-----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, KI5GaUpM6kKh5bt63/ndTohRIXQIv8lRM7CkCSgFPC+wIq4thMPet256Cj0NgUKG n0/n9JkKzY2wf/ZY14kltg== 0000936772-04-000204.txt : 20040915 0000936772-04-000204.hdr.sgml : 20040915 20040914202642 ACCESSION NUMBER: 0000936772-04-000204 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040915 DATE AS OF CHANGE: 20040914 EFFECTIVENESS DATE: 20040915 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND INC CENTRAL INDEX KEY: 0000825316 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-05398 FILM NUMBER: 041030616 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-CSRS 1 edgvarp_comp.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) Mark R. Manley 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, 2004 Date of reporting period: June 30, 2004 ITEM 1. REPORTS TO STOCKHOLDERS. ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN AMERICAS GOVERNMENT INCOME PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2004 INVESTMENT PRODUCTS OFFERED - --------------------------- > ARE NOT FDIC INSURED > MAY LOSE VALUE > ARE NOT BANK GUARANTEED - --------------------------- YOU MAY OBTAIN A DESCRIPTION OF THE FUND'S PROXY VOTING POLICIES AND PROCEDURES, WITHOUT CHARGE, UPON REQUEST BY VISITING ALLIANCE CAPITAL'S WEB SITE AT WWW.ALLIANCEBERNSTEIN.COM (CLICK ON INVESTORS, THEN THE "PROXY VOTING POLICIES AND PROCEDURES" LINK ON THE LEFT SIDE OF THE PAGE), OR BY GOING TO THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT WWW.SEC.GOV, OR BY CALLING ALLIANCE CAPITAL AT (800) 227-4618. AMERICAS GOVERNMENT INCOME PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE - ------------------------------------------------------------------------------- LONG-TERM INVESTMENTS-106.7% CANADA-4.0% GOVERNMENT/AGENCY OBLIGATIONS-4.0% Government of Canada 8.75%, 12/01/05 (a) CAD $ 1,414 $ 1,137,612 10.25%, 3/15/14 (a) 1,090 1,148,982 ------------- Total Canadian Securities (cost $1,943,450) 2,286,594 ------------- MEXICO-24.2% GOVERNMENT/AGENCY OBLIGATIONS-24.2% Mexican Government Bonds 8.00%, 12/19/13 (a) MXP 11,034 842,752 8.00%, 12/07/23 (a) 23,007 1,542,911 9.00%, 12/27/07 (a) 10,000 856,748 9.00%, 12/24/09 (a) 23,662 1,965,720 9.00%, 12/20/12 (a) 82,297 6,593,616 10.50%, 7/14/11 (a) 3,833 344,916 10.50%, 11/07/14 16,624 1,500,269 ------------- Total Mexican Securities (cost $15,284,455) 13,646,932 ------------- UNITED STATES-78.5% U.S. GOVERNMENT SPONSORED AGENCY OBLIGATIONS-32.2 % Federal Home Loan Mortgage Corp. 3.625%, 9/15/08 US $ 5,800 5,723,092 Federal National Mortgage Association 4.125%, 4/15/14 2,000 1,842,902 5.375%, 11/15/11 5,000 5,176,395 6.00%, 7/14/34 TBA 5,000 5,104,690 7.00%, 3/01/32 279 294,389 Government National Mortgage Association 9.00%, 9/15/24 US 13 15,125 ------------- 18,156,593 ------------- U.S. TREASURY SECURITIES-46.3% U.S. Treasury Bonds 6.125%, 8/15/29 1,400 1,540,438 6.25%, 5/15/30 4,700 5,263,817 8.125%, 8/15/19 (b) 2,000 2,620,000 U.S. Treasury Notes 2.25%, 2/15/07 280 274,630 4.25%, 8/15/13 3,070 2,997,809 4.25%, 11/15/13 768 747,750 4.875%, 2/15/12 850 878,157 5.75%, 8/15/10 2,280 2,486,627 U.S. Treasury Strips 0.00%, 5/15/13 3,500 2,299,731 0.00%, 2/15/16 2,500 1,386,048 0.00%, 11/15/21 14,700 5,612,489 ------------- 26,107,496 ------------- Total United States Securities (cost $43,788,694) 44,264,089 ------------- TOTAL INVESTMENTS-106.7% (cost $61,016,599) 60,197,615 Other assets less liabilities-(6.7%) (3,792,069) ------------- NET ASSETS-100% $ 56,405,546 ============= FORWARD EXCHANGE CURRENCY CONTRACTS (SEE NOTE D) U.S. $ CONTRACT VALUE ON U.S. $ UNREALIZED AMOUNT ORIGINATION CURRENT APPRECIATION/ (000) DATE VALUE (DEPRECIATION) - ------------------------------------------------------------------------------- BUY CONTRACTS Canadian Dollar, settling 7/08/04 6,930 $ 5,007,765 $ 5,168,077 $ 160,312 Chilean Peso, settling 8/17/04 1,522,661 2,431,050 2,393,167 (37,883) Mexican Peso, settling 7/19/04 7,443 646,457 640,757 (5,700) SALE CONTRACTS Canadian Dollar, settling 7/08/04 10,173 7,388,053 7,586,381 (198,328) Chilean Peso, settling 8/17/04 1,522,660 2,654,337 2,393,167 261,170 Mexican Peso, settling 7/19/04 14,000 1,226,994 1,210,436 16,558 Mexican Peso, settling 8/13/04 109,268 9,520,464 9,406,330 114,134 1 AMERICAS GOVERNMENT INCOME PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ FINANCIAL FUTURES CONTRACTS SOLD (SEE NOTE D) VALUE AT NUMBER OF EXPIRATION ORIGINAL JUNE 30, UNREALIZED TYPE CONTRACTS MONTH VALUE 2004 DEPRECIATION - ------------------------------------------------------------------------------- U.S. Treasury Note September 10 Year Futures 46 2004 $4,970,177 $5,029,094 $(58,917) (a) Positions, or portion thereof, with an aggregate market value of $15,066,449 have been segregated to collateralize forward exchange currency contracts. (b) Position, with a market value of $268,185 has been segregated to collateralize margin requirements for open futures contracts. Currency Abbreviations: CAD - Canadian Dollar MXP - Mexican Peso US$ - United States Dollar Glossary: TBA - To Be Assigned-Securities are purchased on a forward commitment with an approximate principal amount (generally +/- 1.0%) and no definite maturity date. The actual principal amount and maturity date will be determined upon settlement when the specific mortgage pools are assigned. See Notes to Financial Statements. 2 AMERICAS GOVERNMENT INCOME PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $61,016,599) $ 60,197,615 Cash 95,481 Unrealized appreciation of forward exchange currency contracts 552,174 Dividends and interest receivable 1,056,567 Receivable for capital stock sold 2,435 ------------- Total assets 61,904,272 ------------- LIABILITIES Unrealized depreciation of forward exchange currency contracts 241,911 Payable for investment securities purchased 5,075,781 Payable for variation margin on futures contracts 33,062 Advisory fee payable 23,199 Administration fee payable 19,807 Distribution fee payable 1,353 Payable for capital stock redeemed 559 Accrued expenses 103,054 ------------- Total liabilities 5,498,726 ------------- NET ASSETS $ 56,405,546 ============= COMPOSITION OF NET ASSETS Capital stock, at par $ 4,636 Additional paid-in capital 54,829,362 Undistributed net investment income 1,450,128 Accumulated net realized gain on investment and foreign currency transactions 704,172 Net unrealized depreciation of investments and foreign currency denominated assets and liabilities (582,752) ------------- $ 56,405,546 ============= CLASS A SHARES Net assets $ 49,684,370 ============= Shares of capital stock outstanding 4,083,202 ============= Net asset value per share $ 12.17 ============= CLASS B SHARES Net assets $ 6,721,176 ============= Shares of capital stock outstanding 552,407 ============= Net asset value per share $ 12.17 ============= See Notes to Financial Statements. 3 AMERICAS GOVERNMENT INCOME PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Interest $ 1,835,743 ------------- EXPENSES Advisory Fee 207,840 Distribution fee--Class B 9,232 Custodian 77,295 Administrative 34,500 Audit 18,750 Printing 10,169 Legal 5,000 Directors' fees 500 Transfer agency 450 Miscellaneous 7,665 ------------- Total expenses before interest 371,401 Interest expense 221 ------------- Total expenses 371,622 Less: expenses waived and reimbursed by the Adviser (see Note B) (47,963) ------------- Net expenses 323,659 ------------- Net investment income 1,512,084 ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS Net realized gain (loss) on: Investment transactions 1,656,975 Written options 11,488 Futures (28,740) Foreign currency transactions 158,395 Net change in unrealized appreciation/depreciation of: Investments (4,742,558) Futures (50,011) Foreign currency denominated assets and liabilities 522,426 ------------- Net loss on investment and foreign currency transactions (2,472,025) ------------- NET DECREASE IN NET ASSETS FROM OPERATIONS $ (959,941) ============= See Notes to Financial Statements. 4 AMERICAS GOVERNMENT INCOME PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 ============= ============= INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 1,512,084 $ 3,458,433 Net realized gain on investment and foreign currency transactions 1,798,118 1,263,571 Net change in unrealized appreciation/ depreciation of investments and foreign currency denominated assets and liabilities (4,270,143) 422,898 ------------- ------------- Net increase (decrease) in net assets from operations (959,941) 5,144,902 DIVIDENDS TO SHAREHOLDERS FROM Net investment income Class A (2,720,328) (3,245,231) Class B (347,443) (143,433) CAPITAL STOCK TRANSACTIONS Net decrease (5,815,336) (8,050,736) ------------- ------------- Total decrease (9,843,048) (6,294,498) NET ASSETS Beginning of period 66,248,594 72,543,092 ------------- ------------- End of period (including undistributed net investment income of $1,450,128 and $3,005,815, respectively) $ 56,405,546 $ 66,248,594 ============= ============= See Notes to Financial Statements. 5 AMERICAS GOVERNMENT INCOME PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein Americas Government Income Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc., (the "Fund"). The Portfolio's investment objective is to seek the highest level of current income, consistent with what Alliance Capital Management L.P., considers to be prudent investment risk, that is available from a portfolio of debt securities issued or guaranteed by the government of the United States, Canada, or Mexico, their political subdivisions (including Canadian provinces, but excluding States of the United States), agencies, instrumentalities or authorities. 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 Alliance Capital Management, L.P. (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. 6 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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, foreign currency exchange contracts, holdings 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 interest, dividends 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 policy of the Portfolio 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 trade 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. 7. REPURCHASE AGREEMENTS It is the policy of the Portfolio that its custodian or designated subcustodian take control of securities as collateral under repurchase agreements and to determine on a daily basis that the value of such securities are sufficient to cover the value of the repurchase agreements. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of collateral by the Portfolio may be delayed or limited. NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of an investment advisory agreement, the Portfolio pays the Adviser, an investment advisory fee at an annual rate of .65% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .50% of the first $2.5 billion, .45% of the next $2.5 billion and .40% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $47,963. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York 7 AMERICAS GOVERNMENT INCOME PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. Pursuant to the advisory agreement, the Portfolio paid $34,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2004. 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 $450 for the six months ended June 30, 2004. 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 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 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. NOTE D: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2004, were as follows: PURCHASES SALES ============= ============= Investment securities (excluding U.S. government securities) $ 11,818,674 $ 20,404,157 U.S. government securities 25,249,528 18,270,535 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 (excluding futures and foreign currency transactions) are as follows: Gross unrealized appreciation $ 1,256,228 Gross unrealized depreciation (2,075,212) ------------- Net unrealized depreciation $ (818,984) ============= 1. FINANCIAL FUTURES CONTRACTS The Portfolio may buy or sell financial futures contracts for the purpose of hedging its portfolio against adverse affects of anticipated movements in the market. The Portfolio bears the market risk that arises from changes in the value of these financial instruments and the imperfect correlation between movements in the price of the futures contracts and movements in the price of the securities hedged or used for cover. At the time the Portfolio enters into a futures contract, the Portfolio deposits and maintains as collateral an initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as variation margin and are recorded by the Portfolio as unrealized gains or losses. Risks may arise from the potential inability of a counterparty to meet the terms of a contract. When the contract is closed, the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the time it was closed. 8 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 2. FORWARD EXCHANGE CURRENCY CONTRACTS The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as unrealized appreciation and depreciation 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 the 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. 3. OPTION TRANSACTIONS For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. Transactions in options written for the six months ended June 30, 2004 were as follows: NUMBER OF PREMIUMS CONTRACTS RECEIVED ============= ============= Options outstanding at December 31, 2003 -0- $ -0- Options written 10,112,100 11,488 Options expired (10,112,100) (11,488) ------------- ------------- Options outstanding at June 30, 2004 -0- $ -0- ============= ============= 4. REVERSE REPURCHASE AGREEMENTS Under a reverse repurchase agreement, the Portfolio sells securities and agrees to repurchase them at a mutually agreed upon date and price. At the time the Portfolio enters into a reverse repurchase agreement, it will establish a segregated account with the custodian containing liquid assets having a value at least equal to the repurchase price. 9 AMERICAS GOVERNMENT INCOME PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE E: 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. For the six months ended June 30, 2004, the Portfolio had no securities on loan. NOTE F: CAPITAL STOCK There are 1,000,000,000 shares of $.001 par value capital stock authorized divided into two classes, designated Class A and Class B shares. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS A Shares sold 235,898 948,584 $ 3,180,462 $ 12,158,631 Shares issued in reinvestment of dividends and distributions 225,566 242,725 2,720,329 3,245,231 Shares redeemed (1,032,662) (2,252,158) (13,369,614) (28,915,805) ----------- ----------- ------------ ------------- Net decrease (571,198) (1,060,849) $ (7,468,823) $ (13,511,943) =========== =========== ============ ============= CLASS B Shares sold 356,729 557,837 $ 4,772,627 $ 7,212,518 Shares issued in reinvestment of dividends and distributions 28,810 10,720 347,443 143,433 Shares redeemed (271,139) (149,149) (3,466,583) (1,894,744) ----------- ----------- ------------ ------------- Net increase 114,400 419,408 $ 1,653,487 $ 5,461,207 =========== =========== ============ ============= NOTE G: RISKS INVOLVED IN INVESTING IN THE PORTFOLIO Interest Rate Risk and Credit Risk-- Interest rate risk is the risk that changes in interest rates will affect the value of the Portfolio's investments in fixed-income debt securities such as bonds or notes. Increases in interest rates may cause the value of the Portfolio's investments to decline. Credit risk is the risk that the issuer or guarantor of a debt security, or the counterparty to a derivative contract, will be unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The degree of risk for a particular security may be reflected in its credit risk rating. Credit risk is greater for medium quality and lower-rated securities. Lower-rated debt securities and similar unrated securities (commonly known as "junk bonds") have speculative elements or are predominantly speculative risks. Foreign Securities 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE H: JOINT CREDIT FACILITY A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2003. NOTE I: DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended December 31, 2003 and December 31, 2002 were as follows: 2003 2002 ============= ============= Distributions paid from: Ordinary income $ 3,388,664 $ 3,178,792 Net long-term capital gains -0- 242,581 ------------- ------------- Total taxable distributions 3,388,664 3,421,373 ------------- ------------- Total distributions paid $ 3,388,664 3,421,373 ============= ============= As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $ 3,057,376 Accumulated capital and other losses (1,102,852)(a) Unrealized appreciation/(depreciation) 3,882,270 ------------- Total accumulated earnings/(deficit) $ 5,836,794 ============= (a) On December 31, 2003, the Portfolio had a net capital loss carryforward of $1,102,852, all of which expires in the year 2010. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. During the current fiscal year, the Portfolio utilized capital loss carryforwards of $1,560,864. NOTE J: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and 11 AMERICAS GOVERNMENT INCOME PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 12 AMERICAS GOVERNMENT INCOME 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 YEAR ENDED DECEMBER 31, JUNE 30, 2004 --------------------------------------------------------------- (UNAUDITED) 2003 2002 2001(a) 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $13.01 $12.65 $12.17 $12.72 $12.42 $12.55 INCOME FROM INVESTMENT OPERATIONS Net investment income (b) .31(c) .61 .67(c) .92(c) 1.08(c) 1.22(c) Net realized and unrealized gain (loss) on investment and foreign currency transactions (.46) .34 .61 (.43) .37 (.16) Net increase (decrease) in net asset value from operations (.15) .95 1.28 .49 1.45 1.06 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.69) (.59) (.73) (.91) (.96) (1.05) Distributions from net realized gain on investment transactions -0- -0- (.07) (.13) (.19) (.14) Total dividends and distributions (.69) (.59) (.80) (1.04) (1.15) (1.19) Net asset value, end of period $12.17 $13.01 $12.65 $12.17 $12.72 $12.42 TOTAL RETURN Total investment return based on net asset value (d) (1.13)% 7.35% 10.99% 3.59% 12.39% 8.90% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $49,685 $60,550 $72,307 $51,146 $33,154 $29,411 Ratio to average net assets of: Expenses, net of waivers and reimbursements .98%(e) 1.04% .93% .95% .95% .95% Expenses, before waivers and reimbursements 1.13%(e) 1.04% 1.05% 1.15% 1.24% 1.20% Net investment income 4.75%(c)(e) 4.75% 5.45%(c) 7.35%(c) 8.68%(c) 9.91%(c) Portfolio turnover rate 59% 73% 60% 57% 0% 6%
See footnote summary on page 14. 13 AMERICAS GOVERNMENT INCOME PORTFOLIO FINANCIAL HIGHLIGHTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period CLASS B ------------------------------------- SIX MONTHS JULY 22, 2002 (f) ENDED YEAR ENDED TO JUNE 30, 2004 DECEMBER 31, DECEMBER 31, (UNAUDITED) 2003 2002 ----------- ----------- ----------- Net asset value, beginning of period $13.01 $12.67 $12.04 INCOME FROM INVESTMENT OPERATIONS Net investment income (b) .29(c) .57 .42(c) Net realized and unrealized gain (loss) on investment and foreign currency transactions (.46) .36 .21 Net increase (decrease) in net asset value from operations (.17) .93 .63 LESS: DIVIDENDS Dividends from net investment income (.67) (.59) -0- Net asset value, end of period $12.17 $13.01 $12.67 TOTAL RETURN Total investment return based on net asset value (d) (1.25)% 7.18% 5.23% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $6,721 $5,698 $236 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.24%(e) 1.30% 1.36%(e) Expenses, before waivers and reimbursements 1.39%(e) 1.30% 1.48%(e) Net investment income 4.53%(c)(e) 4.42% 4.72%(c)(e) Portfolio turnover rate 59% 73% 60% (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 was to decrease net investment income per share by $.04, increase net realized and unrealized (loss) on investments per share by $.04, and decrease the ratio of net investment income to average net assets from 7.61% to 7.35%. 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 oustanding. (c) Net of expenses waived 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 (This page left intentionally blank.) (This page left intentionally blank.) (This page left intentionally blank.) ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN GLOBAL BOND PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2004 INVESTMENT PRODUCTS OFFERED - --------------------------- > ARE NOT FDIC INSURED > MAY LOSE VALUE > ARE NOT BANK GUARANTEED - --------------------------- YOU MAY OBTAIN A DESCRIPTION OF THE FUND'S PROXY VOTING POLICIES AND PROCEDURES, WITHOUT CHARGE, UPON REQUEST BY VISITING ALLIANCE CAPITAL'S WEB SITE AT WWW.ALLIANCEBERNSTEIN.COM (CLICK ON INVESTORS, THEN THE "PROXY VOTING POLICIES AND PROCEDURES" LINK ON THE LEFT SIDE OF THE PAGE), OR BY GOING TO THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT WWW.SEC.GOV, OR BY CALLING ALLIANCE CAPITAL AT (800) 227-4618. GLOBAL BOND PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE - ------------------------------------------------------------------------------- LONG-TERM INVESTMENTS-82.2% AUSTRIA-4.4% GOVERNMENT OBLIGATION-4.4% Republic of Austria 3.80%, 10/20/13 (a) EUR 2,500 $ 2,927,844 ------------- BELGIUM-4.2% GOVERNMENT OBLIGATION-4.2% Kingdom of Belgium 4.25%, 9/28/14 (a) 2,300 2,770,485 ------------- DENMARK-3.2% GOVERNMENT OBLIGATION-3.2% Kingdom of Denmark 7.00%, 11/15/07 (a) DKK 11,650 2,124,143 ------------- FINLAND-4.3% GOVERNMENT OBLIGATION-4.3% Government of Finland 5.38%, 7/04/13 (a) EUR 2,175 2,864,745 ------------- GERMANY-10.5% BANKING-9.6% Deutsche Ausgleichbank 7.00%, 6/23/05 150 156,762 Deutsche Bundesrepublik 4.25%, 1/04/14 (a) 5,100 6,189,979 ------------- 6,346,741 ------------- GOVERNMENT OBLIGATION-0.9% Bundesobligation 3.25%, 4/17/09 (a) 500 599,897 ------------- 6,946,638 ------------- IRELAND-4.8% GOVERNMENT OBLIGATION-4.8% Republic of Ireland 4.25%, 10/18/07 (a) 2,525 3,172,715 ------------- ITALY-4.0% GOVERNMENT OBLIGATIONS-4.0% Republic of Italy 6.75%, 2/01/07 (a) 2,000 2,656,124 ------------- JAPAN-21.6% GOVERNMENT OBLIGATIONS-21.6% Government of Japan 1.40%, 6/20/11 JPY 106,600 983,059 1.70%, 3/22/10 280,000 2,667,381 1.70%, 9/20/10 280,000 2,658,164 1.80%, 9/20/10 309,000 2,950,417 1.90%, 6/21/10 270,000 2,565,019 1.90%, 12/20/10 253,500 2,429,604 ------------- 14,253,644 ------------- NETHERLANDS-4.7% GOVERNMENT OBLIGATION-4.7% Kingdom of the Netherlands 3.75%, 7/15/09 (a) EUR 2,550 3,120,852 ------------- SPAIN-7.7% GOVERNMENT OBLIGATION-7.7% Government of Spain 6.15%, 1/31/13 (a) 3,700 5,119,809 ------------- SWEDEN-0.9% GOVERNMENT OBLIGATION-0.9% Kingdom of Sweden 6.50%, 5/05/08 (a) SEK 3,910 568,245 ------------- UNITED KINGDOM-0.2% BANKING-0.2% Scotland International Finance II BV 4.25%, 5/23/13 (b) 160 147,764 ------------- UNITED STATES-4.5% FINANCIAL-2.9% GE Financial Assurance Holdings 1.60%, 6/20/11 (a) JPY 75,000 662,289 International Lease Finance 3.50%, 4/01/09 USD 350 333,169 Pershing Road Development Co. 1.99%, 9/01/26 (b)(c) 660 660,000 Suntrust Bank 1.43%, 6/02/09 (c) 250 249,930 ------------- 1,905,388 ------------- INDUSTRIAL-0.5% General Electric Co. 5.00%, 2/01/13 330 325,336 ------------- RETAIL-1.1% Wal Mart Stores, Inc. 4.55%, 5/01/13 750 723,863 ------------- 2,954,587 ------------- U.S. GOVERNMENT AND GOVERNMENTSPONSORED AGENCY OBLIGATIONS-7.2% Federal National Mortgage Association 4.13%, 4/15/14 1,525 1,405,213 U.S. Treasury Bond 5.38%, 2/15/31 2,567 2,589,764 U.S. Treasury Note 3.13%, 4/15/09 780 758,094 ------------- 4,753,071 ------------- Total Long-Term Investments (cost $52,224,268) 54,380,666 ------------- 1 GLOBAL BOND PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE - ------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS-14.5% UNITED STATES-14.5% GOVERNMENT OBLIGATION-3.5% U.S. Treasury Bill Zero Coupon, 8/05/04 USD 2,300 $ 2,297,378 TIME DEPOSIT-11.0% Societe Generale 1.375%, 7/01/04 7,300 7,300,000 ------------- Total Short-Term Investments (cost $9,597,448) 9,597,378 ------------- TOTAL INVESTMENTS-96.7% (cost $61,821,716) 63,978,044 Other assets less liabilities-3.3% 2,170,613 ------------- NET ASSETS-100% $ 66,148,657 ============= FORWARD EXCHANGE CURRENCY CONTRACTS (SEE NOTE D) U.S. $ CONTRACT VALUE ON U.S. $ UNREALIZED AMOUNT ORIGINATION CURRENT APPRECIATION (000) DATE VALUE (DEPRECIATION) - ------------------------------------------------------------------------------- BUY CONTRACTS: Australian Dollar, settling 8/04/04 325 $ 225,737 $ 225,198 $ (539) British Pound, settling 7/12/04 1,835 3,264,622 3,325,310 60,688 Canadian Dollar, settling 7/08/04 159 115,765 118,502 2,737 Euro, settling 7/26/04 3,744 4,537,539 4,552,277 14,738 Japanese Yen, settling 8/30/04 422,609 3,954,051 3,882,937 (71,114) SALE CONTRACTS: Canadian Dollar, settling 7/08/04 159 115,404 118,502 (3,098) Danish Krone, settling 7/16/04 7,907 1,284,820 1,293,766 (8,946) Euro, settling 7/26/04 9,175 11,019,221 11,157,350 (138,129) Swedish Krona, settling 7/16/04 462 61,408 61,285 123 (a) Positions, or portions thereof, with an aggregate market value of $33,282,865 have been segregated to collateralize forward exchange currency contracts. (b) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2004, the aggregate market value of these securities amounted to $807,764 or 1.2% of net assets. (c) Floating rate security. Stated interest rate was in effect at June 30, 2004. Currency Abbreviations: CAD - Canadian Dollar DKK - Danish Krona EUR - Euros JPY - Japanese Yen SEK - Swedish Krona USD - United States Dollar See Notes to Financial Statements. 2 GLOBAL BOND PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $61,821,716) $ 63,978,044 Foreign cash, at value (cost $958,840) 982,822 Unrealized appreciation of forward exchange currency contracts 79,304 Interest receivable 1,052,807 Receivable for investment securities sold 580,040 ------------- Total assets 66,673,017 ------------- LIABILITIES Due to custodian 101,291 Unrealized depreciation of forward exchange currency contracts 222,844 Advisory fee payable 24,278 Distribution fee payable 6,099 Accrued expenses 169,848 ------------- Total liabilities 524,360 ------------- NET ASSETS $ 66,148,657 ============= COMPOSITION OF NET ASSETS Capital stock, at par $ 5,403 Additional paid-in capital 62,762,104 Distribution in excess of net investment income (1,637,345) Accumulated net realized gain on investment transactions and foreign currency transactions 2,980,119 Net unrealized appreciation of investments and foreign currency denominated assets and liabilities 2,038,376 ------------- $ 66,148,657 ============= CLASS A SHARES Net assets $ 53,469,952 ============= Shares of capital stock outstanding. 4,361,054 ============= Net asset value per share $ 12.26 ============= CLASS B SHARES Net assets $ 12,678,705 ============= Shares of capital stock outstanding. 1,041,720 ============= Net asset value per share $ 12.17 ============= See Notes to Financial Statements. 3 GLOBAL BOND PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Interest (net of foreign taxes withheld of $5,710) $ 945,060 ---------- EXPENSES Advisory fee 220,630 Distribution fee -- Class B 15,162 Custodian 82,790 Administrative 34,500 Audit and legal 23,750 Printing 5,580 Directors' fees 500 Transfer agency 450 Miscellaneous 1,397 ---------- Total expenses 384,759 Less: expenses waived and reimbursed by the Adviser (see Note B) (67,886) ---------- Net expenses 316,873 ---------- Net investment income 628,187 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS Net realized gain on: Investment transactions. 3,348,746 Foreign currency transactions 1,230,384 Net change in unrealized appreciation/depreciation of: Investments (5,849,162) Foreign currency denominated assets and liabilities (301,301) ---------- Net loss on investment and foreign currency transactions (1,571,333) ---------- NET DECREASE IN NET ASSETS FROM OPERATIONS $ (943,146) ========== See Notes to Financial Statements. 4 GLOBAL BOND PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 ============= ============= INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 628,187 $ 1,289,455 Net realized gain on investment and foreign currency transactions 4,579,130 4,071,774 Net change in unrealized appreciation/ depreciation of investments and foreign currency denominated assets and liabilities (6,150,463) 3,103,651 ------------- ------------- Net increase (decrease) in net assets from operations. (943,146) 8,464,880 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM Net investment income Class A (3,156,752) (3,476,111) Class B (714,607) (610,949) Net realized gain on investment transactions Class A (1,105,271) -0- Class B (258,556) -0- CAPITAL STOCK TRANSACTIONS Net increase 2,270,633 1,034,328 ------------- ------------- TOTAL INCREASE (DECREASE) (3,907,699) 5,412,148 NET ASSETS Beginning of period 70,056,356 64,644,208 ------------- ------------- End of period (including distribution in excess of net investment income of $1,637,345 and undistributed net investment income of $1,605,827, respectively) $ 66,148,657 $ 70,056,356 ============= ============= See Notes to Financial Statements. 5 GLOBAL BOND PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein Global Bond Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek a high level of return from a combination of current income and capital appreciation by investing in a globally diversified portfolio of high-quality debt securities denominated in the U.S. dollar and a range of foreign currencies. 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 Alliance Capital Management L.P. (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. 6 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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, 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 policy of the Portfolio 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. 7. REPURCHASE AGREEMENTS It is the policy of the Portfolio that its custodian or designated subcustodian take control of securities as collateral under repurchase agreements and to determine on a daily basis that the value of such securities are sufficient to cover the value of the repurchase agreements. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of collateral by the Portfolio may be delayed or limited. NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of an investment advisory agreement, the Portfolio pays the Adviser an investment advisory fee at an annual rate of .65% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .45% of the first $2.5 billion, .40% of the next $2.5 billion and .35% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $67,886. The 7 GLOBAL BOND PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. Pursuant to the advisory agreement, the Portfolio paid $34,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2004. 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 $450 for the six months ended June 30, 2004. 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 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 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. NOTE D: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2004, were as follows: PURCHASES SALES ============= ============= Investment securities (excluding U.S. government securities) $ 47,059,096 $ 48,127,498 U.S. government securities 6,957,965 7,091,432 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 (excluding foreign currency transactions) are as follows: Gross unrealized appreciation $ 2,302,162 Gross unrealized depreciation (145,834) ------------- Net unrealized appreciation $ 2,156,328 ============= 1. FORWARD EXCHANGE CURRENCY CONTRACTS The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. 8 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as unrealized appreciation and depreciation 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. 2. OPTION TRANSACTIONS For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. NOTE E: 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 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. For the six months ended June 30, 2004, the Portfolio had no securities on loan. 9 GLOBAL BOND PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE F: CAPITAL STOCK There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS A Shares sold 143,155 680,667 $ 1,917,375 $ 8,767,973 Shares issued in reinvestment of dividends and distributions 350,207 264,343 4,262,023 3,476,111 Shares redeemed (476,900) (1,044,491) (6,351,133) (13,455,988) ----------- ----------- ------------ ------------- Net increase (decrease) 16,462 (99,481) $ (171,735) $ (1,211,904) =========== =========== ============ ============= CLASS B Shares sold 182,764 1,557,003 $ 2,421,557 $ 19,931,078 Shares issued in reinvestment of dividends and distributions 80,560 46,745 973,164 610,949 Shares redeemed (72,236) (1,431,327) (952,353) (18,295,795) ----------- ----------- ------------ ------------- Net increase 191,088 172,421 $ 2,442,368 $ 2,246,232 =========== =========== ============ ============= NOTE G: RISKS INVOLVED IN INVESTING IN THE PORTFOLIO Interest Rate Risk and Credit Risk--Interest rate risk is the risk that changes in interest rates will affect the value of the Portfolio's investments in fixed-income debt securities such as bonds or notes. Increases in interest rates may cause the value of the Portfolio's investments to decline. Credit risk is the risk that the issuer or guarantor of a debt security, or the counterparty to a derivative contract, will be unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The degree of risk for a particular security may be reflected in its credit risk rating. Credit risk is greater for medium quality and lower-rated securities. Lower-rated debt securities and similar unrated securities (commonly known as "junk bonds") have speculative elements or are predominantly speculative risks. 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H: JOINT CREDIT FACILITY A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE I: DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended December 31, 2003 and December 31, 2002 were as follows: 2003 2002 ============= ============= Distributions paid from: Ordinary Income $ 4,087,060 $ 614,590 ------------- ------------- Total distributions paid $ 4,087,060 $ 614,590 ============= ============= As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $ 4,566,986 Undistributed long term capital gains 640,356 Accumulated capital and other losses (1,518,523)(a) Unrealized appreciation/(depreciation) 7,953,282(b) ------------- Total accumulated earnings/(deficit) $ 11,642,101 ============= (a) On December 31, 2003, the Portfolio had a net capital loss carryforward of $1,518,523 of which $66,089 expires in the year 2007, and $1,452,434 expires in the year 2008. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. 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 merger with Brinson Series Trust Strategic Income Portfolio, may apply. During the current fiscal year, the Portfolio utilized capital loss carryforwards of $396,833. (b) The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales and the recognition of unrealized gains and losses on certain forward exchange currency contracts. NOTE J: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. 11 GLOBAL BOND PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 12 GLOBAL BOND 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 YEAR ENDED DECEMBER 31, JUNE 30, 2004 --------------------------------------------------------------- (UNAUDITED) 2003 2002 2001(A) 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $13.50 $12.63 $10.93 $10.96 $11.25 $12.42 INCOME FROM INVESTMENT OPERATIONS Net investment income (b) .13(c) .25 .25 .35 .45(c) .48(c) Net realized and unrealized gain (loss) on investment and foreign currency transactions (.32) 1.40 1.58 (.38) (.32) (1.24) Net increase (decrease) in net asset value from operations (.19) 1.65 1.83 (.03) .13 (.76) LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.78) (.78) (.13) -0- (.42) (.37) Distributions from net realized gain on investment transactions (.27) -0- -0- -0- -0- (.04) Total dividends and distributions (1.05) (.78) (.13) -0- (.42) (.41) Net asset value, end of period $12.26 $13.50 $12.63 $10.93 $10.96 $11.25 TOTAL RETURN Total investment return based on net asset value (d) (1.39)% 13.26% 16.91% (.27)% 1.17% (6.11)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $53,470 $58,658 $56,137 $48,221 $50,325 $50,569 Ratio to average net assets of: Expenses, net of waivers and reimbursements .89%(e) 1.15% 1.17% 1.07% 1.02% .90% Expenses, before waivers and reimbursements 1.09%(e) 1.15% 1.17% 1.07% 1.06% 1.04% Net investment income 1.90%(c)(e) 1.93% 2.18% 3.28% 4.13%(c) 4.16%(c) Portfolio turnover rate 88% 197% 220% 101% 372% 183%
See footnote summary on page 14. 13 GLOBAL BOND PORTFOLIO FINANCIAL HIGHLIGHTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS B ---------------------------------------------------------------------------- SIX MONTHS JULY 16, 1999(f) ENDED YEAR ENDED DECEMBER 31, TO JUNE 30, 2004 -------------------------------------------------- DECEMBER 31, (UNAUDITED) 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $13.40 $12.54 $10.86 $10.92 $11.23 $10.98 INCOME FROM INVESTMENT OPERATIONS Net investment income (b) .11(c) .21 .22 .32 .41(c) .21(c) Net realized and unrealized gain (loss) on investment and foreign currency transactions (.32) 1.41 1.57 (.38) (.31) .04 Net increase (decrease) in net asset value from operations (.21) 1.62 1.79 (.06) .10 .25 LESS: DIVIDENDS Dividends from net investment income (.75) (.76) (.11) -0- (.41) -0- Distributions from net realized gain on investment transactions (.27) -0- -0- -0- -0- -0- Total dividends and distributions (1.02) (.76) (.11) -0- (.41) -0- Net asset value, end of period $12.17 $13.40 $12.54 $10.86 $10.92 $11.23 TOTAL RETURN Total investment return based on net asset value (d) (1.51)% 13.08% 16.59% (.55)% .98% 2.18% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $12,679 $11,399 $8,507 $7,150 $6,145 $1,770 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.14%(e) 1.40% 1.42% 1.32% 1.31% 1.20%(e) Expenses, before waivers and reimbursements 1.34%(e) 1.40% 1.42% 1.32% 1.35% 1.34%(e) Net investment income 1.65%(c)(e) 1.66% 1.92% 3.00% 3.82%(c) 3.96%(c)(e) Portfolio turnover rate 88% 197% 220% 101% 372% 183%
