15/13 260 280,828 ERP Operating LP 5.20%, 4/01/13 195 204,306 Lennar Corp. 5.95%, 3/01/13 100 109,691 Vornado Realty Trust 5.625%, 6/15/07 265 284,591 ------------ 879,416 CABLE-0.9% AT&T Broadband Corp. 9.455%, 11/15/22 315 430,660 Comcast Cable Communications, Inc. 6.20%, 11/15/08 635 716,041 Comcast Corp. 7.05%, 3/15/33 190 211,860 Cox Communications, Inc. 7.125%, 10/01/12 255 305,037 ------------ 1,663,598 COMMUNICATIONS-1.6% AT&T Corp. 7.80%, 11/15/11 (b) 190 217,600 British Telecommunications Plc 8.875%, 12/15/30 405 554,707 Citizens Communications Co. 9.00%, 8/15/31 150 $202,854 Koninklijke (Royal) KPN NV 8.00%, 10/01/10 270 334,823 Sprint Capital Corp. 6.00%, 1/15/07 425 457,165 7.625%, 1/30/11 660 754,680 Vodafone Airtouch Plc 7.875%, 2/15/30 225 290,964 ------------ 2,812,793 COMMUNICATIONS - MOBILE-1.3% AT&T Wireless Services, Inc. 8.75%, 3/01/31 465 576,818 Telus Corp. 7.50%, 6/01/07 465 520,800 Verizon Global Funding Corp. 7.375%, 9/01/12 610 745,566 Verizon Wireless Capital LLC 5.375%, 12/15/06 435 478,235 ------------ 2,321,419 ELECTRIC UTILITIES-0.6% Carolina Power & Light Co. 6.50%, 7/15/12 270 312,867 Cincinnati Gas & Electric Co. 5.70%, 9/15/12 190 209,124 FirstEnergy Corp. Series C 7.375%, 11/15/31 230 258,587 Nisource Finance Corp. 7.875%, 11/15/10 205 242,391 ------------ 1,022,969 ENERGY-1.0% Conoco Funding Co. 5.45%, 10/15/06 380 419,791 Conoco, Inc. 6.95%, 4/15/29 590 712,192 Devon Financing Corp. 7.875%, 9/30/31 245 312,114 Noram Energy Corp 6.50%, 2/01/08 320 343,530 ------------ 1,787,627 FINANCIAL-4.7% American General Finance Corp. 4.50%, 11/15/07 255 271,351 BEAR STEARNS COS., INC. 4.00%, 1/31/08 260 272,254 CIT Group, Inc. 4.125%, 2/21/06 390 403,909 5.50%, 11/30/07 205 221,997 Countrywide Home Loans, Inc. 4.25%, 12/19/07 435 457,403 General Electric Capital Corp. 5.45%, 1/15/13 370 401,513 6.75%, 3/15/32 1,100 1,290,954 Goldman Sachs Group Inc. 5.25%, 4/01/13 320 341,860 6.125%, 2/15/33 420 451,991 2 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE Household Finance Corp. 6.50%, 11/15/08 $ 600 $ 690,691 7.00%, 5/15/12 235 278,631 John Deere Capital Corp. 4.50%, 8/22/07 275 292,895 Lehman Brothers Holdings, Inc. 4.00%, 1/22/08 795 829,412 6.625%, 1/18/12 270 317,071 MBNA America Bank 6.50%, 6/20/06 410 452,651 Morgan Stanley 7.25%, 4/01/32 295 362,885 National Rural Utilities Cooperative Finance Corp. 7.25%, 3/01/12 150 179,904 Washington Mutual Financial Corp. 6.875%, 5/15/11 785 932,221 ------------ 8,449,593 FOOD/BEVERAGE-0.6% Kellogg Co. 2.875%, 6/01/08 270 268,405 Pepsi Bottling Group, Inc. 7.00%, 3/01/29 700 855,052 ------------ 1,123,457 HEALTHCARE-0.5% Bristol-Myers Squibb Co. 4.75%, 10/01/06 235 253,128 HCA, Inc. 7.125%, 6/01/06 345 375,309 Health Net, Inc. 8.375%, 4/15/11 250 304,322 ------------ 932,759 INDUSTRIAL-0.5% General Electric Co. 5.00%, 2/01/13 310 328,065 Lenfest Communications, Inc. 8.375%, 11/01/05 395 446,044 Praxair, Inc. 2.75%, 6/15/08 205 203,548 ------------ 977,657 INSURANCE-0.5% Anthem, Inc. 6.80%, 8/01/12 255 298,220 MetLife, Inc. 6.50%, 12/15/32 210 240,487 New York Life Insurance Co. 5.875%, 5/15/33 (a) 350 368,642 ------------ 907,349 METALS / MINING-0.1% Alcan, Inc. 4.50%, 5/15/13 165 168,084 NON-AIR TRANSPORTATION-0.3% CSX Corp. 7.95%, 5/01/27 465 $597,128 PAPER/PACKAGING-0.3% International Paper Co. 5.85%, 10/30/12 245 267,507 MeadWestvaco Corp. 8.20%, 1/15/30 215 267,639 ------------ 535,146 PETROLEUM PRODUCTS-0.6% AMERADA HESS CORP. 7.875%, 10/01/29 605 738,620 Devon Energy Corp. 7.95%, 4/15/32 280 361,592 ------------ 1,100,212 PUBLIC UTILITIES - ELECTRIC & GAS-1.2% Columbus Southern Power Co. 5.50%, 3/01/13 (a) 75 80,787 Dominion Resources, Inc. 5.00%, 3/15/13 285 296,083 Duke Energy Corp. 3.75%, 3/05/08 (a) 350 360,651 KeySpan Corp. 7.25%, 11/15/05 650 729,859 MidAmerican Energy Holdings Co. 5.875%, 10/01/12 195 214,246 Public Service Company of Colorado 7.875%, 10/01/12 200 252,228 Xcel Energy, Inc. 7.00%, 12/01/10 260 297,789 ------------ 2,231,643 RETAIL-0.2% Limited, Inc. 6.95%, 3/01/33 140 155,275 Target Corp. 5.875%, 3/01/12 250 283,004 ------------ 438,279 SERVICE-0.3% Waste Management, Inc. 6.875%, 5/15/09 390 454,488 SOVEREIGN-0.9% Quebec Province 7.50%, 9/15/29 605 809,544 Republic of Italy 2.50%, 3/31/06 750 765,186 ------------ 1,574,730 TECHNOLOGY-0.2% Hewlet-Packard Co. 7.15%, 6/15/05 260 287,644 3 U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE Total Corporate Debt Obligations (cost $42,934,419) $47,209,783 ASSET