(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 $.04 and $.04, increase net realized and unrealized gain (loss) on investments per share by $.04 and $.04, and decrease the ratio of net investment income to average net assets from 3.67% to 3.28% and 3.39% to 3.00%, 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 waived 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 (This page left intentionally blank.) (This page left intentionally blank.) (This page left intentionally blank.) ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN GLOBAL DOLLAR GOVERNMENT PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2004 INVESTMENT PRODUCTS OFFERED - --------------------------- > ARE NOT FDIC INSURED > MAY LOSE VALUE > ARE NOT BANK GUARANTEED - --------------------------- YOU MAY OBTAIN A DESCRIPTION OF THE FUND'S PROXY VOTING POLICIES AND PROCEDURES, WITHOUT CHARGE, UPON REQUEST BY VISITING ALLIANCE CAPITAL'S WEB SITE AT WWW.ALLIANCEBERNSTEIN.COM (CLICK ON INVESTORS, THEN THE "PROXY VOTING POLICIES AND PROCEDURES" LINK ON THE LEFT SIDE OF THE PAGE), OR BY GOING TO THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT WWW.SEC.GOV, OR BY CALLING ALLIANCE CAPITAL AT (800) 227-4618. GLOBAL DOLLAR GOVERNMENT PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE - ------------------------------------------------------------------------------- SOVEREIGN DEBT OBLIGATIONS-77.8% NON-COLLATERALIZED BRADY BONDS-17.9% BRAZIL-15.7% Federal Republic of Brazil 2.063%, 4/15/12 (a) $ 329 $ 277,134 C-Bonds 8.00%, 4/15/14 2,950 2,708,358 DCB Series L 2.125%, 4/15/12 (a) 1,275 1,070,697 ------------- 4,056,189 ------------- VENEZUELA-2.2% Republic of Venezuela DCB Series DL 2.75%, 12/18/07 (a) 583 558,873 ------------- Total Non-Collateralized Brady Bonds (cost $4,321,221) 4,615,062 ------------- SOVEREIGN DEBT SECURITIES-59.9% ARGENTINA-1.7% Republic of Argentina 1.234%, 8/03/12 (a) 656 438,208 ------------- BELIZE-0.2% Government of Belize 9.50%, 8/15/12 63 51,296 ------------- BRAZIL-2.2% Federal Republic of Brazil 7.309%, 6/29/09 (a) 206 206,773 11.00%, 8/17/40 374 350,719 ------------- 557,492 ------------- BULGARIA-1.0% Republic of Bulgaria 8.25%, 1/15/15 (b) 12 13,914 8.25%, 1/15/15 200 234,051 ------------- 247,965 ------------- COLOMBIA-3.3% REPUBLIC OF COLOMBIA 10.75%, 1/15/13 300 318,600 11.75%, 2/25/20 495 539,798 ------------- 858,398 ------------- ECUADOR-1.8% Republic of Ecuador 6.00%, 8/15/30 (b)(c) 691 473,335 ------------- EL SALVADOR-0.4% Republic of El Salvador 8.50%, 7/25/11 (b) 100 109,550 ------------- INDONESIA-0.7% Republic of Indonesia 6.75%, 3/10/14 (b) 200 179,750 ------------- JAMAICA-0.7% Government of Jamaica 11.75%, 5/15/11 (b) 120 133,200 12.75%, 9/01/07 (b) 30 33,989 ------------- 167,189 ------------- MEXICO-12.0% United Mexican States 8.125%, 12/30/19 971 1,041,398 11.375%, 9/15/16 (d) 1,465 2,056,493 ------------- 3,097,891 ------------- PANAMA-1.8% Republic of Panama 8.875%, 9/30/27 50 48,700 9.375%, 4/01/29 25 27,688 10.75%, 5/15/20 350 395,500 ------------- 471,888 ------------- PERU-2.2% Republic of Peru 8.375%, 5/03/16 62 57,505 9.125%, 2/21/12 (d) 205 211,150 9.875%, 2/06/15 285 297,113 ------------- 565,768 ------------- PHILIPPINES-3.4% Republic of Philippines 8.25%, 1/15/14 275 261,594 9.00%, 2/15/13 425 421,547 9.875%, 1/15/19 125 123,750 10.625%, 3/16/25 75 77,625 ------------- 884,516 ------------- RUSSIA-15.1% Russia Ministry of Finance Series V 3.00%, 5/14/08 615 539,827 Series VII 3.00%, 5/14/11 2,690 2,040,178 Russian Federation 5.00%, 3/31/30 (b)(c) 1,422 1,301,169 ------------- 3,881,174 ------------- SOUTH AFRICA-1.5% Republic of South Africa 6.50%, 6/02/14 70 70,875 7.375%, 4/25/12 275 299,406 ------------- 370,281 ------------- TURKEY-4.2% Republic of Turkey 9.875%, 3/19/08 100 105,900 11.00%, 1/14/13 35 38,290 11.50%, 1/23/12 200 224,500 11.75%, 6/15/10 100 112,500 12.375%, 6/15/09 515 589,675 ------------- 1,070,865 ------------- 1 GLOBAL DOLLAR GOVERNMENT PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ CONTRACTS(F) OR PRINCIPAL AMOUNT (000) U.S. $ VALUE - ------------------------------------------------------------------------------- UKRAINE-4.6% Government of Ukraine 6.875%, 3/04/11 (b) $ 200 $ 189,500 7.65%, 6/11/13 575 547,974 7.65%, 6/11/13 (b) 175 167,563 11.00%, 3/15/07 249 269,464 ------------- 1,174,501 ------------- URUGUAY-0.8% Republic of Uruguay 7.875%, 1/15/33 327 209,059 ------------- VENEZUELA-2.3% Republic of Venezuela 5.375%, 8/07/10 250 197,875 9.25%, 9/15/27 (e) 470 397,150 ------------- 595,025 ------------- Total Sovereign Debt Securities (cost $14,908,395) 15,404,151 ------------- Total Sovereign Debt Obligations (cost $19,229,616) 20,019,213 ------------- CORPORATE DEBT OBLIGATIONS-9.1% BANKING-0.9% Chohung Bank (South Korea) 11.875%, 4/01/10 (b) 100 106,363 Hanvit Bank, SA (South Korea) 12.75%, 3/01/10 (b)(c) 20 21,300 Kazkommerts International BV (Kazakhstan) 8.50%, 4/16/13 (b) 100 99,000 ------------- 226,663 ------------- COMMUNICATIONS - MOBILE-2.1% MobiFon Holdings BV (Romania) 12.50%, 7/31/10 100 114,500 Mobile Telesystems Finance (Russia) 9.75%, 1/30/08 (b) 225 232,875 10.95%, 12/21/04 (b) 80 83,000 PTC International Finance II, SA (Poland) 11.25%, 12/01/09 100 109,000 ------------- 539,375 ------------- ENERGY-1.8% Gazprom Oao (Russia) 9.625%, 3/01/13 (b) 390 403,013 Monterrey Power SA De C.V. (Mexico) 9.625%, 11/15/09 (b) 45 51,378 ------------- 454,391 ------------- METALS/MINING-0.6% Freeport-McMoran Copper & Gold (Indonesia) 10.125%, 2/01/10 150 166,500 ------------- PETROLEUM PRODUCTS-3.7% Pemex Project Funding Master Trust (Mexico) 8.00%, 11/15/11 250 270,625 PF Export Receivables Master Trust (Brazil) 6.436%, 6/01/15 (b) 135 132,940 Sibneft (Russia) 10.75%, 1/15/09 80 82,546 Tyumen Oil (Russia) 11.00%, 11/06/07 (b) 425 468,689 ------------- 954,800 ------------- Total Corporate Debt Obligations (cost $2,265,188) 2,341,729 ------------- CALL OPTIONS PURCHASED (G)-0.1% RUSSIA-0.1% Russian Federation 5.00%, 3/31/30 expiring Jul '04 @ $90.625 800,000 8,800 expiring Jul '04 @ $90.9375 450,000 6,750 ------------- Total Call Options Purchased (cost $20,125) 15,550 ------------- SHORT-TERM INVESTMENT-12.4% TIME DEPOSIT-12.4% Societe Generale 1.375%, 7/01/04 (cost $3,200,000) $ 3,200 3,200,000 ------------- TOTAL INVESTMENTS-99.4% (cost $24,714,929) 25,576,492 Other assets less liabilities-0.6% 147,872 ------------- NET ASSETS-100% $ 25,724,364 ============= 2 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ CALL OPTION WRITTEN (SEE NOTE D) EXERCISE EXPIRATION DESCRIPTION CONTRACTS (f) PRICE MONTH U.S. $ VALUE - ------------------------------------------------------------------------------- Republic of Venezuela 9.25%, 9/15/27 (premiums received $160) 100,000 $85.40 Jul '04 $ (800) CREDIT DEFAULT SWAP CONTRACTS (SEE NOTE D) NOTIONAL UNREALIZED SWAP COUNTERPARTY AMOUNT INTEREST TERMINATION APPRECIATION/ & REFERENCED OBLIGATION (000'S) RATE DATE (DEPRECIATION) - ------------------------------------------------------------------------------- BUY CONTRACTS: Citigroup Global Markets, Inc. Federal Republic of Brazil 12.25%, 3/06/30 400 6.35% 8/20/05 $ 25,393 Citigroup Global Markets, Inc. Federal Republic of Brazil 12.25%, 3/06/30 200 2.55 5/20/05 (1,606) Citigroup Global Markets, Inc. Republic of Hungary 4.50%, 2/06/13 75 0.50 11/26/13 (1,248) Citigroup Global Markets, Inc. Republic of Philippines 10.625%, 3/16/25 130 5.60 3/20/14 (3,815) Credit Suisse First Boston Federal Republic of Brazil 12.25%. 3/06/30 175 3.60 6/20/05 (3,535) JP Morgan Chase Republic of Ecuador 6.00%, 8/15/30 175 3.70 4/30/05 (4,089) SALE CONTRACTS: Citigroup Global Markets, Inc. Federal Republic of Brazil 12.25%, 3/06/30 200 4.40 5/20/06 976 Citigroup Global Markets, Inc. United Mexican States 8.30%, 8/15/31 450 2.05 5/20/09 13,682 Citigroup Global Markets, Inc. United Mexican States 8.30%, 8/15/31 200 2.40 5/20/14 6,393 Citigroup Global Markets, Inc. Republic of Philippines 10.625%, 3/16/25 130 4.95 3/20/09 1,167 Credit Suisse First Boston Federal Republic of Brazil 12.25%, 3/06/30 175 6.90 6/20/07 7,502 Deutsche Bank Federal Republic of Brazil 12.25%, 3/06/30 370 3.50 4/20/06 2,540 JP Morgan Chase Russian Federation 5.00%, 3/31/30 200 2.98 4/29/14 (277) JP Morgan Chase Russian Federation 5.00%, 3/31/30 100 3.20 6/26/13 957 JP Morgan Chase Russian Federation 5.00%, 3/31/30 100 3.20 6/25/13 980 3 GLOBAL DOLLAR GOVERNMENT PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ REVERSE REPURCHASE AGREEMENTS (SEE NOTE D) BROKER INTEREST RATE MATURITY AMOUNT - ------------------------------------------------------------------------------- JP Morgan Chase 1.00% 12/31/04 $121,914 JP Morgan Chase 0.10 12/31/04 667,056 JP Morgan Chase 0.75 7/02/04 128,604 -------- $917,574 ======== (a) Floating rate security. Stated interest rate was in effect at June 30, 2004. (b) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2004, the aggregate market value of these securities amounted to $4,200,528 or 16.3% of net assets. (c) Coupon increases periodically based upon a predetermined schedule. Stated interest rate in effect at June 30, 2004. (d) Positions, or portions thereof, with an aggregate market value of $820,327 have been segregated to collateralize reverse repurchase agreements. (e) A position, or portion of the underlying security has been segregated by the Portfolio for the written call option outstanding at June 30, 2004. The value of this security amounted to $84,500 at June 30, 2004. (f) One contract relates to principal amount of $1.00. (g) Non-income producing security. Glossary: DCB - Debt Conversion Bonds See Notes to Financial Statements. 4 GLOBAL DOLLAR GOVERNMENT PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $24,714,929) $ 25,576,492 Cash 160,457 Unrealized appreciation of swap contracts 59,590 Receivable for investment securities sold 888,571 Interest receivable 402,347 ------------- Total assets 27,087,457 ------------- LIABILITIES Outstanding call option written, at value (premiums received $160) 800 Unrealized depreciation of swap contracts 14,570 Reverse Repurchase Agreement 917,574 Payable for investment securities purchased 316,045 Advisory fee payable 10,431 Distribution fee payable 841 Accrued expenses 102,832 ------------- Total liabilities 1,363,093 ------------- NET ASSETS $ 25,724,364 ============= COMPOSITION OF NET ASSETS Capital stock, at par $ 1,986 Additional paid-in capital 23,725,818 Undistributed net investment income 916,373 Accumulated net realized gain on investment transactions 174,244 Net unrealized appreciation of investments 905,943 ------------- $ 25,724,364 ============= CLASS A SHARES Net assets $ 21,500,752 ============= Shares of capital stock outstanding 1,659,467 ============= Net asset value per share $ 12.96 ============= CLASS B SHARES Net assets $ 4,223,612 ============= Shares of capital stock outstanding 326,594 ============= Net asset value per share $ 12.93 ============= See Notes to Financial Statements. 5 GLOBAL DOLLAR GOVERNMENT PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Interest $ 1,136,106 ------------- EXPENSES Advisory fee 105,345 Distribution fee--Class B 4,843 Custodian 67,629 Administrative 34,500 Audit 18,750 Printing 5,451 Legal 5,000 Directors' fees 500 Transfer agency 450 Miscellaneous 6,400 ------------- Total expenses before interest 248,868 Interest expense 1,773 ------------- Total expenses 250,641 Less: expenses waived and reimbursed by the Adviser (see Note B) (35,115) ------------- Net expenses 215,526 ------------- Net investment income 920,580 ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS Net realized gain on: Investment transactions 1,081,174 Written options 13,152 Swap contracts 43,340 Net change in unrealized appreciation/depreciation of: Investments (2,798,482) Written options (640) Swap contracts (224,213) ------------- Net loss on investment transactions (1,885,669) ------------- NET DECREASE IN NET ASSETS FROM OPERATIONS $ (965,089) ============= See Notes to Financial Statements. 6 GLOBAL DOLLAR GOVERNMENT PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 ============= ============= INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 920,580 $ 1,945,850 Net realized gain on investment transactions 1,137,666 3,971,000 Net change in unrealized appreciation/ depreciation of investments (3,023,335) 1,632,673 ------------- ------------- Net increase (decrease) in net assets from operations (965,089) 7,549,523 DIVIDENDS TO SHAREHOLDERS FROM Net investment income Class A (1,636,884) (1,368,257) Class B (308,029) (63,134) CAPITAL STOCK TRANSACTIONS Net increase (decrease) (960,414) 1,053,177 ------------- ------------- Total increase (decrease) (3,870,416) 7,171,309 NET ASSETS Beginning of period 29,594,780 22,423,471 ------------- ------------- End of period (including undistributed net investment income of $916,373 and $1,940,706, respectively) $ 25,724,364 $ 29,594,780 ============= ============= See Notes to Financial Statements. 7 GLOBAL DOLLAR GOVERNMENT PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein Global Dollar Government Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek a high level of current income and, secondarily, capital appreciation. 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 Portfolio'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 Alliance Capital Management L.P. (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. 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. 8 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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 investments 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 trade 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. 7. REPURCHASE AGREEMENTS It is the policy of the Portfolio that its custodian or designated subcustodian take control of securities as collateral under repurchase agreements and to determine on a daily basis that the value of such securities are sufficient to cover the value of the repurchase agreements. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of collateral by the Portfolio may be delayed or limited. NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of an investment advisory agreement, the Portfolio pays the Adviser, an investment advisory fee at an annual rate of .75% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .50% of the first $2.5 billion, .45% of the next $2.5 billion and .40% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $35,115. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. Pursuant to the advisory agreement, the Portfolio paid $34,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2004. The Portfolio compensates Alliance Global Investor Services, Inc. (AGIS), 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 $450 for the six months ended June 30, 2004. 9 GLOBAL DOLLAR GOVERNMENT 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 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 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. NOTE D: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2004, were as follows: PURCHASES SALES ============= ============= Investment securities (excluding U.S. government securities) $ 26,122,793 $ 30,020,613 U.S. government securities -0- -0- 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 (excluding the written option and swap contracts) are as follows: Gross unrealized appreciation $ 1,325,557 Gross unrealized depreciation (463,994) ------------- Net unrealized appreciation $ 861,563 ============= 1. OPTION TRANSACTIONS For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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. Transactions in options written for the six months ended June 30, 2004 were as follows: NUMBER OF PREMIUMS CONTRACTS RECEIVED ============= ============= Options outstanding at beginning of period -0- $ -0- Options written 1,030,000 21,155 Options terminated in closing purchase transactions (100,000) (2,500) Options expired (830,000) (18,495) ------------- ------------- Options outstanding at June 30, 2004 100,000 $ 160 ============= ============= 2. SWAP AGREEMENTS The Fund may enter into swaps on sovereign debt obligations to protect itself from interest rate fluctuations on the underlying debt instruments and for investment purposes. A swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified prices or rates for a specified amount of an underlying asset. The payment flows are usually netted against each other, with the difference being paid by one party to the other. Risks may arise as a result of the failure of the counterparty to the swap contract to comply with the terms of the swap contract. The loss incurred by the failure of a counterparty is generally limited to the net interim payment to be received by the Fund, and/or the termination value at the end of the contract. Therefore, the Fund considers the creditworthiness of each counterparty to a swap contract in evaluating potential credit risk. Additionally, risks may arise from unanticipated movements in interest rates or in the underlying value of the securities. The Fund accrues for the interim payments on swap contracts on a daily basis, with the net amount recorded within unrealized appreciation/depreciation of swap contracts on the statement of assets and liabilities. Once the interim payments are settled in cash, the net amount is recorded as realized gain/loss on swaps, in addition to realized gain/loss recorded upon the termination of swap contracts on the statements of operations. Fluctuations in the value of swap contracts are recorded as a component of net change in unrealized appreciation/depreciation of investments. The Fund may enter into credit default swaps. The Fund may purchase credit protection on the referenced obligation of the credit default swap ("Buy Contract") or provide credit protection on the referenced obligation of the credit default swap ("Sale Contract"). A sale/(buy) in a credit default swap provides upon the occurrence of a credit event, as defined in the swap agreement, for the Fund to buy/(sell) from/(to) the counterparty at the notional amount (the "Notional Amount") and receive/(deliver) the principal amount of the referenced obligation. If a credit event occurs, the maximum payout amount for a Sale Contract is limited to the Notional Amount of the swap contract ("Maximum Payout Amount"). During the term of the swap agreement, the Fund receives/(pays) semi-annual fixed payments from/(to) the respective counterparty, calculated at the agreed upon interest rate applied to the Notional Amount. These interim payments are recorded within unrealized appreciation/depreciation of swap contracts on the statement of assets and liabilities. Credit default swaps may involve greater risks than if a Fund had invested in the referenced obligation directly. Credit default swaps are subject to general market risk, liquidity risk, counterparty risk and credit risk. If the Fund is a buyer and no credit event occurs, it will lose its investment. In addition, if the Fund is a seller and a credit event occurs, the value of the referenced obligation received by the Fund coupled with the periodic payments previously received, may be less than the Maximum Payout Amount it pays to the buyer, resulting in a loss to the Fund. At June 30, 2004, the Fund had Sale Contracts outstanding with Maximum Payout Amounts aggregating $1,925,000, with net unrealized appreciation of $33,920 and terms ranging from 2 to 10 years, as reflected in the portfolio of investments. In certain circumstances, the Fund may hold Sale Contracts on the same referenced obligation and with the same counterparty it has purchased credit protection, which may reduce its obligation to make payments on Sale Contracts, if a credit event occurs. The Fund had Buy Contracts outstanding with a Notional Amount of $905,000 with respect to the 11 GLOBAL DOLLAR GOVERNMENT PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ same referenced obligations and same counterparties of certain Sale Contracts outstanding, which reduced its obligation to make payments on Sale Contracts to $1,020,000 as of June 30, 2004. 3. REVERSE REPURCHASE AGREEMENTS Under a reverse repurchase agreement, the Fund sells securities and agrees to repurchase them at a mutually agreed upon date and price. At the time the Fund enters into a reverse repurchase agreement, it will establish a segregated account with the custodian containing liquid assets having a value at least equal to the repurchase price. For the six months ended June 30, 2004, the average amount of reverse repurchase agreements outstanding was $1,592,766 and the daily weighted average interest rate was .38%. NOTE E: 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, 2004, the Portfolio had no securities on loan. For the six months ended June 30, 2004, the Portfolio earned fee income of $129 which is included in interest income in the accompanying statement of operations. NOTE F: CAPITAL STOCK There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes designated Class A and Class B. Each class consist of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS A Shares sold 113,661 676,545 $ 1,653,321 $ 8,656,711 Shares issued in reinvestment of dividends 127,285 99,946 1,636,884 1,368,257 Shares redeemed (400,638) (900,148) (5,786,913) (11,632,275) ----------- ----------- ------------ ------------- Net decrease (159,692) (123,657) $ (2,496,708) $ (1,607,307) =========== =========== ============ ============= CLASS B Shares sold 128,723 226,684 $ 1,848,478 $ 3,029,568 Shares issued in reinvestment of dividends 23,990 4,615 308,029 63,133 Shares redeemed (44,011) (33,182) (620,213) (432,217) ----------- ----------- ------------ ------------- Net increase 108,702 198,117 $ 1,536,294 $ 2,660,484 =========== =========== ============ ============= NOTE G: RISKS INVOLVED IN INVESTING IN THE PORTFOLIO Interest Rate Risk and Credit Risk-- Interest rate risk is the risk that changes in interest rates will affect the value of the Portfolio's investments in fixed-income debt securities such as bonds or notes. Increases in interest rates may cause the value of the Portfolio's investments to decline. Credit risk is the risk that the issuer or guarantor of a debt security, or the counterparty to a derivative contract, will be unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The degree of risk for a particular security may be reflected in its credit risk rating. Credit risk is greater for medium quality and lower-rated securities. Lower-rated debt securities and similar unrated securities (commonly known as "junk bonds") have speculative elements or are predominantly speculative risks. 12 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H: JOINT CREDIT FACILITY A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. NOTE I: DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended December 31, 2003 and December 31, 2002 were as follows: 2003 2002 ============= ============= Distributions paid from: Ordinary income $ 1,431,391 $ 1,130,687 ------------- ------------- Total taxable distributions 1,431,391 1,130,687 ------------- ------------- Total distributions paid $ 1,431,391 $ 1,130,687 ============= ============= As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $ 1,940,706 Accumulated capital and other losses (833,622)(a) Unrealized appreciation/(depreciation) 3,799,478(b) ------------- Total accumulated earnings/(deficit) $ 4,906,562 ============= (a) On December 31, 2003, the Portfolio had a net capital loss carryforward of $833,622 of which $41,898 will expire in the year 2007, $680,833 will expire in the year 2009 and $110,891 will expire in the year 2010. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. During the current fiscal year, $3,697,541 of the capital loss carryforward was utilized. (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 J: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: 13 GLOBAL DOLLAR GOVERNMENT PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 14 GLOBAL DOLLAR GOVERNMENT 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 YEAR ENDED DECEMBER 31, JUNE 30, 2004(a) -------------------------------------------------------------- (UNAUDITED) 2003 2002 2001(b) 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $14.53 11.43 $10.63 $10.76 $10.79 $10.18 INCOME FROM INVESTMENT OPERATIONS Net investment income (c) .47(d) .95 .94(d) 1.11(d) 1.27(d) 1.21(d) Net realized and unrealized gain (loss) on investment transactions (.99) 2.83 0.70 (0.10) 0.14 1.08 Net increase (decrease) in net asset value from operations .52 3.78 1.64 1.01 1.41 2.29 LESS: DIVIDENDS Dividends from net investment income (1.05) (.68) (.84) (1.14) (1.44) (1.68) Net asset value, end of period $12.96 $14.53 $11.43 $10.63 $10.76 $10.79 TOTAL RETURN Total investment return based on net asset value (e) (3.51)% 33.41% 16.14% 9.37% 14.06% 26.08% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $21,501 $26,433 $22,198 $11,249 $9,423 $10,139 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.50%(f) 1.90% 1.40% .95% .95% .95% Expenses, before waivers and reimbursements 1.74%(f) 1.90% 2.00% 2.37% 2.42% 2.29% Expenses, before waivers and reimbursements excluding interest expense 1.75%(f) 1.88% 2.00% 2.37% 2.42% 2.29% Net investment income 6.59%(d)(f) 7.20% 8.83%(d) 10.63%(d) 11.71%(d) 12.42%(d) Portfolio turnover rate 99% 150% 142% 176% 148% 117%
See footnote summary on page 16. 15 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period CLASS B ------------------------------------ SIX MONTHS JULY 22, ENDED YEAR ENDED 2002(g) TO JUNE 30, 2004(a) DECEMBER 31, DECEMBER 31, (UNAUDITED) 2003 2002 ----------- ----------- ----------- Net asset value, beginning of period $14.51 $11.42 $10.20 INCOME FROM INVESTMENT OPERATIONS Net investment income (c) .45(d) 0.88 0.35(d) Net realized and unrealized gain (loss) on investment transactions (.99) 2.89 0.87 Net increase (decrease) in net asset value from operations (.54) 3.77 1.22 LESS: DIVIDENDS Dividends from net investment income (1.04) (.68) (.00) Net asset value, end of period $12.93 $14.51 $11.42 TOTAL RETURN Total investment return based on net asset value (e) (3.68)% 33.34% 11.96% RATIOS/SUPPLEMENTAL DATA Net Assets, End Of Period (000's Omitted) $4,223 $3,162 $226 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.76%(f) 2.14% 1.63%(f) Expenses, before waivers and reimbursements 2.00%(f) 2.14% 1.99%(f) Expenses, before waivers and reimbursements excluding interest expense 2.01%(f) 2.12% 1.99%(f) Net investment income 6.35%(d)(f) 6.67% 9.12%(d)(f) Portfolio turnover rate 99% 150% 142% (a) As of November 1, 2003, the Fund has adopted the method of accounting for interim payments on swap contracts in accordance with Financial Accounting Standards Board Statement No. 133. These interim payments are reflected within net realized and unrealized gain (loss) on swap contracts, however, prior to November 1, 2003, these interim payments were reflected within interest income/expense on the statement of operations. The effect of this change for the six months ended June 30, 2004, was to decrease net investment income per share by $.01 and increase net realized and unrealized gain (loss) on investment transactions per share by $.01. Consequently, the ratios of net investment income and expenses to average net assets were decreased by 0.09% and 0.11% for Class A and 0.10% and 0.11% for Class B, respectively. (b) 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 was to decrease net investment income by less than $.01 per share, decrease net realized and unrealized loss on investments by less than $.01 per share, and decrease the ratio of net investment income to average net assets from 10.65% to 10.63%. Per share, ratios and supplemental data for periods prior to January 1, 2001 have not been restated to reflect this change in presentation. (c) Based on average shares outstanding. (d) Net of expenses waived or reimbursed by the Adviser. (e) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total return does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Total investment return calculated for a period of less than one year is not annualized. (f) Annualized. (g) Commencement of distribution. 16 (This page left intentionally blank.) ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN GROWTH PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2004 INVESTMENT PRODUCTS OFFERED - --------------------------- > ARE NOT FDIC INSURED > MAY LOSE VALUE > ARE NOT BANK GUARANTEED - --------------------------- YOU MAY OBTAIN A DESCRIPTION OF THE FUND'S PROXY VOTING POLICIES AND PROCEDURES, WITHOUT CHARGE, UPON REQUEST BY VISITING ALLIANCE CAPITAL'S WEB SITE AT WWW.ALLIANCEBERNSTEIN.COM (CLICK ON INVESTORS, THEN THE "PROXY VOTING POLICIES AND PROCEDURES" LINK ON THE LEFT SIDE OF THE PAGE), OR BY GOING TO THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT WWW.SEC.GOV, OR BY CALLING ALLIANCE CAPITAL AT (800) 227-4618. GROWTH PORTFOLIO TEN LARGEST HOLDINGS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PERCENT OF COMPANY U.S. $ VALUE NET ASSETS _______________________________________________________________________________ Marvell Technology Group Ltd. (Bermuda) $ 14,492,760 4.9% - ------------------------------------------------------------------------------- Broadcom Corp. Cl.A 14,054,385 4.8 - ------------------------------------------------------------------------------- Juniper Networks, Inc. 13,913,991 4.8 - ------------------------------------------------------------------------------- Legg Mason, Inc. 13,351,167 4.6 - ------------------------------------------------------------------------------- eBay, Inc. 12,689,100 4.3 - ------------------------------------------------------------------------------- American International Group, Inc. 10,219,342 3.5 - ------------------------------------------------------------------------------- Citigroup, Inc. 9,848,700 3.4 - ------------------------------------------------------------------------------- Forest Laboratories, Inc. 9,593,122 3.3 - ------------------------------------------------------------------------------- Harley-Davidson, Inc. 8,708,764 3.0 - ------------------------------------------------------------------------------- Stryker Corp. 8,646,000 2.9 ------------ ---- - ------------------------------------------------------------------------------- $115,517,331 39.5% - ------------------------------------------------------------------------------- 1 GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- COMMON STOCKS-99.9% TECHNOLOGY-33.2% COMMUNICATION EQUIPMENT-6.6% Corning, Inc. (a) 136,100 $ 1,777,466 Juniper Networks, Inc. (a) 566,300 13,913,991 QUALCOMM, Inc. 49,900 3,641,702 ------------- 19,333,159 ------------- COMPUTER HARDWARE/STORAGE-2.2% Dell, Inc. (a) 177,000 6,340,140 ------------- COMPUTER PERIPHERALS-0.3% Network Appliance, Inc. (a) 44,700 962,391 ------------- CONTRACT MANUFACTURING-1.0% Flextronics International Ltd. (Singapore) (a) 188,500 3,006,575 ------------- SEMI-CONDUCTOR CAPITAL EQUIPMENT-1.3% Applied Materials, Inc. (a) 192,500 3,776,850 ------------- SEMI-CONDUCTOR COMPONENTS-11.6% Broadcom Corp. Cl.A (a) 300,500 14,054,384 Marvell Technology Group Ltd. (Bermuda) (a) 542,800 14,492,760 Silicon Laboratories, Inc. (a) 113,300 5,251,455 ------------- 33,798,599 ------------- SOFTWARE-7.4% Cognos, Inc. (Canada) (a) 25,900 936,544 Electronic Arts, Inc. (a) 62,250 3,395,738 Mercury Interactive Corp. (a) 19,450 969,194 SAP AG (ADR) (Germany) 78,100 3,265,361 Symantec Corp. (a) 169,600 7,425,088 VERITAS Software Corp. (a) 205,000 5,678,500 ------------- 21,670,425 ------------- MISCELLANEOUS-2.8% Amphenol Corp. Cl.A (a) 158,500 5,281,220 Tektronix, Inc. 89,800 3,054,996 ------------- 8,336,216 ------------- 97,224,355 ------------- FINANCE-21.2% BANKING - REGIONAL-0.9% Bank One Corp. 52,400 2,672,400 ------------- BROKERAGE & MONEY MANAGEMENT-8.0% Legg Mason, Inc. 146,700 13,351,167 Merrill Lynch & Co., Inc. 55,800 3,012,084 Morgan Stanley 53,000 2,796,810 The Goldman Sachs Group, Inc. 46,400 4,369,024 ------------- 23,529,085 ------------- INSURANCE-5.7% American International Group, Inc. 143,369 10,219,342 Axis Capital Holdings Ltd. (Bermuda) 100,400 2,811,200 Everest Re Group Ltd. (Bermuda) 44,100 3,543,876 ------------- 16,574,418 ------------- MISCELLANEOUS-6.6% Ambac Financial Group, Inc. 51,500 3,782,160 Citigroup, Inc. 211,800 9,848,700 MBNA Corp. 222,200 5,730,538 ------------- 19,361,398 ------------- 62,137,301 ------------- HEALTHCARE-20.3% DRUGS-6.2% Forest Laboratories, Inc. (a) 169,400 9,593,122 Patterson Dental Co. (a) 33,000 2,524,170 Teva Pharmaceutical Industries Ltd. (ADR) (Israel) 88,300 5,941,707 ------------- 18,058,999 ------------- MEDICAL PRODUCTS-7.5% Alcon, Inc. (Switzerland) 41,000 3,224,650 Boston Scientific Corp. (a) 64,300 2,752,040 St. Jude Medical, Inc. (a) 40,200 3,041,130 Stryker Corp. 157,200 8,646,000 Zimmer Holdings, Inc. (a) 49,100 4,330,620 ------------- 21,994,440 ------------- MEDICAL SERVICES-6.6% Anthem, Inc. (a) 35,300 3,161,468 Caremark Rx, Inc. (a) 129,500 4,265,730 Health Management Associates, Inc. Cl.A 63,700 1,428,154 Stericycle, Inc. (a) 57,900 2,995,746 WellPoint Health Networks, Inc. (a) 66,200 7,415,062 ------------- 19,266,160 ------------- 59,319,599 ------------- CONSUMER SERVICES-17.9% BROADCASTING & CABLE-0.3% XM Satellite Radio Holdings, Inc. Cl.A (a) 35,700 974,253 ------------- 2 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- ENTERTAINMENT & LEISURE-3.0% Harley-Davidson, Inc. 140,600 $ 8,708,764 ------------- GAMING-0.2% International Game Technology 16,200 625,320 ------------- RETAIL - GENERAL MERCHANDISE-6.6% Bed Bath & Beyond, Inc. (a) 38,000 1,461,100 eBay, Inc. (a) 138,000 12,689,100 Lowe's Cos., Inc. 52,300 2,748,365 Williams-Sonoma, Inc. (a) 71,700 2,363,232 ------------- 19,261,797 ------------- MISCELLANEOUS-7.8% Career Education Corp. (a) 147,400 6,715,544 CDW Corp. 42,000 2,677,920 Education Management Corp. (a) 56,900 1,869,734 Iron Mountain, Inc. (a) 89,900 4,338,574 Strayer Education, Inc. 9,200 1,026,444 Yahoo!, Inc. (a) 167,400 6,081,642 ------------- 22,709,858 ------------- 52,279,992 ------------- CONSUMER MANUFACTURING-5.4% BUILDING & RELATED-5.4% Centex Corp. 93,200 4,263,900 D.R. Horton, Inc. 146,300 4,154,920 Lennar Corp. Cl.A 90,400 4,042,688 NVR, Inc. (a) 6,750 3,268,350 ------------- 15,729,858 ------------- MULTI-INDUSTRY COMPANIES-1.0% Danaher Corp. 60,800 3,152,480 ------------- AEROSPACE & DEFENSE-0.9% DEFENSE ELECTRONICS-0.9% L-3 Communications Holdings, Inc. 38,300 2,558,440 ------------- Total Common Stocks (cost $209,602,188) 292,402,025 ------------- TOTAL INVESTMENTS-99.9% (cost $209,602,188) 292,402,025 Other assets less liabilities-0.1% 212,283 ------------- NET ASSETS-100% $ 292,614,308 ============= (a) Non-income producing security. Glossary: ADR - American Depositary Receipt See Notes to Financial Statements. 3 GROWTH PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $209,602,188) $ 292,402,025 Receivable for investment securities sold 769,917 Dividends and interest receivable 73,852 ------------- Total assets 293,245,794 ------------- LIABILITIES Due to custodian 155,616 Advisory fee payable 177,300 Payable for investment securities purchased 72,687 Distribution fee payable 32,227 Accrued expenses 193,656 ------------- Total liabilities 631,486 ------------- NET ASSETS $ 292,614,308 ============= COMPOSITION OF NET ASSETS Capital stock, at par $ 16,888 Additional paid-in capital 361,200,384 Accumulated net investment loss (776,101) Accumulated net realized loss on investment transactions (150,626,700) Net unrealized appreciation of investments 82,799,837 ------------- $ 292,614,308 ============= CLASS A SHARES Net assets $ 142,571,150 ============= Shares of capital stock outstanding 8,174,569 ============= Net asset value per share $ 17.44 ============= CLASS B SHARES Net assets $ 150,043,158 ============= Shares of capital stock outstanding 8,713,011 ============= Net asset value per share $ 17.22 ============= See Notes to Financial Statements. 4 GROWTH PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $3,084) $ 619,966 Interest 14,698 ------------- Total investment income 634,664 ------------- EXPENSES Advisory fee 1,061,271 Distribution fee--Class B 173,412 Custodian 71,458 Printing 35,441 Administrative 34,500 Audit and legal 23,981 Directors' fees 500 Transfer agency 450 Miscellaneous 9,752 ------------- Total expenses 1,410,765 ------------- Net investment loss (776,101) ------------- REALIZED AND UNREALIZED GAIN ON INVESTMENT TRANSACTIONS Net realized gain on investment transactions 11,080,130 Net change in unrealized appreciation/depreciation of investments 14,003,682 ------------- Net gain on investment transactions 25,083,812 ------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 24,307,711 ============= See Notes to Financial Statements. 5 GROWTH PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 ============= ============= INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment loss $ (776,101) $ (1,170,753) Net realized gain (loss) on investment transactions 11,080,130 (10,808,268) Net change in unrealized appreciation/ depreciation of investments 14,003,682 77,063,597 ------------- ------------- Net increase in net assets from operations 24,307,711 65,084,576 CAPITAL STOCK TRANSACTIONS Net increase 6,037,470 4,021,668 ------------- ------------- Total increase 30,345,181 69,106,244 NET ASSETS Beginning of period 262,269,127 193,162,883 ------------- ------------- End of period (including accumulated net investment loss of $776,101 and $0, respectively) $ 292,614,308 $ 262,269,127 ============= ============= See Notes to Financial Statements. 6 GROWTH PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein Growth Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek to provide long-term growth of capital. Current income is incidental to the Portfolio's objective. 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 Alliance Capital Management L.P. (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. 7 GROWTH PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) 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 the Adviser an investment advisory fee at an annual rate of .75% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Pursuant to the advisory agreement, the Portfolio paid $34,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2004. Brokerage commissions paid on investment transactions for the six months ended June 30, 2004, amounted to $197,951 of which $4,826 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 $450 for the six months ended June 30, 2004. 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 the Portfolio's average daily net assets attributable to 8 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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 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. NOTE D: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2004, were as follows: PURCHASES SALES ============= ============= Investment securities (excluding U.S. government securities) $ 85,759,376 $ 74,425,465 U.S. government securities -0- -0- 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 $ 86,894,809 Gross unrealized depreciation (4,094,972) ------------- Net unrealized appreciation $ 82,799,837 ============= 1. FORWARD EXCHANGE CURRENCY CONTRACTS The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as unrealized appreciation and depreciation 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. 2. OPTION TRANSACTIONS For hedging and investment purposes, the Portfolio may purchase and write (sell) 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 9 GROWTH PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. NOTE E: 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. For the six months ended June 30, 2004, the Portfolio had no securities on loan. NOTE F: CAPITAL STOCK There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B shares. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS A Shares sold 187,571 503,509 $ 3,200,289 $ 6,916,297 Shares redeemed (906,053) (1,895,109) (15,373,900) (25,118,830) ----------- ----------- ------------ ------------- Net decrease (718,482) (1,391,600) $(12,173,611) $ (18,202,533) =========== =========== ============ ============= CLASS B Shares sold 2,322,563 4,048,545 $ 39,074,393 $ 56,912,203 Shares redeemed (1,250,794) (2,536,343) (20,863,312) (34,688,002) ----------- ----------- ------------ ------------- Net increase 1,071,769 1,512,202 $ 18,211,081 $ 22,224,201 =========== =========== ============ ============= NOTE G: RISKS INVOLVED IN INVESTING IN THE PORTFOLIO Foreign Securities 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 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H: JOINT CREDIT FACILITY A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. NOTE I: COMPONENTS OF ACCUMULATED EARNINGS (DEFICIT) The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Accumulated capital and other losses $ (161,426,076)(a) Unrealized appreciation/(depreciation) 68,515,401(b) -------------- Total accumulated earnings/(deficit) $ (92,910,675) ============== (a) On December 31, 2003, the Portfolio had a net capital loss carryforward of $161,426,076 of which $546,450 expires in the year 2008, $61,644,805 expires in the year 2009, $84,319,349 expires in the year 2010, and $14,915,472 expires in the year 2011. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. 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 Fund's merger with Brinson Series Trust Aggressive Growth 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 J: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and 11 GROWTH PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 12 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS A ---------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, 2004 --------------------------------------------------------------- (UNAUDITED) 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $15.95 $11.81 $16.42 $25.10 $33.59 $27.25 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (a) (.04) (.06) (.06) (.06) .08 .03 Net realized and unrealized gain (loss) on investment transactions 1.53 4.20 (4.55) (5.47) (5.36) 8.73 Net increase (decrease) in net asset value from operations 1.49 4.14 (4.61) (5.53) (5.28) 8.76 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income -0- -0- -0- (.06) (.02) (.09) Distributions from net realized gain on investment transactions -0- -0- -0- (1.85) (3.19) (2.33) Distributions in excess of net realized gain on investment transactions -0- -0- -0- (1.23) -0- -0- Return of capital -0- -0- -0- (.01) -0- -0- Total dividends and distributions -0- -0- -0- (3.15) (3.21) (2.42) Net asset value, end of period $17.44 $15.95 $11.81 $16.42 $25.10 $33.59 TOTAL RETURN Total investment return based on net asset value (b) 9.34% 35.06% (28.08)% (23.47)% (17.51)% 34.47% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $142,571 $141,809 $121,439 $226,237 $357,664 $456,027 Ratio to average net assets of: Expenses .87%(c) .89% .88% .85% .81% .84% Net investment income (loss) (.42)%(c) (.43)% (.44)% (.31)% .26% .12% Portfolio turnover rate 27% 49% 38% 104% 58% 54%
See footnote summary on page 14. 13 GROWTH PORTFOLIO FINANCIAL HIGHLIGHTS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS B ---------------------------------------------------------------------------- SIX MONTHS JUNE 1, 1999(d) ENDED YEAR ENDED DECEMBER 31, TO JUNE 30, 2004 -------------------------------------------------- DECEMBER 31, (UNAUDITED) 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $15.76 $11.70 $16.31 $24.99 $33.54 $26.83 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (a) (.06) (.09) (.09) (.11) .04 (.03) Net realized and unrealized gain (loss) on investment transactions 1.52 4.15 (4.52) (5.44) (5.39) 6.74 Net increase (decrease) in net asset value from operations 1.46 4.06 (4.61) (5.55) (5.35) 6.71 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income -0- -0- -0- (.04) (.01) -0- Distributions from net realized gain on investment transactions -0- -0- -0- (1.85) (3.19) -0- Distributions in excess of net realized gain on investment transactions -0- -0- -0- (1.23) -0- -0- Return of capital -0- -0- -0- (.01) -0- -0- Total dividends and distributions -0- -0- -0- (3.13) (3.20) -0- Net asset value, end of period $17.22 $15.76 $11.70 $16.31 $24.99 $33.54 TOTAL RETURN Total investment return based on net asset value (b) 9.26% 34.70% (28.26)% (23.65)% (17.75)% 25.01% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $150,043 $120,460 $71,724 $94,215 $54,127 $5,707 Ratio to average net assets of: Expenses 1.13%(c) 1.14% 1.13% 1.11% 1.08% 1.12%(c) Net investment income (loss) (.68)%(c) (.68)% (.69)% (.59)% .13% (.20)%(c) Portfolio turnover rate 27% 49% 38% 104% 58% 54%
(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) Annualized. (d) Commencement of distribution. 14 (This page left intentionally blank.) (This page left intentionally blank.) (This page left intentionally blank.) ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN GROWTH & INCOME PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2004 INVESTMENT PRODUCTS OFFERED - --------------------------- > ARE NOT FDIC INSURED > MAY LOSE VALUE > ARE NOT BANK GUARANTEED - --------------------------- YOU MAY OBTAIN A DESCRIPTION OF THE FUND'S PROXY VOTING POLICIES AND PROCEDURES, WITHOUT CHARGE, UPON REQUEST BY VISITING ALLIANCE CAPITAL'S WEB SITE AT WWW.ALLIANCEBERNSTEIN.COM (CLICK ON INVESTORS, THEN THE "PROXY VOTING POLICIES AND PROCEDURES" LINK ON THE LEFT SIDE OF THE PAGE), OR BY GOING TO THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT WWW.SEC.GOV, OR BY CALLING ALLIANCE CAPITAL AT (800) 227-4618. GROWTH & INCOME PORTFOLIO TEN LARGEST HOLDINGS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PERCENT OF COMPANY U.S. $ VALUE NET ASSETS _______________________________________________________________________________ Citigroup, Inc. $ 104,625,000 4.2% - ------------------------------------------------------------------------------- Bank One Corp. 96,900,000 3.8 - ------------------------------------------------------------------------------- Bank of America Corp. 92,616,590 3.7 - ------------------------------------------------------------------------------- American International Group, Inc. 91,951,200 3.7 - ------------------------------------------------------------------------------- Viacom, Inc. Cl.B 83,942,000 3.3 - ------------------------------------------------------------------------------- Microsoft Corp. 78,540,000 3.1 - ------------------------------------------------------------------------------- Union Pacific Corp. 69,259,250 2.8 - ------------------------------------------------------------------------------- ConocoPhillips 66,753,750 2.6 - ------------------------------------------------------------------------------- Altria Group, Inc. 65,975,910 2.6 - ------------------------------------------------------------------------------- General Electric Co. 64,800,000 2.6 ------------- ---- - ------------------------------------------------------------------------------- $ 815,363,700 32.4% - ------------------------------------------------------------------------------- 1 GROWTH & INCOME PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- COMMON STOCKS-96.1% FINANCE-27.6% BANKING-MONEY CENTER-0.8% Wachovia Corp. 465,000 $ 20,692,500 -------------- BANKING-REGIONAL-8.1% Bank of America Corp. 1,094,500 92,616,590 Bank One Corp. 1,900,000 96,900,000 Fifth Third Bancorp 275,000 14,789,500 -------------- 204,306,090 -------------- BROKERAGE & MONEY MANAGEMENT-3.0% Lehman Brothers Holdings, Inc. 300,000 22,575,000 Merrill Lynch & Co., Inc. 400,000 21,592,000 Morgan Stanley 595,000 31,398,150 -------------- 75,565,150 -------------- INSURANCE-8.5% ACE Ltd. (Cayman Islands) 1,075,000 45,451,000 Allstate Corp. 600,000 27,930,000 American International Group, Inc. 1,290,000 91,951,200 Axis Capital Holdings Ltd. (Bermuda) 740,400 20,731,200 MetLife, Inc. 529,500 18,982,575 XL Capital Ltd. Cl.A (Cayman Islands) 125,000 9,432,500 -------------- 214,478,475 -------------- MORTGAGE BANKING-1.6% Fannie Mae 550,000 39,248,000 -------------- MISCELLANEOUS-5.6% Citigroup, Inc. 2,250,000 104,625,000 MBNA Corp. 1,427,100 36,804,909 -------------- 141,429,909 -------------- 695,720,124 -------------- CONSUMER SERVICES-15.1% BROADCASTING & CABLE-10.3% Clear Channel Communications, Inc. 1,293,300 47,787,435 Comcast Corp. Cl.A (a) 1,600,000 44,848,000 Comcast Corp. Special Cl.A (a) 825,000 22,778,250 Time Warner, Inc. (a) 2,150,200 37,800,516 Viacom, Inc. Cl.B 2,350,000 83,942,000 Westwood One, Inc. (a) 909,900 21,655,620 -------------- 258,811,821 -------------- ENTERTAINMENT & LEISURE-1.6% Carnival Corp. (Panama) 285,000 13,395,000 Harley-Davidson, Inc. 350,000 21,679,000 Royal Caribbean Cruises Ltd. (Liberia) 104,500 4,536,345 -------------- 39,610,345 -------------- RETAIL-GENERAL MERCHANDISE-3.2% Bed Bath & Beyond, Inc. (a) 300,000 11,535,000 Lowe's Cos., Inc. 435,000 22,859,250 The Home Depot, Inc. 1,350,000 47,520,000 -------------- 81,914,250 -------------- 380,336,416 -------------- HEALTHCARE-11.1% BIOTECHNOLOGY-0.6% Applera Corp.-Applied Biosystems Group 750,000 16,312,500 -------------- DRUGS-4.4% Forest Laboratories, Inc. (a) 500,000 28,315,000 Pfizer, Inc. 1,850,000 63,418,000 Wyeth 500,000 18,080,000 -------------- 109,813,000 -------------- MEDICAL PRODUCTS-1.0% Boston Scientific Corp. (a) 600,000 25,680,000 -------------- MEDICAL SERVICES-5.1% Anthem, Inc. (a) 415,000 37,167,400 Caremark Rx, Inc. (a) 479,900 15,807,906 HCA, Inc. 550,000 22,874,500 Health Management Associates, Inc. Cl.A 504,300 11,306,406 WellPoint Health Networks, Inc. (a) 365,000 40,883,650 -------------- 128,039,862 -------------- 279,845,362 -------------- ENERGY-9.7% DOMESTIC INTEGRATED-0.7% Occidental Petroleum Corp. 350,000 16,943,500 -------------- DOMESTIC PRODUCERS-1.3% Kerr-McGee Corp. 385,000 20,701,450 Noble Energy, Inc. 225,000 11,475,000 -------------- 32,176,450 -------------- INTERNATIONAL-2.8% BP p.l.c. (ADR) (United Kingdom) 880,900 47,189,813 Exxon Mobil Corp. 515,000 22,871,150 -------------- 70,060,963 -------------- 2 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- OIL SERVICE-2.3% Baker Hughes, Inc. 419,700 $ 15,801,705 EnCana Corp. (Canada) 439,700 18,977,452 Nabors Industries Ltd. (Bermuda) (a) 535,000 24,192,700 -------------- 58,971,857 -------------- MISCELLANEOUS-2.6% ConocoPhillips 875,000 66,753,750 -------------- 244,906,520 -------------- CONSUMER STAPLES-7.9% BEVERAGES-0.9% The Coca-Cola Co. 425,000 21,454,000 -------------- COSMETICS-1.6% Avon Products, Inc. 900,000 41,526,000 -------------- FOOD-0.4% Dean Foods Co. 250,000 9,327,500 -------------- HOUSEHOLD PRODUCTS-1.6% The Procter & Gamble Co. 750,000 40,830,000 -------------- TOBACCO-3.4% Altria Group, Inc. 1,318,200 65,975,910 Loews Corp.- Carolina Group 777,100 19,077,805 -------------- 85,053,715 -------------- 198,191,215 -------------- TECHNOLOGY-7.0% COMPUTER HARDWARE/STORAGE-2.1% EMC Corp. (a) 1,485,100 16,930,140 Hewlett-Packard Co. 1,750,000 36,925,000 -------------- 53,855,140 -------------- COMPUTER SERVICES-1.2% Fiserv, Inc. (a) 750,000 29,167,500 -------------- SEMI-CONDUCTOR CAPITAL EQUIPMENT-0.6% Applied Materials, Inc. (a) 775,000 15,205,500 -------------- SOFTWARE-3.1% Microsoft Corp. 2,750,000 78,540,000 -------------- 176,768,140 -------------- CAPITAL GOODS-5.1% ELECTRICAL EQUIPMENT-0.7% Johnson Controls, Inc. 350,000 18,683,000 -------------- MACHINERY-1.0% Ingersoll-Rand Co. Cl.A (Bermuda) 350,000 23,908,500 -------------- MISCELLANEOUS-3.4% General Electric Co. 2,000,000 64,800,000 United Technologies Corp. 235,000 21,497,800 -------------- 86,297,800 -------------- 128,889,300 -------------- UTILITIES-4.7% ELECTRIC & GAS UTILITY-2.6% Dominion Resources, Inc. 75,000 4,731,000 Entergy Corp. 350,000 19,603,500 Exelon Corp. 650,000 21,638,500 PPL Corp. 425,000 19,507,500 -------------- 65,480,500 -------------- TELEPHONE UTILITY-2.1% BellSouth Corp. 600,000 15,732,000 Verizon communications, Inc. 1,000,000 36,190,000 -------------- 51,922,000 -------------- 117,402,500 -------------- TRANSPORTATION-4.4% RAILROAD-4.4% Burlington Northern Santa Fe Corp. 1,197,500 41,996,325 Union Pacific Corp. 1,165,000 69,259,250 -------------- 111,255,575 -------------- AEROSPACE & DEFENSE-1.2% AEROSPACE-1.2% General Dynamics Corp. 100,000 9,930,000 Northrop Grumman Corp. 370,000 19,869,000 -------------- 29,799,000 -------------- CONSUMER MANUFACTURING-0.9% BUILDING & RELATED-0.9% American Standard Cos., Inc. (a) 531,500 21,424,765 -------------- BASIC INDUSTRY-0.9% CHEMICALS-0.9% Air Products and Chemicals, Inc. 400,000 20,980,000 Cabot Corp. 7,200 293,040 -------------- 21,273,040 -------------- MULTI-INDUSTRY COMPANIES-0.5% 3M Co. 135,000 12,151,350 -------------- Total Common Stocks (cost $2,108,803,377) 2,417,963,307 -------------- 3 GROWTH & INCOME PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT COMPANY (000) U.S. $ VALUE - ------------------------------------------------------------------------------- SHORT-TERM INVESTMENT-5.3% TIME DEPOSIT-5.3% The Bank of New York 0.563%, 7/01/04 (cost $132,197,000) $132,197 $ 132,197,000 -------------- TOTAL INVESTMENTS-101.4% (cost $2,241,000,377) 2,550,160,307 Other assets less liabilities-(1.4%) (33,987,160) -------------- NET ASSETS-100% $2,516,173,147 ============== (a) Non-income producing security. Glossary: ADR - American Depositary Receipt See Notes to Financial Statements. 4 GROWTH & INCOME PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $2,241,000,377) $2,550,160,307 Cash 30,702 Receivable for investment securities sold 4,985,573 Dividends and interest receivable 3,628,534 -------------- Total assets 2,558,805,116 -------------- LIABILITIES Payable for securities purchased 41,023,579 Advisory fee payable 1,120,410 Distribution fee payable 395,170 Accrued expenses 92,810 -------------- Total liabilities 42,631,969 -------------- NET ASSETS $2,516,173,147 ============== COMPOSITION OF NET ASSETS Capital stock, at par $ 113,516 Additional paid-in capital 2,387,090,703 Undistributed net investment income 12,573,312 Accumulated net realized loss on investment transactions (192,764,314) Net unrealized appreciation of investments 309,159,930 -------------- $2,516,173,147 ============== CLASS A SHARES Net assets $ 622,272,720 ============== Shares of capital stock outstanding 27,913,465 ============== Net asset value per share $ 22.29 ============== CLASS B SHARES Net assets $1,893,900,427 ============== Shares of capital stock outstanding 85,602,848 ============== Net asset value per share $ 22.12 ============== See Notes to Financial Statements. 5 GROWTH & INCOME PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $60,419) $ 21,642,859 Interest 262,341 ------------- Total investment income 21,905,200 ------------- EXPENSES Advisory fee 7,482,813 Distribution fee--Class B 2,220,631 Custodian 115,442 Printing 92,654 Administrative 34,500 Audit and legal 23,750 Directors' fees 500 Transfer agency 450 Miscellaneous 68,807 ------------- Total expenses 10,039,547 Less: expenses waived and reimbursed by the Adviser (see Note B) (897,938) ------------- Net expenses 9,141,609 ------------- Net investment income 12,763,591 ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS Net realized gain on investment transactions 78,456,336 Net change in unrealized appreciation/depreciation of investments (18,439,223) ------------- Net gain on investment transactions 60,017,113 ------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 72,780,704 ============= See Notes to Financial Statements. 6 GROWTH & INCOME PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 ============== ============== INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 12,763,591 $ 19,192,015 Net realized gain on investment transactions 78,456,336 27,303,599 Net change in unrealized appreciation/ depreciation of investments (18,439,223) 468,948,547 -------------- -------------- Net increase in net assets from operations 72,780,704 515,444,161 DIVIDENDS TO SHAREHOLDERS FROM Net investment income Class A (5,566,213) (5,298,556) Class B (13,683,981) (10,692,656) CAPITAL STOCK TRANSACTIONS Net increase 187,298,155 251,538,159 -------------- -------------- Total increase 240,828,665 750,991,108 NET ASSETS Beginning of period 2,275,344,482 1,524,353,374 -------------- -------------- End of period (including undistributed net investment income of $12,573,312 and $19,059,915, respectively) $2,516,173,147 $2,275,344,482 ============== ============== See Notes to Financial Statements. 7 GROWTH & INCOME PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein Growth & Income Portfolio (the "Portfolio") is a series of AllianceBernstein 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 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 Portfolio'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 Alliance Capital Management L.P. (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. 8 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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, 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 the Adviser an investment advisory fee at an annual rate of .625% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .55% of the first $2.5 billion, .45% of the next $2.5 billion and .40% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $897,938. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. Pursuant to the advisory agreement, the Portfolio paid $34,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2004. Brokerage commissions paid on investment transactions for the six months ended June 30, 2004 amounted to $2,028,969, of which $78,892 was paid to Sanford C. Bernstein &Co. LLC, an affiliate of the Adviser. 9 GROWTH & INCOME PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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 $450 for the six months ended June 30, 2004. 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 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 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. NOTE D: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2004, were as follows: PURCHASES SALES ============= ============= Investment securities (excluding U.S. government securities) $ 848,433,264 $ 695,173,750 U.S. government securities -0- -0- 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 $ 345,579,129 Gross unrealized depreciation (36,419,199) ------------- Net unrealized appreciation $ 309,159,930 ============= 1. FORWARD EXCHANGE CURRENCY CONTRACTS The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as unrealized appreciation and depreciation 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 the 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. 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 2. OPTION TRANSACTIONS For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. NOTE E: 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. For the six months ended June 30, 2004, the Portfolio had no securities on loan. NOTE F: CAPITAL STOCK There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B shares. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS A Shares sold 2,160,427 4,525,746 $ 48,305,297 $ 85,909,173 Shares issued in reinvestment of dividends and distributions 251,524 271,026 5,566,213 5,298,557 Shares redeemed (2,192,019) (4,570,168) (48,891,478) (83,057,077) ----------- ----------- ------------ ------------- Net increase 219,932 226,604 $ 4,980,032 $ 8,150,653 =========== =========== ============ ============= 11 GROWTH & INCOME PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS B Shares sold 11,819,359 23,010,963 $260,104,672 $ 432,799,344 Shares issued in reinvestment of dividends and distributions 623,132 550,600 13,683,981 10,692,656 Shares redeemed (4,147,311) (11,015,402) (91,470,530) (200,104,494) ----------- ----------- ------------ ------------- Net increase 8,295,180 12,546,161 $182,318,123 $ 243,387,506 =========== =========== ============ ============= NOTE G: RISKS INVOLVED IN INVESTING IN THE PORTFOLIO Foreign Securities 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H: JOINT CREDIT FACILITY A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. NOTE I: DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended December 31, 2003 and December 31, 2002 were as follows: 2003 2002 ============= ============= Distributions paid from: Ordinary income $ 15,991,212 $ 9,560,093 Net long-term capital gains -- 54,978,227 ------------- ------------- Total taxable distributions 15,991,212 64,538,320 ------------- ------------- Total distributions paid $ 15,991,212 $ 64,538,320 ============= ============= As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $ 19,059,915 Accumulated capital and other losses (252,119,085)(a) Unrealized appreciation/(depreciation) 308,497,588(b) ------------- Total accumulated earnings/(deficit) $ 75,438,418 ============= (a) On December 31, 2003, the Portfolio had a net capital loss carryforward of $252,119,085 of which $229,142,961 expires in the year 2010 and $22,976,124 expires in the year 2011. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. (b) The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales. 12 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE J: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. 13 GROWTH & INCOME PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 14 GROWTH & INCOME 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 YEAR ENDED DECEMBER 31, JUNE 30, 2004 --------------------------------------------------------------- (UNAUDITED) 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $21.80 $16.62 $22.16 $23.15 $21.79 $21.84 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) .14(b) .23 .22 .21 .22 .16 Net realized and unrealized gain (loss) on investment and foreign currency transactions .55 5.15 (5.01) (.05) 2.75 2.25 Net increase (decrease) in net asset value from operations .69 5.38 (4.79) .16 2.97 2.41 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.20) (.20) (.12) (.14) (.14) (.18) Distributions from net realized gain on investment transactions -0- -0- (.63) (1.01) (1.47) (2.28) Total dividends and distributions (.20) (.20) (.75) (1.15) (1.61) (2.46) Net asset value, end of period $22.29 $21.80 $16.62 $22.16 $23.15 $21.79 TOTAL RETURN Total investment return based on net asset value (c) 3.18% 32.50% (22.05)% .36% 13.89% 11.37% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $622,273 $603,673 $456,402 $673,722 $596,547 $522,163 Ratio to average net assets of: Expenses, net of waivers and reimbursements .58%(d) .66% .68% .67% .69% .71% Expenses, before waivers and reimbursements .65%(d) .66% .68% .67% .69% .71% Net investment income 1.25%(b)(d) 1.25% 1.15% .95% 1.01% .75% Portfolio turnover rate 30% 57% 69% 80% 74% 46%
See footnote summary on page 16. 15 GROWTH & INCOME PORTFOLIO FINANCIAL HIGHLIGHTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS B ---------------------------------------------------------------------------- SIX MONTHS JUNE 1, 1999 (e) ENDED YEAR ENDED DECEMBER 31, TO JUNE 30, 2004 -------------------------------------------------- DECEMBER 31, (UNAUDITED) 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $21.62 $16.49 $22.03 $23.06 $21.76 $21.37 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) .11(b) .18 .17 .16 .18 .07 Net realized and unrealized gain (loss) on investment and foreign currency transactions .55 5.11 (4.98) (.05) 2.73 .32 Net increase (decrease) in net asset value from operations .66 5.29 (4.81) .11 2.91 .39 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.16) (.16) (.10) (.13) (.14) -0- Distributions from net realized gain on investment transactions -0- -0- (.63) (1.01) (1.47) -0- Total dividends and distributions (.16) (.16) (.73) (1.14) (1.61) -0- Net asset value, end of period $22.12 $21.62 $16.49 $22.03 $23.06 $21.76 TOTAL RETURN Total investment return based on net asset value (c) 3.07% 32.18% (22.26)% .15% 13.59% 1.83% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $1,893,900 $1,671,671 $1,067,952 $889,394 $151,739 $7,993 Ratio to average net assets of: Expenses, net of waivers and reimbursements .83%(d) .91% .93% .92% .95% .97%(d) Expenses, before waivers and reimbursements .90%(d) .91% .93% .92% .95% .97%(d) Net investment income 1.00%(b)(d) .99% .91% .75% .85% .55%(d) Portfolio turnover rate 30% 57% 69% 80% 74% 46%
(a) Based on average shares outstanding. (b) Net of expenses reimbursed or waived by the Adviser. (c) 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. (d) Annualized. (e) Commencement of distribution. 16 (This page left intentionally blank.) ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN HIGH YIELD PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2004 INVESTMENT PRODUCTS OFFERED - --------------------------- > ARE NOT FDIC INSURED > MAY LOSE VALUE > ARE NOT BANK GUARANTEED - --------------------------- YOU MAY OBTAIN A DESCRIPTION OF THE FUND'S PROXY VOTING POLICIES AND PROCEDURES, WITHOUT CHARGE, UPON REQUEST BY VISITING ALLIANCE CAPITAL'S WEB SITE AT WWW.ALLIANCEBERNSTEIN.COM (CLICK ON INVESTORS, THEN THE "PROXY VOTING POLICIES AND PROCEDURES" LINK ON THE LEFT SIDE OF THE PAGE), OR BY GOING TO THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT WWW.SEC.GOV, OR BY CALLING ALLIANCE CAPITAL AT (800) 227-4618. HIGH YIELD PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE - ------------------------------------------------------------------------------- CORPORATE DEBT OBLIGATIONS-93.0% AEROSPACE/DEFENSE-0.9% K & F Industries, Inc. Series B 9.625%, 12/15/10 $ 120 $ 132,150 Sequa Corp. 9.00%, 8/01/09 70 74,725 Transdigm, Inc. 8.375%, 7/15/11 260 265,200 ------------- 472,075 ------------- AIR TRANSPORTATION-1.3% ATA Airlines, Inc. 6.99%, 4/15/16 (a) 289 231,464 ATA Holdings Corp. 12.125%, 6/15/10 (a)(b) 175 112,875 13.00%, 2/01/09 (c) 120 84,600 Continental Airlines, Inc. 9.56%, 9/01/19 165 165,000 North Atlantic Holdings 12.25%, 3/01/14 (a)(b) 135 75,600 ------------- 669,539 ------------- AUTOMOTIVE-2.9% Dana Corp. 10.125%, 3/15/10 205 233,188 Dura Operating Corp. Series D 9.00%, 5/01/09 255 251,174 HLI Operating Co., Inc. 10.50%, 6/15/10 140 158,200 Keystone Automotive Operations, Inc. 9.75%, 11/01/13 (a) 213 228,975 Sonic Automotive, Inc. Series B 8.625%, 8/15/13 90 94,275 Tenneco Automotive, Inc. Series B 10.25%, 7/15/13 195 221,325 TRW Automotive 9.375%, 2/15/13 93 105,323 11.00%, 2/15/13 67 79,395 United Auto Group, Inc. 9.625%, 3/15/12 115 126,500 ------------- 1,498,355 ------------- BROADCASTING/MEDIA-2.8% Allbritton Communications Co. 7.75%, 12/15/12 170 168,300 Corus Entertainment, Inc.(Canada) 8.75%, 3/01/12 120 128,850 Emmis Operating Co. 6.875%, 5/15/12 (a) 180 177,300 Paxson Communications Corp. 10.75%, 7/15/08 140 142,800 12.25%, 1/15/09 (b) 135 118,125 PRIMEDIA, Inc. 8.00%, 5/15/13 (a) 70 66,150 8.875%, 5/15/11 135 134,325 Radio One, Inc. 8.875%, 7/01/11 100 109,625 Sinclair Broadcast Group, Inc. 8.00%, 3/15/12 210 215,775 8.75%, 12/15/11 90 96,750 Young Broadcasting, Inc. 8.50%, 12/15/08 85 89,888 ------------- 1,447,888 ------------- BUILDING/REAL ESTATE-3.9% Associated Materials, Inc. 11.25%, 3/01/14 (a)(b) 640 432,000 D.R. Horton, Inc. 6.875%, 5/01/13 190 194,750 KB HOME 7.75%, 2/01/10 190 196,650 LNR Property Corp. 7.25%, 10/15/13 270 264,600 7.625%, 7/15/13 125 125,000 Meritage Corp. 9.75%, 6/01/11 195 215,475 Nortek Holdings, Inc. 10.00%, 5/15/11 (a)(b) 355 285,775 Schuler Homes, Inc. 10.50%, 7/15/11 155 177,669 William Lyon Homes, Inc. 10.75%, 4/01/13 120 133,200 ------------- 2,025,119 ------------- CABLE-6.0% Cablevision Systems Corp. 8.00%, 4/15/12 (a) 510 504,900 Charter Communications Holdings LLC 11.75%, 5/15/11 (b) 1,245 812,362 CSC Holdings, Inc. 6.75%, 4/15/12 (a) 505 487,325 7.625%, 7/15/18 195 182,813 DirecTV Holdings LLC 8.375%, 3/15/13 125 138,906 EchoStar DBS Corp. 6.375%, 10/01/11 355 351,450 Innova S. de R.L., SA (Mexico) 9.375%, 9/19/13 135 142,088 12.875%, 4/01/07 48 49,069 Insight Communications Co., Inc. 12.25%, 2/15/11 265 239,825 1 HIGH YIELD PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE - ------------------------------------------------------------------------------- Insight Midwest LP/Insight Capital, Inc. 9.75%, 10/01/09 $ 190 $ 201,400 ------------- 3,110,138 ------------- CHEMICALS-2.8% Equistar Chemical Funding LP 10.125%, 9/01/08 185 203,500 10.625%, 5/01/11 130 144,950 Huntsman Advanced Materials LLC 11.00%, 7/15/10 (a) 140 158,550 Huntsman ICI Chemicals LLC 10.125%, 7/01/09 205 210,125 Huntsman LLC 11.50%, 7/15/12 (a) 260 264,550 Quality Distribution LLC 9.00%, 11/15/10 (a) 240 229,200 Westlake Chemical Corp. 8.75%, 7/15/11 215 234,350 ------------- 1,445,225 ------------- COMMUNICATIONS - FIXED-3.5% Consolidated Communication Holdings 9.75%, 4/01/12 (a) 80 81,600 FairPoint Communications, Inc. 11.875%, 3/01/10 80 91,800 12.50%, 5/01/10 65 69,550 MCI, Inc. 5.908%, 5/01/07 45 43,763 6.688%, 5/01/09 45 41,738 7.735%, 5/01/14 39 35,003 Qwest Communications International 7.50%, 2/15/14 (a) 125 113,438 Qwest Corp. 9.125%, 3/15/12 (a)(c) 190 206,150 Qwest Services Corp. 13.50%, 12/15/10 (a) 568 663,139 Time Warner Telecom, Inc. 10.125%, 2/01/11 525 480,374 ------------- 1,826,555 ------------- COMMUNICATIONS - MOBILE-8.2% American Cellular Corp. Seies B 10.00%, 8/01/11 225 195,188 Dobson Communications Corp. 8.875%, 10/01/13 385 294,525 Inmarsat Finance Plc (United Kingdom) 7.625%, 6/30/12 (a) 295 286,888 Iridium LLC/Capital Corp. Series B 14.00%, 7/15/05 (d)(e) 550 55,000 MobiFon Holdings BV (Netherlands) 12.50%, 7/31/10 505 578,224 Mobile Telesystems Finance,SA (Luxembourg) 8.375%, 10/14/10 (a) 250 236,875 Nextel Communications, Inc. 6.875%, 10/31/13 265 264,006 7.375%, 8/01/15 235 238,525 9.375%, 11/15/09 60 64,425 Nextel Partners, Inc. 8.125%, 7/01/11 145 148,625 12.50%, 11/15/09 72 84,240 PTC International Finance II, SA (Luxembourg) 11.25%, 12/01/09 200 218,000 Rural Cellular Corp. 9.75%, 1/15/10 560 511,000 9.875%, 2/01/10 130 129,675 Triton PCS, Inc. 8.50%, 6/01/13 175 166,250 8.75%, 11/15/11 195 161,850 9.375%, 2/01/11 115 98,900 Western Wireless Corp. 9.25%, 7/15/13 500 517,499 ------------- 4,249,695 ------------- CONSUMER MANUFACTURING-2.7% Broder Brothers Co. 11.25%, 10/15/10 270 257,175 Collins & Aikman Floorcoverings Series B 9.75%, 2/15/10 110 112,200 Hines Nurseries, Inc. 10.25%, 10/01/11 130 142,350 K2, Inc. 7.375%, 7/01/14 185 185,000 Playtex Products, Inc. 8.00%, 3/01/11 (a) 190 198,788 Simmons Co. 7.875%, 1/15/14 (a) 205 210,125 Solo Cup Co. 8.50%, 2/15/14 (a) 230 215,050 St. John Knits International, Inc. 12.50%, 7/01/09 90 96,975 ------------- 1,417,663 ------------- CONTAINERS-0.7% Crown Euro Holdings, SA (France) 9.50%, 3/01/11 215 235,425 Greif Brothers Corp. 8.875%, 8/01/12 140 151,375 ------------- 386,800 ------------- 2 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE - ------------------------------------------------------------------------------- ENERGY-2.9% Chesapeake Energy Corp. 7.75%, 1/15/15 $ 195 $ 204,262 Frontier Oil Corp. 11.75%, 11/15/09 110 120,725 Grant Prideco, Inc. 9.00%, 12/15/09 115 125,638 HilCorp Energy 10.50%, 9/01/10 (a) 445 483,937 North American Energy Partners, Inc. 8.75%, 12/01/11 (a) 80 79,600 Premcor Refining Group, Inc. 9.50%, 2/01/13 115 133,113 Pride International, Inc. 7.375%, 7/15/14 (a) 210 211,837 9.375%, 5/01/07 81 82,823 Universal Compression, Inc. 7.25%, 5/15/10 80 83,000 ------------- 1,524,935 ------------- ENTERTAINMENT/LEISURE-3.2% Gaylord Entertainment Co. 8.00%, 11/15/13 (a) 175 178,281 Royal Caribbean Cruises, Ltd. (Liberia) 8.00%, 5/15/10 85 92,013 8.75%, 2/02/11 240 267,000 Six Flags, Inc. 9.50%, 2/01/09 485 500,762 9.625%, 6/01/14 (a) 380 380,000 9.75%, 4/15/13 20 20,200 Universal City Development 11.75%, 4/01/10 195 226,688 ------------- 1,664,944 ------------- FINANCIAL-2.5% Crum & Forster Holdings Corp. 10.375%, 6/15/13 105 114,975 Eircom Funding (Ireland) 8.25%, 8/15/13 125 130,625 Fairfax Financial Holdings Ltd. (Canada) 8.25%, 10/01/15 75 70,875 iStar Financial, Inc. 6.00%, 12/15/10 50 49,937 7.00%, 3/15/08 50 53,307 8.75%, 8/15/08 17 18,887 Markel Capital Trust I Series B 8.71%, 1/01/46 130 131,950 PXRE Capital Trust I 8.85%, 2/01/27 45 45,000 Royal & Sun Alliance Insurance (United Kingdom) 8.95%, 10/15/29 80 90,704 Western Financial Bank 9.625%, 5/15/12 195 215,475 Williams Scotsman, Inc. 9.875%, 6/01/07 385 384,038 ------------- 1,305,773 ------------- FOOD/BEVERAGE-2.2% Del Monte Corp. 8.625%, 12/15/12 115 124,488 Series B 9.25%, 5/15/11 110 120,725 DIMON, Inc. Series B 9.625%, 10/15/11 195 197,924 Dole Food Co., Inc. 8.625%, 5/01/09 (c) 105 110,513 8.875%, 3/15/11 65 69,063 Merisant Co. 9.50%, 7/15/13 (a) 135 144,450 North Atlantic Trading 9.25%, 3/01/12 (a) 195 189,637 Swift & Co. 10.125%, 10/01/09 170 182,325 ------------- 1,139,125 ------------- GAMING-4.5% Ameristar Casinos, Inc. 10.75%, 2/15/09 95 108,775 Argosy Gaming Co. 9.00%, 9/01/11 100 111,000 Boyd Gaming Corp. 7.75%, 12/15/12 110 111,650 Harrahs Operating Co., Inc. 7.875%, 12/15/05 100 105,875 Mandalay Resort Group 10.25%, 8/01/07 165 183,975 MGM Mirage, Inc. 8.375%, 2/01/11 260 273,000 Mohegan Tribal Gaming Authority 6.375%, 7/15/09 60 60,450 8.375%, 7/01/11 95 103,075 Park Place Entertainment Corp. 7.00%, 4/15/13 100 101,250 7.875%, 3/15/10 90 95,400 9.375%, 2/15/07 120 130,650 Riviera Holdings Corp. 11.00%, 6/15/10 155 170,113 Seneca Gaming Corp. 7.25%, 5/01/12 (a) 405 406,518 Turning Stone Casino Resort Enterprises 9.125%, 12/15/10 (a) 140 147,000 Venetian Casino/LV Sands, Inc. 11.00%, 6/15/10 195 226,200 ------------- 2,334,931 ------------- 3 HIGH YIELD PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE - ------------------------------------------------------------------------------- HEALTHCARE-5.5% Alliance Imaging, Inc. 10.375%, 4/15/11 $ 175 $ 184,188 Concentra Operating Corp. 9.125%, 6/01/12 (a) 95 99,750 9.50%, 8/15/10 145 155,150 Extendicare Health Services, Inc. 9.50%, 7/01/10 145 161,675 Genesis HealthCare Corp. 8.00%, 10/15/13 (a) 180 184,500 Hanger Orthopedic Group, Inc. 10.375%, 2/15/09 295 303,113 Iasis Healthcare Corp. 8.75%, 6/15/14 245 251,738 PacifiCare Health Systems, Inc. 10.75%, 6/01/09 182 208,390 Select Medical Corp. 7.50%, 8/01/13 365 361,349 Tenet Healthcare Corp. 7.375%, 2/01/13 180 163,800 Triad Hospitals, Inc. 7.00%, 11/15/13 220 210,100 Universal Hospital Services, Inc. 10.125%, 11/01/11 240 244,800 Vanguard Health Systems, Inc. 9.75%, 8/01/11 270 293,625 ------------- 2,822,178 ------------- HOTEL/LODGING-3.3% Corrections Corp. of America 7.50%, 5/01/11 45 45,675 9.875%, 5/01/09 155 172,825 Felcor Lodging LP 9.00%, 6/01/11 25 25,938 10.00%, 9/15/08 85 90,100 Host Marriott LP Series G 9.25%, 10/01/07 160 177,200 Series I 9.50%, 1/15/07 125 137,188 Intrawest Corp. (Canada) 7.50%, 10/15/13 105 103,163 10.50%, 2/01/10 170 184,663 La Quinta Properties, Inc. 8.875%, 3/15/11 185 199,800 Starwood Hotels Resorts 7.875%, 5/01/12 225 241,874 Sun International Hotels Ltd. 8.875%, 8/15/11 105 112,613 Vail Resorts, Inc. 6.75%, 2/15/14 (a) 210 200,024 ------------- 1,691,063 ------------- INDUSTRIAL-6.4% Amsted Industries, Inc. 10.25%, 10/15/11 (a) 255 277,950 Amtrol, Inc. 10.625%, 12/31/06 145 117,088 Case New Holland, Inc. 9.25%, 8/01/11 (a) 350 369,249 Dayton Superior Corp. 10.75%, 9/15/08 90 90,900 13.00%, 6/15/09 140 122,500 FastenTech, Inc. 11.50%, 5/01/11 (a) 120 133,500 Fimep, SA (France) 10.50%, 2/15/13 115 131,675 Flowserve Corp. 12.25%, 8/15/10 160 182,000 H & E Equipment Services, Inc. 11.125%, 6/15/12 245 249,288 Milacron Escrow Corp. 11.50%, 5/15/11 (a) 265 265,000 Mueller Group, Inc. 10.00%, 5/01/12 (a) 190 198,550 NMHG Holdings Co. 10.00%, 5/15/09 105 116,025 Sensus Metering Systems, Inc. 8.625%, 12/15/13 (a) 360 347,399 Terex Corp. Series B 10.375%, 4/01/11 195 218,400 TriMas Corp. 9.875%, 6/15/12 195 207,675 Trinity Industries 6.50%, 3/15/14 (a) 305 280,600 ------------- 3,307,799 ------------- MINING & METALS-2.3% AK Steel Corp. 7.875%, 2/15/09 210 197,400 Freeport-McMoRan Copper & Gold, Inc. Cl. B 10.125%, 2/01/10 120 133,200 International Steel Group 6.50%, 4/15/14 (a) 234 220,545 Ispat Inland ULC 9.75%, 4/01/14 (a) 205 212,175 Peabody Energy Corp. 6.875%, 3/15/13 220 223,850 Russel Metals, Inc. (Canada) 6.375%, 3/01/14 200 188,500 ------------- 1,175,670 ------------- NON-AIR TRANSPORTATION-0.2% Horizon Lines LLC 9.00%, 11/01/12 (a) 105 106,969 ------------- PAPER/PACKAGING-6.4% Abitibi-Consolidated, Inc. (Canada) 7.75%, 6/15/11 (a) 190 190,664 Anchor Glass Container Corp. 11.00%, 2/15/13 230 264,213 Berry Plastics Corp. 10.75%, 7/15/12 185 206,275 4 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE - ------------------------------------------------------------------------------- Doman Industries, Ltd. (Canada) 12.00%, 7/01/04 (d) $ 95 $ 95,000 Georgia-Pacific Corp. 9.375%, 2/01/13 285 327,750 Graphic Packaging International Corp. 9.50%, 8/15/13 365 397,849 Huntsman International Holdings LLC zero coupon, 12/31/09 500 247,500 Huntsman Packaging Corp. 13.00%, 6/01/10 245 220,500 Jefferson Smurfit Corp. 8.25%, 10/01/12 140 146,300 MDP Acquisitions Plc 9.625%, 10/01/12 205 225,500 Norske Skog Canada, Ltd. (Canada) Series D 8.625%, 6/15/11 165 175,725 Owens-Brockway Glass Container 8.875%, 2/15/09 395 428,574 Pliant Corp. 11.125%, 9/01/09 60 64,500 13.00%, 6/01/10 185 166,500 Russell-Stanley Holdings, Inc. 9.00%, 11/30/08 (a)(f)(g) 84 8,357 Stone Container Corp. 9.25%, 2/01/08 25 27,438 9.75%, 2/01/11 125 138,125 ------------- 3,330,770 ------------- PUBLIC UTILITIES - ELECTRIC & GAS-5.8% AES Corp. 8.75%, 5/15/13 (a) 55 59,194 9.00%, 5/15/15 (a) 100 107,625 10.00%, 7/15/05 (a) 74 76,021 Allegheny Energy, Inc. 7.75%, 8/01/05 245 254,800 Calpine Corp. 8.50%, 7/15/10 (a) 445 370,462 Northwest Pipeline Corp. 8.125%, 3/01/10 105 113,663 NRG Energy, Inc. 8.00%, 12/15/13 (a) 255 258,825 Ormat Funding Corp. 8.25%, 12/30/20 (a) 230 218,500 PG&E Corp. 6.875%, 7/15/08 (a) 50 52,500 SEMCO Energy, Inc. 7.125%, 5/15/08 65 66,950 7.75%, 5/15/13 120 124,200 Southern Natural Gas Co. 7.35%, 2/15/31 245 220,500 8.875%, 3/15/10 130 142,675 Williams Cos., Inc. 7.625%, 7/15/19 315 304,763 8.625%, 6/01/10 555 613,274 ------------- 2,983,952 ------------- PUBLISHING-2.8% American Media Operation 8.875%, 1/15/11 100 97,250 10.25%, 5/01/09 155 161,588 Dex Media, Inc. 8.00%, 11/15/13 (a) 250 241,250 Dex Media East LLC 9.875%, 11/15/09 50 56,375 12.125%, 11/15/12 135 158,288 Dex Media West LLC Series B 8.50%, 8/15/10 80 87,600 9.875%, 8/15/13 320 352,799 Hollinger International Publishing, Inc. 9.00%, 12/15/10 165 191,400 RH Donnelley Financial Corp. 10.875%, 12/15/12 (a) 110 128,150 ------------- 1,474,700 ------------- RESTAURANTS-0.4% Domino's, Inc. 8.25%, 7/01/11 175 186,375 ------------- RETAIL-0.9% Jostens, Inc. 12.75%, 5/01/10 270 302,400 Petro Stopping Center 9.00%, 2/15/12 (a) 142 141,290 ------------- 443,690 ------------- SERVICE-2.4% Allied Waste North America, Inc. 8.50%, 12/01/08 210 230,738 8.875%, 4/01/08 125 137,500 Iron Mountain, Inc. 7.75%, 1/15/15 80 79,800 8.625%, 4/01/13 150 159,750 National Waterworks, Inc. 10.50%, 12/01/12 115 128,225 Service Corp. 7.70%, 4/15/09 160 164,800 Service Corp. International 6.00%, 12/15/05 4 4,105 6.50%, 3/15/08 55 55,275 United Rentals North America, Inc. 6.50%, 2/15/12 292 277,400 ------------- 1,237,593 ------------- 5 HIGH YIELD PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SHARES OR PRINCIPAL AMOUNT (000) U.S. $ VALUE - ------------------------------------------------------------------------------- SUPERMARKET/DRUG-2.6% Couche-Tard US/Finance Corp. 7.50%, 12/15/13 $ 169 $ 169,845 Pathmark Stores, Inc. 8.75%, 2/01/12 345 346,725 Rite Aid Corp. 9.25%, 6/01/13 100 105,500 9.50%, 2/15/11 140 155,050 11.25%, 7/01/08 130 143,975 Roundy's, Inc. Series B 8.875%, 6/15/12 110 117,150 Stater Brothers Holdings, Inc. 8.125%, 6/15/12 (a) 315 317,756 ------------- 1,356,001 ------------- TECHNOLOGY-3.0% Amkor Technologies, Inc. 7.75%, 5/15/13 330 314,325 Celestica, Inc. (Canada) 7.875%, 7/01/11 385 394,625 Fairchild Semiconductor Corp. 10.50%, 2/01/09 210 229,425 Flextronics International, Ltd. (Singapore) 6.50%, 5/15/13 255 249,900 ON Semiconductor Corp. 13.00%, 5/15/08 222 255,855 SCG Holding Corp. zero coupon, 8/04/11 (a) 70 99,750 ------------- 1,543,880 ------------- Total Corporate Debt Obligations (cost $47,372,964) 48,179,400 ------------- SOVEREIGN DEBT OBLIGATIONS-0.4% Government of Ukraine 11.00%, 3/15/07 34 36,332 Republic of Brazil 8.000%, 4/15/14 111 102,155 Russian Federation 5.00%, 3/31/30 (a) 100 91,500 ------------- Total Sovereign Debt Obligations (cost $169,571) 229,987 ------------- YANKEE BOND-0.3% Dunlop Stand Aero Holdings (United Kingdom) 11.875%, 5/15/09 (a) (cost $125,154) 119 127,033 ------------- INDEX-4.5% Trac-X North America High Yield 7.375%, 3/25/09 (a) 1,370 1,340,887 8.00%, 3/25/09 (a) 1,004 975,763 ------------- Total Index (cost $2,288,255) 2,316,650 ------------- PREFERRED STOCKS-1.3% BROADCASTING/MEDIA-0.4% Paxson Communications Corp. 14.25%, 11/15/06 (f) 23 200,267 ------------- FINANCIAL-0.9% Sovereign REIT Series A 12.00%, 8/29/49 (a) 335 489,937 ------------- Total Preferred Stocks (cost $543,856) 690,204 ------------- WARRANT-0.0% Pliant Corp. warrants, expiring 6/01/10 (e)(g) (cost $1,820) 50 1 ------------- TOTAL INVESTMENTS-99.5% (cost $50,501,620) 51,543,275 Other assets less liabilities-0.5% 257,505 ------------- NET ASSETS-100% $ 51,800,780 ============= (a) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2004, the aggregate market value of these securities amounted to $15,879,652 or 30.7% of net assets. (b) Indicates a security that has a zero coupon that remains in effect until a predetermined date at which time the stated coupon rate becomes effective until final maturity. (c) Variable rate coupon, rate shown is as of June 30, 2004. (d) Security is in default. (e) Non-income producing security. (f) PIK (Paid-in-kind) preferred quarterly stock payments. (g) Illiquid security, valued at fair value (see Note A). See Notes to Financial Statements. 6 HIGH YIELD PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $50,501,620) $ 51,543,275 Dividends and interest receivable 1,117,963 Receivable for investment securities sold 160,476 ------------- Total assets 52,821,714 ------------- LIABILITIES Due to custodian 134,054 Payable for investment securities purchased 731,219 Advisory fee payable 21,101 Distribution fee payable 1,988 Accrued expenses 132,572 ------------- Total liabilities 1,020,934 ------------- NET ASSETS $ 51,800,780 ============= COMPOSITION OF NET ASSETS Capital stock, at par $ 7,003 Additional paid-in capital 64,102,748 Undistributed net investment income 2,065,963 Accumulated net realized loss on investment transactions (15,416,589) Net unrealized appreciation of investments 1,041,655 ------------- $ 51,800,780 ============= CLASS A SHARES Net assets $ 41,987,149 ============= Shares of capital stock outstanding 5,675,691 ============= Net asset value per share $ 7.40 ============= CLASS B SHARES Net assets $ 9,813,631 ============= Shares of capital stock outstanding 1,327,584 ============= Net asset value per share $ 7.39 ============= See Notes to Financial Statements. 7 HIGH YIELD PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Interest $ 2,329,782 Dividends 44,071 ------------- Total investment income 2,373,853 ------------- EXPENSES Advisory fee 203,135 Distribution fee--Class B 11,372 Custodian 81,024 Administrative 34,500 Audit 18,750 Printing 6,125 Legal 5,000 Directors' fees 500 Transfer agency 450 Miscellaneous 1,274 ------------- Total expenses 362,130 Less: expenses waived and reimbursed by the Adviser (see Note B) (67,712) ------------- Net expenses 294,418 ------------- Net investment income 2,079,435 ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS Net realized gain on investment transactions 697,771 Net change in unrealized appreciation/depreciation of investments (2,656,507) ------------- Net loss on investment transactions (1,958,736) ------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 120,699 ============= See Notes to Financial Statements. 8 HIGH YIELD PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 ============= ============= INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 2,079,435 $ 3,468,368 Net realized gain on investment transactions 697,771 964,757 Net change in unrealized appreciation/ depreciation of investments (2,656,507) 4,679,646 ------------- ------------- Net increase in net assets from operations 120,699 9,112,771 DIVIDENDS TO SHAREHOLDERS FROM Net investment income Class A (2,827,523) (2,439,115) Class B (641,967) (149,865) CAPITAL STOCK TRANSACTIONS Net increase (decrease) (888,157) 14,382,819 ------------- ------------- Total increase (decrease) (4,236,948) 20,906,610 NET ASSETS Beginning of period 56,037,728 35,131,118 ------------- ------------- End of period (including undistributed net investment income of $2,065,963 and $3,456,018, respectively) $ 51,800,780 $ 56,037,728 ============= ============= See Notes to Financial Statements. 9 HIGH YIELD PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein High Yield Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek to earn the highest level of current income without assuming undue risk by investing principally in high yielding, fixed-income securities rated Baa or lower by Moody's or BBB or lower by S&P Duff &Phelps or Fitch or, if unrated of comparable quantity. 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 Alliance Capital Management L.P. (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. 10 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 policy of the Portfolio 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 trade 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 the Adviser, an investment advisory fee at an annual rate of .75% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .50% of the first $2.5 billion, .45% of the next $2.5 billion and .40% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $67,712. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. Pursuant to the advisory agreement, the Portfolio paid $34,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2004. 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 $450 for the six months ended June 30, 2004. 11 HIGH YIELD 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 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 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 six months ended June 30, 2004, were as follows: PURCHASES SALES ============= ============= Investment securities (excluding U.S. government securities) $ 24,347,825 $ 24,001,496 U.S. government securities -0- -0- 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 $ 2,682,669 Gross unrealized depreciation (1,641,014) ------------- Net unrealized appreciation $ 1,041,655 ============= 1. FORWARD EXCHANGE CURRENCY CONTRACTS The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as unrealized appreciation and depreciation 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. 12 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 2. OPTION TRANSACTIONS For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. NOTE E: 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 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 June 30, 2004, the Portfolio had no securities on loan. For the six months ended June 30, 2004, the Portfolio earned fee income of $1,614 which is included in interest income in the accompanying statement of operations. NOTE F: CAPITAL STOCK There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B shares. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS A Shares sold 208,000 2,095,774 $ 1,654,044 $ 15,413,642 Shares issued in reinvestment of dividends 385,221 334,126 2,827,523 2,439,115 Shares redeemed (997,083) (1,437,649) (7,867,859) (10,591,185) ----------- ----------- ------------ ------------- Net increase (decrease) (403,862) 992,251 $ (3,386,292) $ 7,261,572 =========== =========== ============ ============= 13 HIGH YIELD PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS B Shares sold 541,767 2,209,656 $ 4,294,036 $ 16,338,500 Shares issued in reinvestment of dividends 87,581 20,501 641,967 149,866 Shares redeemed (308,964) (1,276,488) (2,437,868) (9,367,119) ----------- ----------- ------------ ------------- Net increase 320,384 953,669 $ 2,498,135 $ 7,121,247 =========== =========== ============ ============= NOTE G: RISKS INVOLVED IN INVESTING IN THE PORTFOLIO Interest Rate Risk and Credit Risk--Interest rate risk is the risk that changes in interest rates will affect the value of the Portfolio's investments in fixed-income debt securities such as bonds or notes. Increases in interest rates may cause the value of the Portfolio's investments to decline. Credit risk is the risk that the issuer or guarantor of a debt security, or the counterparty to a derivative contract, will be unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The degree of risk for a particular security may be reflected in its credit risk rating. Credit risk is greater for medium quality and lower-rated securities. Lower-rated debt securities and similar unrated securities (commonly known as "junk bonds") have speculative elements or are predominantly speculative risks. 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H: JOINT CREDIT FACILITY A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. NOTE I: DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended December 31, 2003 and December 31, 2002 were as follows: 2003 2002 ============= ============= Distributions paid from: Ordinary income $ 2,588,980 $ 2,125,869 ------------- ------------- Total taxable distributions 2,588,980 2,125,869 ------------- ------------- Total distributions paid $ 2,588,980 $ 2,125,869 ============= ============= 14 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $ 3,456,018 Accumulated capital and other losses (16,080,255)(a) Unrealized appreciation/(depreciation) 3,664,057(b) ------------- Total accumulated earnings/(deficit) $ (8,960,180) ============= (a) On December 31, 2003, the Portfolio had a net capital loss carryforward of $16,080,255 of which $3,206,642 expires in the year 2007, $5,774,960 expires in the year 2008, $2,890,265 expires in the year 2009 and $4,208,388 expires in the year 2010. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. 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 merger with Brinson Series Trust High Income Portfolio, may apply. During the current fiscal year, the Portfolio utilized capital loss carryforwards of $790,788. (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 J: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capi- 15 HIGH YIELD PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ tal Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 16 HIGH YIELD 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 YEAR ENDED DECEMBER 31, JUNE 30, 2004 --------------------------------------------------------------- (UNAUDITED) 2003 2002 2001 (a) 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $7.91 $6.83 $7.51 $7.91 $9.14 $9.94 INCOME FROM INVESTMENT OPERATIONS Net investment income (b) .30(c) .55 .54(c) .63(c) .74(c) .91(c) Net realized and unrealized gain (loss) on investment transactions (.28) .95 (.76) (.38) (1.18) (1.16) Net increase (decrease) in net asset value from operations .02 1.50 (.22) .25 (.44) (.25) LESS: DIVIDENDS Dividends from net investment income (.53) (.42) (.46) (.65) (.79) (.55) Net asset value, end of period $7.40 $7.91 $6.83 $7.51 $7.91 $9.14 TOTAL RETURN Total investment return based on net asset value (d) 0.26% 22.44% (3.03)% 3.04% (5.15)% (2.58)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $41,987 $48,076 $34,765 $31,283 $22,333 $24,567 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.05%(e) 1.46% 1.18% .95% .95% .95% Expenses, before waivers and reimbursements 1.30%(e) 1.46% 1.45% 1.51% 1.42% 1.40% Net investment income 7.71%(c)(e) 7.48% 7.78%(c) 8.08%(c) 8.68%(c) 9.72%(c) Portfolio turnover rate 46% 105% 83% 95% 175% 198%