BACKED SECURITIES-1.7% Citibank Credit Card Issuance Trust, Series 2001-A6 5.65%, 6/16/08 $ 860 945,506 Citibank Credit Card Issuance Trust, Series 2003-A7 4.15%, 7/07/17 795 794,626 Discover Card Master Trust I Series 2000-9A 6.35%, 7/15/08 560 620,731 Fleet Credit Card Master Trust II Series 2001-B 5.60%, 12/15/08 560 602,353 Total Asset Backed Securities (cost $2,794,926) 2,963,216 SHORT-TERM INVESTMENTS-37.4% U.S. TREASURY SECURITY-33.6% U.S. Treasury Bill 0.00%, 7/31/03 $60,760 60,706,897 TIME DEPOSIT-3.8% State Street Euro Dollar 0.50%, 7/01/03 6,800 6,800,000 Total Short-Term Investments (amortized cost $67,506,897) 67,506,897 TOTAL INVESTMENTS-127.2% (cost $224,618,470) 229,726,905 Other assets less liabilities*-(27.2%) (49,098,676) NET ASSETS-100% $180,628,229 * SECURITY LENDING INFORMATION Includes cash collateral received of $56,822,500 for securities on loan as of June 30, 2003 (see Note F). The lending agent invested the cash collateral in a short-term investment as follows: PERCENT CURRENT U.S. $ OF NET YIELD SHARES VALUE ASSETS UBS Private Money Market Fund LLC1.........15% 56,822,500 $56,822,500 31.5% (a) Securities exempt from Registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to certain qualified buyers. At June 30, 2003, the aggregate market value of these securities amounted to $3,407,655 or 1.9% of net assets. (b) Variable rate coupon, rate shown is as of June 30, 2003. See Notes to Financial Statements. 4 U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2003 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $224,618,470) $229,726,905(a) Cash 79,472 Collateral held for securities loaned 56,822,500 Dividends and interest receivable 1,205,401 Receivable for investment securities sold 15,737,534 Total assets 303,571,812 LIABILITIES Payable for investment securities purchased 65,928,882 Payable for collateral received on securities loaned 56,822,500 Advisory fee payable 89,252 Distribution fee payable 3,399 Accrued expenses 99,550 Total liabilities 122,943,583 NET ASSETS $180,628,229 COMPOSITION OF NET ASSETS Capital stock, at par $ 14,410 Additional paid-in capital 169,293,583 Undistributed net investment income 1,819,239 Accumulated net realized gain on investment transactions 4,392,562 Net unrealized appreciation of investments 5,108,435 $180,628,229 CLASS A SHARES Net assets $163,506,402 Shares of capital stock outstanding 13,036,425 Net asset value per share $12.54 CLASS B SHARES Net assets $ 17,121,827 Shares of capital stock outstanding 1,373,352 Net asset value per share $12.47 (a) Includes securities on loan with a value of $55,598,587 (see Note F). See Notes to Financial Statements. 5 U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2003 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Interest $2,501,289 EXPENSES Advisory fee 532,549 Distribution fee--Class B 17,205 Custodian 48,100 Administrative 37,500 Audit and legal 20,704 Printing 6,193 Transfer agency 474 Directors' fees and expenses 343 Miscellaneous 122 Total expenses 663,190 Net investment income 1,838,099 REALIZED AND UNREALIZED GAIN ON INVESTMENT TRANSACTIONS Net realized gain on investment transactions 4,606,590 Net change in unrealized appreciation/depreciation of investments 94,084 Net gain on investment transactions 4,700,674 NET INCREASE IN NET ASSETS FROM OPERATIONS $6,538,773 See Notes to Financial Statements. 6 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED YEAR ENDED JUNE 30, 2003 DECEMBER 31, (UNAUDITED) 2002 INCREASE IN NET ASSETS FROM OPERATIONS Net investment income $ 1,838,099 $5,024,028 Net realized gain on investment transactions 4,606,590 2,881,465 Net change in unrealized appreciation/ depreciation of investments 94,084 3,637,024 Net increase in net assets from operations 6,538,773 11,542,517 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM Net investment income Class A (4,723,237) (3,720,955) Class B (437,765) (206,001) Net realized gain on investment transactions CLASS A (1,253,621) -0- Class B (121,738) -0- CAPITAL STOCK TRANSACTIONS Net increase 5,759,239 55,585,246 Total increase 5,761,651 63,200,807 NET ASSETS Beginning of period 174,866,578 111,665,771 End of period (including undistributed net investment income of $5,142,142 at December 31, 2002) $180,628,229 $174,866,578 See Notes to Financial Statements. 