See footnote summary on page 18. 17 HIGH YIELD PORTFOLIO FINANCIAL HIGHLIGHTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period CLASS B ------------------------------------ SIX MONTHS JULY 22, ENDED YEAR ENDED 2002(f) TO JUNE 30, 2004 DECEMBER 31, DECEMBER 31, (UNAUDITED) 2003 2002 ----------- ----------- ----------- Net asset value, beginning of period $7.91 $6.84 $6.45 INCOME FROM INVESTMENT OPERATIONS Net investment income (b) .29(c) .52 .15(c) Net realized and unrealized gain on investment transactions (.29) .97 .24 Net increase in net asset value from operations -0- 1.49 .39 LESS: DIVIDENDS Dividends from net investment income (.52) (.42) -0- Net asset value, end of period $7.39 $7.91 $6.84 TOTAL RETURN Total investment return based on net asset value (d) 0.04% 22.24% 6.05% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $9,814 $7,962 $366 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.30%(e) 1.70% 1.42%(e) Expenses, before waivers and reimbursements 1.55%(e) 1.70% 1.63%(e) Net investment income 7.51%(c)(e) 7.19% 8.39%(c)(e) Portfolio turnover rate 46% 105% 83% (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 $.04, increase net realized and unrealized gain (loss) on investments per share by $.04 and $.04, and decrease the ratio of net investment income to average net assets from 3.67% to 3.28% and 3.39% to 3.00%, 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 expenses reimbursed or waived by the Adviser. (d) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total 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. 18 (This page left intentionally blank.) (This page left intentionally blank.) (This page left intentionally blank.) ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN INTERNATIONAL PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2004 INVESTMENT PRODUCTS OFFERED - --------------------------- > ARE NOT FDIC INSURED > MAY LOSE VALUE > ARE NOT BANK GUARANTEED - --------------------------- YOU MAY OBTAIN A DESCRIPTION OF THE FUND'S PROXY VOTING POLICIES AND PROCEDURES, WITHOUT CHARGE, UPON REQUEST BY VISITING ALLIANCE CAPITAL'S WEB SITE AT WWW.ALLIANCEBERNSTEIN.COM (CLICK ON INVESTORS, THEN THE "PROXY VOTING POLICIES AND PROCEDURES" LINK ON THE LEFT SIDE OF THE PAGE), OR BY GOING TO THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT WWW.SEC.GOV, OR BY CALLING ALLIANCE CAPITAL AT (800) 227-4618. INTERNATIONAL PORTFOLIO TEN LARGEST HOLDINGS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PERCENT OF COMPANY U.S. $ VALUE NET ASSETS _______________________________________________________________________________ Vodafone Group Plc $ 1,643,616 2.8% - ------------------------------------------------------------------------------- UBS AG 1,269,140 2.2 - ------------------------------------------------------------------------------- Mitsubishi Corp. 1,258,855 2.1 - ------------------------------------------------------------------------------- Novartis AG 1,204,215 2.0 - ------------------------------------------------------------------------------- Banco Bilbao Vizcaya Argentaria, SA 1,163,512 2.0 - ------------------------------------------------------------------------------- HSBC Holdings Plc 1,147,230 2.0 - ------------------------------------------------------------------------------- Credit Suisse Group 1,095,338 1.9 - ------------------------------------------------------------------------------- Standard Chartered Plc 1,090,182 1.9 - ------------------------------------------------------------------------------- GlaxoSmithKline Plc 1,056,539 1.8 - ------------------------------------------------------------------------------- AstraZeneca Group Plc 984,719 1.7 ------------ ---- - ------------------------------------------------------------------------------- $ 11,913,346 20.4% - ------------------------------------------------------------------------------- SECTOR DIVERSIFICATION June 30, 2004 (unaudited) PERCENT OF SECTOR U.S. $ VALUE NET ASSETS _______________________________________________________________________________ Basic Industries $ 2,436,135 4.2% - ------------------------------------------------------------------------------- Capital Goods 2,671,311 4.6 - ------------------------------------------------------------------------------- Consumer Manufacturing 2,895,009 5.0 - ------------------------------------------------------------------------------- Consumer Services 7,120,566 12.2 - ------------------------------------------------------------------------------- Consumer Staples 5,117,139 8.7 - ------------------------------------------------------------------------------- Energy 6,510,238 11.1 - ------------------------------------------------------------------------------- Finance 11,297,702 19.3 - ------------------------------------------------------------------------------- Healthcare 7,020,879 12.0 - ------------------------------------------------------------------------------- Multi Industry Companies 1,408,755 2.4 - ------------------------------------------------------------------------------- Technology 5,254,649 9.0 - ------------------------------------------------------------------------------- Transportation 757,183 1.3 - ------------------------------------------------------------------------------- Utilities 4,105,212 7.0 ------------ ---- - ------------------------------------------------------------------------------- Total Investments 56,594,778 96.8 - ------------------------------------------------------------------------------- Cash and receivables, net of liabilities 1,885,200 3.2 ------------ ---- - ------------------------------------------------------------------------------- Net Assets $ 58,479,978 100.0% - ------------------------------------------------------------------------------- 1 INTERNATIONAL PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- COMMON STOCKS & OTHER INVESTMENTS-96.8% AUSTRALIA-1.4% News Corp., Ltd. 69,787 $ 616,422 Telstra Corp., Ltd. 63,955 224,092 ------------- 840,514 ------------- BERMUDA-1.3% Nabors Industries, Ltd. (a) 16,500 746,130 ------------- BRAZIL-0.8% Aracruz Celulose, S.A. (ADR) 15,100 493,166 ------------- CANADA-1.2% Talisman Energy, Inc. 31,500 683,684 ------------- CHINA-2.5% Beijing Datang Power Generation Co., Ltd. 694,000 538,309 China Resources Power Holdings Co., Ltd. (a) 570,000 321,547 CNOOC Ltd. (ADR) 14,600 624,150 ------------- 1,484,006 ------------- FRANCE-8.7% Accor, SA 12,358 521,576 Dassault Systemes, SA (a) 9,000 417,298 France Telecom, SA 17,492 455,852 L'Oreal, SA 8,951 714,943 LVMH Moet Hennessy Louis Vuitton, SA 10,252 741,525 Sanofi-Synthelabo, SA (a) 9,200 583,164 Schneider Electric, SA 12,327 841,367 Total, SA 4,109 783,376 ------------- 5,059,101 ------------- GERMANY-6.0% Altana AG 5,707 343,699 BASF AG 10,029 537,488 Deutsche Telekom AG (a) 27,815 489,004 Porsche AG pfd. 850 571,369 SAP AG 4,710 780,826 Siemens AG (a) 10,945 787,654 ------------- 3,510,040 ------------- INDIA-0.3% Dr. Reddy's Laboratories, Ltd. (ADR) 10,100 175,538 ------------- IRELAND-0.3% Allied Irish Banks Plc 1,334 20,661 Eircom Group Plc (a) 100,000 180,064 ------------- 200,725 ------------- ISRAEL-0.6% Teva Pharmaceutical Industries, Ltd. (ADR) 4,900 329,721 ------------- ITALY-3.5% Alleanza Assicurazioni 71,400 814,828 Eni S.p.A. 23,721 470,997 Telecom Italia Mobile SpA 52,564 298,016 Telecom Italia SpA 151,166 469,905 ------------- 2,053,746 ------------- JAPAN-21.0% Advantest Corp. 4,700 314,870 Bank of Fukuoka, Ltd. 122,000 723,402 Bridgestone Corp. 50,000 939,376 Canon, Inc. 14,900 785,181 Daikin Industries, Ltd. 32,000 859,277 Denso Corp. 40,000 931,128 East Japan Railway Co. 135 757,183 Eisai Co., Ltd. 9,700 279,137 Honda Motor Co., Ltd. 9,400 453,137 Hoya Corp. 6,300 659,359 ITO EN, Ltd. 5,000 236,906 JSR Corp. 18,600 349,448 KDDI Corp. 36 205,874 Kirin Brewery Co., Ltd. 42,000 415,323 Mitsubishi Corp. 50,000 485,726 Mitsubishi Tokyo Financial Group, Inc. 136 1,258,855 Nitto Denko Corp. 6,300 322,174 NTT DoCoMo, Inc. 81 144,756 Obic Co., Ltd. 1,300 277,001 Ricoh Co., Ltd. 3,400 406,947 Shin-Etsu Chemical Co., Ltd. 9,500 339,550 Takashimaya Co., Ltd. 35,000 404,802 Takeda Chemical Industries, Ltd. 10,000 438,986 Yamanouchi Pharmaceutical Co., Ltd. 8,000 269,074 ------------- 12,257,472 ------------- LUXEMBOURG-0.6% Tenaris, SA (ADR) 10,800 353,700 ------------- NETHERLANDS-1.8% IHC Caland NV 14,223 661,547 Philips Electronics NV 13,459 362,376 ------------- 1,023,923 ------------- NORWAY-2.2% Norsk Hydro ASA 11,803 767,114 Smedvig ASA 45,000 495,023 ------------- 1,262,137 ------------- PORTUGAL-0.3% Portugal Telecom, SGPS, SA 15,234 164,400 ------------- 2 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- RUSSIA-1.5% LUKOIL (ADR) 4,200 $ 441,840 Gazprom Oao (ADR) 11,800 337,834 AO VimpelCom (ADR) (a) 1,100 106,095 ------------- 885,769 ------------- SOUTH AFRICA-0.8% Edgars Consolidated Stores Ltd. 20,200 481,243 ------------- SOUTH KOREA-1.4% Kookmin Bank (a) 14,070 437,138 Samsung Electronics Co., Ltd. 900 371,527 ------------- 808,665 ------------- SPAIN-4.2% Banco Bilbao Vizcaya Argentaria, SA 87,097 1,163,512 Industria de Diseno Textil, SA (Inditex) 24,584 564,104 Telefonica, SA 48,594 718,330 ------------- 2,445,946 ------------- SWEDEN-1.0% Ericsson AB Cl.B 201,000 592,358 ------------- SWITZERLAND-10.6% Compagnie Financiere Richemont AG 12,557 327,862 Credit Suisse Group 30,827 1,095,338 Nestle, SA 3,656 975,011 Nobel Biocare Holding AG 2,393 374,503 Novartis AG 27,297 1,204,215 Roche Holding AG-Genusshein 9,914 981,584 UBS AG 18,011 1,269,140 ------------- 6,227,653 ------------- TAIWAN-2.3% Chinatrust Financial Holding Co., Ltd. 320,000 356,718 Hon Hai Precision Industry 77,000 286,118 Nanya Technology Corp. (a) 293,000 226,457 Taiwan Green Point Enterprises Co., Ltd. 44,000 135,375 Taiwan Semiconductor Manufacturing Co., Ltd. Merrill Lynch International & Co. warrants, expiring 11/21/05 (a) 190,000 316,730 ------------- 1,321,398 ------------- UNITED KINGDOM-21.7% AstraZeneca Group Plc 21,948 984,719 BHP Billiton Plc 82,567 716,483 Carnival Plc 10,830 525,965 Compass Group Plc 69,551 424,430 Diageo Plc 49,584 668,559 GlaxoSmithKline Plc 52,204 1,056,539 GUS Plc 39,315 602,822 HSBC Holdings Plc 77,147 1,147,230 Legal & General Group Plc 559,104 963,238 MmO2 Plc (a) 58,799 98,901 Reckitt Benckiser Plc 26,470 749,332 Royal Bank of Scotland Group Plc 33,247 957,460 Standard Chartered Plc 66,943 1,090,182 Tesco Plc 127,482 615,540 Vodafone Group Plc 750,578 1,643,616 WPP Group Plc 45,891 466,051 ------------- 12,711,067 ------------- UNITED STATES-0.8% Schlumberger Ltd. 7,600 482,676 ------------- Total Common Stocks & Other Investments (cost $49,334,626) 56,594,778 ------------- TOTAL INVESTMENTS-96.8% (cost $49,334,626) 56,594,778 Other assets less liabilities-3.2% 1,885,200 ------------- NET ASSETS-100% $ 58,479,978 ============= (a) Non-income producing security. Glossary: ADR-American Depository Receipt See Notes to Financial Statements. 3 INTERNATIONAL PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $49,334,626) $ 56,594,778 Foreign cash, at value (cost $4,285,504) 4,285,647 Receivable for investment securities sold and foreign currency contracts 1,818,515 Dividends and interest receivable 151,995 ------------- Total assets 62,850,935 ------------- LIABILITIES Due to custodian 342,685 Payable for investment securities purchased 3,777,872 Advisory fee payable 72,241 Distribution fee payable 2,458 Accrued expenses 175,701 ------------- Total liabilities 4,370,957 ------------- NET ASSETS $ 58,479,978 ============= COMPOSITION OF NET ASSETS Capital stock, at par $ 4,431 Additional paid-in capital 68,318,120 Undistributed net investment income 325,501 Accumulated net realized loss on investment and foreign currency transactions (17,433,323) Net unrealized appreciation of investments and foreign currency denominated assets and liabilities 7,265,249 ------------- $ 58,479,978 ============= CLASS A SHARES Net assets $ 53,383,172 ============= Shares of capital stock outstanding 4,042,057 ============= Net asset value per share $ 13.21 ============= CLASS B SHARES Net assets $ 5,096,806 ============= Shares of capital stock outstanding 388,471 ============= Net asset value per share $ 13.12 ============= See Notes to Financial Statements. 4 INTERNATIONAL PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $92,008) $ 723,425 Interest 15,073 ------------- Total investment income 738,498 ------------- EXPENSES Advisory fee 286,968 Distribution fee--Class B 4,965 Custodian 121,715 Administrative 34,500 Audit and legal 23,750 Printing 1,040 Directors' fees 500 Transfer agency 450 Miscellaneous 1,774 ------------- Total expenses 475,662 Less: expenses waived and reimbursed by the Adviser (see Note B) (71,742) ------------- Net expenses 403,920 ------------- Net investment income 334,578 ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS Net realized gain on: Investment transactions 4,802,649 Foreign currency transactions 28,780 Net change in unrealized appreciation/depreciation of: Investments (4,107,698) Foreign currency denominated assets and liabilities (10,071) ------------- Net gain on investment and foreign currency transactions 713,660 ------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 1,048,238 ============= See Notes to Financial Statements. 5 INTERNATIONAL PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 ============= ============= INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 334,578 $ 97,971 Net realized gain on investment and foreign currency transactions 4,831,429 1,875,251 Net change in unrealized appreciation/ depreciation of investments and foreign currency denominated assets and liabilities (4,117,769) 11,999,606 ------------- ------------- Net increase in net assets from operations 1,048,238 13,972,828 DIVIDENDS TO SHAREHOLDERS FROM Net investment income Class A (146,839) (65,147) Class B (9,710) (1,610) CAPITAL STOCK TRANSACTIONS Net increase (decrease) 1,397,524 (4,660,978) ------------- ------------- Total increase 2,289,213 9,245,093 NET ASSETS Beginning of period 56,190,765 46,945,672 ------------- ------------- End of period (including undistributed net investment income of $325,501 and $147,472, respectively) $ 58,479,978 $ 56,190,765 ============= ============= See Notes to Financial Statements. 6 INTERNATIONAL PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein International Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek to obtain a total return on its assets from long-term growth of capital principally through a broad portfolio of marketable securities of established non-U.S. companies (i.e., companies incorporated outside the U.S.), companies participating in foreign economies with prospects for growth, and foreign government securities. 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 Alliance Capital Management L.P. (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. 7 INTERNATIONAL PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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, 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 policy of the Portfolio 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 trade 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 the Adviser an investment advisory fee at an annual rate of 1% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .75% of the first $2.5 billion, .65% of the next $2.5 billion and .60% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $71,742. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. Pursuant to the advisory agreement, the Portfolio paid $34,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2004. Brokerage commissions paid on investment transactions for the six months ended June 30, 2004 amounted to $154,741, none of which was paid to Sanford C. Bernstein & Co. LLC, an affiliate of the Adviser. 8 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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 $450 for the six months ended June 30, 2004. 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 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 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. NOTE D: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2004, were as follows: PURCHASES SALES ============= ============= Investment securities (excluding U.S. government securities) $ 42,603,602 $ 41,196,454 U.S. government securities -0- -0- 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 (excluding foreign currency transactions) are as follows: Gross unrealized appreciation $ 7,925,525 Gross unrealized depreciation (665,373) ------------- Net unrealized appreciation $ 7,260,152 ============= 1. FORWARD EXCHANGE CURRENCY CONTRACTS The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as unrealized appreciation and depreciation 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. 9 INTERNATIONAL PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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. 2. OPTION TRANSACTIONS For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. NOTE E: 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, 2004, the Portfolio had no securities on loan. For the six months ended June 30, 2004, the Portfolio earned fee income of $537 which is included in interest income in the accompanying statement of operations. 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE F: CAPITAL STOCK There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS A Shares sold 329,580 1,549,813 $ 4,333,228 $ 16,548,722 Shares issued in reinvestment of dividends 11,243 5,933 146,839 65,146 Shares redeemed (405,792) (2,144,595) (5,350,024) (22,845,563) ----------- ----------- ------------ ------------- Net decrease (64,969) (588,849) $ (869,957) $ (6,231,695) =========== =========== ============ ============= CLASS B Shares sold 202,214 2,579,858 $ 2,633,639 $ 25,688,833 Shares issued in reinvestment of dividends 748 147 $9,710 1,610 Shares redeemed (28,453) (2,413,375) (375,868) (24,119,726) ----------- ----------- ------------ ------------- Net increase 174,509 166,630 $ 2,267,481 $ 1,570,717 =========== =========== ============ ============= NOTE G: RISKS INVOLVED IN INVESTING IN THE PORTFOLIO 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H: JOINT CREDIT FACILITY A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. NOTE I: DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended December 31, 2003 and December 31, 2002 were as follows: 2003 2002 ============= ============= Distributions paid from: Ordinary income $ 66,757 $ 26,587 ------------- ------------- Total taxable distributions 66,757 26,587 ------------- ------------- Total distributions paid $ 66,757 $ 26,587 ============= ============= 11 INTERNATIONAL PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $ 147,472 Accumulated capital and other losses (21,844,051)(a) Unrealized appreciation/(depreciation) 10,962,317(b) ------------- Total accumulated earnings/(deficit) $ (10,734,262) ============= (a) On December 31, 2003, the Portfolio had a net capital loss carryforward of $21,844,051 of which $1,383,309 will expire in the year 2008, $7,972,319 will expire in the year 2009, $11,004,034 will expire in the year 2010 and $1,484,389 will expire in the year 2011. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. 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 Global Equity 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 J: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; 12 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 13 INTERNATIONAL 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 YEAR ENDED DECEMBER 31, JUNE 30, 2004 --------------------------------------------------------------- (UNAUDITED) 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $13.01 $9.90 $11.69 $16.01 $21.78 $16.17 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) .08(b) .02 -0-(b) .03(b) .01(b) .12(b) Net realized and unrealized gain (loss) on investment and foreign currency transactions .16 3.11 (1.78) (3.55) (4.01) 6.13 Net increase (decrease) in net asset value from operations .24 3.13 (1.78) (3.52) (4.00) 6.25 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.04) (.02) (.01) -0- (.03) (.15) Distributions from net realized gain on investment transactions -0- -0- -0- (.78) (1.74) (.49) Distributions in excess of net realized gain on investment transactions -0- -0- -0- (.02) -0- -0- Total dividends and distributions (.04) (.02) (.01) (.80) (1.77) (.64) Net asset value, end of period $13.21 $13.01 $9.90 $11.69 $16.01 $21.78 TOTAL RETURN Total investment return based on net asset value (c) 1.82% 31.59% (15.28)% (22.35)% (19.86)% 40.23% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $53,383 $53,425 $46,478 $64,036 $78,990 $81,370 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.39%(d) 1.80% 1.36% .95% .95% .95% Expenses, before waivers and reimbursements 1.64%(d) 1.80% 1.66% 1.44% 1.34% 1.36% Net investment income 1.17%(b)(d) .22% .04%(b) .23%(b) .07%(b) .69%(b) Portfolio turnover rate 73% 96% 70% 56% 57% 111%
See footnote summary on page 15. 14 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS B ---------------------------------------------------- SIX MONTHS YEAR ENDED OCTOBER 26, ENDED DECEMBER 31, 2001(e) TO JUNE 30, 2004 ------------------------ DECEMBER 31, (UNAUDITED) 2003 2002 2001 ----------- ----------- ----------- ----------- Net asset value, beginning of period $12.93 $9.87 $11.68 $11.31 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (a) .07(b) (.02) (.03)(b) (.02)(b) Net realized and unrealized gain (loss) on investment and foreign currency transactions .15 3.09 (1.78) .39 Net increase (decrease) in net asset value from operations .22 3.07 (1.81) .37 LESS: DIVIDENDS Dividends from net investment income (.03) (.01) -0- -0- Net asset value, end of period $13.12 $12.93 $9.87 $11.68 TOTAL RETURN Total investment return based on net asset value (c) 1.67% 31.11% (15.50)% 3.27% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $5,097 $2,766 $467 $413 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.63%(d) 2.05% 1.63% 1.20%(d) Expenses, before waivers and reimbursements 1.88%(d) 2.05% 1.92% 2.26%(d) Net investment income (loss) 1.09%(b)(d) (.17)% (.25)%(b) (.88)%(b)(d) Portfolio turnover rate 73% 96% 70% 56%
(a) Based on average shares outstanding. (b) Net of expenses reimbursed or waived by the Adviser. (c) 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. (d) Annualized. (e) Commencement of distribution. 15 (This page left intentionally blank.) (This page left intentionally blank.) ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2004 INVESTMENT PRODUCTS OFFERED - --------------------------- > ARE NOT FDIC INSURED > MAY LOSE VALUE > ARE NOT BANK GUARANTEED - --------------------------- YOU MAY OBTAIN A DESCRIPTION OF THE FUND'S PROXY VOTING POLICIES AND PROCEDURES, WITHOUT CHARGE, UPON REQUEST BY VISITING ALLIANCE CAPITAL'S WEB SITE AT WWW.ALLIANCEBERNSTEIN.COM (CLICK ON INVESTORS, THEN THE "PROXY VOTING POLICIES AND PROCEDURES" LINK ON THE LEFT SIDE OF THE PAGE), OR BY GOING TO THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT WWW.SEC.GOV, OR BY CALLING ALLIANCE CAPITAL AT (800) 227-4618. INTERNATIONAL VALUE PORTFOLIO TEN LARGEST HOLDINGS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PERCENT OF COMPANY U.S. $ VALUE NET ASSETS _______________________________________________________________________________ Nissan Motor Co., Ltd. $ 7,382,608 3.7% - ------------------------------------------------------------------------------- Canon, Inc. 6,639,784 3.3 - ------------------------------------------------------------------------------- Arcelor 6,528,320 3.3 - ------------------------------------------------------------------------------- GlaxoSmithKline Plc 6,053,382 3.0 - ------------------------------------------------------------------------------- Continental AG 5,494,549 2.7 - ------------------------------------------------------------------------------- Assurance Generales de France 5,363,984 2.7 - ------------------------------------------------------------------------------- Honda Motor Co., Ltd. 5,177,327 2.6 - ------------------------------------------------------------------------------- POSCO 4,977,412 2.5 - ------------------------------------------------------------------------------- BP p.l.c. 4,619,885 2.3 - ------------------------------------------------------------------------------- Bank of Nova Scotia 4,586,349 2.3 ------------ ---- - ------------------------------------------------------------------------------- $ 56,823,600 28.4% - ------------------------------------------------------------------------------- SECTOR DIVERSIFICATION June 30, 2004 (unaudited) PERCENT OF SECTOR U.S. $ VALUE NET ASSETS _______________________________________________________________________________ Finance $ 55,593,098 27.8% - ------------------------------------------------------------------------------- Industrial Commodities 30,484,999 15.2 - ------------------------------------------------------------------------------- Capital Equipment 27,906,111 13.9 - ------------------------------------------------------------------------------- Energy 21,882,477 10.9 - ------------------------------------------------------------------------------- Construction 15,165,606 7.6 - ------------------------------------------------------------------------------- Technology 14,634,619 7.3 - ------------------------------------------------------------------------------- Medical 9,556,259 4.8 - ------------------------------------------------------------------------------- Telecommunications 7,922,042 4.0 - ------------------------------------------------------------------------------- Consumer Staples 5,003,752 2.5 - ------------------------------------------------------------------------------- Consumer Cyclical 4,157,784 2.1 - ------------------------------------------------------------------------------- Transportation 860,981 0.4 ------------ ---- - ------------------------------------------------------------------------------- Total Investments* 193,167,728 96.5 - ------------------------------------------------------------------------------- Cash and receivables, net of liabilities 7,020,304 3.5 ------------ ---- - ------------------------------------------------------------------------------- Net Assets $200,188,032 100.0% - ------------------------------------------------------------------------------- * Excludes short-term obligations. 1 INTERNATIONAL VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- COMMON STOCKS-96.5% AUSTRALIA-0.3% Qantas Airways Ltd. 272,900 $ 669,161 ------------- BELGIUM-1.7% Delhaize Group 65,089 3,329,958 ------------- BRAZIL-2.1% Petroleo Brasilerio, SA (ADR) 120,000 3,024,000 Votorantim Celulose e Papel, SA 35,300 1,122,540 ------------- 4,146,540 ------------- CANADA-7.3% Alcan Inc. 95,300 3,923,595 Bank of Nova Scotia 171,668 4,586,349 Magna International, Inc. Cl.A 23,550 1,995,888 Manulife Financial Corp. 104,000 4,192,579 ------------- 14,698,411 ------------- FRANCE-14.3% Arcelor 388,800 6,528,320 Assurance Generales de France (a) 88,300 5,363,984 Aventis, SA 46,400 3,502,877 BNP Paribas, SA 36,200 2,226,358 Compagnie de Saint Gobain 43,200 2,153,351 Credit Agricole, SA 113,000 2,749,626 France Telecom, SA 45,672 1,190,240 PSA Peugeot Citroen 35,950 2,001,912 Societe Generale 33,720 2,865,624 ------------- 28,582,292 ------------- GERMANY-8.2% AMB Generali Holding AG 19,250 1,427,010 Continental AG 113,900 5,494,549 Depfa Bank Plc 151,300 2,190,539 Hannover Rueckversicherungs AG 43,550 1,459,738 Heidelberger Zement AG 38,650 1,911,504 MAN AG 47,600 1,743,165 Volkswagen AG 51,900 2,191,099 ------------- 16,417,604 ------------- HUNGARY-1.2% MOL Magyar Olaj-es Gazipari Rt. (GDR) 61,850 2,462,063 ------------- ISRAEL-1.0% Bank Hapoalim Ltd. 715,700 1,903,339 ------------- ITALY-2.3% Eni S.p.A. 230,300 4,572,769 ------------- JAPAN-19.2% Aiful Corp. 21,650 2,259,941 Canon, Inc. 126,000 6,639,784 Honda Motor Co., Ltd. 107,400 5,177,327 JFE Holdings, Inc. 131,300 3,218,874 Nippon Meat Packer, Inc. 119,000 1,465,756 Nissan Motor Co., Ltd. 664,100 7,382,608 Promise Co., Ltd. 53,450 3,566,109 Sumitomo Mitsui Financial Group, Inc. 660 4,524,401 UFJ Holdings, Inc. (a) 936 4,134,647 ------------- 38,369,447 KOREA-5.2% Hyundai Motor Co., Ltd. 49,900 1,919,563 Kookmin Bank (a) 59,000 1,833,059 POSCO 38,600 4,977,412 Shinhan Financial Group Co., Ltd. 115,600 1,680,727 ------------- 10,410,761 ------------- MEXICO-1.3% Cemex SA de CV (ADR) 92,406 2,689,015 ------------- NETHERLANDS-1.2% DSM NV 49,700 2,438,652 ------------- PEOPLES REPUBLIC OF CHINA-0.9% China Petroleum Chemical Corp. (Sinopec) 5,112,000 1,867,894 ------------- SINGAPORE-3.0% Flextronics International Ltd. (a) 111,400 1,776,830 Singapore Airlines Ltd. 29,500 191,820 Singapore Telecommunications Ltd. 3,151,000 4,116,085 ------------- 6,084,735 ------------- SPAIN-2.9% ACS, Actividades de Construccion y Servicios, SA 114,717 1,933,048 Repsol YPF, SA 172,100 3,768,934 ------------- 5,701,982 ------------- SWEDEN-1.9% Svenska Cellulosa AB Cl.B 101,800 3,864,993 ------------- SWITZERLAND-1.8% Credit Suisse Group 103,200 3,666,880 ------------- TAIWAN-3.1% Compal Electronics, Inc. (GDR) (a) 699,779 3,796,371 Taiwan Semiconductor Manufacturing Co., Ltd. (ADR) 291,412 2,421,634 ------------- 6,218,005 ------------- THAILAND-0.8% PTT Public Co., Ltd. 416,000 1,566,932 ------------- 2 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT COMPANY (000) U.S. $ VALUE - ------------------------------------------------------------------------------- UNITED KINGDOM-16.8% Aviva Plc 361,800 $ 3,736,627 BP Plc 523,100 4,619,885 George Wimpey Plc 166,800 1,116,195 GlaxoSmithKline Plc 299,100 6,053,382 InterContinental Hotels Group Plc 126,864 1,340,145 Persimmon Plc 79,131 906,946 RMC Group Plc 304,900 3,359,087 Royal & Sun Alliance Insurance Group Plc 819,150 1,225,561 Taylor Woodrow Plc 234,800 1,096,460 Vodafone Group Plc 1,194,500 2,615,717 Whitbread Plc 188,900 2,817,639 William Morrison Supermarkets Plc 49,500 208,038 Xstrata Plc 330,000 4,410,613 ------------- 33,506,295 ------------- Total Common Stocks (cost $161,059,772) 193,167,728 ------------- SHORT-TERM INVESTMENT-2.5% TIME DEPOSIT-2.5% The Bank of New York 0.563%, 7/01/04 (cost $5,080,000) $5,080 5,080,000 ------------- TOTAL INVESTMENTS-99.0% (cost $166,139,772) 198,247,728 Other assets less liabilities-1.0% 1,940,304 ------------- NET ASSETS-100% $ 200,188,032 ============= FINANCIAL FUTURES CONTRACTS PURCHASED (SEE NOTE D) VALUE AT NUMBER OF EXPIRATION ORIGINAL JUNE 30, UNREALIZED TYPE CONTRACTS MONTH VALUE 2004 APPRECIATION - ------------------------------------------------------------------------------- EURO STOXX 50 125 SEP 2004 $4,182,642 $4,284,124 $101,482 TOPIX INDEX FUT 4 Sep 2004 427,285 436,420 9,135 -------- $110,617 ======== (a) Non-income producing security. Glossary of Terms: ADR - American Depositary Receipt GDR - Global Depositary Receipt See Notes to Financial Statements. 3 INTERNATIONAL VALUE PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $166,139,772) $ 198,247,728 Cash 13,800 Foreign cash, at value (cost $2,192,899) 2,210,140(a) Dividends and interest receivable 545,583 Receivable for foreign currency contracts 219,951 ------------- Total assets 201,237,202 ------------- LIABILITIES Payable for investment securities purchased 544,751 Foreign capital gain tax payable 236,923 Advisory fee payable 81,317 Distribution fee payable 31,529 Payable for variation margin on futures contracts 1,976 Accrued expenses 152,674 ------------- Total liabilities 1,049,170 ------------- NET ASSETS $ 200,188,032 ============= COMPOSITION OF NET ASSETS Capital stock, at par $ 14,440 Additional paid-in capital 162,831,347 Undistributed net investment income 1,896,396 Accumulated net realized gain on investment and foreign currency transactions 3,191,445 Net unrealized appreciation of investments and foreign currency denominated assets and liabilities 32,254,404 ------------- $ 200,188,032 ============= CLASS A SHARES Net assets $ 35,639,197 ============= Shares of capital stock outstanding 2,561,465 ============= Net asset value per share $ 13.91 ============= CLASS B SHARES Net Assets $ 164,548,835 ============= Shares of capital stock outstanding 11,878,589 ============= Net asset value per share $ 13.85 ============= (a) An amount of U.S. $12,727 has been segregated as collateral for the financial futures contracts outstanding at June 30, 2004. See Notes to Financial Statements. 4 INTERNATIONAL VALUE PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $432,732) $ 2,913,241 Interest 11,124 ------------- Total investment income 2,924,365 ------------- EXPENSES Advisory fee 863,968 Distribution fee--Class B 173,141 Custodian 147,384 Administrative 34,500 Audit and legal 23,750 Printing 5,160 Directors' fees 500 Transfer agency 450 Miscellaneous 2,688 ------------- Total expenses 1,251,541 Less: expenses waived and reimbursed by the Adviser (see Note B) (250,492) ------------- Net expenses 1,001,049 ------------- Net investment income 1,923,316 ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS Net realized gain (loss) on: Investment transactions 4,037,784 Futures 438,395 Foreign currency transactions (251,022) Net change in unrealized appreciation/depreciation of: Investments 257,355 Futures (5,686) Foreign currency denominated assets and liabilities 210,303 ------------- Net gain on investment and foreign currency transactions 4,687,129 ------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 6,610,445 ============= See Notes to Financial Statements. 5 INTERNATIONAL VALUE PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 ============= ============= INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 1,923,316 $ 680,489 Net realized gain on investment and foreign currency transactions 4,225,157 10,435 Net change in unrealized appreciation/ depreciation of investments and foreign currency denominated assets and liabilities 461,972 33,356,129 ------------- ------------- Net increase in net assets from operations 6,610,445 34,047,053 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM Net investment income Class A (191,011) (88,130) Class B (705,496) (155,555) Net realized gain on investment transactions Class A (78,951) -0- Class B (352,749) -0- CAPITAL STOCK TRANSACTIONS Net increase 50,942,100 69,636,068 ------------- ------------- Total increase 56,224,338 103,439,436 NET ASSETS Beginning of period 143,963,694 40,524,258 ------------- ------------- End of period (including undistributed net investment income of $1,896,396 and $869,587, respectively) $ 200,188,032 $ 143,963,694 ============= ============= See Notes to Financial Statements. 6 INTERNATIONAL VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein International Value Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek long-term growth of capital. The Portfolio commenced operations on May 10, 2001. The Fund was incorporated in the State of Maryland on November 17, 1987, as an open-end series investment company. The Fund offers 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 Alliance Capital Management L.P. (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. 7 INTERNATIONAL VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) 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 policy of the Portfolio 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 trade 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 the Adviser an investment advisory fee at an annualized rate of 1% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. On May 1, 2002, the Adviser agreed to waive its fee and to reimburse the additional operating expenses to the extent necessary to limit total operating expenses on an annual basis to 1.20% and 1.45% of the average daily net assets for Class A and Class B shares, respectively. Any expense waivers or reimbursements are accrued daily and paid monthly. For the six months ended June 30, 2004, the Portfolio received no such waivers/reimbursements. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .75% of the first $2.5 billion, .65% of the next $2.5 billion and .60% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $215,992. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. 8 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Pursuant to the terms of the investment advisory agreement, the Portfolio has agreed to reimburse the Adviser for the cost of providing the Portfolio with certain legal and accounting services. Because of the Adviser's agreement to limit total operating expenses as described above, the Adviser waived reimbursement for such services in the amount of $34,500 for the six months ended June 30, 2004. Brokerage commissions paid on investment transactions for the six months ended June 30, 2004, amounted to $225,798, of which $21,453 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 $450 for the six months ended June 30, 2004. 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 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 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. NOTE D: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2004, were as follows: PURCHASES SALES ============= ============= Investment securities (excluding U.S. government securities) $ 76,632,188 $ 23,925,203 U.S. government securities -0- -0- 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 (excluding futures and foreign currency transactions) are as follows: Gross unrealized appreciation $ 33,583,020 Gross unrealized depreciation (1,475,064) ------------- Net unrealized appreciation $ 32,107,956 ============= 1. FINANCIAL FUTURES CONTRACTS The Portfolio may buy or sell financial futures contracts for the purpose of hedging its portfolio against adverse effects of anticipated movements in the market. The Portfolio bears the market risk that arises from changes in the value of these financial instruments and the imperfect correlation between movements in the price of the futures contracts and movements in the price of the securities hedged or used for cover. 9 INTERNATIONAL VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ At the time the Portfolio enters into a futures contract, the Portfolio deposits and maintains as collateral an initial margin as required by the exchange on which the transaction is affected. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as variation margin and are recorded by the Portfolio as unrealized gains or losses. Risks may arise from the potential inability of a counterparty to meet the terms of the contract. When the contract is closed, the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the time it was closed. 2. FORWARD EXCHANGE CURRENCY CONTRACTS The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as unrealized appreciation and depreciation 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. 3. OPTION TRANSACTIONS For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE E: CAPITAL STOCK There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B shares. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS A Shares sold 363,162 1,698,934 $ 5,031,162 $ 17,079,554 Shares issued in reinvestment of dividends and distributions 19,619 8,034 269,962 88,130 Shares redeemed (173,061) (894,222) (2,379,499) (9,125,866) ----------- ----------- ------------ ------------- Net increase 209,720 812,746 $ 2,921,625 $ 8,041,818 =========== =========== ============ ============= CLASS B Shares sold 3,723,058 10,300,772 $ 51,267,655 $ 109,827,156 Shares issued in reinvestment of dividends and distributions 77,188 14,219 1,058,244 155,555 Shares redeemed (309,044) (4,729,080) (4,305,424) (48,388,461) ----------- ----------- ------------ ------------- Net increase 3,491,202 5,585,911 $ 48,020,475 $ 61,594,250 =========== =========== ============ ============= NOTE F: RISKS INVOLVED IN INVESTING IN THE PORTFOLIO 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE G: JOINT CREDIT FACILITY A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. NOTE H: DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended December 31, 2003 and December 31, 2002 were as follows: 2003 2002 ============= ============= Distributions paid from: Ordinary income $ 243,685 $ 24,197 ------------- ------------- Total distributions paid $ 243,685 $ 24,197 ============= ============= 11 INTERNATIONAL VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $ 1,268,461 Accumulated capital and other losses (960,036)(a) Unrealized appreciation/(depreciation) 31,751,582(b) ------------ Total accumulated earnings/(deficit) $ 32,060,007 ============ (a) During the year ended December 31, 2003, the Portfolio utilized capital loss carryforwards of $164,056. Net capital losses and net foreign currency losses incurred after October 31, and within the taxable year are deemed to arise on the first business day of the Portfolio's net taxable year. For the year ended December 31, 2003, the Portfolio deferred to January 1, 2004, post October capital losses of $960,036. (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 I: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds including the Fund, 12 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 13 INTERNATIONAL VALUE 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 YEAR ENDED DECEMBER 31, MAY 10, 2001(a) JUNE 30, 2004 ------------------------ TO (UNAUDITED) 2003 2002 DECEMBER 31, 2001 ----------- ----------- ----------- ----------- Net asset value, beginning of period $13.45 $9.35 $9.87 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (b)(c) .16 .13 .13 .04 Net realized and unrealized gain (loss) on investment and foreign currency transactions .41 4.01 (.64) (.17) Net increase (decrease) in net asset value from operations .57 4.14 (.51) (.13) LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.08) (.04) (.01) -0- Distributions from net realized gain on investment transactions (.03) -0- -0- -0- Total dividends and distributions (.11) (.04) (.01) -0- Net asset value, end of period $13.91 $13.45 $9.35 $9.87 TOTAL RETURN Total investment return based on net asset value (d) 4.22% 44.36% (5.15)% (1.30)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $35,639 $31,628 $14,391 $3,913 Ratio to average net assets of: Expenses, net of waivers and reimbursements .96%(e) 1.20% 1.17% .95%(e) Expenses, before waivers and reimbursements 1.25%(e) 1.49% 2.20% 8.41%(e) Net investment income (c) 2.36%(e) 1.16% 1.30% .59%(e) Portfolio turnover rate 15% 14% 19% 22%
See footnote summary on page 15. 14 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS B -------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, AUGUST 15, 2001(f) JUNE 30, 2004 ------------------------ TO (UNAUDITED) 2003 2002 DECEMBER 31, 2001 ----------- ----------- ----------- ----------- Net asset value, beginning of period $13.39 $9.33 $9.87 $10.25 INCOME FROM INVESTMENT OPERATIONS Net investment income (b)(c) .15 .08 .08 .01 Net realized and unrealized gain (loss) on investment and foreign currency transactions .40 4.01 (.61) (.39) Net increase (decrease) in net asset value from operations .55 4.09 (.53) (.38) LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.06) (.03) (.01) -0- Distributions from net realized gain on investment transactions (.03) -0- -0- -0- Total dividends and distributions (.09) (.03) (.01) -0- Net asset value, end of period $13.85 $13.39 $9.33 $9.87 TOTAL RETURN Total investment return based on net asset value (d) 4.14% 43.95% (5.36)% (3.71)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $164,549 $112,336 $26,133 $1,828 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.21%(e) 1.45% 1.44% 1.20%(e) Expenses, before waivers and reimbursements 1.50%(e) 1.74% 2.47% 9.31%(e) Net investment income (c) 2.19%(e) .38% .86% .17%(e) Portfolio turnover rate 15% 14% 19% 22%
(a) Commencement of operations. (b) Based on average shares outstanding. (c) Net of expenses reimbursed or waived by the Adviser. (d) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total 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. 15 (This page left intentionally blank.) (This page left intentionally blank.) ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN MONEY MARKET PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2004 INVESTMENT PRODUCTS OFFERED - --------------------------- > ARE NOT FDIC INSURED > MAY LOSE VALUE > ARE NOT BANK GUARANTEED - --------------------------- YOU MAY OBTAIN A DESCRIPTION OF THE FUND'S PROXY VOTING POLICIES AND PROCEDURES, WITHOUT CHARGE, UPON REQUEST BY VISITING ALLIANCE CAPITAL'S WEB SITE AT WWW.ALLIANCEBERNSTEIN.COM (CLICK ON INVESTORS, THEN THE "PROXY VOTING POLICIES AND PROCEDURES" LINK ON THE LEFT SIDE OF THE PAGE), OR BY GOING TO THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT WWW.SEC.GOV, OR BY CALLING ALLIANCE CAPITAL AT (800) 227-4618. MONEY MARKET PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT COMPANY (000) U.S. $ VALUE - ------------------------------------------------------------------------------- U.S. GOVERNMENT AND GOVERNMENT SPONSORED AGENCY OBLIGATIONS-14.7% Federal Home Loan Bank 1.21%, 9/27/04 $ 10,000 $ 9,999,034 Federal Home Loan Mortgage Corp. 1.07%, 7/13/04 1,500 1,499,465 1.17%, 8/20/04 1,000 1,000,000 1.22%, 8/20/04 1,000 998,306 1.25%, 8/19/04 750 748,724 Federal National Mortgage Association 1.22%, 8/18/04 600 599,024 1.28%, 8/10/04 300 299,573 ------------- Total U.S. Government and Government Sponsored Agency Obligations (amortized cost $15,144,126) 15,144,126 ------------- CORPORATE OBLIGATIONS-1.2% Chase Bank USA FRN 1.05%, 5/11/05 1,300,000 ------------- Total Corporate Obligations (amortized cost $1,300,000) 1,300,000 ------------- COMMERCIAL PAPER-81.0% Abbey National North America LLC 1.41%, 8/31/04 1,500 1,496,416 Amstel Funding 1.30%, 9/14/04 1,600 1,595,667 BNP Paribas 1.26%, 9/14/04 1,500 1,496,078 Banque Caisse d'Epargne l'Etat 1.12%, 12/02/04 3,000 2,985,627 Barton Capital 1.06%, 7/19/04 1,500 1,499,205 Beta Finance, Inc. 1.35%, 9/03/04 4,000 3,990,400 Cafco LLC 1.08%, 7/19/04 2,500 2,498,650 CDC CP 1.20%, 8/17/04 1,400 1,397,807 CXC, Inc. 1.06%, 9/14/04 1,400 1,396,908 Caisse Nationale Des Caisses 1.16%, 8/11/04 1,500 1,498,018 Chevrontexaco 1.20%, 7/27/04 1,500 1,498,700 Citigroup Global Market 1.06%, 7/6/04 2,000 1,999,706 DNB Nor Bank ASA 1.19%, 8/20/04 1,500 1,497,521 Depfa Bank Europe Plc 1.10%, 8/4/04 1,300 1,298,649 Dexia Delaware LLC 1.30%, 7/29/04 1,700 1,698,288 Falcon Asset Securitization 1.45%, 9/15/04 1,500 1,495,408 Gemini Securitization 1.08%, 7/12/04 1,500 1,499,505 General Electric Capital Corp. 1.28%, 9/03/04 1,000 997,725 1.33%, 9/07/04 1,500 1,496,232 Giro Balanced Funding Corp. 1.25%, 8/11/04 1,000 998,576 1.47%, 9/17/04 2,000 1,993,630 Treasury Service(Hali-Bkscot) 1.47%, 9/14/04 4,000 3,987,750 HSBC (Hong Kong) 1.08%, 8/09/04 2,000 1,997,660 JP Morgan Chase Bankers Acceptance 1.48%, 9/13/04 680 677,931 KFW International Finance 1.17%, 8/17/04 2,000 1,996,945 K2 Corporation Cp Disc. 1.15%, 8/09/04 4,700 4,694,145 Kitty Hawk Funding 1.18%, 7/12/04 1,000 999,639 Landesbank Baden-wurt 1.25%, 9/08/04 1,000 997,604 Morgan Stanley Dean Witter 1.25%, 7/27/04 1,500 1,498,646 NBNZ International London 1.10%, 8/3/04 1,000 998,996 Natexis Banques Populare 1.11%, 9/02/04 1,300 1,297,475 Nordea North America 1.08%, 7/15/04 2,900 2,898,782 1.09%, 7/30/04 1,300 1,298,859 1.37%, 9/09/04 1,000 997,336 Northern Rock Plc 1.34%, 9/08/04 1,300 1,296,661 Prudential Plc 1.17%, 8/18/04 4,700 4,692,668 San Paolo US Financial 1.31%, 8/23/04 1,350 1,347,396 Sheffield Receivables 1.09%, 7/06/04 2,000 1,999,697 Sigma Finance, Inc. 1.14%, 10/04/04 1,000 996,992 1.25%, 08/11/04 2,500 2,496,441 1.44%, 11/16/04 1,000 994,480 Svenska Handelsbanken, Inc. 1.08%, 7/28/04 1,500 1,498,785 1 MONEY MARKET PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT COMPANY (000) U.S. $ VALUE - ------------------------------------------------------------------------------- Swedbank 1.20%, 7/23/04 $ 1,500 $ 1,498,900 Ticonderoga Funding LLC 1.27%, 8/25/04 3,500 3,493,209 Unicredit Del, Inc. 1.48%, 9/14/04 1,000 996,917 Verizon Network Funding 1.20%, 07/19/04 1,500 1,499,100 ------------- Total Comercial Paper (amortized cost $83,481,730) 83,481,730 ------------- CERTIFICATES OF DEPOSIT-3.5% Credit Suisse First Boston 1.365%, 9/9/04 1,000 1,000,000 Washington Mutual 1.25%, 7/22/04 1,500 1,500,000 Westdeutsche Landesbank 1.15%, 12/27/04 1,100 1,100,000 ------------- Total Certificates of Deposit (amortized cost $3,600,000) 3,600,000 ------------- TOTAL INVESTMENTS-100.4% (cost $103,525,856) 103,525,856 Other assets less liabilities-(0.4%) (450,470) ------------- NET ASSETS-100% $ 103,075,386 ============= Glossary: FRN - Floating Rate Note See Notes to Financial Statements. 2 MONEY MARKET PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $103,525,856) $ 103,525,856 Interest receivable 11,720 ------------- Total assets 103,537,576 ------------- LIABILITIES Due to custodian 337,678 Advisory fee payable 38,378 Dividends payable 36,086 Distribution fee payable 10,384 Accrued expenses 39,664 ------------- Total liabilities 462,190 ------------- NET ASSETS $ 103,075,386 ============= COMPOSITION OF NET ASSETS Capital stock, at par $ 103,076 Additional paid-in capital 102,972,310 ------------- $ 103,075,386 ============= CLASS A SHARES Net assets $ 52,250,460 ============= Shares of capital stock outstanding 52,248,817 ============= Net asset value per share $ 1.00 ============= CLASS B SHARES Net assets $ 50,824,926 ============= Shares of capital stock outstanding 50,826,900 ============= Net asset value per share $ 1.00 ============= See Notes to Financial Statements. 3 MONEY MARKET PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Interest $ 538,372 ----------- EXPENSES Advisory fee 240,834 Distribution fee--Class B 55,431 Administrative 34,500 Custodian 32,520 Audit 18,750 Legal 5,000 Printing 560 Directors' fees 500 Transfer agency 450 Miscellaneous 2,851 ----------- Total expenses 391,396 Less: expenses waived and reimbursed by the Adviser (see Note B) (24,083) ----------- Net expenses 367,313 ----------- Net investment income 171,059 ----------- REALIZED GAIN ON INVESTMENT TRANSACTIONS Net realized gain on investment transactions 18 ----------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 171,077 =========== See Notes to Financial Statements. 4 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ MONEY MARKET PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 ============= ============= INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 171,059 $ 570,205 Net realized gain on investment transactions 18 324 ------------- ------------- Net increase in net assets from operations 171,077 570,529 DIVIDENDS TO SHAREHOLDERS FROM Net investment income Class A (121,970) (411,077) Class B (49,359) (159,585) CAPITAL STOCK TRANSACTIONS Net increase (decrease) 283,067 (46,739,540) ------------- ------------- Total increase (decrease) 282,815 (46,739,673) NET ASSETS Beginning of period 102,792,571 149,532,244 ------------- ------------- End of period $ 103,075,386 $ 102,792,571 ============= ============= See Notes to Financial Statements. 5 MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein Money Market Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek safety of principal, excellent liquidity and maximum current income to the extent consistent with the first two objectives. 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 Securities in which the Portfolio invests are valued at amortized cost which approximates fair value, under which method a portfolio instrument is valued at cost and any premium or discount is amortized on a straight-line basis to maturity. 2. 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. 3. 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. 4. 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. 5. DIVIDENDS AND DISTRIBUTIONS The Portfolio declares dividends daily from net investment income. The dividends are paid monthly. Net realized gains distributions, if any, will be made 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 .50% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. 6 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .45% of the first $2.5 billion, .40% of the next $2.5 billion and .35% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six month ended June 30, 2004, such waiver amounted to $24,083. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. Pursuant to the advisory agreement, the Portfolio paid $34,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2004. 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 $450 for the six months ended June 30, 2004. 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 the Portfolio's average daily net assets attributable to Class B shares. The fees are accrued daily and paid monthly. The Board of Directors currently limits payments under the Plan to .25% of the Portfolio's average daily net assets attributable to Class B shares. The Plan provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Portfolio is not obligated under the Plan to pay any distribution and servicing fees in excess of the amounts set forth above. The purpose of the payments to the Distributor under the Plan is to compensate the Distributor for its distribution services with respect to the sale of the Portfolio's 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. NOTE D: INVESTMENT TRANSACTIONS At June 30, 2004, the cost of investments for federal income tax purposes was the same as the cost for financial reporting purposes. 7 MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE E: CAPITAL STOCK There are 2,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B shares. Each class consists of 1,000,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS A Shares sold 18,024,028 36,286,688 $ 18,024,028 $ 36,286,688 Shares issued in reinvestment of dividends 98,867 475,045 98,867 475,045 Shares redeemed (20,719,272) (79,130,806) (20,719,272) (79,130,807) ----------- ----------- ------------ ------------- Net decrease (2,596,377) (42,369,073) $ (2,596,377) $ (42,369,074) =========== =========== ============ ============= CLASS B Shares sold 26,983,792 102,776,644 $ 26,983,792 $ 102,776,644 Shares issued in reinvestment of dividends 36,958 180,806 36,958 180,806 Shares redeemed (24,141,306) (107,327,917) (24,141,306) (107,327,916) ----------- ----------- ------------ ------------- Net increase (decrease) 2,879,444 (4,370,467) $ 2,879,444 $ (4,370,466) =========== =========== ============ ============= NOTE F: RISKS INVOLVED IN INVESTING IN THE PORTFOLIO Interest Rate Risk and Credit Risk--Interest rate risk is the risk that changes in interest rates will affect the value of the Portfolio's investments in fixed-income debt securities such as bonds or notes. Increases in interest rates may cause the value of the Portfolio's investments to decline. Credit risk is the risk that the issuer or guarantor of a debt security, or the counterparty to a derivative contract, will be unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The degree of risk for a particular security may be reflected in its credit risk rating. Credit risk is greater for medium quality and lower-rated securities. Lower-rated debt securities and similar unrated securities (commonly known as "junk bonds") have speculative elements or are predominantly speculative risks. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE G: DISTRIBUTIONS TO SHAREHOLDERS The tax character or distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended December 31, 2003 and December 31, 2002 were as follows: 2003 2002 ============= ============= Distributions paid from: Ordinary income $ 570,662 $ 1,681,405 ------------- ------------- Total distributions paid $ 570,662 $ 1,681,405 ============= ============= As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $252 Accumulated capital and other losses -0-(a) ------------- Total accumulated earnings/(deficit) $252 ============= (a) During the fiscal year 2003, the Portfolio utilized capital loss carryforwards of $72. 8 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE H: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. 9 MONEY MARKET PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 10 MONEY MARKET 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 YEAR ENDED DECEMBER 31, JUNE 30, 2004 --------------------------------------------------------------- (UNAUDITED) 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income -0-(a)(b) .01 .01 .04 .06 .05 LESS: DIVIDENDS Dividends from net investment income -0-(b) (.01) (.01) (.04) (.06) (.05) Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 TOTAL RETURN Total investment return based on net asset value (c) .24% .53% 1.10% 3.57% 5.91% 4.69% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $52,250 $54,847 $97,216 $128,700 $146,270 $134,467 Ratio to average net assets of: Expenses, net of waivers and reimbursements .65%(d) .66% .68% .63% .67% .64% Expenses, before waivers and reimbursements .70%(d) .66% .68% .63% .67% .64% Net investment income .47%(a)(d) .55% 1.10% 3.55% 5.73% 4.59%
See footnote summary on page 12. 11 MONEY MARKET PORTFOLIO FINANCIAL HIGHLIGHTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS B ---------------------------------------------------------------------------- SIX MONTHS JUNE 16, ENDED YEAR ENDED DECEMBER 31, 1999(e) TO JUNE 30, 2004 -------------------------------------------------- DECEMBER 31, (UNAUDITED) 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 INCOME FROM INVESTMENT OPERATIONS Net investment income -0-(a)(b) -0-(b) .01 .03 .05 .02 LESS: DIVIDENDS Dividends from net investment income -0-(b) -0-(b) (.01) (.03) (.05) (.02) Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 TOTAL RETURN Total investment return based on net asset value (c) .11% .28% .85% 3.32% 5.65% 2.52% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $50,825 $47,946 $52,316 $49,161 $9,758 $1,163 Ratio to average net assets of: Expenses, net of waivers and reimbursements .90%(d) .91% .93% .90% .95% .89%(d) Expenses, before waivers and reimbursements .95%(d) .91% .93% .90% .95% .89%(d) Net investment income .22%(a)(d) .29% .85% 2.60% 5.64% 4.71%(d)
(a) Net of expenses reimbursed or waived by the Adviser. (b) Amount is less than $.01 per share. (c) 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. (d) Annualized. (e) Commencement of distribution. 12 (This page left intentionally blank.) ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN PREMIER GROWTH PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2004 INVESTMENT PRODUCTS OFFERED - --------------------------- > ARE NOT FDIC INSURED > MAY LOSE VALUE > ARE NOT BANK GUARANTEED - --------------------------- YOU MAY OBTAIN A DESCRIPTION OF THE FUND'S PROXY VOTING POLICIES AND PROCEDURES, WITHOUT CHARGE, UPON REQUEST BY VISITING ALLIANCE CAPITAL'S WEB SITE AT WWW.ALLIANCEBERNSTEIN.COM (CLICK ON INVESTORS, THEN THE "PROXY VOTING POLICIES AND PROCEDURES" LINK ON THE LEFT SIDE OF THE PAGE), OR BY GOING TO THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT WWW.SEC.GOV, OR BY CALLING ALLIANCE CAPITAL AT (800) 227-4618. PREMIER GROWTH PORTFOLIO TEN LARGEST HOLDINGS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PERCENT OF COMPANY U.S. $ VALUE NET ASSETS _______________________________________________________________________________ Yahoo!, Inc. $ 64,968,939 5.0% - ------------------------------------------------------------------------------- Dell, Inc. 62,409,186 4.8 - ------------------------------------------------------------------------------- Intel Corp. 58,892,880 4.5 - ------------------------------------------------------------------------------- American International Group, Inc. 51,770,094 3.9 - ------------------------------------------------------------------------------- Lowe's Cos., Inc. 49,985,560 3.8 - ------------------------------------------------------------------------------- eBay, Inc. 49,965,630 3.8 - ------------------------------------------------------------------------------- UnitedHealth Group, Inc. 44,141,475 3.4 - ------------------------------------------------------------------------------- Pfizer, Inc. 43,031,684 3.3 - ------------------------------------------------------------------------------- Electronic Arts, Inc. 42,663,555 3.3 - ------------------------------------------------------------------------------- Cisco Systems, Inc. 39,908,430 3.0 ------------ ---- - ------------------------------------------------------------------------------- $507,737,433 38.8% - ------------------------------------------------------------------------------- 1 PREMIER GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- COMMON STOCKS-99.4% TECHNOLOGY-34.1% COMMUNICATION EQUIPMENT-7.4% Cisco Systems, Inc. (a) 1,683,900 $ 39,908,430 Corning, Inc. (a) 1,269,700 16,582,282 Juniper Networks, Inc. (a) 1,277,300 31,383,261 Motorola, Inc. 58,300 1,063,975 QUALCOMM, Inc. 113,700 8,297,826 -------------- 97,235,774 -------------- COMPUTER HARDWARE/STORAGE-6.5% Dell, Inc. (a) 1,742,300 62,409,186 EMC Corp. (a) 1,952,200 22,255,080 -------------- 84,664,266 -------------- SEMI-CONDUCTOR CAPITAL EQUIPMENT-1.0% Applied Materials, Inc. (a) 628,200 12,325,284 -------------- SEMI-CONDUCTOR COMPONENTS-10.2% Broadcom Corp. Cl. A (a) 540,100 25,260,477 Intel Corp. 2,133,800 58,892,880 Marvell Technology Group Ltd. (Bermuda) (a) 775,200 20,697,840 Maxim Integrated Products, Inc. 146,000 7,653,320 Taiwan Semiconductor Manufacturing Co., Ltd. (ADR) (Taiwan) (a) 2,301,126 19,122,357 Texas Instruments, Inc. 91,300 2,207,634 -------------- 133,834,508 -------------- SOFTWARE-9.0% Electronic Arts, Inc. (a) 782,100 42,663,555 Intuit, Inc. (a) 352,100 13,584,018 Microsoft Corp. 1,113,800 31,810,128 Symantec Corp. (a) 672,000 29,420,160 -------------- 117,477,861 -------------- 445,537,693 -------------- CONSUMER SERVICES-23.4% BROADCASTING & CABLE-3.0% The E.W. Scripps Co. Cl. A 181,200 19,026,000 Univision Communications, Inc. Cl.A (a) 324,510 10,361,604 Viacom, Inc. Cl. B 263,600 9,415,792 -------------- 38,803,396 -------------- ENTERTAINMENT & LEISURE-1.1% Carnival Corp. (Panama) 296,800 13,949,600 -------------- PRINTING & PUBLISHING-0.2% Gannett Co., Inc. 35,900 3,046,115 -------------- RESTAURANTS & LODGING-0.3% Starbucks Corp. (a) 104,100 4,526,268 -------------- RETAIL - GENERAL MERCHANDISE-13.8% Amazon.com, Inc. (a) 274,000 14,905,600 Bed Bath & Beyond, Inc. (a) 761,900 29,295,055 eBay, Inc. (a) 543,400 49,965,630 Lowe's Cos., Inc. 951,200 49,985,560 Target Corp. 367,700 15,616,219 Wal-Mart Stores, Inc. 405,100 21,373,076 -------------- 181,141,140 -------------- MISCELLANEOUS-5.0% Yahoo!, Inc. (a) 1,788,300 64,968,939 -------------- 306,435,458 -------------- HEALTHCARE-20.4% BIOTECHNOLOGY-3.3% Amgen, Inc. (a) 604,300 32,976,651 Cephalon, Inc. (a) 185,900 10,038,600 -------------- 43,015,251 -------------- DRUGS-6.9% Forest Laboratories, Inc. (a) 490,400 27,771,352 Pfizer, Inc. 1,255,300 43,031,684 Teva Pharmaceutical Industries Ltd. (ADR) (Israel) 286,600 19,285,314 -------------- 90,088,350 -------------- MEDICAL PRODUCTS-4.5% Alcon, Inc. (Switzerland) 189,000 14,864,850 Boston Scientific Corp. (a) 508,300 21,755,240 St. Jude Medical, Inc. (a) 297,800 22,528,570 -------------- 59,148,660 -------------- MEDICAL SERVICES-5.7% UnitedHealth Group, Inc. 709,100 44,141,475 WellPoint Health Networks, Inc. (a) 271,100 30,365,911 -------------- 74,507,386 -------------- 266,759,647 -------------- FINANCE-14.9% BANKING - MONEY CENTER-1.8% JP Morgan Chase & Co. 624,600 24,215,742 -------------- BROKERAGE & MONEY MANAGEMENT-1.8% Merrill Lynch & Co., Inc. 442,300 23,875,354 -------------- INSURANCE-6.1% American International Group, Inc. 726,292 51,770,094 Progressive Corp. 327,400 27,927,220 -------------- 79,697,314 -------------- 2 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SHARES OR PRINCIPAL AMOUNT COMPANY (000) U.S. $ VALUE - ------------------------------------------------------------------------------- MISCELLANEOUS-5.2% Citigroup, Inc. 690,700 $ 32,117,550 MBNA Corp. 1,371,600 35,373,564 -------------- 67,491,114 -------------- 195,279,524 -------------- CAPITAL GOODS-3.0% MISCELLANEOUS-3.0% General Electric Co. 1,196,700 38,773,080 -------------- CONSUMER STAPLES-2.6% COSMETICS-1.5% Avon Products, Inc. 429,000 19,794,060 -------------- HOUSEHOLD PRODUCTS-1.1% The Procter & Gamble Co. 267,400 14,557,256 -------------- 34,351,316 -------------- ENERGY-1.0% OIL SERVICE-1.0% Nabors Industries Ltd. (Bermuda) (a) 301,300 13,624,786 -------------- Total Common Stocks (cost $1,079,059,134) 1,300,761,504 -------------- SHORT-TERM INVESTMENT-0.3% TIME DEPOSIT-0.3% The Bank of New York 0.563%, 7/01/04 (cost $3,500,000) $ 3,500 3,500,000 -------------- TOTAL INVESTMENTS-99.7% (cost $1,082,559,134) 1,304,261,504 Other assets less liabilities-0.3% 3,518,141 -------------- NET ASSETS-100% $1,307,779,645 ============== (a) Non-income producing security. Glossary: ADR-American Depositary Receipt See Notes to Financial Statements. 3 PREMIER GROWTH PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $1,082,559,134) $1,304,261,504 Cash 48,936 Receivable for investment securities sold 15,768,586 Dividends and interest receivable 626,916 -------------- Total assets 1,320,705,942 -------------- LIABILITIES Payable for investment securities purchased 11,617,289 Advisory fee payable 798,133 Distribution fee payable 123,354 Accrued expenses 387,521 -------------- Total liabilities 12,926,297 -------------- NET ASSETS $1,307,779,645 ============== COMPOSITION OF NET ASSETS Capital stock, at par $ 58,925 Additional paid-in capital 1,894,539,555 Accumulated net investment loss (2,197,551) Accumulated net realized loss on investment transactions (806,323,654) Net unrealized appreciation of investments 221,702,370 -------------- $1,307,779,645 ============== CLASS A SHARES Net assets $ 700,362,527 ============== Shares of capital stock outstanding 31,366,188 ============== Net asset value per share $ 22.33 ============== CLASS B SHARES Net assets $ 607,417,118 ============== Shares of capital stock outstanding 27,558,686 ============== Net asset value per share $ 22.04 ============== See Notes to Financial Statements. 4 PREMIER GROWTH PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $84,751) $ 4,586,338 Interest 18,445 ------------- Total investment income 4,604,783 ------------- EXPENSES Advisory fee 7,392,445 Distribution fee--Class B 836,338 Printing 161,233 Custodian 124,304 Administrative 34,500 Audit and legal 23,750 Directors' fees 500 Transfer agency 450 Miscellaneous 76,925 ------------- Total expenses 8,650,445 Less: expenses waived and reimbursed by the Adviser (see Note B) (1,848,111) ------------- Net expenses 6,802,334 ------------- Net investment loss (2,197,551) ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS Net realized gain on investment transactions 106,178,444(a) Net change in unrealized appreciation/depreciation of investments (61,621,438) ------------- Net gain on investment transactions 44,557,006 ------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 42,359,455 ============= (a) On April 30, 2004, the Portfolio had a redemption-in-kind with total proceeds in the amount of $130,541,513. The net realized gain of the transactions of $15,783,738 will not be realized for tax purposes. See Notes to Financial Statements. 5 PREMIER GROWTH PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 ============== ============== INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment loss $ (2,197,551) $ (5,000,925) Net realized gain (loss) on investment transactions 106,178,444 (79,811,980) Net change in unrealized appreciation/ depreciation of investments (61,621,438) 393,353,656 -------------- -------------- Net increase in net assets from operations 42,359,455 308,540,751 CAPITAL STOCK TRANSACTIONS Net decrease (346,278,934) (59,908,719) -------------- -------------- Total increase (decrease) (303,919,479) 248,632,032 NET ASSETS Beginning of period 1,611,699,124 1,363,067,092 -------------- -------------- End of period (including accumulated net investment loss of $2,197,551 and $0,respectively) $1,307,779,645 $1,611,699,124 ============== ============== See Notes to Financial Statements. 6 PREMIER GROWTH PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein Premier Growth Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek growth of capital by pursuing aggressive investment policies. 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 Portfolio'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 Alliance Capital Management L.P. (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. 7 PREMIER GROWTH PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) 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 the Adviser an investment advisory fee at an annual rate of 1% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .75% of the first $2.5 billion, .65% of the next $2.5 billion and .60% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $1,848,111. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. Pursuant to the advisory agreement, the Portfolio paid $34,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2004. Brokerage commissions paid on investment transactions for the six months ended June 30, 2004, amounted to $1,811,011, of which $108,948 was paid to Sanford C. Bernstein & Co. LLC, an affiliate of the Adviser. 8 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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 $450 for the six months ended June 30, 2004. 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 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 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. NOTE D: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2004, were as follows: PURCHASES SALES ============= ============= Investment securities (excluding U.S. government securities) $ 602,015,500 $ 939,937,349 U.S. government securities -0- -0- 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 $ 238,956,303 Gross unrealized depreciation (17,253,933) ------------- Net unrealized appreciation $ 221,702,370 ============= 1. FORWARD EXCHANGE CURRENCY CONTRACTS The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as unrealized appreciation and depreciation 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 the 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. 9 PREMIER GROWTH PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 2. OPTION TRANSACTIONS For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. NOTE E: 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. For the six months ended June 30, 2004, the Portfolio had no securities on loan. NOTE F: CAPITAL STOCK There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B shares. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------- ------------- CLASS A Shares sold 273,513 1,261,503 $ 6,004,147 $ 24,349,408 Shares redeemed (11,437,747) (8,537,343) (248,387,783) (160,817,203) ----------- ----------- ------------- ------------- Net decrease (11,164,234) (7,275,840) $(242,383,636) $(136,467,795) =========== =========== ============= ============= CLASS B Shares sold 2,427,417 8,653,586 $ 52,625,760 $ 164,814,247 Shares redeemed (7,390,833) (4,698,475) (156,521,058) (88,255,171) ----------- ----------- ------------- ------------- Net increase (decrease) (4,963,416) 3,955,111 $(103,895,298) $ 76,559,076 =========== =========== ============= ============= 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE G: RISKS INVOLVED IN INVESTING IN THE PORTFOLIO Foreign Securities 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H: JOINT CREDIT FACILITY A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. NOTE I: COMPONENTS OF ACCUMULATED EARNINGS (DEFICIT) The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Accumulated capital and other losses $(883,053,918)(a) Unrealized appreciation/(depreciation) 253,875,628(b) ------------- Total accumulated earnings/(deficit) $(629,178,290) ============= (a) On December 31, 2003, the Portfolio had a net capital loss carryforward of $883,053,918 of which $237,722,331 will expire in the year 2009, $478,225,244 will expire in the year 2010 and $167,106,343 will expire in the year 2011. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. (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 J: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and 11 PREMIER GROWTH PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 12 PREMIER GROWTH 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 YEAR ENDED DECEMBER 31, JUNE 30, 2004 --------------------------------------------------------------- (UNAUDITED) 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $21.58 $17.45 $25.16 $32.05 $40.45 $31.03 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (.02)(b) (.05)(b) (.08) (.06) (.11) (.09) Net realized and unrealized gain (loss) on investment transactions .77 4.18 (7.63) (5.31) (6.18) 9.98 Net increase (decrease) in net asset value from operations .75 4.13 (7.71) (5.37) (6.29) 9.89 LESS: DIVIDENDS AND DISTRIBUTIONS Distributions from net realized gain on investment transactions -0- -0- -0- (1.38) (2.11) (.47) Distributions in excess of net realized gain on investment transactions -0- -0- -0- (.14) -0- -0- Total dividends and distributions -0- -0- -0- (1.52) (2.11) (.47) Net asset value, end of period $22.33 $21.58 $17.45 $25.16 $32.05 $40.45 TOTAL RETURN Total investment return based on net asset value (c) 3.48% 23.67% (30.64)% (17.21)% (16.58)% 32.32% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $700,363 $917,935 $869,130 $1,586,575 $2,148,332 $2,345,563 Ratio to average net assets of: Expenses, net of waivers and reimbursements .81%(d) 1.04% 1.05% 1.04% 1.04% 1.05% Expenses, before waivers and reimbursements 1.06%(d) 1.05% 1.05% 1.04% 1.04% 1.05% Net investment loss (.18)%(b)(d) (.24)%(b) (.41)% (.21)% (.29)% (.27)% Portfolio turnover rate 41% 79% 109% 49% 41% 26%
See footnote summary on page 14. 13 PREMIER GROWTH PORTFOLIO FINANCIAL HIGHLIGHTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS B ---------------------------------------------------------------------------- SIX MONTHS JULY 14, 1999 (e) ENDED YEAR ENDED DECEMBER 31, TO JUNE 30, 2004 -------------------------------------------------- DECEMBER 31, (UNAUDITED) 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $21.33 $17.29 $25.00 $31.93 $40.40 $35.72 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (.05)(b) (.09)(b) (.13) (.12) (.18) (.07) Net realized and unrealized gain (loss) on investment transactions .76 4.13 (7.58) (5.29) (6.18) 4.75 Net increase (decrease) in net asset value from operations .71 4.04 (7.71) (5.41) (6.36) 4.68 LESS: DISTRIBUTIONS Distributions from net realized gain on investment transactions -0- -0- -0- (1.38) (2.11) -0- Distributions in excess of net realized gain on investment transactions -0- -0- -0- (.14) -0- -0- Total distributions -0- -0- -0- (1.52) (2.11) -0- Net asset value, end of period $22.04 $21.33 $17.29 $25.00 $31.93 $40.40 TOTAL RETURN Total investment return based on net asset value (c) 3.33% 23.37% (30.84)% (17.40)% (16.78)% 13.10% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $607,417 $693,764 $493,937 $572,266 $336,104 $27,124 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.06%(d) 1.29% 1.31% 1.29% 1.30% 1.29%(d) Expenses, before waivers and reimbursements 1.31%(d) 1.30% 1.31% 1.29% 1.30% 1.29%(d) Net investment loss (.44)%(b)(d) (.49)%(b) (.64)% (.47)% (.51)% (.53)%(d) Portfolio turnover rate 41% 79% 109% 49% 41% 26%
(a) Based on average shares outstanding. (b) Net of expenses reimbursed or waived by the Adviser. (c) 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. (d) Annualized. (e) Commencement of distribution. 14 (This page left intentionally blank.) (This page left intentionally blank.) (This page left intentionally blank.) ALLIANCEBERNSTEIN ---------------------------- VARIABLE PRODUCTS ---------------------------- SERIES FUND ---------------------------- ALLIANCEBERNSTEIN ---------------------------- REAL ESTATE INVESTMENT ---------------------------- PORTFOLIO ---------------------------- SEMI-ANNUAL REPORT JUNE 30, 2004 Investment Products Offered =============================== o Are Not FDIC Insured o May Lose Value o Are Not Bank Guaranteed =============================== You may obtain a description of the Fund's proxy voting policies and procedures, without charge, upon request by visiting Alliance Capital's web site at www.alliancebernstein.com (click on Investors, then the "proxy voting policies and procedures" link on the left side of the page), or by going to the Securities and Exchange Commission's web site at www.sec.gov, or by calling Alliance Capital at (800) 227-4618. REAL ESTATE INVESTMENT PORTFOLIO TEN LARGEST HOLDINGS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund ================================================================================ Percentage of Company U.S. $ Value Net Assets ================================================================================ Simon Property Group, Inc. $ 7,461,042 6.1% ================================================================================ ProLogis 7,423,460 6.1 ================================================================================ General Growth Properties, Inc. 6,682,820 5.5 ================================================================================ Equity Residential 5,589,240 4.6 ================================================================================ Developers Diversified Realty Corp. 5,514,183 4.5 ================================================================================ Host Marriott Corp. 4,999,620 4.1 ================================================================================ Vornado Realty Trust 4,700,153 3.9 ================================================================================ The Rouse Co. 4,536,250 3.7 ================================================================================ Equity Office Properties Trust 4,033,760 3.3 ================================================================================ Duke Realty Corp. 3,966,707 3.2 -------------- ----- $ 54,907,235 45.0% 1 REAL ESTATE INVESTMENT PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund Company Shares U.S. $ Value - -------------------------------------------------------------------------------- COMMON STOCKS-99.1% REAL ESTATE INVESTMENT TRUSTS-99.1% OFFICE-20.1% Alexandria Real Estate Equities, Inc. ........................ 59,300 $ 3,367,054 Boston Properties, Inc. .................. 72,500 3,630,800 Corporate Office Properties Trust ................................. 138,200 3,434,270 Equity Office Properties Trust ........... 148,300 4,033,760 Glenborough Realty Trust, Inc. ........................... 93,400 1,713,890 Mack-Cali Realty Corp. ................... 73,900 3,057,982 Prentiss Properties Trust ................ 77,300 2,591,096 SL Green Realty Corp. .................... 56,400 2,639,520 ------------ 24,468,372 ------------ REGIONAL MALLS-18.7% General Growth Properties, Inc. ...................... 226,000 6,682,820 Simon Property Group, Inc. ............... 145,100 7,461,042 The Macerich Co. ......................... 43,300 2,072,771 The Mills Corp. .......................... 44,500 2,078,150 The Rouse Co. ............................ 95,500 4,536,250 ------------ 22,831,033 ------------ APARTMENTS-13.9% Archstone-Smith Trust .................... 134,900 3,956,617 Camden Property Trust .................... 62,900 2,880,820 Equity Residential ....................... 188,000 5,589,240 Essex Property Trust, Inc. ............... 22,900 1,565,215 United Dominion Realty Trust, Inc. ........................... 147,800 2,923,484 ------------ 16,915,376 ------------ SHOPPING CENTERS-12.4% Developers Diversified Realty Corp. .......................... 155,900 5,514,183 Kimco Realty Corp. ....................... 56,000 2,548,000 Pan Pacific Retail Properties, Inc. ...................... 53,400 2,697,768 Regency Centers Corp. .................... 88,700 3,805,230 Tanger Factory Outlet Centers, Inc. ......................... 15,500 606,050 ------------ 15,171,231 ------------ INDUSTRIAL-10.7% AMB Property Corp. ....................... 79,300 $ 2,746,159 EastGroup Properties, Inc. ............... 65,800 2,215,486 First Potomac Realty Trust ............... 37,000 709,290 ProLogis ................................. 225,500 7,423,460 ------------ 13,094,395 ------------ REAL ESTATE LODGING-8.8% Boca Resorts, Inc. Cl. A (a) ............. 76,500 1,516,230 Hersha Hospitality Trust ................. 54,800 541,424 Host Marriott Corp. (a) .................. 404,500 4,999,620 LaSalle Hotel Properties ................. 11,000 268,400 Starwood Hotels & Resorts Worldwide, Inc. ....................... 77,000 3,453,450 ------------ 10,779,124 ------------ DIVERSIFIED-8.7% Cousins Properties, Inc. ................. 78,100 2,573,395 iStar Financial, Inc. .................... 84,100 3,364,000 Vornado Realty Trust ..................... 82,300 4,700,153 ------------ 10,637,548 ------------ OFFICE-INDUSTRIAL MIX-3.3% Duke Realty Corp. ........................ 124,700 3,966,707 ------------ STORAGE-2.0% Shurgard Storage Centers, Inc. Cl.A .................... 64,400 2,408,560 ------------ HEALTHCARE-0.5% Windrose Medical Properties Trust ................................. 60,700 667,093 ------------ Total Common Stocks (cost $90,769,726) .................... 120,939,439 ------------ TOTAL INVESTMENTS-99.1% (cost $90,769,726) .................... 120,939,439 Other assets less liabilities-0.9% ...................... 1,057,474 ------------ NET ASSETS-100% .......................... $121,996,913 ============ - -------------------------------------------------------------------------------- (a) Non-income producing security. See Notes to Financial Statements. 2 REAL ESTATE INVESTMENT PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund ================================================================================ ASSETS Investments in securities, at value (cost $90,769,726)...... $ 120,939,439 Cash ....................................................... 813,503 Dividends and interest receivable........................... 548,719 Receivable for investment securities sold................... 301,151 -------------- Total assets................................................ 122,602,812 -------------- LIABILITIES Payable for investment securities purchased................. 420,388 Advisory fee payable........................................ 73,782 Distribution fee payable.................................... 10,629 Accrued expenses............................................ 101,100 -------------- Total liabilities........................................... 605,899 -------------- NET ASSETS..................................................... $ 121,996,913 =============== COMPOSITION OF NET ASSETS Capital stock, at par....................................... $ 7,520 Additional paid-in capital.................................. 89,111,667 Undistributed net investment income......................... 2,263,620 Accumulated net realized gain on investment transactions.... 444,393 Net unrealized appreciation of investments.................. 30,169,713 -------------- $ 121,996,913 =============== Class A Shares Net assets.................................................. $ 68,440,574 =============== Shares of capital stock outstanding......................... 4,209,628 =============== Net asset value per share................................... $ 16.26 =============== Class B Shares Net assets.................................................. $ 53,556,339 =============== Shares of capital stock outstanding......................... 3,309,875 =============== Net asset value per share................................... $ 16.18 =============== - -------------------------------------------------------------------------------- See Notes to Financial Statements. 3 REAL ESTATE INVESTMENT PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund ================================================================================ INVESTMENT INCOME Dividends................................................. $ 2,785,994 Interest.................................................. 3,793 -------------- Total investment income................................... 2,789,787 -------------- EXPENSES Advisory fee.............................................. 532,414 Distribution fee--Class B................................. 61,302 Custodian................................................. 59,045 Administrative............................................ 34,500 Audit and legal........................................... 23,750 Printing.................................................. 5,962 Directors' fees........................................... 500 Transfer agency........................................... 450 Miscellaneous............................................. 2,129 -------------- Total expenses............................................ 720,052 Less: expenses waived and reimbursed by the Adviser (see Note B)........................................... (207,050) -------------- Net expenses.............................................. 513,002 -------------- Net investment income..................................... 2,276,785 -------------- REALIZED AND UNREALIZED GAIN ON INVESTMENT TRANSACTIONS Net realized gain on investment transactions.............. 1,551,752 Net change in unrealized appreciation/depreciation of investments............................................ 3,706,898 -------------- Net gain on investment transactions....................... 5,258,650 -------------- NET INCREASE IN NET ASSETS FROM OPERATIONS................... $ 7,535,435 ============== - -------------------------------------------------------------------------------- See Notes to Financial Statements. 4 REAL ESTATE INVESTMENT PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund ================================================================================
Six Months Ended Year Ended June 30, 2004 December 31, (unaudited) 2003 ---------------- ---------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income................................................ $ 2,276,785 $ 2,888,091 Net realized gain on investment transactions......................... 1,551,752 1,406,199 Net change in unrealized appreciation/depreciation of investments....................................................... 3,706,898 24,701,512 -------------- -------------- Net increase in net assets from operations........................... 7,535,435 28,995,802 DIVIDENDS TO SHAREHOLDERS FROM Net investment income Class A............................................................ (1,670,715) (1,491,301) Class B............................................................ (1,210,837) (676,451) CAPITAL STOCK TRANSACTIONS Net increase......................................................... 4,707,355 19,119,814 -------------- -------------- Total increase....................................................... 9,361,238 45,947,864 NET ASSETS Beginning of period.................................................. 112,635,675 66,687,811 -------------- -------------- End of period (including undistributed net investment income of $2,263,620 and $2,868,387, respectively)................. $ 121,996,913 $ 112,635,675 ============== ==============
- -------------------------------------------------------------------------------- See Notes to Financial Statements. 5 REAL ESTATE INVESTMENT PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund ================================================================================ NOTE A: Significant Accounting Policies The AllianceBernstein Real Estate Investment Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek total return from long-term growth of capital and income principally through investing in equity securities of companies that are primarily engaged in or related to the real estate industry. 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 Alliance Capital Management L.P. (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. 6 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 policy of the Portfolio 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 trade 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 the Adviser an investment advisory fee at an annual rate of .90% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .55% of the first $2.5 billion, .45% of the next $2.5 billion and .40% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $207,050. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. Pursuant to the advisory agreement, the Portfolio paid $34,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2004. Brokerage commissions paid on investment transactions for the six months ended June 30, 2004 amounted to $60,545, none of which was paid to Sanford C. Bernstein &Co. LLC, an affiliate of the Adviser. 7 REAL ESTATE INVESTMENT PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund ================================================================================ 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 $450 for the six months ended June 30, 2004. 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 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 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. NOTE D: Investment Transactions Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2004, were as follows: Purchases Sales --------- ----- Investment securities (excluding U. S. government securities).................. $ 21,235,215 $ 15,972,597 U.S. government securities................. -0- -0- 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..................... $ 30,407,319 Gross unrealized depreciation..................... (237,606) -------------- Net unrealized appreciation $ 30,169,713 ============== 1. Forward Exchange Currency Contracts The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as net unrealized appreciation or depreciation 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. 8 AllianceBernstein Variable Products Series Fund ================================================================================ 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. 2. Option Transactions For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. NOTE E: 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. For the six months ended June 30, 2004, the Portfolio had no securities on loan. NOTE F: Capital Stock There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B shares. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows:
====================================== ==================================== Shares Amount ====================================== ==================================== Six Months Ended Year Ended Six Months Ended Year Ended June 30, 2004 December 31, June 30, 2004 December 31, (unaudited) 2003 (unaudited) 2003 ---------------- ---------------- ---------------- ---------------- Class A Shares sold....................... 356,308 929,384 $ 5,846,435 $ 12,364,972 Shares issued in reinvestment of dividends................... 105,875 115,158 1,670,715 1,491,301 Shares redeemed................... (650,591) (991,714) (10,490,709) (12,805,746) -------------- -------------- -------------- -------------- Net increase (decrease)........... (188,408) 52,828 $ (2,973,559) $ 1,050,527 ============== ============== ============== ==============