7 U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2003 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein U.S. Government/High Grade Securities Portfolio (the "Portfolio"), formerly Alliance U.S. Government/High Grade Securities Portfolio, is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"), formerly Alliance Variable Products Series Fund, Inc. The Portfolio's investment objective is to seek high current income consistent with preservation of capital. The Fund was incorporated in the State of Maryland on November 17, 1987, as an open-end series investment company. The Fund offers twenty 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. Additional information about some of the items discussed in these Notes to Financial Statements is contained in the Fund's Statement of Additional Information, which is available upon request. The following is a summary of significant accounting policies followed by the Portfolio. 1. SECURITY VALUATION In accordance with Pricing Policies adopted by the Board of Directors of the Fund (the "Pricing Policies") and applicable law, portfolio securities are valued at current market value or at fair value. The Board of Directors has delegated to the Adviser, subject to the Board's continuing oversight, certain responsibilities with respect to the implementation of the Pricing Policies. Pursuant to the Pricing Policies, securities for which market quotations are readily available are valued at their current market value. In general, the market value of these securities is determined as follows: Securities listed on a national securities exchange or on a foreign securities exchange are valued at the last sale price at the close of the exchange or foreign securities exchange. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices on such day. If no bid or asked prices are quoted on such day, then the security is valued in good faith at fair value in accordance with the Pricing Policies. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities not listed on an exchange but traded on The Nasdaq Stock Market, Inc. ("NASDAQ") are valued in accordance with the NASDAQ Official Closing Price; listed put or call options are valued at the last sale price. If there has been no sale on that day, such securities will be valued at the closing bid prices on that day; open futures contracts and options thereon are valued using the closing settlement price or, in the absence of such a price, the most recent quoted bid price. If there are no quotations available for the day of valuations, the last available closing settlement price is used; securities traded in the over-the-counter market, (but excluding securities traded on NASDAQ) are valued at the mean of the current bid and asked prices as reported by the National Quotation Bureau or other comparable sources; U.S. Government securities and other debt instruments having 60 days or less remaining until maturity are valued at amortized cost if their original maturity was 60 days or less, or by amortizing their fair value as of the 61st day prior to maturity if their original term to maturity exceeded 60 days; fixed-income securities, including mortgage backed and asset backed securities, may be valued on the basis of prices provided by a pricing service or at a price obtained from one or more of the major broker/dealers. In cases where broker/dealer quotes are obtained, the Pricing Policies provide that the Adviser may establish procedures whereby changes in market yields or spreads are used to adjust, on a daily basis, a recently obtained quoted price on a security; and OTC and other derivatives are valued on the basis of a quoted bid price or spread from a major broker/dealer in such security. Securities for which market quotations are not readily available are valued at fair value in accordance with the Pricing Policies. 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. 8 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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, 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. Investment gains and losses are determined on the identified cost basis. The Portfolio amortizes premiums and accretes discounts as adjustments to interest income. 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 shares outstanding are borne on a pro-rata basis by each outstanding class of shares, based on the proportionate interest in the portfolio represented by the net assets of such class, except that the portfolio's Class B shares bear the distribution fees. 6. DIVIDENDS AND DISTRIBUTIONS The Portfolio declares and distributes dividends and distributions from net investment income and net realized gains, respectively, if any, at least annually. Income dividends and capital gains distributions to shareholders are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with accounting principles generally accepted in the United States. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification. NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of an investment advisory agreement, the Portfolio pays Alliance Capital Management L.P. (the "Adviser"), an investment advisory fee at an annual rate of .60 of 1% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Prior to May 1, 2003, the Adviser agreed to waive its fee and to reimburse the additional operating expenses ("Expense Limitation Undertaking") 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. The Adviser terminated the Expense Limitation Undertaking effective May 1, 2003. Any expense waivers or reimbursements were accrued daily and paid monthly. For the six months ended June 30, 2003, the Portfolio received no such waivers/reimbursements. Pursuant to the advisory agreement, the Portfolio paid $37,500 to the Adviser representing the cost of certain legal and accounting services to the Portfolio by the Adviser for the six months ended June 30, 2003. 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 $474 for the six months ended June 30, 2003. 9 U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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 AllianceBernstein Investment Research and Management, Inc., (the "Distributor"), formerly Alliance Fund Distributors, Inc., 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 Portfolios 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 period ended June 30, 2003, were as follows: PURCHASES SALES Investment securities $ 25,025,306 $ 27,831,094 U.S. government securities 710,156,630 723,370,134 The cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes. Accordingly, gross unrealized appreciation and unrealized depreciation are as follows: Gross unrealized appreciation $5,497,822 Gross unrealized depreciation (389,387) Net unrealized appreciation $5,108,435 NOTE E: DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions to be paid for the year ending December 31, 2003 will be determined at the end of the current fiscal year. 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 $3,926,956 $3,463,728 Total distributions paid $3,926,956 $3,463,728 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ As of December 31, 2002, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $6,466,054 Undistributed long-term capital gains 61,109 Accumulated capital and other losses (158,506)(a) Unrealized appreciation/(depreciation) 4,949,167(b) TOTAL ACCUMULATED EARNINGS/(DEFICIT) $11,317,824 (a) On December 31, 2002, the Portfolio had a net capital loss carryforward of $158,506 all of which will expire in the year 2007. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. During the current fiscal year $1,219,926 of the capital loss carryforward was utilized. Based on certain provisions in the Internal Revenue Code, various limitations regarding the future utilization of these carryforwards, brought forward as a result of the Portfolio's prior year merger with Brinson Series Trust High Grade Portfolio, may apply. (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 Warburg LLC (the "Lending Agent"), formerly UBS/PaineWebber, Inc. 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 on 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 June 30, 2003, the Portfolio has loaned securities with a value of $55,598,587 and received cash collateral of $56,822,500, which was invested in a money market fund as included in the footnotes to the accompanying portfolio of investments. For the six months ended June 30, 2003, the Portfolio earned fee income of $11,928 which is included in interest income in the accompanying statement of operations. 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. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT --------------------------- ------------------------------ SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED JUNE 30, 2003 DECEMBER 31, JUNE 30, 2003 DECEMBER 31, (UNAUDITED) 2002 (UNAUDITED) 2002 Class A Shares sold 1,260,282 6,896,200 $16,024,870 $83,158,391 Shares issued in connection with acquisition of Brinson Series Trust Strategic Fixed Income Portfolio -0- 214,442 -0- 2,581,245 Shares issued in reinvestment of dividends and distributions 470,989 314,536 5,976,858 3,720,955 Shares redeemed (1,792,291) (3,047,586) (22,822,311) (37,024,668) Net increase (decrease) (61,020) 4,377,592 $(820,583) $52,435,923 11 U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SHARES AMOUNT --------------------------- ------------------------------ SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED JUNE 30, 2003 DECEMBER 31, JUNE 30, 2003 DECEMBER 31, (UNAUDITED) 2002 (UNAUDITED) 2002 ------------ ------------ -------------- -------------- CLASS B Shares sold 1,094,645 651,657 $13,806,447 $7,879,889 Shares issued in reinvestment of dividends and distributions 44,370 17,487 559,503 206,001 Shares redeemed (615,850) (407,878) (7,786,128) (4,936,567) Net increase 523,165 261,266 $6,579,822 $3,149,323 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 six months ended June 30, 2003. NOTE J: ACQUISITION OF BRINSON SERIES TRUST STRATEGIC FIXED INCOME PORTFOLIO On April 5, 2002, the Portfolio acquired all of the assets and liabilities of the Brinson Series Trust Strategic Fixed Income Portfolio pursuant to a plan of reorganization approved by the shareholders of Brinson Series Trust Strategic Fixed Income Portfolio on February 25, 2002. The acquisition was accomplished by a tax-free exchange of 214,442 shares of the Portfolio for 247,070 shares of Brinson Series Trust Strategic Fixed Income Portfolio on April 5, 2002. The aggregate net assets of the Portfolio and Brinson Series Trust Strategic Fixed Income Portfolio immediately before the acquisition were $120,888,612 and $2,581,245 (including $136,372 net unrealized appreciation of investments), respectively. Immediately after the acquisition, the combined net assets of the Portfolio amounted to $123,469,857. 12 U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO FINANCIAL HIGHLIGHTS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS A ------------------------------------------------------------------------------ SIX MONTHS ENDED JUNE 30, 2003 YEAR ENDED DECEMBER 31, (UNAUDITED) 2002 2001(A) 2000 1999 1998 --------------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $12.54 $12.00 $11.68 $11.18 $12.27 $11.93 INCOME FROM INVESTMENT OPERATIONS Net investment income (b) .13 .42 .57 .67 .64 .63(c) Net realized and unrealized gain (loss) on investment transactions .34 .49 .33 .52 (.94) .32 Net increase (decrease) in net asset value from operations .47 .91 .90 1.19 (.30) .95 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.37) (.37) (.58) (.69) (.49) (.55) Distributions from net realized gain on investment transactions (.10) -0- -0- -0- (.30) (.06) Total dividends and distributions (.47) (.37) (.58) (.69) (.79) (.61) Net asset value, end of period $12.54 $12.54 $12.00 $11.68 $11.18 $12.27 TOTAL RETURN Total investment return based on net asset value (d) 3.72% 7.79% 7.88% 11.08% (2.45)% 8.22% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $163,506 $164,265 $104,635 $58,170 $60,504 $58,418 Ratio to average net assets of: Expenses, net of waivers and reimbursements .73%(e) .82% .89% .95% .86% .78% Expenses, before waivers and reimbursements .73%(e) .82% .89% .95% .86% .91% Net investment income 2.09%(e) 3.49% 4.86% 5.95% 5.51% 5.24%(c) Portfolio turnover rate 428% 551% 259% 236% 172% 235%
See footnote summary on page 14. 13 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS B ----------------------------------------------------------------- SIX MONTHS JUNE 2, ENDED 1999(F) TO JUNE 30, 2003 YEAR ENDED DECEMBER 31, DECEMBER 31, (UNAUDITED) 2002 2001(A) 2000 1999 ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $12.47 $11.94 $11.64 $11.16 $11.13 INCOME FROM INVESTMENT OPERATIONS Net investment income (b) .11 .39 .55 .63 .33 Net realized and unrealized gain (loss) on investment transactions .34 .49 .31 .53 (.30) Net increase in net asset value from operations .45 .88 .86 1.16 .03 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.35) (.35) (.56) (.68) -0- Distributions from net realized gain on investment transactions (.10) -0- -0- -0- -0- TOTAL DIVIDENDS AND DISTRIBUTIONS (.45) (.35) (.56) (.68) -0- Net asset value, end of period $12.47 $12.47 $11.94 $11.64 $11.16 TOTAL RETURN Total investment return based on net asset value (d) 3.61% 7.54% 7.60% 10.84% .27% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $17,122 $10,602 $7,031 $3,627 $1,438 Ratio to average net assets of: Expenses .98%(e) 1.07% 1.14% 1.20% 1.15%(e) Net investment income 1.84%(e) 3.25% 4.61% 5.67% 5.48%(e) Portfolio turnover rate 428% 551% 259% 236% 172%