9 REAL ESTATE INVESTMENT 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, 2004 December 31, June 30, 2004 December 31, (unaudited) 2003 (unaudited) 2003 ---------------- ---------------- ---------------- ---------------- Class B Shares sold....................... 578,158 1,417,075 $ 9,218,088 $ 18,602,093 Shares issued in reinvestment of dividends................... 77,074 52,439 1,210,837 676,451 Shares redeemed................... (169,743) (92,900) (2,748,011) (1,209,257) -------------- -------------- -------------- -------------- Net increase...................... 485,489 1,376,614 $ 7,680,914 $ 18,069,287 ============== ============== ============== ==============
NOTE G: Risks Involved in Investing in the Portfolio Concentration of Risk--Although the Portfolio does not invest directly in real estate, it invests primarily in Real Estate Equity Securities and has a policy of concentration of its investments in the real estate industry. Therefore, an investment in the Portfolio is subject to certain risks associated with the direct ownership of real estate and with the real estate industry in general. To the extent that assets underlying the Portfolio's investments are concentrated geographically, by property type or in certain other respects, the Portfolio may be subject to additional risks. In addition, investing in Real Estate Investment Trusts ("REITs") involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. REITs are dependent upon management skills, are not diversified, and are subject to heavy cash flow dependency, default by borrowers and self-liquidation. REITs are also subject to the possibilities of failing to qualify for tax-free pass-through of income under the Code and failing to maintain their exemptions from registration under the 1940 Act. REITs (especially mortgage REITs) also are subject to interest rate risks. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims of losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H: Joint Credit Facility A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. NOTE I: Distributions to Shareholders The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended December 31, 2003 and December 31, 2002 were as follows: 2003 2002 ---------------- ----------------- Distribution paid from: Ordinary income...................... $ 2,167,752 $ 1,476,136 --------------- --------------- Total taxable distributions............ 2,167,752 1,476,136 --------------- --------------- Total distributions paid............... $ 2,167,752 $ 1,476,136 =============== =============== 10 AllianceBernstein Variable Products Series Fund ================================================================================ As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income.................... $ 2,868,387 Accumulated capital and other losses............. (660,047)(a) Unrealized appreciation/(depreciation)........... 26,015,504(b) --------------- Total accumulated earnings/(deficit)............. $ 28,223,844 =============== (a) On December 31, 2003, the Portfolio had a net capital loss carryforward of $660,047, all of which expires in the year 2008. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. During the fiscal year, the Portfolio utilized capital loss carryforwards of $1,431,703. (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 J: Legal Proceedings As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not 11 REAL ESTATE INVESTMENT PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund ================================================================================ affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 12 REAL ESTATE INVESTMENT 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, 2004 Year Ended December 31, (unaudited) 2003 2002 2001 2000 1999 ------------- -------- --------- --------- --------- --------- Net asset value, beginning of period .......... $15.62 $11.52 $11.50 $10.75 $ 8.87 $9.78 ------ ------ ------ ------ ----- ------ Income From Investment Operations - --------------------------------- Net investment income (a)...................... .31(b) .46 .44(b) .47(b) .48(b) .56(b) Net realized and unrealized gain (loss) on investment transactions.................. .73 3.99 (.12) .67 1.84 (1.01) ------ ------ ------ ------ ----- ------ Net increase (decrease) in net asset value from operations... ......................... 1.04 4.45 .32 1.14 2.32 (.45) ------ ------ ------ ------ ----- ------ Less: Dividends - --------------- Dividends from net investment income .......... (.40) (.35) (.30) (.39) (.44) (.46) ------ ------ ------ ------ ----- ------ Net asset value, end of period................. $16.26 $15.62 $11.52 $11.50 $ 10.75 $8.87 ====== ====== ====== ====== ===== ====== Total Return - ------------ Total investment return based on net asset value (c)............................. 6.74% 39.30% 2.60% 10.79% 26.69% (5.11)% Ratios/Supplemental Data - ------------------------ Net assets, end of period (000's omitted)............................. $68,441 $68,717 $50,062 $39,417 $29,124 $17,852 Ratio to average net assets of: Expenses, net of waivers and reimbursements........................... .76%(d) 1.24% 1.06% .95% .95% .95% Expenses, before waivers and reimbursements........................... 1.11%(d) 1.24% 1.29% 1.39% 1.67% 1.72% Net investment income....................... 3.93%(b)(d) 3.50% 3.70%(b) 4.32%(b) 4.87%(b) 5.96%(b) Portfolio turnover rate........................ 14% 23% 31% 33% 25% 37%
- -------------------------------------------------------------------------------- See footnote summary on page 14. 13 REAL ESTATE INVESTMENT PORTFOLIO FINANCIAL HIGHLIGHTS (continued) AllianceBernstein Variable Products Series Fund ================================================================================ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
================================================================ Class B ================================================================ Six Months Ended April 24, 2001(e) June 30, 2004 Year Ended December 31, to (unaudited) 2003 2002 December 31, 2001 -------------- --------------- --------------- --------------- Net asset value, beginning of period......... $15.55 $11.48 $ 11.49 $ 10.46 ------ ------ ------- ------- Income From Investment Operations - --------------------------------- Net investment income (a).................... .30 (b) .43 .40(b) .31(b) Net realized and unrealized gain (loss) on investment transactions................. .71 3.98 (.11) 1.11 ------ ------ ------- ------- Net increase in net asset value from operations................................ 1.01 4.41 .29 1.42 ------ ------ ------- ------- Less: Dividends - --------------- Dividends from net investment income......... (.38) (.34) (.30) (.39) ------ ------ ------- ------- Net asset value, end of period............... $16.18 $15.55 $ 11.48 $ 11.49 ====== ====== ======= ======= Total Return - ------------ Total investment return based on net asset value (c)................................. 6.56% 39.02% 2.31% 13.77% Ratios/Supplemental Data - ------------------------- Net assets, end of period (000's omitted).... $53,556 $43,919 $16,626 $5,603 Ratio to average net assets of: Expenses, net of waivers and reimbursements......................... 1.01%(d) 1.49% 1.31% 1.20%(d) Expenses, before waivers and reimbursements......................... 1.36%(d) 1.49% 1.52% 1.84%(d) Net investment income..................... 3.74%(b)(d) 3.22% 3.43%(b) 4.40%(b)(d) Portfolio turnover rate...................... 14% 23% 31% 33%
- -------------------------------------------------------------------------------- (a) Based on average shares outstanding. (b) Net of expenses reimbursed or waived by the Adviser. (c) 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. (d) Annualized. (e) Commencement of distribution. 14 (This page left intentionally blank.) (This page left intentionally blank.) (This page left intentionally blank.) - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN SMALL CAP GROWTH PORTFOLIO - ------------------------------------------------------------------------------- SEMI-ANNUAL REPORT JUNE 30, 2004 - --------------------------- INVESTMENT PRODUCTS OFFERED o ARE NOT FDIC INSURED o MAY LOSE VALUE o ARE NOT BANK GUARANTEED - --------------------------- You may obtain a description of the Fund's proxy voting policies and procedures, without charge, upon request by visiting Alliance Capital's web site at www.alliancebernstein.com (click on Investors, then the "proxy voting policies and procedures" link on the left side of the page), or by going to the Securities and Exchange Commission's web site at www.sec.gov, or by calling Alliance Capital at (800) 227-4618. SMALL CAP GROWTH PORTFOLIO TEN LARGEST HOLDINGS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PERCENT OF COMPANY U.S. $ VALUE NET ASSETS - ------------------------------------------------------------------------------- Dycom Industries, Inc. $ 1,360,800 1.7% Scansource, Inc. 1,297,733 1.7 Alliance Data Systems Corp. 1,284,400 1.6 Amphenol Corp. Cl.A 1,246,168 1.6 Micros Sytems, Inc. 1,213,641 1.5 Martek Biosciences Corp. 1,207,655 1.5 Hyperion Solution Corp. 1,184,812 1.5 Insight Enterprises, Inc. 1,134,864 1.4 Avocent Corp. 1,120,570 1.4 Station Casinos, Inc. 1,098,680 1.4 - ------------------------------------------------------------------------------- $12,149,323 15.3% 1 SMALL CAP GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------- COMMON STOCKS-98.3% TECHNOLOGY-27.9% COMMUNICATION EQUIPMENT-1.0% Inet Technologies, Inc. (a) 62,200 $ 775,634 COMPUTER HARDWARE/STORAGE-1.4% Avocent Corp. (a) 30,500 1,120,570 COMPUTER SERVICES-2.8% Alliance Data Systems Corp. (a) 30,400 1,284,400 Cognizant Technology Solutions Corp. (a) 36,800 935,088 ------------ 2,219,488 INTERNET INFRASTRUCTURE-1.7% SupportSoft, Inc. (a) 101,200 878,416 WebEx Communcations, Inc. (a) 21,800 474,368 ------------ 1,352,784 SEMI-CONDUCTOR CAPITAL EQUIPMENT-1.1% FormFactor, Inc. (a) 39,600 889,020 SEMI-CONDUCTOR COMPONENTS-3.1% Micrel, Inc. (a) 44,900 545,535 Microsemi Corp. (a) 64,700 919,387 ON Semiconductor Corp. (a) 113,600 570,272 Sirf Technology Holdings, Inc. (a) 32,900 430,003 ------------ 2,465,197 SOFTWARE-7.8% Aspect Communications Corp. (a) 58,500 830,700 Hyperion Solution Corp. (a) 27,100 1,184,812 Informatica Corp. (a) 76,600 584,458 MicroStrategy, Inc. (a) 18,700 798,490 PalmSource, Inc. (a) 27,900 478,206 Quest Software, Inc. (a) 62,900 811,410 SERENA Software, Inc. (a) 41,000 782,690 SINA Corp. (a) 22,700 748,873 ------------ 6,219,639 MISCELLANEOUS-9.0% Amphenol Corp. Cl.A (a) 37,400 1,246,168 Exar Corp. (a) 50,800 744,728 Kronos, Inc. (a) 26,400 1,087,680 Micros Sytems, Inc. (a) 25,300 1,213,641 O2MICRO International, Ltd. (a) 51,300 873,639 Power-One, Inc. (a) 64,500 708,210 TNS, Inc. (a) 20,100 438,180 TTM Technologies, Inc. (a) 67,700 802,245 ------------ 7,114,491 ------------ 22,156,823 CONSUMER SERVICES-24.9% ADVERTISING-1.9% Digitas, Inc. (a) 62,400 688,272 Startek, Inc. 23,300 834,140 ------------ 1,522,412 APPAREL-1.0% The Children's Place Retail Stores, Inc. (a) 33,000 776,160 BROADCASTING & CABLE-2.1% Cumulus Media, Inc. Cl.A (a) 58,882 989,806 Entravision Communications Corp. Cl.A (a) 85,900 659,712 ------------ 1,649,518 ENTERTAINMENT/LEISURE-0.9% Activision, Inc. (a) 46,550 740,145 GAMING-1.4% Station Casinos, Inc. 22,700 1,098,680 RETAIL - GENERAL MERCHANDISE-4.0% Cost Plus, Inc. (a) 16,200 525,690 Dick's Sporting Goods, Inc. (a) 27,000 900,450 Hibbett Sporting Goods, Inc. (a) 37,550 1,026,992 Tuesday Morning Corp. (a) 25,900 751,100 ------------ 3,204,232 MISCELLANEOUS-13.6% Bright Horizons Family Solutions, Inc. (a) 16,500 884,565 Charles River Associates, Inc. (a) 22,700 702,565 Dycom Industries, Inc. (a) 48,600 1,360,800 Hughes Supply, Inc. 16,600 978,238 Insight Enterprises, Inc. (a) 63,900 1,134,864 Intersections, Inc. (a) 8,200 196,718 Laureate Education, Inc. (a) 23,800 910,112 Life Time Fitness, Inc. (a) 23,100 485,100 MSC Industrial Direct Co., Inc. Cl.A 29,100 955,644 Resources Connection, Inc. (a) 27,200 1,063,792 2 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------- Scansource, Inc. (a) 21,840 $ 1,297,733 Strayer Education, Inc. 7,100 792,147 ------------ 10,762,278 ------------ 19,753,425 HEALTHCARE-18.0% BIOTECHNOLOGY-9.3% Indevus Pharmaceuticals, Inc. (a) 83,900 515,985 Martek Biosciences Corp. (a) 21,500 1,207,655 MGI Pharma, Inc. (a) 39,600 1,069,596 Nektar Therapeutics (a) 37,300 744,508 Neopharm, Inc. (a) 46,000 475,180 Protein Design Labs, Inc. (a) 35,800 684,854 Seattle Genetics, Inc. (a) 66,300 466,089 Serologicals Corp. (a) 39,100 781,609 Techne Corp. (a) 20,000 869,000 Telik, Inc. (a) 24,000 572,880 ------------ 7,387,356 DRUGS-1.2% Impax Laboratories, Inc. (a) 48,300 936,054 MEDICAL PRODUCTS-4.4% Abaxis, Inc. (a) 48,300 916,734 Angiotech Pharmaceuticals, Inc. (a) 39,300 791,895 Animas Corp. (a) 19,900 371,135 Inamed Corp. (a) 12,348 776,072 OraSure Technologies, Inc. (a) 66,100 643,153 ------------ 3,498,989 MEDICAL SERVICES-3.1% eResearch Technology, Inc. (a) 25,600 716,800 Labone, Inc. (a) 27,900 886,662 Stericycle, Inc. (a) 15,900 822,666 ------------ 2,426,128 ------------ 14,248,527 CAPITAL GOODS-7.9% ELECTRICAL EQUIPMENT-2.5% EDO Corp. 21,100 508,932 Engineered Support Systems, Inc. 13,725 803,050 United Defense Industries, Inc. (a) 18,600 651,000 ------------ 1,962,982 MACHINERY-2.5% Actuant Corp. Cl.A (a) 27,900 1,087,821 Oskosh Truck Corp. 15,600 894,036 ------------ 1,981,857 MISCELLANEOUS-2.9% Graftech International, Ltd. (a) 74,400 778,224 IDEX Corp. 26,000 893,100 Simpson Manufacturing Co., Inc. 11,400 639,768 ------------ 2,311,092 ------------ 6,255,931 FINANCE-7.5% BANKING - MONEY CENTER-1.7% UCBH Holdings, Inc. 14,900 588,848 Wintrust Financial Corp. 15,800 798,058 ------------ 1,386,906 BANKING - REGIONAL-1.9% Oriental Financial Group 24,700 668,629 R&G Financial Corp. Cl.B 24,600 813,276 ------------ 1,481,905 BROKERAGE & MONEY MANAGEMENT-2.2% Affiliated Managers Group, Inc. (a) 11,200 564,144 Greenhill & Co., Inc. (a) 11,500 240,465 Southwest Bancorporation of Texas, Inc. 22,400 988,288 ------------ 1,792,897 INSURANCE-0.8% Triad Guaranty, Inc. (a) 10,600 616,920 MISCELLANEOUS-0.9% Investors Financial Services Corp. 15,800 688,564 ------------ 5,967,192 ENERGY-5.1% OIL SERVICE-4.3% Core Laboratories NV (a) 20,300 466,900 FMC Technologies, Inc. (a) 31,700 912,960 Helmerich & Payne, Inc. 27,200 711,280 Range Resources Corp. 45,000 657,000 W-H Energy Services, Inc. (a) 34,300 672,280 ------------ 3,420,420 PIPELINES-0.8% Hydril Co. (a) 19,500 614,250 ------------ 4,034,670 TRANSPORTATION-4.2% AIR FREIGHT-1.2% UTI Worldwide, Inc. (U.S. Virgin Islands) 17,500 922,075 SHIPPING-1.0% Kirby Corp. (a) 21,400 832,460 3 SMALL CAP GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SHARES OR PRINCIPAL AMOUNT COMPANY (000) U.S. $ VALUE - ------------------------------------------------------------------------- TRUCKING-1.1% Werner Enterprises, Inc. 40,775 $ 860,353 MISCELLANEOUS-0.9% Pacer International, Inc. (a) 40,100 741,850 ------------ 3,356,738 BASIC INDUSTRY-2.0% CHEMICALS-2.0% Ferro Corp. 26,000 693,680 Georgia Gulf Corp. 25,500 914,430 ------------ 1,608,110 CONSUMER STAPLES-0.8% HOUSEHOLD PRODUCTS-0.8% Tempur-Pedic International, Inc. (a) 45,100 631,851 Total Common Stocks (cost $63,018,804) 78,013,267 SHORT-TERM INVESTMENT-2.8% TIME DEPOSIT-2.8% 0.563%, 7/1/04 (cost $2,179,000) $ 2,179 2,179,000 TOTAL INVESTMENTS-101.1% (cost $65,197,804) 80,192,267 Other assets less liabilities-(1.1%) (856,746) NET ASSETS-100% $79,335,521 (a) Non-income producing security. See Notes to Financial Statements. 4 SMALL CAP GROWTH PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $65,197,804) $ 80,192,267 Cash 886 Receivable for investment securities sold 376,317 Dividends and interest receivable 6,375 Total assets 80,575,845 LIABILITIES Payable for investment securities purchased 994,061 Advisory fee payable 28,804 Distribution fee payable 4,616 Accrued expenses 212,843 Total liabilities 1,240,324 NET ASSETS $ 79,335,521 COMPOSITION OF NET ASSETS Capital stock, at par $ 7,516 Additional paid-in capital 138,330,485 Accumulated net investment loss (416,157) Accumulated net realized loss on investment transactions (73,580,786) Net unrealized appreciation of investments 14,994,463 $ 79,335,521 CLASS A SHARES Net assets $ 61,009,481 Shares of capital stock outstanding 5,767,062 Net asset value per share $ 10.58 CLASS B SHARES Net assets $ 18,326,040 Shares of capital stock outstanding 1,749,329 Net asset value per share $ 10.48 See Notes to Financial Statements. 5 SMALL CAP GROWTH PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $604) $ 61,487 Interest 3,870 Total investment income 65,357 EXPENSES Advisory fee 398,824 Distribution fee--Class B 22,018 Custodian 75,748 Administrative 34,500 Audit and legal 23,750 Printing 14,759 Directors' fees 500 Transfer agency 450 Miscellaneous 10,671 Total expenses 581,220 Less: expenses waived and reimbursed by the Adviser (see Note B) (99,706) Net expenses 481,514 Net investment loss (416,157) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS Net realized gain on investment transactions 7,430,106 Net change in unrealized appreciation/depreciation of investments (4,131,877) Net gain on investment transactions 3,298,229 NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,882,072 See Notes to Financial Statements. 6 SMALL CAP GROWTH PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 -------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment loss $ (416,157) $ (981,904) Net realized gain on investment transactions 7,430,106 17,151,773 Net change in unrealized appreciation/ depreciation of investments (4,131,877) 17,476,095 Net increase in net assets from operations 2,882,072 33,645,964 CAPITAL STOCK TRANSACTIONS Net decrease (472,002) (47,914,869) Total increase (decrease) 2,410,070 (14,268,905) NET ASSETS Beginning of period 76,925,451 91,194,356 End of period (including accumulated net investment loss of $416,157 and $0, respectively) $ 79,335,521 $ 76,925,451 See Notes to Financial Statements. 7 SMALL CAP GROWTH PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein Small Cap Growth Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek growth of capital by pursuing aggressive investment policies. Current income is incidental to the Portfolio's objective. 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 Alliance Capital Management L.P., (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. 8 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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 and loss on foreign currency transactions represents foreign exchange gains and losses from sales and maturities of foreign fixed income investments, foreign currency exchange contracts, holdings 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 policy of the Portfolio 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 trade 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 the Adviser an investment advisory fee at an annual rate of 1% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .75% of the first $2.5 billion, .65% of the next $2.5 billion and .60% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $99,706. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. 9 SMALL CAP GROWTH PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Pursuant to the advisory agreement, the Portfolio paid $34,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2004. Brokerage commissions paid on investment transactions for the six months ended June 30, 2004 amounted to $150,470, of which $734 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 $450 for the six months ended June 30, 2004. 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 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 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. NOTE D: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2004, were as follows: PURCHASES SALES -------------- ------------- Investment securities (excluding U.S. government securities) $ 38,059,214 $ 38,452,315 U.S. government securities -0- -0- 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 $ 16,968,347 Gross unrealized depreciation (1,973,884) Net unrealized appreciation $ 14,994,463 1. FORWARD EXCHANGE CURRENCY CONTRACTS The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as unrealized appreciation and depreciation 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. 2. OPTION TRANSACTIONS For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. NOTE E: 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 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. For the six months ended June 30, 2004, the Portfolio had no securities on loan. For the six months ended June 30, 2004, the Portfolio earned fee income of $558 which is included in the interest income in the accompanying statement of operations. 11 SMALL CAP GROWTH PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE F: CAPITAL STOCK There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B shares. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT --------------------------- ------------------------------ SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ------------ ------------ -------------- -------------- CLASS A Shares sold 497,304 1,879,099 $ 5,301,329 $ 16,198,723 Shares redeemed (736,488) (8,487,293) (7,655,238) (71,082,082) Net decrease (239,184) (6,608,194) $(2,353,909) $(54,883,359) CLASS B Shares sold 446,348 1,989,555 $ 4,676,501 $ 16,775,516 Shares redeemed (268,543) (1,170,025) (2,794,594) (9,807,026) Net increase 177,805 819,530 $ 1,881,907 $ 6,968,490 NOTE G: RISKS INVOLVED IN INVESTING IN THE PORTFOLIO Foreign Securities 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H: JOINT CREDIT FACILITY A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. NOTE I: COMPONENTS OF ACCUMULATED EARNINGS (DEFICIT) The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Accumulated capital and other losses $ (78,506,792)(a) Unrealized appreciation/(depreciation) 16,622,240(b) Total accumulated earnings/(deficit) $ (61,884,552) (a) On December 31, 2003, the Portfolio had a net capital loss carrryforward of $78,506,792 of which $259,502 expires in the year 2008, $32,924,052 expires in the year 2009, and $45,323,238 expires in the year 2010. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. 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 merger with Brinson Series Trust Small Cap Growth Portfolio, may apply. During the fiscal year, the Portfolio utilized capital loss carryforwards of $2,088,841. (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 J: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices 12 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 13 SMALL CAP GROWTH 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 YEAR ENDED DECEMBER 31, JUNE 30, 2004 -------------------------------------------------------------- (UNAUDITED) 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- ---------- Net asset value, beginning of period $10.17 $ 6.83 $10.01 $11.84 $13.00 $11.14 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (a) (.05)(b) (.09) (.07)(b) (.07)(b) (.06)(b) .08(b) Net realized and unrealized gain (loss) on investment transactions .46 3.43 (3.11) (1.41) (.71) 1.82 Net increase (decrease) in net asset value value from operations .41 3.34 (3.18) (1.48) (.77) 1.90 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income -0- -0- -0- -0- (.05) (.04) Distributions from net realized gain on investment transactions -0- -0- -0- (.26) (.34) -0- Distributions in excess of net realized gain on investment transactions -0- -0- -0- (.09) -0- -0- Total dividends and distributions -0- -0- -0- (.35) (.39) (.04) Net asset value, end of period $10.58 $10.17 $ 6.83 $10.01 $11.84 $13.00 TOTAL RETURN Total investment return based on net asset value (c) 4.03% 48.90% (31.77)% (12.75)% (6.09)% 17.08% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $61,010 $61,079 $86,093 $184,223 $232,239 $169,611 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.15%(d) 1.36% 1.11% .95% .95% .95% Expenses, before waivers and reimbursements 1.40%(d) 1.36% 1.25% 1.16% 1.14% 1.19% Net investment income (loss) (.99)%(b)(d) (1.10)% (.86)%(b) (.70)%(b) (.46)%(b) .72%(b) Portfolio turnover rate 53% 129% 111% 113% 178% 110%
See footnote summary on page 15. 14 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS B ----------------------------------------------------------------- SIX MONTHS AUGUST 11, ENDED YEAR ENDED DECEMBER 31, 2000(e) TO JUNE 30, 2004 ------------------------------------- DECEMBER 31, (UNAUDITED) 2003 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $10.08 $ 6.78 $ 9.98 $11.82 $13.00 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (.06)(b) (.11) (.09)(b) (.09)(b) (.03)(b) Net realized and unrealized gain (loss) on investment transactions .46 3.41 (3.11) (1.40) (1.15) Net increase (decrease) in net asset value from operations .40 3.30 (3.20) (1.49) (1.18) LESS: DISTRIBUTIONS Distributions from net realized gain on investment transactions -0- -0- -0- (.26) -0- Distributions in excess of net realized gain on investment transactions -0- -0- -0- (.09) -0- Total distributions -0- -0- -0- (.35) -0- Net asset value, end of period $10.48 $10.08 $6.78 $9.98 $11.82 TOTAL RETURN Total investment return based on net asset value (c) 3.97% 48.67% (32.06)% (12.86)% (8.16)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $18,326 $15,846 $5,101 $6,835 $435 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.40%(d) 1.61% 1.37% 1.20% 1.20%(d) Expenses, before waivers and reimbursements 1.65%(d) 1.61% 1.51% 1.43% 1.41%(d) Net investment loss (1.23)%(b)(d) (1.37)% (1.10)%(b) (.98)%(b) (.69)%(b)(d) Portfolio turnover rate 53% 129% 111% 113% 178%
(a) Based on average shares outstanding. (b) Net of expenses reimbursed or waived by the Adviser. (c) 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. (d) Annualized. (e) Commencement of distribution. 15 - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN SMALL CAP VALUE PORTFOLIO - ------------------------------------------------------------------------------- SEMI-ANNUAL REPORT JUNE 30, 2004 - --------------------------- INVESTMENT PRODUCTS OFFERED o ARE NOT FDIC INSURED o MAY LOSE VALUE o ARE NOT BANK GUARANTEED - --------------------------- You may obtain a description of the Fund's proxy voting policies and procedures, without charge, upon request by visiting Alliance Capital's web site at www.alliancebernstein.com (click on Investors, then the "proxy voting policies and procedures" link on the left side of the page), or by going to the Securities and Exchange Commission's web site at www.sec.gov, or by calling Alliance Capital at (800) 227-4618. SMALL CAP VALUE PORTFOLIO TEN LARGEST HOLDINGS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PERCENT OF COMPANY U.S. $ VALUE NET ASSETS - ------------------------------------------------------------------------------ Cytec Industries, Inc. $ 4,026,870 1.9% Universal Corp. 3,774,654 1.8 Jones Apparel Group, Inc. 3,600,576 1.7 URS Corp. 3,594,880 1.7 Constellation Brands, Inc. Cl. A 3,594,184 1.7 Dana Corp. 3,435,880 1.7 Office Depot, Inc. 3,435,138 1.7 Valero Energy Corp. 3,319,200 1.6 Del Monte Foods Co. 3,277,616 1.6 Reliance Steel & Aluminum Co. 3,273,984 1.6 - ------------------------------------------------------------------------------- $ 35,332,982 17.0% 1 SMALL CAP VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------- COMMON STOCKS-95.5% CONSUMER CYCLICALS-16.6% AUTOS & AUTO PARTS-2.6% American Axle & Manufacturing Holdings, Inc. 52,000 $ 1,890,720 Dana Corp. 175,300 3,435,880 ------------ 5,326,600 HOTEL - MOTEL-0.7% Caesars Entertainment, Inc. (a) 102,300 1,534,500 MISCELLANEOUS CONSUMER CYCLICALS-0.7% Brunswick Corp. 35,200 1,436,160 RETAILERS-9.8% AutoNation, Inc. (a) 163,400 2,794,140 BJ's Wholesale Club, Inc. (a) 58,900 1,472,500 Borders Group, Inc. 123,200 2,887,808 Federated Department Stores, Inc. 38,000 1,865,800 Foot Locker, Inc. 36,000 876,240 Group 1 Automotive, Inc. (a) 89,400 2,968,974 Neiman Marcus Group, Inc. Cl. A 24,500 1,363,425 Office Depot, Inc. (a) 191,800 3,435,138 Payless ShoeSource, Inc. (a) 178,000 2,653,980 ------------ 20,318,005 TEXTILES/SHOES - APPAREL MFG.-2.8% Jones Apparel Group, Inc. 91,200 3,600,576 V.F. Corp. 44,500 2,167,150 ------------ 5,767,726 ------------ 34,382,991 FINANCIAL-15.4% MAJOR REGIONAL BANKS-4.9% Banknorth Group, Inc. 59,000 1,916,320 Hibernia Corp. Cl. A 86,300 2,097,090 Popular, Inc. 46,000 1,967,420 UnionBanCal Corp. 36,900 2,081,160 Whitney Holding Corp. 48,000 2,144,160 ------------ 10,206,150 MULTI-LINE INSURANCE-2.9% PacifiCare Health Systems, Inc. (a) 80,800 3,123,728 StanCorp Financial Group, Inc. 41,500 2,780,500 ------------ 5,904,228 PROPERTY - CASUALTY INSURANCE-2.9% Fidelity National Financial, Inc. 25,100 937,234 Old Republic International Corp. 64,000 1,518,080 PartnerRe Ltd. (Bermuda) 17,700 1,004,121 Radian Group, Inc. 54,100 2,591,390 ------------ 6,050,825 REAL ESTATE INVESTMENT TRUST-0.4% FelCor Lodging Trust, Inc. (a) 70,000 847,000 SAVINGS AND LOAN-4.3% Astoria Financial Corp. 75,600 2,765,448 Commercial Federal Corp. 70,700 1,915,970 Sovereign Bancorp, Inc. 110,000 2,431,000 Washington Federal, Inc. 77,104 1,850,496 ------------ 8,962,914 ------------ 31,971,117 CAPITAL EQUIPMENT-11.5% AUTO TRUCKS - PARTS-4.8% ArvinMeritor, Inc. 165,900 3,246,663 BorgWarner, Inc. 42,000 1,838,340 Modine Manufacturing Co. 89,500 2,850,575 PACCAR, Inc. 34,500 2,000,655 ------------ 9,936,233 ELECTRICAL EQUIPMENT-2.1% Anixter International, Inc. (a) 51,600 1,755,948 Cooper Industries Ltd. Cl. A 42,200 2,507,102 ------------ 4,263,050 MACHINERY-2.3% Lincoln Electric Holdings, Inc. 78,000 2,659,020 Terex Corp. (a) 65,000 2,218,450 ------------ 4,877,470 MISCELLANEOUS CAPITAL GOODS-2.3% Parker-Hannifin Corp. 36,000 2,140,560 Textron, Inc. 45,500 2,700,425 ------------ 4,840,985 ------------ 23,917,738 COMMODITIES-11.0% CHEMICALS-5.1% Albemarle Corp. 88,300 2,794,695 Crompton Corp. 276,200 1,740,060 Cytec Industries, Inc. 88,600 4,026,870 FMC Corp. (a) 48,400 2,086,524 ------------ 10,648,149 2 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------- CONTAINERS - METAL/GLASS/PAPER-0.7% Ball Corp. 21,500 $ 1,549,075 MISCELLANEOUS INDUSTRIAL COMMODITIES-1.4% United Stationers, Inc. (a) 70,995 2,819,922 MISCELLANEOUS METALS-2.9% Mueller Industries, Inc. 75,000 2,685,000 Reliance Steel & Aluminum Co. 81,200 3,273,984 ------------ 5,958,984 PAPER-0.9% MeadWestvaco Corp. 60,660 1,782,797 ------------ 22,758,927 TECHNOLOGY-8.5% COMMUNICATION - EQUIP. MFRS.-3.5% ADC Telecommunications, Inc. (a) 636,000 1,806,240 Andrew Corp. (a) 122,000 2,441,220 Nortel Networks Corp. (a) 316,100 1,577,339 Tellabs, Inc. (a) 157,000 1,372,180 ------------ 7,196,979 COMPUTERS-1.1% Western Digital Corp. (a) 252,800 2,189,248 COMPUTER/INSTRUMENTATION-0.9% Adaptec, Inc. (a) 228,100 1,929,726 MISCELLANEOUS INDUSTRIAL TECHNOLOGY-1.9% Arrow Electronics, Inc. (a) 21,000 563,220 Avnet, Inc. (a) 22,000 499,400 Solectron Corp. (a) 107,400 694,878 Tech Data Corp. (a) 57,500 2,249,975 ------------ 4,007,473 SEMICONDUCTORS-1.1% Vishay Intertechnology, Inc. (a) 124,600 2,315,068 ------------ 17,638,494 NON-FINANCIAL-7.1% BUILDING MATERIALS - CEMENT-1.4% Texas Industries, Inc. 72,000 2,964,240 BUILDING MATERIALS - HEAT/PLUMBING/AIR-1.4% Hughes Supply, Inc. 47,000 2,769,710 HOME BUILDING-2.8% Beazer Homes USA, Inc. 29,700 2,979,207 Pulte Homes, Inc. 54,200 2,820,026 ------------ 5,799,233 MISCELLANEOUS BUILDING-1.5% Harsco Corp. 66,000 3,102,000 ------------ 14,635,183 CONSUMER STAPLES-6.8% BEVERAGES-1.7% Constellation Brands, Inc. Cl. A (a) 96,800 3,594,184 FOODS-4.6% Corn Products International, Inc. 52,000 2,420,600 Del Monte Foods Co. (a) 322,600 3,277,616 Universal Corp. 74,100 3,774,654 ------------ 9,472,870 RETAIL STORES - FOOD-0.5% SUPERVALU, Inc. 30,000 918,300 ------------ 13,985,354 CONSUMER GROWTH-6.6% HOSPITAL MANAGEMENT-1.2% Universal Health Services, Inc. Cl. B 56,000 2,569,840 HOSPITAL SUPPLIES-1.2% Owens & Minor, Inc. 95,900 2,483,810 MISCELLANEOUS CONSUMER GROWTH-1.8% URS Corp. (a) 131,200 3,594,880 PUBLISHING-2.4% Deluxe Corp. 64,500 2,805,750 The Readers Digest Association, Inc. 139,500 2,230,605 ------------ 5,036,355 ------------ 13,684,885 UTILITIES-6.1% ELECTRIC COMPANIES-6.1% Constellation Energy Group, Inc. 41,000 1,553,900 Northeast Utilities 129,200 2,515,524 OGE Energy Corp. 60,100 1,530,747 PNM Resources, Inc. 96,300 2,000,151 Puget Energy, Inc. 120,800 2,646,728 WPS Resources Corp. 51,500 2,387,025 ------------ 12,634,075 3 SMALL CAP VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SHARES OR PRINCIPAL AMOUNT COMPANY (000) U.S. $ VALUE - ------------------------------------------------------------------------- ENERGY-3.7% OILS - INTEGRATED DOMESTIC-3.7% Amerada Hess Corp. 16,400 $ 1,298,716 Pogo Producing Co. 60,500 2,988,700 Valero Energy Corp. 45,000 3,319,200 ------------ 7,606,616 SERVICES-2.2% MISCELLANEOUS INDUSTRIAL TRANSPORTATION-1.0% SEACOR Holdings, Inc. (a) 45,100 1,981,243 TRUCKERS-1.2% USF Corp. 73,000 2,564,490 ------------ 4,545,733 Total Common Stocks (cost $164,987,667) 197,761,113 SHORT-TERM INVESTMENT-4.6% TIME DEPOSIT-4.6% Bank of New York 0.563%, 7/01/04 (cost $9,475,000) $ 9,475 9,475,000 TOTAL INVESTMENTS-100.1% (cost $174,462,667) 207,236,113 Other assets less liabilities-(0.1%) (133,691) NET ASSETS-100% $ 207,102,422 (a) Non-income producing security. See Notes to Financial Statements. 4 SMALL CAP VALUE PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $174,462,667) $207,236,113 Cash 116 Dividends and interest receivable 141,736 Total assets 207,377,965 LIABILITIES Advisory fee payable 119,044 Payable for investment securities purchased 34,039 Distribution fee payable 20,664 Accrued expenses 101,796 Total liabilities 275,543 NET ASSETS $207,102,422 COMPOSITION OF NET ASSETS Capital stock, at par $ 13,682 Additional paid-in capital 166,448,937 Undistributed net investment income 300,862 Accumulated net realized gain on investment transactions 7,565,495 Net unrealized appreciation of investments 32,773,446 $207,102,422 CLASS A SHARES Net assets $101,734,381 Shares of capital stock outstanding 6,713,968 Net asset value per share $ 15.15 CLASS B SHARES Net assets $105,368,041 Shares of capital stock outstanding 6,967,732 Net asset value per share $ 15.12 See Notes to Financial Statements. 5 SMALL CAP VALUE PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $1,242) $ 1,217,887 Interest 27,721 Total investment income 1,245,608 EXPENSES Advisory fee 951,455 Distribution fee--Class B 118,346 Custodian 55,723 Administrative 34,500 Audit and legal 20,863 Printing 7,108 Directors' fees 500 Transfer agency 450 Miscellaneous 2,508 Total expenses 1,191,453 Less: expenses waived and reimbursed by the Adviser (see Note B) (272,364) Net expenses 919,089 Net investment income 326,519 REALIZED AND UNREALIZED GAIN ON INVESTMENT TRANSACTIONS Net realized gain on investment transactions 7,623,551 Net change in unrealized appreciation/ depreciation of investments 5,401,905 Net gain on investment transactions 13,025,456 NET INCREASE IN NET ASSETS FROM OPERATIONS $13,351,975 See Notes to Financial Statements. 6 SMALL CAP VALUE PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 --------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 326,519 $ 247,937 Net realized gain on investment transactions 7,623,551 4,696,947 Net change in unrealized appreciation/ depreciation of investments 5,401,905 36,071,777 Net increase in net assets from operations 13,351,975 41,016,661 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM Net investment income Class A (181,706) (375,698) Class B (80,321) (199,672) Net realized gain on investment transactions Class A (2,336,222) (896,307) Class B (2,409,632) (529,290) CAPITAL STOCK TRANSACTIONS Net increase 24,855,224 56,463,493 Total increase 33,199,318 95,479,187 NET ASSETS Beginning of period 173,903,104 78,423,917 End of period (including undistributed net investment income of $300,862 and $236,370, respectively) $207,102,422 $173,903,104 See Notes to Financial Statements. 7 SMALL CAP VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein Small Cap Value Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek long-term growth of capital. The Fund was incorporated in the State of Maryland on November 17, 1987, as an open-end series investment company. The Fund offers twenty separately managed pools of assets which have differing investment objectives and policies. The Portfolio commenced operations on May 1, 2001. The Portfolio offers Class A and Class B shares. Both classes of shares have identical voting, dividend, liquidating and other rights, except that Class B shares bear a distribution expense and have exclusive voting rights with respect to the Class B distribution plan. The Portfolio offers and sells its shares only to separate accounts of certain life insurance companies for the purpose of funding variable annuity contracts and variable life insurance policies. Sales are made without a sales charge at the Portfolio's net asset value per share. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 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 Alliance Capital Management L.P. (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. 8 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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, 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 policy of the Portfolio 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 trade 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 the Adviser an investment advisory fee at an annual rate of 1% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Effective May 1, 2002, the Adviser agreed to waive its fee and to reimburse the additional operating expenses to the extent necessary to limit total operating expenses on an annual basis to 1.20% and 1.45% of the average daily net assets for Class A and Class B shares, respectively. Any expense waivers or reimbursements are accrued daily and paid monthly. For the six months ended June 30, 2004, the Portfolio received no such waivers/reimbursements. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .75% of the first $2.5 billion, .65% of the next $2.5 billlion and .60% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $237,864. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. 9 SMALL CAP VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Pursuant to the terms of the investment advisory agreement, the Portfolio has agreed to reimburse the Adviser for the cost of providing the Portfolio with certain legal and accounting services. Because of the Adviser's agreement to limit total operating expenses as described above, the Adviser waived reimbursement for such services in the amount of $34,500 for the six months ended June 30, 2004. Brokerage commissions paid on investment transactions for the six months ended June 30, 2004, amounted to $158,612, of which $77,976 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 $450 for the six months ended June 30, 2004. 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 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 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. NOTE D: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2004, were as follows: PURCHASES SALES ------------- ------------ Investment securities (excluding U.S. government securities) $58,356,196 $33,947,313 U.S. government securities -0- -0- 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 $35,795,783 Gross unrealized depreciation (3,022,337) Net unrealized appreciation $32,773,446 1. FORWARD EXCHANGE CURRENCY CONTRACTS The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as net unrealized appreciation or depreciation 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. 2. OPTION TRANSACTIONS For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. NOTE E: CAPITAL STOCK There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B shares. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT --------------------------- ------------------------------ SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ------------ ------------ -------------- -------------- CLASS A Shares sold 703,432 1,773,991 $10,511,633 $21,676,008 Shares issued in reinvestment of dividends and distributions 172,225 105,912 2,517,928 1,272,005 Shares redeemed (439,330) (916,018) (6,525,079) (10,323,748) Net increase 436,327 963,885 $ 6,504,482 $12,624,265 11 SMALL CAP VALUE 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, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ------------ ------------ -------------- -------------- CLASS B Shares sold 1,727,439 4,982,506 $25,696,269 $60,285,362 Shares issued in reinvestment of dividends and distributions 170,662 60,747 2,489,954 728,963 Shares redeemed (666,313) (1,489,294) (9,835,481) (17,175,097) Net increase 1,231,788 3,553,959 $18,350,742 $43,839,228 NOTE F: RISKS INVOLVED IN INVESTING IN THE PORTFOLIO Foreign Securities 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE G: JOINT CREDIT FACILITY A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. NOTE H: DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended December 31, 2003 and December 31, 2002 were as follows: 2003 2002 ---------- --------- Distributions paid from: Ordinary income $1,591,215 $164,117 Net long-term capital gains 409,752 5,488 Total taxable distributions 2,000,967 169,605 Total distributions paid $2,000,967 $169,605 As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $ 1,369,462 Accumulated long-term capital gains 3,558,085 Unrealized appreciation/(depreciation) 27,368,162(a) Total accumulated earnings/(deficit) $32,295,709 (a) The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales. 12 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE I: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 13 SMALL CAP VALUE PORTFOLIO FINANCIAL HIGHLIGHTS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS A ---------------------------------------------------- SIX MONTHS YEAR ENDED MAY 2, 2001(a) ENDED DECEMBER 31, TO JUNE 30, 2004 ----------------------- DECEMBER 31, (UNAUDITED) 2003 2002 2001 ----------- ----------- ----------- ----------- Net asset value, beginning of period $14.49 $10.46 $11.18 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (b)(c) .03 .04 .12 .14 Net realized and unrealized gain (loss) on investment transactions 1.02 4.23 (.81) 1.04 Net increase (decrease) in net asset value from operations 1.05 4.27 (.69) 1.18 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.03) (.07) (.02) -0- Distributions from net realized gain on investment transactions (.36) (.17) (.01) -0- Total dividends and distributions (.39) (.24) (.03) -0- Net asset value, end of period $15.15 $14.49 $10.46 $11.18 TOTAL RETURN Total investment return based on net asset value (d) 7.33% 41.26% (6.20)% 11.80% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $101,734 $90,949 $55,592 $21,076 Ratio to average net assets of: Expenses, net of waivers and reimbursements .84%(e) 1.20% 1.13% .95%(e) Expenses, before waivers and reimbursements 1.13%(e) 1.28% 1.41% 2.65%(e) Net investment income (c) .47%(e) .34% 1.04% 1.99%(e) Portfolio turnover rate 19% 21% 28% 12%
See footnote summary on page 15. 14 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS B ---------------------------------------------------- SIX MONTHS YEAR ENDED MAY 1, 2001(f) ENDED DECEMBER 31, TO JUNE 30, 2004 ----------------------- DECEMBER 31, (UNAUDITED) 2003 2002 2001 ----------- ----------- ----------- ----------- Net asset value, beginning of period $14.46 $10.46 $11.20 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (b)(c) .02 .01 .08 .11 Net realized and unrealized gain (loss) on investment transactions 1.01 4.22 (.79) 1.09 Net increase (decrease) in net asset value from operations 1.03 4.23 (.71) 1.20 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.01) (.06) (.02) -0- Distributions from net realized gain on investment transactions (.36) (.17) (.01) -0- Total dividends and distributions (.37) (.23) (.03) -0- Net asset value, end of period $15.12 $14.46 $10.46 $11.20 TOTAL RETURN Total investment return based on net asset value (d) 7.23% 40.89% (6.37)% 12.00% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $105,368 $82,954 $22,832 $346 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.09%(e) 1.45% 1.43% 1.20%(e) Expenses, before waivers and reimbursements 1.38%(e) 1.53% 1.70% 3.17%(e) Net investment income (c) .22%(e) .05% .74% 2.17%(e) Portfolio turnover rate 19% 21% 28% 12%
(a) Commencement of distribution. (b) Based on average shares outstanding. (c) Net of expenses reimbursed or waived by the Adviser. (d) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total 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 operations. 15 ALLIANCEBERNSTEIN ------------------------ VARIABLE PRODUCTS ------------------------ SERIES FUND ------------------------ ALLIANCEBERNSTEIN ------------------------ TECHNOLOGY PORTFOLIO ------------------------ SEMI-ANNUAL REPORT JUNE 30, 2004 INVESTMENT PRODUCTS OFFERED - --------------------------- > ARE NOT FDIC INSURED > MAY LOSE VALUE > ARE NOT BANK GUARANTEED - --------------------------- You may obtain a description of the Fund's proxy voting policies and procedures, without charge, upon request by visiting Alliance Capital's web site at www.alliancebernstein.com (click on Investors, then the "proxy voting policies and procedures" link on the left side of the page), or by going to the Securities and Exchange Commission's web site at www.sec.gov, or by calling Alliance Capital at (800) 227-4618. TECHNOLOGY PORTFOLIO TEN LARGEST HOLDINGS JUNE 30, 2004 (UNAUDITED) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY U.S. $ VALUE PERCENT OF NET ASSETS - ------------------------------------------------------------------------------- Microsoft Corp. $ 17,492,999 5.8% Intel Corp. 15,963,839 5.3 QUALCOMM, Inc. 11,691,396 3.9 Yahoo!, Inc. 11,669,196 3.9 Oracle Corp. 11,198,095 3.7 Broadcom Corp. Cl.A 9,007,902 3.0 Dell, Inc. 8,978,283 3.0 SAP AG 8,318,100 2.8 Samsung Electronics Co., Ltd. 8,123,216 2.7 Marvell Technology Group Ltd. 8,060,730 2.7 ------------ ---- $110,503,756 36.8% - ------------------------------------------------------------------------------- 1 TECHNOLOGY PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 2004 (UNAUDITED) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- COMMON STOCKS & OTHER INVESTMENTS - 96.5% TECHNOLOGY - 83.1% COMMUNICATION EQUIPMENT - 13.1% 3Com Corp. (a) 405,100 $ 2,531,875 Cisco Systems, Inc. (a) 316,400 7,498,680 Corning, Inc. (a) 423,800 5,534,828 Juniper Networks, Inc. (a) 310,450 7,627,757 Motorola, Inc. 237,000 4,325,250 QUALCOMM, Inc. 160,200 11,691,396 ------------ 39,209,786 ------------ COMPUTER HARDWARE/ STORAGE - 6.7% Dell, Inc. (a) 250,650 8,978,283 EMC Corp. (a) 528,763 6,027,898 Hewlett-Packard Co. 134,300 2,833,730 Western Digital Corp. (a) 249,900 2,164,134 ------------ 20,004,045 ------------ COMPUTER SERVICES - 8.4% Accenture Ltd. Cl.A (Bermuda) (a) 145,600 4,001,088 BearingPoint, Inc. (a) 135,340 1,200,466 Computer Sciences Corp. (a) 97,150 4,510,675 First Data Corp. 130,600 5,814,312 Fiserv, Inc. (a) 76,125 2,960,501 Infosys Technologies Ltd. (ADR) (India) 50,300 4,666,331 Manhattan Associates, Inc. (a) 63,000 1,945,440 ------------ 25,098,813 ------------ CONTRACT MANUFACTURING - 3.6% Flextronics International Ltd. (Singapore) (a) 353,300 5,635,135 Sanmina-SCI Corp. (a) 574,950 5,232,045 ------------ 10,867,180 ------------ INTERNET MEDIA - 1.3% SINA Corp. (Cayman Islands) (a) 118,400 3,906,016 ------------ SEMI-CONDUCTOR CAPITAL EQUIPMENT - 2.5% Applied Materials, Inc. (a) 218,250 4,282,065 KLA-Tencor Corp. (a) 63,200 3,120,816 ------------ 7,402,881 ------------ SEMI-CONDUCTOR COMPONENTS - 22.2% Agere Systems, Inc. Cl.A (a) 395,700 910,110 Altera Corp. (a) 133,680 2,970,370 Broadcom Corp. Cl.A (a) 192,600 9,007,902 Intel Corp. 578,400 15,963,839 Linear Technology Corp. 173,500 6,848,045 Marvell Technology Group Ltd. (Bermuda) (a) 301,900 8,060,730 Maxim Integrated Products, Inc. 46,750 2,450,635 Samsung Electronics Co., Ltd. (GDR) (South Korea) (b) 39,481 8,123,216 Silicon Laboratories, Inc. (a) 57,600 2,669,760 Taiwan Semiconductor Manufacturing Co., Ltd. (ADR) (Taiwan) (a) 565,227 4,697,036 United Microelectronics Corp. (ADR) (Taiwan) (a) 497,700 2,145,087 Vishay Intertechnology, Inc. (a) 155,100 2,881,758 ------------ 66,728,488 ------------ SOFTWARE - 24.4% BMC Software, Inc. (a) 185,700 3,435,450 Cognos, Inc. (Canada) (a) 94,600 3,420,736 Electronic Arts, Inc. (a) 109,800 5,989,590 Mercury Interactive Corp. (a) 117,700 5,864,991 Microsoft Corp. 612,500 17,492,999 Oracle Corp. (a) 938,650 11,198,095 SAP AG (ADR) (Germany) 198,950 8,318,100 Symantec Corp. (a) 149,500 6,545,110 TIBCO Software, Inc. (a) 359,300 3,036,085 VERITAS Software Corp. (a) 253,200 7,013,640 webMethods, Inc. (a) 123,600 1,059,252 ------------ 73,374,048 ------------ MISCELLANEOUS - 0.9% HOYA Corp. (Japan) 27,300 2,857,224 ------------ 249,448,481 ------------ CONSUMER SERVICES - 10.4% BROADCASTING & CABLE - 1.6% News Corp. Ltd. pfd. (ADR) (Australia) 145,100 4,770,888 ------------ CELLULAR COMMUNICATIONS - 3.1% Nextel Communications, Inc. Cl.A (a) 253,800 6,766,308 Vodafone Group Plc (ADR) (United Kingdom) 122,383 2,704,664 ------------ 9,470,972 ------------ - ------------------------------------------------------------------------------- 2 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- RETAIL - GENERAL MERCHANDISE - 1.8% eBay, Inc. (a) 57,700 $ 5,305,515 ------------ MISCELLANEOUS - 3.9% Yahoo!, Inc. (a) 321,200 11,669,196 ------------ 31,216,571 ------------ CAPITAL GOODS - 2.6% ELECTRICAL EQUIPMENT - 1.7% AU Optronics Corp. (ADR) (Taiwan) 75,800 1,238,572 Hon Hai (Salomon Smith Barney) warrants expiring 1/17/07 (a) 1,070,853 3,897,905 ------------ 5,136,477 ------------ MISCELLANEOUS - 0.9% NITTO DENKO Corp. (Japan) 54,800 2,802,401 ------------ 7,938,878 ------------ SHARES OR PRINCIPAL AMOUNT COMPANY (000) U.S. $ VALUE - ------------------------------------------------------------------------------- MULTI-INDUSTRY COMPANIES - 0.4% Novatek Microelectronics Corp., Ltd. (UBS AG) warrants expiring 11/29/05 (a) 360,000 $ 1,188,000 ------------ Total Common Stocks & Other Investments (cost $235,391,293) 289,791,930 ------------ SHORT-TERM INVESTMENT - 4.5% TIME DEPOSIT - 4.5% The Bank of New York 0.563%, 7/01/04 (cost $13,400,000) $13,400 13,400,000 ------------ TOTAL INVESTMENTS - 101.0% (cost $248,791,293) 303,191,930 Other assets less liabilities - (1.0%) (3,043,250) ------------ NET ASSETS - 100% $300,148,680 ============ (a) Non-income producing security (b) Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2004, the aggregate market value of this security amounted to $8,123,216 or 2.7% of net assets Glossary of Terms: ADR - American Depository Receipt GDR - Global Depository Receipt See Notes to Financial Statements. - ------------------------------------------------------------------------------- 3 TECHNOLOGY PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2004 (UNAUDITED) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $248,791,293) $303,191,930 Cash 105,300 Receivable for investment securities sold 7,369,118 Dividends and interest receivable 93,727 ------------ Total assets 310,760,075 ------------ LIABILITIES Payable for investment securities purchased 10,260,179 Advisory fee payable 161,328 Distribution fee payable 35,396 Accrued expenses 154,492 ------------ Total liabilities 10,611,395 ------------ NET ASSETS $300,148,680 ============ COMPOSITION OF NET ASSETS Capital stock, at par $20,656 Additional paid-in capital 554,775,584 Accumulated net investment loss (1,107,079) Accumulated net realized loss on investment and foreign currency transactions (307,941,118) Net unrealized appreciation of investments 54,400,637 ------------ $300,148,680 ============ Class A Shares Net assets $122,006,181 ============ Shares of capital stock outstanding 8,342,005 ============ Net asset value per share $ 14.63 ============ Class B Shares Net assets $178,142,499 ============ Shares of capital stock outstanding 12,314,278 ============ Net asset value per share $ 14.47 ============ See Notes to Financial Statements. - ------------------------------------------------------------------------------- 4 TECHNOLOGY PORTFOLIO STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $27,726) $ 435,351 Interest 21,503 ------------ Total investment income 456,854 ------------ EXPENSES Advisory fee 1,555,939 Distribution fee - Class B 229,807 Custodian 72,185 Administrative 34,500 Printing 24,956 Audit and legal 23,750 Directors' fees 500 Transfer agency 450 Miscellaneous 8,710 ------------ Total expenses 1,950,797 Less: expenses waived and reimbursed by the Adviser (see Note B) (388,985) ------------ Net expenses 1,561,812 ------------ Net investment loss (1,104,958) ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS Net realized gain (loss) on: Investment transactions 28,287,303 Foreign currency transactions (51,164) Net change in unrealized appreciation/depreciation of investments (25,668,176) ------------ Net gain on investment transactions 2,567,963 ------------ NET INCREASE IN NET ASSETS FROM OPERATIONS $ 1,463,005 ============ See Notes to Financial Statements. - ------------------------------------------------------------------------------- 5 TECHNOLOGY PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Six Months Ended Year Ended June 30, 2004 December 31, (unaudited) 2003 ================ ============= INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment loss $ (1,104,958) $ (2,464,249) Net realized gain (loss) on investment and foreign currency transactions 28,236,139 (8,583,216) Net change in unrealized appreciation/ depreciation of investments (25,668,176) 97,858,822 ------------- ------------- Net increase in net assets from operations 1,463,005 86,811,357 CAPITAL STOCK TRANSACTIONS Net increase (decrease) (18,760,281) 37,738,092 ------------- ------------- Total increase (decrease) (17,297,276) 124,549,449 NET ASSETS Beginning of period 317,445,956 192,896,507 ------------- ------------- End of period (including accumulated net investment loss of $1,107,079 and $2,121, respectively) $ 300,148,680 $ 317,445,956 ============= ============= See Notes to Financial Statements. - ------------------------------------------------------------------------------- 6 TECHNOLOGY PORTFOLIO NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 (UNAUDITED) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: Significant Accounting Policies The AllianceBernstein Technology Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek growth of capital. Current income is incidental to the Portfolio's objective. 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 Portfolio'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 Alliance Capital Management L.P. (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. - ------------------------------------------------------------------------------- 7 TECHNOLOGY PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) 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 the Adviser an investment advisory fee at an annual rate of 1% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .75% of the first $2.5 billion, .65% of the next $2.5 billion and .60% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $388,985. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. Pursuant to the advisory agreement, the Portfolio paid $34,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2004. Brokerage commissions paid on investment transactions for the six months ended June 30, 2004 amounted to $722,922, of which $26,312 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 $450 for the six months ended June 30, 2004. - ------------------------------------------------------------------------------- 8 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 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 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. NOTE D: Investment Transactions Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2004, were as follows: Purchases Sales ============ ============ Investment securities (excluding U.S. government securities) $142,396,116 $167,221,707 U.S. government securities -0- -0- 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 $59,793,709 Gross unrealized depreciation (5,393,072) ----------- Net unrealized appreciation $54,400,637 =========== 1. Forward Exchange Currency Contracts The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as unrealized appreciation and depreciation 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 the 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. - ------------------------------------------------------------------------------- 9 TECHNOLOGY PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 2. Option Transactions For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. NOTE E: 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. Goverment 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. For the six months ended June 30, 2004, the Portfolio had no securities on loan. NOTE F: Capital Stock There are 1,000,000,000 share 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 follows: SHARES AMOUNT --------------------------- ------------------------------ Six Months Ended Year Ended Six Months Ended Year Ended June 30, 2004 December 31, June 30, 2004 December 31, (unaudited) 2003 (unaudited) 2003 ------------ ------------ -------------- -------------- Shares sold 660,480 1,984,424 $ 9,928,677 $ 24,443,993 Shares redeemed (1,296,934) (2,293,157) (18,801,717) (27,150,563) ------------ ------------ -------------- -------------- Net decrease (636,454) (308,733) $ (8,873,040) $ (2,706,570) ============ ============ ============== ============== Class B Shares sold 2,415,793 6,947,943 $ 35,447,384 $ 86,020,360 Shares redeemed (3,152,283) (3,870,229) (45,334,625) (45,575,698) ------------ ------------ -------------- -------------- Net increase (decrease) (736,490) 3,077,714 $ (9,887,241) $ 40,444,662 ============ ============ ============== ============== - ------------------------------------------------------------------------------- 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE G: Risks Involved in Investing in the Portfolio 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H: Joint Credit Facility A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. NOTE I: Components of Accumulated Earnings (Deficit) The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Accumulated capital and other losses $(318,384,220)(a) Unrealized appreciation/(depreciation) 62,273,655(b) ------------- Total accumulated earnings/(deficit) $(256,110,565) ============= (a) On December 31, 2003, the Portfolio had a net capital loss carryforward of $318,382,099 of which $124,840,492 expires in the year 2009, $172,308,210 expires in the year 2010, and $21,233,397 expires in the year 2011. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. Net capital losses and net foreign currency losses incurred after October 31, and within the taxable year are deemed to arise on the first business day of Portfolio's next taxable year. For the year ended December 31, 2003, the Portfolio deferred to January 1, 2004, post October foreign currency losses of $2,121. (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 J: Legal Proceedings As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which - ------------------------------------------------------------------------------- 11 TECHNOLOGY PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. - ------------------------------------------------------------------------------- 12 TECHNOLOGY 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, Year Ended December 31, 2004 --------------------------------------------------------- (unaudited) 2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ Net asset value, beginning of period $14.49 $10.05 $17.24 $24.95 $33.61 $19.17 Income From Investment Operations Net investment loss (a) (.04)(b) (.11) (.13) (.12) (.14)(b) (.09)(b) Net realized and unrealized gain (loss) on investment transactions .18 4.55 (7.06) (5.92) (6.40) 14.57 ------------------------------------------------------------------------------ Net increase (decrease) in net asset value from operations .14 4.44 (7.19) (6.04) (6.54) 14.48 ------------------------------------------------------------------------------ Less: Distributions Distributions from net realized gain on investment transactions -0- -0- -0- (.11) (2.12) (.04) Distributions in excess of net realized gain on investment transactions -0- -0- -0- (1.56) -0- -0- ------------------------------------------------------------------------------ Total dividends and distributions -0- -0- -0- (1.67) (2.12) (.04) ------------------------------------------------------------------------------ Net asset value, end of period $14.63 $14.49 $10.05 $17.24 $24.95 $33.61 ============================================================================== Total Return Total investment return based on net asset value (c) 0.97% 44.18% (41.71)% (25.23)% (21.52)% 75.71% Ratios/Supplemental Data Net assets, end of period (000's omitted) $122,006 $130,127 $93,369 $235,252 $343,601 $357,480 Ratio to average net assets of: Expenses, net of waivers and reimbursements .86%(d) 1.11% 1.20% 1.08% 1.02% .95% Expenses, before waivers and reimbursements 1.11%(d) 1.11% 1.20% 1.08% 1.06% 1.12% Net investment loss (.56)%(b)(d) (.86)% (1.01)% (.64)% (.38)%(b) (.39)%(b) Portfolio turnover rate 47% 90% 68% 40% 61% 64%
See footnote summary on page 14. - ------------------------------------------------------------------------------- 13 TECHNOLOGY PORTFOLIO FINANCIAL HIGHLIGHTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS B ------------------------------------------------------------------------------ Six Months Ended September 22, June 30, Year Ended December 31, 1999(e) to 2004 ------------------------------------------ December 31, (unaudited) 2003 2002 2001 2000 1999 ------------------------------------------------------------------------------ Net asset value, beginning of period $14.35 $9.98 $17.15 $24.90 $33.61 $23.59 ------------------------------------------------------------------------------ Income From Investment Operations Net investment loss (a) (.06)(b) (.14) (.16) (.17) (.21)(b) (.05)(b) Net realized and unrealized gain (loss) on investment transactions .18 4.51 (7.01) (5.91) (6.38) 10.07 ------------------------------------------------------------------------------ Net increase (decrease) in net asset value from operations .12 4.37 (7.17) (6.08) (6.59) 10.02 ------------------------------------------------------------------------------ Less: Distributions Distributions from net realized gain on investment transactions -0- -0- -0- (.11) (2.12) -0- Distributions in excess of net realized gain on investment transactions -0- -0- -0- (1.56) -0- -0- ------------------------------------------------------------------------------ Total distributions -0- -0- -0- (1.67) (2.12) -0- ------------------------------------------------------------------------------ Net asset value, end of period $14.47 $14.35 $9.98 $17.15 $24.90 $33.61 ============================================================================== Total Return Total investment return based on net asset value (c) 0.84% 43.79% (41.81)% (25.45)% (21.68)% 42.48% Ratios/Supplemental Data Net assets, end of period (000's omitted) $178,142 $187,319 $99,528 $179,076 $178,768 $10,350 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.11%(d) 1.37% 1.46% 1.33% 1.31% 1.20%(d) Expenses, before waivers and reimbursements 1.36%(d) 1.37% 1.46% 1.33% 1.33% 1.52%(d) Net investment loss (.81)%(b)(d) (1.11)% (1.27)% (.92)% (.66)%(b) (.64)%(b)(d) Portfolio turnover rate 47% 90% 68% 40% 61% 64%
(a) Based on average shares outstanding. (b) Net of expenses reimbursed or waived by the Adviser. (c) 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. (d) Annualized. (e) Commencement of distribution. - ------------------------------------------------------------------------------- 14 (This page left intentionally blank.) (This page left intentionally blank.) (This page left intentionally blank.) AllianceBernstein -------------------------------- Variable Products -------------------------------- Series Fund -------------------------------- AllianceBernstein -------------------------------- Total Return Portfolio -------------------------------- Semi-Annual Report June 30, 2004 Investment Products Offered ================================ o Are Not FDIC Insured o May Lose Value o Are Not Bank Guaranteed ================================ You may obtain a description of the Fund's proxy voting policies and procedures, without charge, upon request by visiting Alliance Capital's web site at www.alliancebernstein.com (click on Investors, then the "proxy voting policies and procedures" link on the left side of the page), or by going to the Securities and Exchange Commission's web site at www.sec.gov, or by calling Alliance Capital at (800) 227-4618. Total Return Portfolio Ten Largest Holdings June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund ================================================================================ ================================================================================ COMPANY U.S. $ VALUE PERCENT OF NET ASSETS ================================================================================ U.S. Treasury Notes $44,152,879 19.3% - -------------------------------------------------------------------------------- U.S. Treasury Bonds 9,130,032 4.0 - -------------------------------------------------------------------------------- American International Group, Inc. 5,659,632 2.5 - -------------------------------------------------------------------------------- Citigroup, Inc. (Bonds & Common Stock) 5,520,132 2.4 - -------------------------------------------------------------------------------- Federal National Mortgage Assoc. (Bonds & Common Stock) 4,688,806 2.1 - -------------------------------------------------------------------------------- Bank One Corp. 4,513,500 2.0 - -------------------------------------------------------------------------------- ConocoPhillips 4,485,852 2.0 - -------------------------------------------------------------------------------- Bank of America Corp. 4,383,316 1.9 - -------------------------------------------------------------------------------- General Electric Co. 4,206,969 1.8 - -------------------------------------------------------------------------------- Microsoft Corp. 3,712,800 1.6 ----------- ----- $90,453,918 39.6% 1 Total Return Portfolio Portfolio Of Investments June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund - ------------------------------------------------------------------------------- Company Shares U.S. $ Value COMMON STOCKS-56.7% FINANCE-15.4% BANKING - MONEY CENTER-1.1% JP Morgan Chase & Co. .................... 46,900 $ 1,818,313 Wachovia Corp. ........................... 16,300 725,350 ----------- 2,543,663 ----------- BANKING - REGIONAL-3.9% Bank of America Corp. .................... 51,800 4,383,316 Bank One Corp. ........................... 88,500 4,513,500 ----------- 8,896,816 ----------- BROKERAGE & MONEY MANAGEMENT-1.3% Merrill Lynch & Co., Inc. ................ 35,600 1,921,688 Morgan Stanley ........................... 18,900 997,353 ----------- 2,919,041 ----------- INSURANCE-5.0% ACE Ltd. (Cayman Islands) ................ 53,000 2,240,840 AFLAC Inc. ............................... 18,600 759,066 Allstate Corp. ........................... 23,000 1,070,650 American International Group, Inc. ........................... 79,400 5,659,632 Axis Capital Holdings Ltd. (Bermuda) ............................. 14,200 397,600 MetLife, Inc. ............................ 33,100 1,186,635 ----------- 11,314,423 ----------- MORTGAGE BANKING-1.2% Fannie Mae ............................... 31,300 2,233,568 The PMI Group, Inc. ...................... 13,600 591,872 ----------- 2,825,440 ----------- MISCELLANEOUS-2.9% Citigroup, Inc. .......................... 117,500 5,463,750 MBNA Corp. ............................... 45,625 1,176,669 ----------- 6,640,419 ----------- 35,139,802 ----------- ENERGY-7.3% DOMESTIC INTEGRATED-0.6% Occidental Petroleum Corp. ............... 28,000 1,355,480 ----------- DOMESTIC PRODUCERS-0.8% Devon Energy Corp. ....................... 7,000 462,000 Noble Energy, Inc. ....................... 26,400 1,346,400 ----------- 1,808,400 ----------- INTERNATIONAL-3.0% BP p.l.c. (ADR) (United Kingdom) ...................... 41,900 2,244,583 ChevronTexaco Corp. ...................... 23,500 2,211,585 Exxon Mobil Corp. ........................ 57,100 2,535,811 ----------- 6,991,979 ----------- OIL SERVICE-0.9% EnCana Corp. (Canada) .................... 16,600 716,456 Halliburton Co. .......................... 17,700 535,602 Nabors Industries Ltd. (Bermuda) (a) ......................... 19,700 890,834 ----------- 2,142,892 ----------- MISCELLANEOUS-2.0% ConocoPhillips ........................... 58,800 4,485,852 ----------- 16,784,603 ----------- CONSUMER SERVICES-7.3% BROADCASTING & CABLE-4.2% Clear Channel Communications, Inc. .................. 48,900 1,806,855 Comcast Corp. Cl.A (a) ................... 36,750 1,030,102 Comcast Corp. Special Cl.A (a) .............................. 46,600 1,286,626 Time Warner, Inc. (a) .................... 106,300 1,868,754 Viacom, Inc. Cl. B ....................... 80,700 2,882,604 Westwood One, Inc. (a) ................... 32,200 766,360 ----------- 9,641,301 ----------- CELLULAR COMMUNICATIONS-0.3% Nextel Communications, Inc. Cl.A (a) .............................. 24,500 653,170 ----------- ENTERTAINMENT & LEISURE-1.1% Carnival Corp. (Panama) .................. 54,200 2,547,400 ----------- RESTAURANTS & LODGING-0.4% McDonald's Corp. ......................... 32,900 855,400 ----------- RETAIL - GENERAL MERCHANDISE-1.3% The Home Depot, Inc. ..................... 62,400 2,196,480 The TJX Cos., Inc. ....................... 28,900 697,646 ----------- 2,894,126 ----------- 16,591,397 ----------- HEALTHCARE-5.7% DRUGS-1.3% Pfizer, Inc. ............................. 84,600 2,900,088 ----------- MEDICAL PRODUCTS-0.7% Alcon, Inc. (Switzerland) ................ 3,900 306,735 Boston Scientific Corp. (a) .............. 32,700 1,399,560 ----------- 1,706,295 ----------- 2 AllianceBernstein Variable Products Series Fund - ------------------------------------------------------------------------------- Company Shares U.S. $ Value MEDICAL SERVICES-3.7% Anthem, Inc. (a) ......................... 17,900 $ 1,603,124 Caremark Rx, Inc. (a) .................... 35,300 1,162,782 HCA, Inc. ................................ 51,500 2,141,885 UnitedHealth Group, Inc. ................. 20,200 1,257,450 WellPoint Health Networks, Inc. (a) .............................. 20,000 2,240,200 ----------- 8,405,441 ----------- 13,011,824 ----------- CONSUMER STAPLES-5.2% BEVERAGES-1.2% Anheuser-Busch Cos., Inc. ................ 24,600 1,328,400 PepsiCo, Inc. ............................ 12,800 689,664 The Coca-Cola Co. ........................ 13,000 656,240 ----------- 2,674,304 ----------- COSMETICS-1.5% Avon Products, Inc. ...................... 72,580 3,348,841 ----------- FOOD-0.2% Dean Foods Co. (a) ....................... 11,900 443,989 ----------- HOUSEHOLD PRODUCTS-1.1% The Procter & Gamble Co. ................. 46,400 2,526,016 ----------- TOBACCO-1.2% Altria Group, Inc. ....................... 56,600 2,832,830 ----------- 11,825,980 ----------- TECHNOLOGY-3.6% COMPUTER HARDWARE/ STORAGE-1.5% EMC Corp. (a) ............................ 50,000 570,000 Hewlett-Packard Co. ...................... 77,700 1,639,470 International Business Machines Corp. (IBM) .................. 14,500 1,278,175 ----------- 3,487,645 ----------- SEMI-CONDUCTOR CAPITAL EQUIPMENT-0.3% Applied Materials, Inc. (a) .............. 30,600 600,372 ----------- SEMI-CONDUCTOR COMPONENTS-0.2% Marvell Technology Group Ltd. (Bermuda) (a) .................... 18,800 501,960 ----------- SOFTWARE-1.6% Microsoft Corp. .......................... 130,000 3,712,800 ----------- 8,302,777 ----------- CAPITAL GOODS-3.5% ELECTRICAL EQUIPMENT-0.5% Johnson Controls, Inc. ................... 21,800 1,163,684 ----------- MACHINERY-0.9% Ingersoll-Rand Co. Cl.A (Bermuda) ............................. 19,600 $ 1,338,876 PACCAR, Inc. ............................. 12,200 707,478 ----------- 2,046,354 ----------- MISCELLANEOUS-2.1% General Electric Co. ..................... 97,600 3,162,240 United Technologies Corp. ................ 16,800 1,536,864 ----------- 4,699,104 ----------- 7,909,142 ----------- UTILITIES-3.3% ELECTRIC & GAS UTILITY-1.3% Entergy Corp. ............................ 21,000 1,176,210 Exelon Corp. ............................. 36,400 1,211,756 PPL Corp. ................................ 14,800 679,320 ----------- 3,067,286 ----------- TELEPHONE UTILTIY-2.0% BellSouth Corp. .......................... 26,600 697,452 SBC Communications, Inc. ................. 40,000 970,000 Sprint Corp. (FON Group) ................. 55,500 976,800 Verizon Communications, Inc. .................................. 50,300 1,820,357 ----------- 4,464,609 ----------- 7,531,895 ----------- TRANSPORTATION-2.1% RAILROAD-2.1% Burlington Northern Santa Fe Corp. ........................ 56,700 1,988,469 Union Pacific Corp. ...................... 46,100 2,740,645 ----------- 4,729,114 ----------- CONSUMER MANUFACTURING-1.0% BUILDING & RELATED-0.9% American Standard Cos., Inc. (a) .............................. 44,400 1,789,764 Mohawk Industries, Inc. (a) .............. 4,900 359,317 ----------- 2,149,081 ----------- MISCELLANEOUS-0.1% Bunge Ltd. (Bermuda) ..................... 6,900 268,686 ----------- 2,417,767 ----------- BASIC INDUSTRY-1.0% CHEMICALS-0.7% Air Products and Chemicals, Inc. .................................. 16,200 849,690 E.I. du Pont de Nemours and Co. ............................... 13,900 617,438 ----------- 1,467,128 ----------- CONTAINERS-0.0% Ball Corp. ............................... 1,100 79,255 ----------- 3 Total Return Portfolio Portfolio Of Investments (continued) AllianceBernstein Variable Products Series Fund - ------------------------------------------------------------------------------- Shares or Principal Amount Company (000) U.S. $ Value - -------------------------------------------------------------------------------- MINING & METALS-0.3% Alcoa, Inc. .............................. 21,000 $ 693,630 ------------ 2,240,013 ------------ MULTI-INDUSTRY COMPANIES-0.9% 3M Co. ................................... 12,300 1,107,123 Tyco International Ltd. .................. 28,400 941,176 ------------ 2,048,299 ------------ AEROSPACE & DEFENSE-0.4% AEROSPACE-0.4% Northrop Grumman Corp. ................... 19,200 1,031,040 ------------ Total Common Stocks (cost $106,583,144) ................... 129,563,653 ------------ U.S. GOVERNMENT & GOVERNMENT SPONSORED AGENCY OBLIGATIONS-24.4% Federal National Mortgage Assoc. 6.625%, 10/15/07 ...................... $ 2,250 2,455,238 U.S. Treasury Bonds 3.625%, 5/15/13 ....................... 3,070 2,875,009 4.00%, 2/15/14 ........................ 1,580 1,506,309 4.25%, 8/15/13 ........................ 1,085 1,059,486 5.375%, 2/15/31 ....................... 1,315 1,326,661 6.875%, 8/15/25 ....................... 650 773,196 8.125%, 8/15/21 ....................... 35 46,324 11.25%, 2/15/15 ....................... 1,000 1,543,047 U.S. Treasury Notes 2.00%, 8/31/05 ........................ 15,000 14,971,890 3.00%, 11/15/07 ....................... 800 792,688 3.00%, 2/15/09 ........................ 450 436,184 3.125%, 4/15/09 ....................... 400 388,766 4.00%, 11/15/12 ....................... 4,850 4,697,113 4.625%, 5/15/06 ....................... 7,125 7,379,669 5.625%, 5/15/08 ....................... 5,425 5,841,201 5.75%, 8/15/10 ........................ 1,000 1,090,626 6.25%, 2/15/07 ........................ 4,600 4,972,315 6.875%, 5/15/06 ....................... 2,750 2,961,192 7.50%, 2/15/05 ........................ 600 621,235 ------------ Total U.S. Government & Government Sponsored Agency Obligations (cost $55,004,782) ................... 55,738,149 ------------ CORPORATE DEBT OBLIGATIONS-14.8% AUTOMOTIVE-1.5% Ford Motor Credit Co. 7.00%, 10/01/13 ....................... 200 202,234 7.375%, 2/01/11 ....................... 650 686,490 7.875%, 6/15/10 ....................... 100 108,936 General Motors Corp. 7.20%, 1/15/11 ........................ 250 262,289 8.375%, 7/15/33 ....................... 1,800 1,910,659 Lear Corp. 8.11%, 5/15/09 ........................ 200 228,041 ------------ 3,398,649 ------------ BANKING-2.2% Abbey National Capital Trust I Plc 8.963%, 12/29/49 (b) .................. 291 363,943 Barclays Bank Plc 8.55%, 9/29/49 (b)(c) ................. 50 59,296 BNP Paribas LLC 5.125%, 1/15/15 (c) ................... 300 291,979 Citigroup, Inc. 7.25%, 10/01/10 ....................... 50 56,382 Deutsche Bank Capital Funding Trust I 7.872%, 12/29/49 (b)(c) ............... 250 284,461 Development Bank of Singapore 7.125%, 5/15/11 (c) ................... 500 553,762 Dresdner Funding Trust I 8.151%, 6/30/31 (c) ................... 150 167,574 First Union Capital II 7.95%, 11/15/29 ....................... 150 178,337 Fuji JGB Investment pfd Mizuho 9.87%, 6/30/08 (b)(c) ................. 500 566,067 HBOS Plc (United Kingdom) 5.375%, 11/29/49 (b)(c) ............... 250 241,362 HSBC Capital Funding LP 10.176%, 12/31/99 (b)(c) .............. 560 782,082 Royal Bank of Scotland Group Plc (United Kingdom) 7.648%, 8/29/49 (b) ................... 250 281,544 Sanwa Bank Ltd. . 7.40%, 6/15/11 ........................ 200 217,765 UBS Preferred Funding Trust II 7.247%, 6/26/49 (b) ................... 250 279,731 UFJ Finance Aruba AEC 6.75%, 7/15/13 ........................ 200 207,162 US Bancorp 7.50%, 6/01/26 ........................ 400 467,740 ------------ 4,999,187 ------------ BROADCASTING/ MEDIA-0.5% Liberty Media Corp. 8.25%, 2/01/30 ........................ 250 285,655 News America Holdings, Inc. 8.25%, 10/17/96 ....................... 60 70,036 Time Warner Cos., Inc. 7.75%, 6/15/05 ........................ 140 145,868 Time Warner Entertainment Co. LP 8.375%, 3/15/23 ....................... 375 438,715 WPP Finance (UK) Corp. 5.875%, 6/15/14 (c) ................... 250 251,493 ------------ 1,191,767 ------------ 4 AllianceBernstein Variable Products Series Fund - ------------------------------------------------------------------------------- Principal Amount Company (000) U.S. $ Value - -------------------------------------------------------------------------------- BUILDING/ REAL ESTATE-0.3% Beazer Homes USA, Inc. 8.375%, 4/15/12 ....................... $ 100 $ 106,000 CRH America, Inc. 6.95%, 3/15/12 ........................ 250 275,108 EOP Operating LP 7.875%, 7/15/31 ....................... 200 223,869 8.375%, 3/15/06 ....................... 35 37,892 Meritage Corp. 9.75%, 6/01/11 ........................ 100 110,500 ------------ 753,369 ------------ CABLE-0.5% Continental Cablevision, Inc. 9.00%, 9/01/08 ........................ 300 349,920 EchoStar DBS Corp. 5.75%, 10/01/08 ....................... 200 198,250 9.125%, 1/15/09 ....................... 130 143,163 Rogers Cable, Inc. (Canada) 6.25%, 6/15/13 ........................ 250 236,605 Shaw Communications, Inc. (Canada) 7.20%, 12/15/11 ....................... 200 207,991 ------------ 1,135,929 ------------ COMMUNICATIONS-0.9% British Telecommunications Plc (United Kingdom) 8.875%, 12/15/30 ...................... 350 433,039 KPN NV (Netherlands) 8.375%, 10/01/30 ...................... 500 609,257 Qwest Capital Funding, Inc. 7.75%, 8/15/06 ........................ 45 44,775 Qwest Services Corp. 13.50%, 12/15/10 (c) .................. 259 302,383 Sprint Capital Corp. 6.875%, 11/15/28 ...................... 850 819,414 ------------ 2,208,868 ------------ COMMUNICATIONS - MOBILE-0.4% America Movil SA de CV (Mexico) 5.50%, 3/01/14 (c) .................... 125 115,461 Mobile Telesystems Finance (Luxembourg) 8.375%, 10/14/10 (c) .................. 250 236,875 PTC International Finance II SA (Luxembourg) 11.25%, 12/01/09 ...................... 250 272,500 TELUS Corp. (Canada) 7.50%, 6/01/07 ........................ 200 217,969 ------------ 842,805 ------------ CONGLOMERATE/ MISCELLANEOUS-0.1% Cendant Corp. 6.25%, 1/15/08 ........................ 250 $ 266,814 ------------ CONTAINERS-0.1% Packaging Corp. of America 4.375%, 8/01/08 ....................... 200 198,085 ------------ ENERGY-0.1% Union Pacific Resources Group, Inc. 7.30%, 4/15/09 ........................ 150 166,054 XTO Energy, Inc. 7.50%, 4/15/12 ........................ 100 113,005 ------------ 279,059 ------------ ENTERTAINMENT/ LEISURE-0.2% Six Flags, Inc. 9.50%, 2/01/09 ........................ 200 206,500 9.75%, 4/15/13 ........................ 200 202,000 ------------ 408,500 ------------ FINANCIAL-2.0% Capital One Bank 6.50%, 6/13/13 ........................ 400 413,129 Chohung Bank (South Korea) 11.875%, 4/01/10 (c) .................. 80 85,000 Countrywide Home Loan, Inc. . 4.25%, 12/19/07 ....................... 250 252,686 General Electric Capital Corp. 5.00%, 6/15/07 ........................ 500 519,546 5.875%, 2/15/12 ....................... 500 525,183 Goldman Sachs Capital I .................. 6.345%, 2/15/34 ....................... 250 235,522 Goldman Sachs Group, Inc. 6.60%, 1/15/12 ........................ 500 538,846 6.65%, 5/15/09 ........................ 200 217,978 Household Finance Corp. 5.75%, 1/30/07 ........................ 200 210,224 6.50%, 1/24/06 ........................ 75 79,083 7.875%, 3/01/07 ....................... 150 165,828 iStar Financial, Inc. 6.00%, 12/15/10 ....................... 200 199,750 Lehman Brothers Holdings, Inc. 7.875%, 8/15/10 ....................... 150 174,462 Markel Capital Trust I 8.71%, 1/01/46 ........................ 200 203,000 Merrill Lynch & Co., Inc. 6.00%, 2/17/09 ........................ 500 532,029 Morgan Stanley 7.75%, 6/15/05 ........................ 125 131,121 The Hartford Financial Services, Inc. 6.375%, 11/01/08 ...................... 125 135,459 ------------ 4,618,846 ------------ 5 Total Return Portfolio Portfolio Of Investments (continued) AllianceBernstein Variable Products Series Fund - ------------------------------------------------------------------------------- Principal Amount Company (000) U.S. $ Value - -------------------------------------------------------------------------------- FOOD/BEVERAGE-0.5% Dimon, Inc. Series B 9.625%, 10/15/11 ...................... $ 200 $ 203,000 Kellogg Co. Cl.B 6.60%, 4/01/11 ........................ 300 329,511 Kraft Foods, Inc. 5.25%, 10/01/13 ....................... 300 292,797 Phillip Morris 7.75%, 1/15/27 ........................ 90 92,269 Swift & Co. 10.125%, 10/01/09 ..................... 200 214,500 ------------ 1,132,077 ------------ HEALTHCARE-0.3% HCA, Inc. 6.25%, 2/15/13 ........................ 400 398,260 UnitedHealth Group, Inc. 4.875%, 4/01/13 ....................... 250 244,420 ------------ 642,680 ------------ HOTEL/LODGING-0.1% Intrawest Corp. (Canada) 7.50%, 10/15/13 ....................... 200 196,500 ------------ INDUSTRIAL-0.7% Case New Holland, Inc. 9.25%, 8/01/11 (c) .................... 100 105,500 CRH America, Inc. 6.40%, 10/15/33 ....................... 300 300,556 Imperial Tobacco (Netherlands) 7.125%, 4/01/09 ....................... 170 185,161 Trimas Corp. 9.875%, 6/15/12 ....................... 200 213,000 Tyco International Group, SA 6.375%, 10/15/11 ...................... 200 213,066 Waste Management, Inc. 6.375%, 11/15/12 ...................... 500 529,817 ------------ 1,547,100 ------------ INSURANCE-0.3% American Reinsurance 7.45%, 12/15/26 ....................... 140 148,898 Loews Corp. 6.75%, 12/15/06 ....................... 100 105,388 Mangrove Bay Pass-Through Trust 6.102%, 7/15/33 (b)(c) ................ 400 395,928 ------------ 650,214 ------------ METALS/MINING-0.1% International Steel Group 6.50%, 4/15/14 (c) .................... 205 193,213 ------------ MUNICIPAL OBLIGATION-0.2% Dallas-Fort Worth Texas International Airport Facility 7.07%, 11/01/24 ....................... 400 431,264 ------------ NON-AIR TRANSPORTATION-0.5% Bombardier Capital, Inc. 7.50%, 10/17/05 (c) ................... 125 127,596 CSX Corp. 6.75%, 3/15/11 ........................ 250 271,534 Union Pacific Corp. 6.625%, 2/01/29 ....................... 800 824,382 ------------ 1,223,512 ------------ PAPER/PACKAGING-0.5% Abitibi-Consolidated, Inc. (Canada) 8.30%, 8/01/05 ........................ 25 25,999 Domtar, Inc. (Canada) 7.875%, 10/15/11 ...................... 250 280,872 MeadWestvaco Corp. 6.85%, 4/01/12 ........................ 500 537,166 Owens-Brockway Glass 8.875%, 2/15/09 ....................... 150 162,750 Tembec Industries, Inc. (Canada) 8.50%, 2/01/11 ........................ 200 203,000 ------------ 1,209,787 ------------ PETROLEUM PRODUCTS-0.3% Amerada Hess Corp. 7.30%, 8/15/31 ........................ 350 56,422 Canadian Natural Resources Ltd. 6.70%, 7/15/11 ........................ 300 327,632 ------------ 684,054 ------------ 6 AllianceBernstein Variable Products Series Fund - ------------------------------------------------------------------------------- Shares or Principal Amount Company (000) U.S. $ Value - -------------------------------------------------------------------------------- PUBLIC UTILITIES - ELECTRIC & GAS-1.6% American Electric Power Co., Inc. Series C 5.375%, 3/15/10 ....................... $ 250 $ 255,742 Calpine Corp. 8.50%, 7/15/10 (c) .................... 200 166,500 CenterPoint Energy Resources Corp. Series B 7.875%, 4/01/13 ....................... 200 224,141 Consumers Energy Co. Series B 5.375%, 4/15/13 ....................... 150 147,143 Dominion Resources Capital Trust III 8.40%, 1/15/31 ........................ 200 232,491 DPL, Inc. 8.25%, 3/01/07 ........................ 550 587,125 FirstEnergy Corp. Series C 7.375%, 11/15/31 ...................... 500 522,706 FPL Energy Virginia 7.52%, 6/30/19 (c) .................... 225 245,228 Nevada Power Co. Series A 8.25%, 6/01/11 ........................ 200 210,000 NiSource Finance Corp. 7.875%, 11/15/10 ...................... 250 286,963 Progress Energy, Inc. 7.10%, 3/01/11 ........................ 400 438,902 Xcel Energy, Inc. 7.00%, 12/01/10 ....................... 175 193,833 Yorkshire Power 8.25%, 2/15/05 (c) .................... 150 153,673 ------------ 3,664,447 ------------ PUBLIC UTILITIES - TELEPHONE-0.2% Telecom Italia Capital, SA (Italy) 4.00%, 11/15/08 (c) ................... 250 245,829 Telefonos de Mexico SA de CV (Mexico) 8.25%, 1/26/06 ........................ 250 268,518 ------------ 514,347 ------------ RETAIL-0.1% J.C. Penney Co., Inc. 7.60%, 4/01/07 ........................ 100 108,375 TM Group Holdings (United Kingdom) 11.00%, 5/15/08 ....................... 211 216,275 ------------ 324,650 ------------ SUPERMARKET/DRUG-0.5% Delhaize America, Inc. 8.125%, 4/15/11 ....................... 500 548,265 Pathmark Stores, Inc. 8.75%, 2/01/12 ........................ 200 201,000 The Kroger Co. 5.50%, 2/01/13 ........................ 300 299,683 ------------ 1,048,948 ------------ TECHNOLOGY-0.1% ON Semiconductor Corp. 12.00%, 3/15/10 ....................... 145 170,375 ------------ Total Corporate Debt Obligations (cost $32,482,096) .................... 33,935,046 ------------ PREFERRED STOCKS-0.7% AUTOMOTIVE-0.2% Ford Motor Co. Capital Trust II .............................. 10,000 547,600 ------------ BANKING-0.1% Royal Bank of Scotland Group Plc ................................... 10,000 215,500 ------------ COMMUNICATIONS-0.1% Centaur Funding Corp. (Cayman Islands) (c) .................. 200 245,222 ------------ FINANCIAL-0.1% Sovereign REIT (c) ....................... 90 131,625 ------------ PUBLIC UTILITIES - ELECTRIC & GAS-0.2% DTE Energy Trust I ....................... 20,000 513,000 ------------ Total Preferred Stocks (cost $1,560,503) ..................... 1,652,947 ------------ SOVEREIGN DEBT OBLIGATIONS-0.4% Korea Development Bank (South Korea) 5.75%, 9/10/13 ........ ............... 200 199,263 United Mexican States (Mexico) 6.375%, 1/16/13 ....................... 700 700,350 ------------ Total Sovereign Debt Obligations (cost $899,723) ....................... 899,613 ------------ CONVERTIBLE PREFERRED STOCKS-0.1% FINANCE-0.1% INSURANCE-0.0% Genworth Financial, Inc. 6.00%, 5/16/07 ........................ 1,350 38,556 ------------ 7 Total Return Portfolio Portfolio Of Investments (continued) AllianceBernstein Variable Products Series Fund - ------------------------------------------------------------------------------- Shares or Principal Amount Company (000) U.S. $ Value - -------------------------------------------------------------------------------- MORTGAGE BANKING-0.1% Sovereign Capital Trust IV 4.375%, 3/01/34 ....................... 4,000 $ 190,000 ------------ Total Convertible Preferred Stocks (cost $233,750) ....................... 228,556 ------------ YANKEE BOND-0.1% Petronas Capital Ltd. 7.00%, 5/22/12 (c) (cost $149,794) ....................... $ 150 163,845 ------------ SHORT-TERM INVESTMENT-3.3% TIME DEPOSIT-3.3% The Bank of New York 0.563%, 7/01/04 (cost $7,600,000) ..................... 7,600 7,600,000 ------------ TOTAL INVESTMENTS-100.5% (cost $204,513,792) .................... 229,781,809 Other assets less liabilities-(0.5%) ..................... (1,094,079) ------------ NET ASSETS-100% ........................... $228,687,730 ============ (a) Non-income producing security. (b) Variable rate coupon, rate shown as of June 30, 2004. (c) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2004, the aggregate market value of these securities amounted to $6,111,954 or 2.7% of net assets. Glossary: ADR-American Depository Receipt See Notes to Financial Statements. 8 Total Return Portfolio Statement Of Assets And Liabilities June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund - ------------------------------------------------------------------------------- ASSETS Investments in securities, at value (cost $204,513,792) ...... $ 229,781,809 Cash ......................................................... 36,884 Dividends and interest receivable ............................ 1,324,221 Receivable for investment securities sold .................... 239,255 ------------ Total assets ................................................. 231,382,169 ------------ LIABILITIES Payable for investment securities purchased .................. 2,432,674 Advisory fee payable ......................................... 101,967 Distribution fee payable ..................................... 10,048 Accrued expenses ............................................. 149,750 ------------ Total liabilities ............................................ 2,694,439 ------------ NET ASSETS ...................................................... $228,687,730 ============ COMPOSITION OF NET ASSETS Capital stock, at par ........................................ $ 12,934 Additional paid-in capital ................................... 218,458,481 Undistributed net investment income .......................... 2,662,351 Accumulated net realized loss on investment transactions ..... (17,714,053) Net unrealized appreciation of investments ................... 25,268,017 ------------ $228,687,730 ============ Class A Shares Net assets ................................................... $190,103,447 ============ Shares of capital stock outstanding .......................... 10,743,689 ============ Net asset value per share .................................... $ 17.69 ============ Class B Shares Net assets ................................................... $ 38,584,283 ============ Shares of capital stock outstanding .......................... 2,190,778 ============ Net asset value per share .................................... $ 17.61 ============ See Notes to Financial Statements. 9 Total Return Portfolio Statement Of Operations Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund - ------------------------------------------------------------------------------- INVESTMENT INCOME Interest $ 2,329,884 Dividends (net of foreign taxes withheld of $3,497) 1,205,656 ----------- Total investment income 3,535,540 ----------- EXPENSES Advisory fee 708,232 Distribution fee--Class B 41,443 Custodian 96,304 Administrative 34,500 Audit and legal 28,667 Printing 12,803 Directors' fees 500 Transfer agency 450 Miscellaneous 13,373 ----------- Total expenses 936,272 Less: expenses waived and reimbursed by the Adviser (see Note B) (84,988) ----------- Net expenses 851,284 ----------- Net investment income 2,684,256 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS Net realized gain on investment transactions 2,281,957 Net change in unrealized appreciation/ depreciation of investments (786,773) ----------- Net gain on investment transactions 1,495,184 ----------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 4,179,440 =========== See Notes to Financial Statements. 10 Total Return Portfolio Statement Of Changes In Net Assets AllianceBernstein Variable Products Series Fund - -------------------------------------------------------------------------------