(a) As required, effective January 1, 2001, the Portfolio has adopted the provisions of the AICPA Audit and Accounting Guide, Audits of Investment Companies, and began amortizing premium on debt securities. For the year ended December 31, 2001, the effect of this change to Class A and Class B shares was to decrease net investment income per share by $.03 and $.03, increase net realized and unrealized gain on investments per share by $.03 and $.03, and decrease the ratio of net investment income to average net assets from 5.11% to 4.86% and 4.86% to 4.61%, respectively. Per share, ratios and supplemental data for periods prior to January 1, 2001 have not been restated to reflect this change in presentation. (b) Based on average shares outstanding. (c) Net of expenses reimbursed or reimbursed by the Adviser. (d) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total 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. (e) Annualized. (f) Commencement of distribution. 14 U.S GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ BOARD OF DIRECTORS JOHN D. CARIFA, Chairman and President RUTH BLOCK (1) DAVID H. DIEVLER (1) JOHN H. DOBKIN (1) WILLIAM H. FOULK, JR. (1) CLIFFORD L. MICHEL (1) DONALD J. ROBINSON (1) OFFICERS KATHLEEN A. CORBET, Senior Vice President LEWIS A. SANDERS, Senior Vice President ANDREW S. ADELSON, Vice President ANDREW ARAN, Vice President BRUCE K. ARONOW, Vice President EDWARD D. BAKER III, Vice President THOMAS J. BARDONG, Vice President MATTHEW D.W. BLOOM, Vice President RUSSELL BRODY, Vice President FRANK V. CARUSO, Vice President JOHN F. CHIODI, Vice President PAUL J. DENOON, Vice President JOSEPH C. DONA, Vice President MARILYN G. FEDAK, Vice President THOMAS KAMP, Vice President SEAN KELLEHER, Vice President DAVID A. KRUTH, Vice President ALAN E. LEVI, Vice President MICHAEL LEVY, Vice President GERALD T. MALONE, Vice President MICHAEL MON, Vice President RANJI H. NAGASWAMI, Vice President DANIEL NORDBY, Vice President JIMMY K. PANG, Vice President RAYMOND J. PAPERA, Vice President JOSEPH G. PAUL, Vice President DOUGLAS J. PEEBLES, Vice President JEFFREY S. PHLEGAR, Vice President DANIEL G. PINE, Vice President MICHAEL J. REILLY, Vice President PAUL C. RISSMAN, Vice President IVAN RUDOLPH-SHABINSKY, Vice President KEVIN F. SIMMS, Vice President MICHAEL A. SNYDER, Vice President ANNIE TSAO, Vice President JEAN VAN DE WALLE, Vice President RICHARD A. WINGE, Vice President SANDRA YEAGER, Vice President EDMUND P. BERGAN, JR., Secretary MARK D. GERSTEN, Treasurer and Chief Financial Officer THOMAS R. MANLEY, Controller CUSTODIAN STATE STREET BANK AND TRUST COMPANY 225 Franklin Street Boston, MA 02110 DISTRIBUTOR ALLIANCEBERNSTEIN INVESTMENT RESEARCH AND MANAGEMENT, 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 786003 San Antonio, TX 78278-6003 Toll-free 1-(800) 221-5672 (1) Member of the Audit Committee. ITEM 2. CODE OF ETHICS. Not applicable when filing a Semi-Annual report to shareholders. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable when filing a Semi-Annual report to shareholders. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable when filing a Semi-Annual report to shareholders. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to the registrant. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the registrant. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) The registrant?s principal executive officer and principal financial officer have concluded that the registrant?s disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document. (b) There were no significant changes in the registrant?s internal controls that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 10. EXHIBITS. The following exhibits are attached to this Form N-CSR: EXHIBIT NO. DESCRIPTION OF EXHIBIT 10 (b) (1) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 10 (b) (2) Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 10 (c) Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant): AllianceBernstein Variable Products Series Fund, Inc. By: /s/John D. Carifa ------------------------------- John D. Carifa President Date: August 22, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/John D. Carifa ---------------------------------- John D. Carifa President Date: August 22, 2003 By: /s/Mark D. Gersten ---------------------------------- Mark D. Gersten Treasurer and Chief Financial Officer Date: August 22, 2003