Six Months Ended Year Ended June 30, 2004 December 31, (unaudited) 2003 =================== =============== INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income ....................................................... $ 2,684,256 $ 5,005,227 Net realized gain (loss) on investment transactions ......................... 2,281,957 (989,573) Net change in unrealized appreciation/depreciation of investments ........... (786,773) 30,153,121 ------------- ------------- Net increase in net assets from operations .................................. 4,179,440 34,168,775 DIVIDENDS TO SHAREHOLDERS FROM Net investment income Class A ..................................................................... (4,209,896) (4,737,202) Class B ..................................................................... (804,109) (245,968) CAPITAL STOCK TRANSACTIONS Net increase ................................................................ 8,771,951 16,592,502 ------------- ------------- Total increase .............................................................. 7,937,386 45,778,107 NET ASSETS Beginning of period ......................................................... 220,750,344 174,972,237 ------------- ------------- End of period (including undistributed net investment income of $2,662,351 and $4,992,100, respectively) .................................... $ 228,687,730 $ 220,750,344 ============= =============
See Notes to Financial Statements. 11 Total Return Portfolio Notes To Financial Statements June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund - ------------------------------------------------------------------------------- NOTE A: Significant Accounting Policies The AllianceBernstein Total Return Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek to achieve a high return through a combination of current income and capital appreciation. 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 Alliance Capital Management L.P. (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. 12 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 or 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 the Adviser an investment advisory fee at an annual rate of .625% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .55% of the first $2.5 billion, .45% of the next $2.5 billion and .40% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $84,988. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. Pursuant to the advisory agreement, the Portfolio paid $34,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2004. 13 Total Return Portfolio Notes To Financial Statements (continued) AllianceBernstein Variable Products Series Fund - ------------------------------------------------------------------------------- Brokerage commissions paid on investment transactions for the six months ended June 30, 2004 amounted to $69,657, none of which 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 $450 for the six months ended June 30, 2004. 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 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 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. NOTE D: Investment Transactions Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2004, were as follows: Purchases Sales ============ ============ Investment securities (excluding U.S. government securities) $ 33,787,350 $ 34,164,951 U.S. government securities 79,168,796 68,467,469 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 $ 28,389,988 Gross unrealized depreciation (3,121,971) ------------ Net unrealized appreciation $ 25,268,017 ============ 1. Forward Exchange Currency Contracts The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the difference between the original contracts and the closing of such contracts would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as unrealized appreciation and depreciation 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. 14 AllianceBernstein Variable Products Series Fund - ------------------------------------------------------------------------------- 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. 2. Option Transactions For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. NOTE E: 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 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. For the six months ended June 30, 2004, the Portfolio had no securities on loan. NOTE F: Capital Stock There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B shares. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows:
================================== ==================================== Shares Amount ================================== ==================================== Six Months Ended Year Ended Six Months Ended Year Ended June 30, 2004 December 31, June 30, 2004 December 31, (unaudited) 2003 (unaudited) 2003 ================== ============== ================== =============== Class A Shares sold ................................... 285,401 1,150,300 $ 5,155,454 $ 18,599,550 Shares issued in reinvestment of dividends and distributions ............. 240,428 281,808 4,209,896 4,737,202 Shares redeemed ............................... (892,255) (1,543,162) (16,096,931) (24,808,763) ---------- ----------- ----------- ------------ Net decrease .................................. (366,426) (111,054) $(6,731,581) $ (1,472,011) ========== =========== =========== ============
15 Total Return 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, 2004 December 31, June 30, 2004 December 31, (unaudited) 2003 (unaudited) 2003 ================== ============== ================== =============== Class B Shares sold .................................. 877,873 1,612,646 $ 15,709,235 $ 26,328,138 Shares issued in reinvestment of dividends and distributions ............ 46,134 14,676 804,109 245,968 Shares redeemed .............................. (56,906) (519,958) (1,009,812) (8,509,593) ---------- ----------- ----------- ------------ Net increase ................................. 867,101 1,107,364 $ 15,503,532 $ 18,064,513 ========== =========== =========== ============
NOTE G: Risks Involved in Investing in the Portfolio Foreign Securities 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H: Joint Credit Facility A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. NOTE I: Distributions to Shareholders The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended December 31, 2003 and December 31, 2002 were as follows: 2003 2002 =========== =========== Distributions paid from: Ordinary income ........................... $ 4,983,170 $ 4,856,562 Net long-term capital gains ............... -0- 840,055 ----------- ----------- Total taxable distributions .................. 4,983,170 5,696,617 ----------- ----------- Total distributions paid ..................... $ 4,983,170 $ 5,696,617 =========== =========== As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income ................ $ 4,992,100 Accumulated capital and other losses ......... (19,288,230)(a) Unrealized appreciation/(depreciation) ....... 25,347,010(b) ------------ Total accumulated earnings/(deficit) ......... $ 11,050,880 ============ (a) On December 31, 2003, the Portfolio had a net capital loss carryforward of $19,288,230 of which $16,290,423 expires in the year 2010 and $2,997,807 expires in year 2011. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. (b) The differences between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales. 16 AllianceBernstein Variable Products Series Fund - ------------------------------------------------------------------------------- NOTE J: Legal Proceedings As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. 17 Total Return Portfolio Notes To Financial Statements (continued) AllianceBernstein Variable Products Series Fund - ------------------------------------------------------------------------------- As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 18 Total Return 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 Year Ended December 31, June 30, 2004 =================================================================== (unaudited) 2003 2002 2001(a) 2000 1999 ============= ======== ======== ======== ======== ======== Net asset value, beginning of period ......... $ 17.76 $ 15.30 $ 17.65 $ 18.01 $ 17.49 $ 18.06 Income From Investment Operations - --------------------------------- Net investment income (b) .................... .21(c) .42 .45 .44 .48 .44 Net realized and unrealized gain (loss) on investment transactions ................ .12 2.47 (2.29) (0.01) 1.63 .70 Net increase (decrease) in net asset value from operations ..................... .33 2.89 (1.84) 0.43 2.11 1.14 Less: Dividends and Distributions - --------------------------------- Dividends from net investment income .................................... (.40) (.43) (.32) (.28) (.39) (.36) Distributions from net realized gain on investment transactions ................... -0- -0- (.19) (.42) (1.20) (1.35) Distributions in excess of net realized gain on investment transactions ........... -0- -0- -0- (.09) -0- -0- Total dividends and distributions ............ (.40) (.43) (.51) (.79) (1.59) (1.71) Net asset value, end of period ............... $ 17.69 $ 17.76 $ 15.30 $ 17.65 $ 18.01 $ 17.49 Total Return - ------------ Total investment return based on net asset value (d) ....................... 1.88% 19.05% (10.58)% 2.27% 12.52% 6.53% Ratios/Supplemental Data - ------------------------ Net assets, end of period (000's omitted) ........................... $190,104 $197,334 $171,670 $183,098 $90,736 $75,170 Ratio to average net assets of: Expenses, net of waivers and reimbursements ......................... .71%(e) .79% .79% .78% .87% .86% Expenses, before waivers and reimbursements ......................... .79%(e) .79% .79% .78% .87% .86% Net investment income ..................... 2.40%(c)(e) 2.60% 2.76% 2.50% 2.77% 2.48% Portfolio turnover rate ...................... 47% 81% 57% 71% 102% 91%
See footnote summary on page 20. 19 Total Return Portfolio Financial Highlights (continued) AllianceBernstein Variable Products Series Fund - -------------------------------------------------------------------------------
======================================================= Class B ======================================================= Six Months October 26, Ended Year Ended December 31, 2001(f) to June 30, 2004 ======================== December 31, (unaudited) 2003 2002 2001(a) ============= ======== ======== ============= Net asset value, beginning of period $ 17.69 $ 15.27 $ 17.65 $ 17.56 Income From Investment Operations - --------------------------------- Net investment income (b) .19(c) .36 .39 .06 Net realized and unrealized gain (loss) on investment transactions .12 2.48 (2.27) .03 Net increase (decrease) in net asset value from operations .31 2.84 (1.88) .09 Less: Dividends and Distributions - --------------------------------- Dividends from net investment income (.39) (.42) (.31) -0- Distributions from net realized gain on investment transactions -0- -0- (.19) -0- Total dividends and distributions (.39) (.42) (.50) -0- Net asset value, end of period $ 17.61 $ 17.69 $ 15.27 $17.65 Total Return - ------------ Total investment return based on net asset value (d) 1.75% 18.78% (10.80)% .51% Ratios/Supplemental Data - ------------------------ Net assets, end of period (000's omitted) $38,584 $23,417 $3,302 $1,570 Ratio to average net assets of: Expenses, net of waivers and reimbursements .97%(e) 1.05% 1.05% 1.00%(e) Expenses, before waivers and reimbursements 1.04%(e) 1.05% 1.05% 1.00%(e) Net investment income 2.16%(c)(e) 2.29% 2.51% 1.80%(e) Portfolio turnover rate 47% 81% 57% 71%
(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 B shares was to decrease net investment income per share by $.02 and $.02, increase net realized and unrealized gain (loss) on investments per share by $.02 and $.02, and decrease the ratio of net investment income to average net assets from 2.61% to 2.50% for Class A and from 2.41% to 1.80% for Class B. 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 waived 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. 20 ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2004 INVESTMENT PRODUCTS OFFERED - --------------------------- > ARE NOT FDIC INSURED > MAY LOSE VALUE > ARE NOT BANK GUARANTEED - --------------------------- YOU MAY OBTAIN A DESCRIPTION OF THE FUND'S PROXY VOTING POLICIES AND PROCEDURES, WITHOUT CHARGE, UPON REQUEST BY VISITING ALLIANCE CAPITAL'S WEB SITE AT WWW.ALLIANCEBERNSTEIN.COM (CLICK ON INVESTORS, THEN THE "PROXY VOTING POLICIES AND PROCEDURES" LINK ON THE LEFT SIDE OF THE PAGE), OR BY GOING TO THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT WWW.SEC.GOV, OR BY CALLING ALLIANCE CAPITAL AT (800) 227-4618. U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE - ------------------------------------------------------------------------------- U.S. GOVERNMENT & SPONSORED AGENCY OBLIGATIONS-57.8% U.S. GOVERMENT SPONSORED AGENCIES-37.1% Federal Home Loan Mortgage Corp. 3.375%, 4/15/09 $ 5,720 $ 5,513,936 5.50%, TBA 1,620 1,612,913 6.00%, TBA 1,745 1,782,081 Federal National Mortgage Association 4.50%, TBA 4,945 4,832,194 5.00%, TBA 3,835 3,839,794 5.00%, TBA 13,465 13,006,354 5.50%, TBA 4,595 4,699,821 6.00%, 11/01/16 648 675,868 6.00%, TBA 3,470 3,542,655 6.50%, 4/01/28 24 25,165 6.50%, 8/01/28 26 26,888 6.50%, 10/01/28 81 84,591 6.50%, 1/01/29 323 337,444 6.50%, 5/01/29 13 13,770 6.50%, 6/01/29 29 30,440 6.50%, 11/01/29 3 3,440 6.50%, 2/01/30 286 298,347 6.50%, 11/01/30 16 16,938 6.50%, 4/01/31 367 382,981 6.50%, 6/01/31 620 647,030 6.50%, 12/01/31 458 478,293 6.50%, 2/01/32 321 335,003 6.50%, 3/01/32 348 362,444 6.50%, 5/01/32 29 30,117 6.50%, 8/01/32 565 589,410 6.50%, 9/01/32 363 378,446 6.50%, 11/01/32 93 97,168 6.50%, 3/01/33 2,198 2,290,539 6.50%, 9/01/33 19 20,082 6.50%, 10/01/33 31 32,644 6.50%, TBA 1,015 1,056,869 Government National Mortgage Association 6.00%, TBA 1,575 1,612,898 6.50%, TBA 1,020 1,065,263 ------------- 49,721,826 ------------- U.S. TREASURY SECURITIES-20.7% U.S. Treasury Bond 5.375%, 2/15/31 695 701,163 U.S. Treasury Notes 1.625%, 2/28/06 22,285 21,965,544 3.875%, 5/15/09 1,355 1,359,976 4.75%, 5/15/14 3,600 3,638,675 ------------- 27,665,358 ------------- Total U.S. Government & Sponsored Agency Obligations (cost $77,015,290) 77,387,184 ------------- CORPORATE DEBT OBLIGATIONS-23.7% AEROSPACE/DEFENSE-0.1% Boeing Capital Corp. 4.75%, 8/25/08 115 117,241 ------------- AUTOMOTIVE-2.5% Ford Motor Co. 6.375%, 2/01/29 95 80,513 7.45%, 7/16/31 405 387,141 Ford Motor Credit Co. 7.00%, 10/01/13 205 207,290 7.375%, 2/01/11 1,135 1,198,718 General Motors Acceptance Corp. 6.875%, 9/15/11 760 780,324 General Motors Corp. 8.375%, 7/15/33 655 695,267 ------------- 3,349,253 ------------- BANKING-2.5% Bank of America Corp. 6.25%, 4/15/12 125 133,552 Barclays Bank Plc (United Kingdom) 8.55%, 6/15/49 (a)(b) 365 432,859 Capital One Bank 6.50%, 6/13/13 195 201,400 JP Morgan Chase & Co. 6.75%, 2/01/11 490 534,766 Mizuho Finance (Cayman Islands) 5.79%, 4/15/14 (a) 60 59,088 8.375%, 4/27/49 535 551,485 RBS Capital Trust I pfd. 4.709%, 7/01/49 (b) 1,100 1,015,986 Suntrust Bank Series CD 1.435%, 6/02/09 (b) 190 189,947 UFJ Finance Aruba AEC (Aruba) 6.75%, 7/15/13 280 290,027 ------------- 3,409,110 ------------- 1 U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE - ------------------------------------------------------------------------------- BROADCASTING/MEDIA-1.6% AOL Time Warner, Inc. 7.70%, 5/01/32 $ 385 $ 421,850 Clear Channel Communications, Inc. 4.625%, 1/15/08 65 65,739 Liberty Media Corp. 5.70%, 5/15/13 295 291,110 News America, Inc. 6.55%, 3/15/33 360 365,343 Time Warner Entertainment Co. 8.375%, 3/15/23 670 783,837 WPP Finance (UK) Corp. 5.875%, 6/15/14 (a) 175 176,045 ------------- 2,103,924 ------------- CABLE-0.9% AT&T Broadband Corp. 9.455%, 11/15/22 220 283,476 Comcast Cable Communications, Inc. 6.875%, 6/15/09 620 674,585 Comcast Corp. 7.05%, 3/15/33 190 197,433 ------------- 1,155,494 ------------- COMMUNICATIONS-1.7% British Telecommunications Plc (United Kingdom) 8.875%, 12/15/30 410 507,274 Deutsche Telekom International Finance BV (Netherlands) 8.75%, 6/15/30 135 164,786 Koninklijke (Royal) KPN NV (Netherlands) 8.00%, 10/01/10 185 214,474 Sprint Capital Corp. 7.625%, 1/30/11 350 387,426 8.375%, 3/15/12 210 241,709 8.75%, 3/15/32 605 707,016 ------------- 2,222,685 ------------- COMMUNICATIONS-MOBILE-1.5% AT&T Wireless Services, Inc. 8.75%, 3/01/31 535 654,151 Telus Corp. (Canada) 7.50%, 6/01/07 330 359,648 Verizon Global Funding Corp. 7.375%, 9/01/12 865 974,439 ------------- 1,988,238 ------------- CONGLOMERATE/MISCELLANEOUS-0.5% Hutchison Whampoa International, Ltd. (Cayman Islands) 7.45%, 11/24/33 (a) 695 667,481 ------------- CONSUMER MANUFACTURING-0.1% Fortune Brands, Inc. 2.875%, 12/01/06 175 173,253 ------------- ENERGY-0.6% Conoco, Inc. 6.95%, 4/15/29 310 342,349 Valero Energy Corp. 7.50%, 4/15/32 385 429,591 ------------- 771,940 ------------- FINANCIAL-5.1% American General Finance Corp. 4.625%, 5/15/09 510 511,288 Capital One Financial Corp. 6.25%, 11/15/13 125 126,564 CBA Capital Trust I pfd. 5.805%, 6/15/49 (a) 445 435,813 CIT Group, Inc. 1.48%, 5/18/07 (b) 210 209,926 Citigroup, Inc. 1.54%, 6/09/09 (b) 175 175,000 Countrywide Home Loans, Inc. 4.00%, 3/22/11 360 336,257 Credit Suisse First Boston 5.50%, 8/15/13 255 254,487 General Electric Capital Corp. 1.61%, 6/22/07 (b) 1,115 1,114,923 6.75%, 3/15/32 840 905,947 Goldman Sachs Capital I 6.345%, 2/15/34 290 273,206 Goldman Sachs Group, Inc. 4.75%, 7/15/13 230 216,451 6.125%, 2/15/33 90 85,214 Household Finance Corp. 6.50%, 11/15/08 495 535,334 7.00%, 5/15/12 195 215,733 MBNA Corp. 4.625%, 9/15/08 290 291,206 Morgan Stanley 4.75%, 4/01/14 380 351,263 Washington Mutual Finance Corp. 6.875%, 5/15/11 655 718,126 ------------- 6,756,738 ------------- FOOD/BEVERAGE-0.4% Kraft Foods, Inc. 5.25%, 10/01/13 380 370,877 Tyson Foods, Inc. 8.25%, 10/01/11 155 178,270 ------------- 549,147 ------------- 2 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE - ------------------------------------------------------------------------------- HEALTHCARE-0.3% Health Net, Inc. 8.375%, 4/15/11 $ 190 $ 222,437 Humana, Inc. 6.30%, 8/01/18 215 213,110 ------------- 435,547 ------------- INDUSTRIAL-0.0% General Electric Co. 5.00%, 2/01/13 35 34,505 ------------- INSURANCE-1.6% Assurant, Inc. 5.625%, 2/15/14 220 216,391 Mangrove Bay Pass-Through Trust 6.102%, 7/15/33 (a)(b) 635 628,536 MetLife, Inc. 5.00%, 11/24/13 225 218,574 Royal & Sun Alliance Insurance (United Kingdom) 8.95%, 10/15/29 265 300,456 Safeco Capital Trust I 8.072%, 7/15/37 180 197,512 Zurich Capital Trust I 8.376%, 6/01/37 (a) 565 625,895 ------------- 2,187,364 ------------- PAPER/PACKAGING-0.7% International Paper Co. 5.30%, 4/01/15 300 286,148 Weyerhaeuser Co. 7.375%, 3/15/32 635 692,650 ------------- 978,798 ------------- PETROLEUM PRODUCTS-0.4% Amerada Hess Corp. 7.125%, 3/15/33 265 264,961 7.875%, 10/01/29 300 325,016 ------------- 589,977 ------------- PUBLIC UTILITIES-ELECTRIC & GAS-2.0% Carolina Power & Light Co. 6.50%, 7/15/12 335 360,723 Cincinnati Gas & Electric Co. 5.70%, 9/15/12 170 174,094 FirstEnergy Corp. Series C 7.375%, 11/15/31 860 899,055 MidAmerican Energy Holdings Co. 5.875%, 10/01/12 195 198,326 NiSource Finance Corp. 7.875%, 11/15/10 190 218,092 Pacific Gas & Electric 6.05%, 3/01/34 355 335,006 Public Service Company of Colorado 7.875%, 10/01/12 200 236,449 Xcel Energy, Inc. 7.00%, 12/01/10 260 287,981 ------------- 2,709,726 ------------- PUBLIC UTILITIES-TELEPHONE-0.5% Telecom Italia Capital (Luxembourg) 6.375%, 11/15/33 (a) 705 682,778 ------------- SERVICE-0.3% Waste Management, Inc. 6.875%, 5/15/09 335 368,201 ------------- SUPERMARKET/DRUG-0.3% Albertson's, Inc. 7.45%, 8/01/29 345 373,758 ------------- TECHNOLOGY-0.1% IBM Corp. 4.375%, 6/01/09 90 90,366 ------------- Total Corporate Debt Obligations (cost $31,283,199) 31,715,524 ------------- COMMERCIAL MORTGAGE BACKED SECURITIES-3.4% Banc of America Commercial Mortgage, Inc. Series 2004-1 Cl.A2 4.04%, 11/10/39 495 479,294 Series 2004-1 Cl.A4 4.76%, 11/10/39 645 618,663 Series 2004-3 Cl.A5 5.48%, 5/10/14 675 678,421 Deutsche Mortgage Securities, Inc. Series 2004-4 Cl.1A1 1.51%, 4/25/34 (b) 299 298,514 Fannie Mae Series 2003-92 Cl.BR 5.00%, 4/25/14 1,260 1,286,082 JP Morgan Chase Commercial Mortgage Securities Corp. Series 2004-C1 Cl.A2 4.30%, 1/15/38 95 91,506 Morgan Stanley Capital I Series 2004-IQ7 Cl.A4 5.57%, 6/15/38 470 474,893 Series 2004-T13 Cl.A2 3.94%, 9/13/45 690 665,732 ------------- Total Commercial Mortgage Backed Securities (cost $4,655,244) 4,593,105 ------------- 3 U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT (000) U.S. $ VALUE - ------------------------------------------------------------------------------- ASSET BACKED SECURITIES-1.4% Merrill Lynch Mortgage Investors, Inc. Series 2004-SL1 Cl.A 1.62%, 4/25/35 (b) $ 215 $ 215,000 Residential Asset Mortgage Products, Inc. Series 2004-RS2 Cl.AI1 1.43%, 1/25/24 (b) 238 238,527 Series 2004-RS6 Cl.AI1 1.48%, 8/25/22 (b) 245 244,944 Residential Asset Securities Corp. Series 2002-KS7 Cl.A2 1.67%, 11/25/32 (b) 434 435,078 Series 2003-KS3 Cl.A2 1.60%, 5/25/33 (b) 483 483,058 Residential Funding Mortgage Securities II Series 2004-HS2 Cl.AI1 1.48%, 6/25/34 (b) 320 320,000 ------------- Total Asset Backed Securities (cost $1,936,061) 1,936,607 ------------- COLLATERALIZED MORTGAGE OBLIGATION-0.2% Countrywide Home Loans Series 2003-49 Cl.A1 1.64%, 12/19/33 335 334,476 ------------- Total Collateralized Mortgage Obligation (cost $335,008) 334,476 ------------- SHORT-TERM INVESTMENTS-41.3% U.S. TREASURY SECURITY-30.5% U.S. Treasury Bill 1.28%, 9/23/04 41,000 40,877,451 ------------- TIME DEPOSIT-10.8% The Bank of New York .5625%, 7/01/04 14,417 14,417,000 ------------- Total Short-Term Investments (amortized cost $55,294,068) 55,294,451 ------------- TOTAL INVESTMENTS-127.8% (cost $170,518,870) 171,261,347 Other assets less liabilities-(27.8%) (37,282,906) ------------- NET ASSETS-100% $133,978,441 ============= (a) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2004, the aggregate market value of these securities amounted to $3,708,495 or 2.8% of net assets. (b) Variable rate coupon, rate shown is as of June 30, 2004. Glossary: TBA - To Be Assigned-Securities are purchased on a forward commitment with an approximate principal amount (generally +/-1.0%) and no definite maturity date. The actual principal amount and maturity date will be determined upon settlement when the specific mortgage pools are assigned. See Notes to Financial Statements. 4 U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $170,518,870) $ 171,261,347 Cash 84,443 Receivable for investment securities sold 9,510,829 Dividends and interest receivable 732,736 ------------- Total assets 181,589,355 ------------- LIABILITIES Payable for investment securities purchased 47,391,867 Advisory fee payable 48,953 Distribution fee payable 4,930 Accrued expenses 165,164 ------------- Total liabilities 47,610,914 ------------- NET ASSETS $ 133,978,441 ============= COMPOSITION OF NET ASSETS Capital stock, at par $ 11,343 Additional paid-in capital 130,635,241 Undistributed net investment income 1,859,334 Accumulated net realized gain on investment transactions 730,046 Net unrealized appreciation of investments 742,477 ------------- $ 133,978,441 ============= CLASS A SHARES Net assets $ 109,443,860 ============= Shares of capital stock outstanding 9,253,695 ============= Net asset value per share $ 11.83 ============= CLASS B SHARES Net assets $ 24,534,581 ============= Shares of capital stock outstanding 2,088,970 ============= Net asset value per share $ 11.74 ============= See Notes to Financial Statements. 5 U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Interest $ 2,386,372 ------------- EXPENSES Advisory fee 424,848 Distribution fee -- Class B 28,926 Custodian 85,327 Administrative 34,500 Audit and legal 23,750 Printing 4,221 Directors' fees 500 Transfer agency 450 Miscellaneous 7,490 ------------- Total expenses 610,012 Less: expenses waived and reimbursed by the Adviser (see Note B) (106,212) ------------- Net expenses 503,800 ------------- Net investment income 1,882,572 ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS Net realized gain on investment transactions 834,443 Net change in unrealized appreciation/depreciation of investments (2,659,073) Net loss on investment transactions (1,824,630) ------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 57,942 ============= See Notes to Financial Statements. 6 U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 ============= ============= INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 1,882,572 $ 3,539,406 Net realized gain on investment transactions 834,443 4,234,326 Net change in unrealized appreciation/ depreciation of investments (2,659,073) (1,612,801) ------------- ------------- Net increase in net assets from operations 57,942 6,160,931 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM Net investment income Class A (3,152,958) (4,723,237) Class B (649,285) (437,765) Net realized gain on investment transactions Class A (3,170,573) (1,253,621) Class B (695,663) (121,738) CAPITAL STOCK TRANSACTIONS Net decrease (9,587,023) (23,315,147) ------------- ------------- Total decrease (17,197,560) (23,690,577) NET ASSETS Beginning of period 151,176,001 174,866,578 ------------- ------------- End of period (including undistributed net investment income of $1,859,334 and $3,779,005, respectively) $ 133,978,441 $ 151,176,001 ============= ============= See Notes to Financial Statements. 7 U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein U.S. Government/High Grade Securities Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). 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 Alliance Capital Management L.P. (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. Purchases and sales of portfolio securities are translated into U.S. dollars at the rates of exchange prevailing when such 8 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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 policy of the Portfolio 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 the Adviser an investment advisory fee at an annual rate of .60% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .45% of the first $2.5 billion, .40% of the next $2.5 billion and .35% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $106,212. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. Pursuant to the advisory agreement, the Portfolio paid $34,500 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, 2004. 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 $450 for the six months ended June 30, 2004. 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 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 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 six months ended June 30, 2004, were as follows: PURCHASES SALES ============= ============= Investment securities (excluding U.S. government securities) $ 23,574,083 $ 65,594,587 U.S. government securities 422,768,968 410,363,321 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 $ 1,329,969 Gross unrealized depreciation (587,492) ------------- Net unrealized appreciation $ 742,477 ============= NOTE E: 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, 2004, the Portfolio had no securities on loan. For the six months ended June 30, 2004, the Portfolio earned fee income of $440 which is included in interest income in the accompanying statement of operations. 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE F: CAPITAL STOCK There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS A Shares sold 58,473 1,581,386 $ 737,418 $ 20,008,752 Shares issued in reinvestment of dividends and distributions 540,011 470,989 6,323,532 5,976,857 Shares redeemed (1,634,842) (4,859,767) (20,600,934) (60,660,994) ----------- ----------- ------------ ------------- Net decrease (1,036,358) (2,807,392) $(13,539,984) $ (34,675,385) =========== =========== ============ ============= CLASS B Shares sold 400,110 2,012,386 $ 4,979,636 $ 25,045,603 Shares issued in reinvestment of dividends and distributions 115,645 44,370 1,344,947 559,503 Shares redeemed (190,092) (1,143,636) (2,371,622) (14,244,868) ----------- ----------- ------------ ------------- Net increase 325,663 913,120 $ 3,952,961 $ 11,360,238 =========== =========== ============ ============= NOTE G: RISKS INVOLVED IN INVESTING IN THE PORTFOLIO Interest Rate Risk and Credit Risk--Interest rate risk is the risk that changes in interest rates will affect the value of the Portfolio's investments in fixed-income debt securities such as bonds or notes. Increases in interest rates may cause the value of the Portfolio's investments to decline. Credit risk is the risk that the issuer or guarantor of a debt security, or the counterparty to a derivative contract, will be unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The degree of risk for a particular security may be reflected in its credit risk rating. Credit risk is greater for medium quality and lower-rated securities. Lower-rated debt securities and similar unrated securities (commonly known as "junk bonds") have speculative elements or are predominantly speculative risks. 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H:JOINT CREDIT FACILITY A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. 11 U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE I: DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended December 31, 2003 and December 31, 2002 were as follows: 2003 2002 ============= ============= Distributions paid from: Ordinary income $ 6,475,252 $ 3,926,956 ------------- ------------- Net long-term capital gains $ 61,109 $ -0- Total taxable distributions 6,536,361 3,926,956 ------------- ------------- Total distributions paid $ 6,536,361 $ 3,926,956 ============= ============= As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $ 6,073,763 Undistributed long-term capital gains 1,528,353 Accumulated capital and other losses (59,901)(a) Unrealized appreciation/(depreciation) 3,400,179(b) ------------- Total accumulated earnings/(deficit) $ 10,942,394 ============= (a) On December 31, 2003, the Portfolio had a net capital loss carryforward of $59,901 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, $98,605 of the capital loss carryforward was utilized. (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 J: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. 12 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 13 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 YEAR ENDED DECEMBER 31, JUNE 30, 2004 --------------------------------------------------------------- (UNAUDITED) 2003 2002 2001(a) 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $12.56 $12.54 $12.00 $11.68 $11.18 $12.27 INCOME FROM INVESTMENT OPERATIONS Net investment income (b) .17(c) .26 .42 .57 .67 .64 Net realized and unrealized gain (loss) on investment transactions. (.18) .23 .49 .33 .52 (.94) Net increase (decrease) in net asset value from operations. (.01) .49 .91 .90 1.19 (.30) LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.36) (.37) (.37) (.58) (.69) (.49) Distributions from net realized gain on investment transactions (.36) (.10) -0- -0- -0- (.30) Total dividends and distributions (.72) (.47) (.37) (.58) (.69) (.79) Net asset value, end of period $11.83 $12.56 $12.54 $12.00 $11.68 $11.18 TOTAL RETURN Total investment return based on net asset value (d) (.04)% 3.88% 7.79% 7.88% 11.08% (2.45)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $109,444 $129,194 $164,265 $104,635 $58,170 $60,504 Ratio to average net assets of: Expenses, net of waivers and reimbursements .67%(e) .77% .82% .89% .95% .86% Expenses, before waivers and reimbursements .82%(e) .77% .82% .89% .95% .86% Net investment income 2.70%(c)(e) 2.10% 3.49% 4.86% 5.95% 5.51% Portfolio turnover rate 328% 748% 551% 259% 236% 172%
See footnote summary on page 15. 14 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS B ---------------------------------------------------------------------------- SIX MONTHS JUNE 2, ENDED YEAR ENDED DECEMBER 31, 1999(f) TO JUNE 30, 2004 -------------------------------------------------- DECEMBER 31, (UNAUDITED) 2003 2002 2001(a) 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $12.47 $12.47 $11.94 $11.64 $11.16 $11.13 INCOME FROM INVESTMENT OPERATIONS Net investment income (b) .15(c) .24 .39 .55 .63 .33 Net realized and unrealized gain (loss) on investment transactions (.18) .21 .49 .31 .53 (.30) Net increase (decrease) in net asset value from operations (.03) .45 .88 .86 1.16 .03 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income. (.34) (.35) (.35) (.56) (.68) -0- Distributions from net realized gain on investment transactions (.36) (.10) -0- -0- -0- -0- Total dividends and distributions (.70) (.45) (.35) (.56) (.68) -0- Net asset value, end of period $11.74 $12.47 $12.47 $11.94 $11.64 $11.16 TOTAL RETURN Total investment return based on net asset value (d) (.22)% 3.61% 7.54% 7.60% 10.84% 0.27% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $24,534 $21,982 $10,602 $7,031 $3,627 $1,438 Ratio to average net assets of: Expenses, net of waivers and reimbursements .92%(e) 1.03% 1.07% 1.14% 1.20% 1.15%(e) Expenses, before waivers and reimbursements 1.07%(e) 1.03% 1.07% 1.14% 1.20% 1.15%(e) Net investment income 2.45%(c)(e) 1.89% 3.25% 4.61% 5.67% 5.48%(e) Portfolio turnover rate 328% 748% 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 waived by the Adviser. (d) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total 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. 15 (This page left intentionally blank.) (This page left intentionally blank.) ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN UTILITY INCOME PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2004 INVESTMENT PRODUCTS OFFERED - --------------------------- > ARE NOT FDIC INSURED > MAY LOSE VALUE > ARE NOT BANK GUARANTEED - --------------------------- YOU MAY OBTAIN A DESCRIPTION OF THE FUND'S PROXY VOTING POLICIES AND PROCEDURES, WITHOUT CHARGE, UPON REQUEST BY VISITING ALLIANCE CAPITAL'S WEB SITE AT WWW.ALLIANCEBERNSTEIN.COM (CLICK ON INVESTORS, THEN THE "PROXY VOTING POLICIES AND PROCEDURES" LINK ON THE LEFT SIDE OF THE PAGE), OR BY GOING TO THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT WWW.SEC.GOV, OR BY CALLING ALLIANCE CAPITAL AT (800) 227-4618. UTILITY INCOME PORTFOLIO TEN LARGEST HOLDINGS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PERCENT OF COMPANY U.S. $ VALUE NET ASSETS _______________________________________________________________________________ TXU Corp. (common & preferred) $ 2,737,441 5.7% - ------------------------------------------------------------------------------- Fpl Group, Inc. (common & preferred) 2,162,352 4.5 - ------------------------------------------------------------------------------- Exelon Corp. 1,937,478 4.0 - ------------------------------------------------------------------------------- Sempra Energy (common & preferred) 1,470,213 3.1 - ------------------------------------------------------------------------------- Equitable Resources, Inc. 1,328,947 2.8 - ------------------------------------------------------------------------------- American Movil S.A. de C.V. Series L (ADR) 1,236,580 2.6 - ------------------------------------------------------------------------------- NSTAR 1,230,516 2.6 - ------------------------------------------------------------------------------- PG&E Corp. 1,201,420 2.5 - ------------------------------------------------------------------------------- PPL Corp. 1,184,220 2.5 - ------------------------------------------------------------------------------- Dominion Resources, Inc. 1,166,980 2.4 ------------ ---- - ------------------------------------------------------------------------------- $ 15,656,147 32.7% - ------------------------------------------------------------------------------- 1 UTILITY INCOME PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- COMMON & PREFERRED STOCKS-95.3% UNITED STATES INVESTMENTS-81.1% UTILITIES-73.2% ELECTRIC & GAS UTILITY-65.7% AES Corp. (a) 63,600 $ 631,548 AGL Resources, Inc. 16,100 467,705 Alliant Energy Corp. 24,000 625,920 Ameren Corp. 24,000 1,031,040 American Electric Power Co., Inc. pfd. 18,800 828,140 Cinergy Corp. 24,000 912,000 Consolidated Edison, Inc. 17,100 679,896 Constellation Energy Group 25,000 947,500 Dominion Resources, Inc. 18,500 1,166,980 DTE Energy Co. 15,000 608,100 DTE Energy Co. pfd. 16,800 421,680 Duke Energy Corp. 26,800 543,772 Entergy Corp. 16,000 896,160 Equitable Resources, Inc. 25,700 1,328,947 Exelon Corp. 58,200 1,937,478 FirstEnergy Corp. 29,600 1,107,336 FPL Group, Inc. 19,500 1,247,025 FPL Group, Inc. pfd. 16,700 915,327 KeySpan Corp. pfd. 17,000 878,900 New Jersey Resources Corp. 23,800 989,604 NSTAR 25,700 1,230,516 PG&E Corp. (a) 43,000 1,201,420 Piedmont Natural Gas Co., Inc. 5,100 217,770 PNM Resources, Inc. 19,500 405,015 PPL Corp. 25,800 1,184,220 Progress Energy, Inc. 10,400 458,120 Public Service Enterprise Group, Inc. pfd. 18,000 1,018,080 Questar Corp. 26,300 1,016,232 SCANA Corp. 20,000 727,400 Sempra Energy 14,100 485,463 Sempra Energy pfd. 32,500 984,750 Southern Co. 9,200 268,180 TXU Corp. 41,500 1,681,165 TXU Corp. pfd. 22,200 1,056,276 Westar Energy, Inc. 23,000 457,930 Wisconsin Energy Corp. 14,000 456,540 Xcel Energy, Inc. 28,000 467,880 ------------- 31,482,015 ------------- TELEPHONE UTILITY-7.5% ALLTEL Corp. 5,000 253,100 BellSouth Corp. 27,600 723,672 SBC Communications, Inc. 19,000 460,750 Sprint Corp. (FON Group) 64,300 1,131,680 Verizon Communications, Inc. 27,700 1,002,463 ------------- 3,571,665 ------------- 35,053,680 ------------- ENERGY-3.5% PIPELINES-3.5% Kinder Morgan, Inc. 11,500 681,835 Southern Union Co. pfd. 6,900 440,013 The Williams Cos., Inc. 45,000 535,500 ------------- 1,657,348 ------------- CONSUMER SERVICES-2.4% CELLULAR COMMUNICATIONS-2.4% Nextel Communications, Inc. Cl. A (a) 31,000 826,460 Western Wireless Corp. Cl.A (a) 11,000 318,010 ------------- 1,144,470 ------------- TECHNOLOGY-2.0% COMMUNICATION EQUIPMENT-2.0% Nextel Partners, Inc. Cl. A (a) 24,800 394,816 QUALCOMM, Inc. 8,000 583,840 ------------- 978,656 ------------- Total United States Investments (cost $32,946,644) 38,834,154 ------------- FOREIGN INVESTMENTS-14.2% CANADA-0.9% TransCanada Corp. 22,000 435,160 ------------- FRANCE-2.3% France Telecom, SA (ADR) 23,100 607,068 Veolia Environnement (ADR) 17,000 481,610 ------------- 1,088,678 ------------- HONG KONG-2.4% Hong Kong & China Gas Co., Ltd. 476,000 784,200 Hong Kong Electric Holdings Ltd. 81,000 335,432 ------------- 1,119,632 ------------- MEXICO-4.2% America Movil, S.A. de C.V. Series L (ADR) 34,000 1,236,580 Telefonos de Mexico, SA Series L (ADR) 23,600 785,172 ------------- 2,021,752 ------------- PEOPLE'S REPUBLIC OF CHINA-0.8% Huaneng Power International, Inc. (ADR) 11,000 398,200 ------------- SOUTH KOREA-0.8% SK Telecom Co., Ltd. (ADR) 19,001 398,831 ------------- SPAIN-1.2% Telefonica de Espana, SA (ADR) 13,126 585,813 ------------- 2 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SHARES OR PRINCIPAL AMOUNT COMPANY (000) U.S. $ VALUE - ------------------------------------------------------------------------------- UNITED KINGDOM-1.6% Vodafone Group Plc. (ADR) 35,200 $ 777,920 ------------- Total Foreign Investments (cost $4,891,324) 6,825,986 ------------- Total Common & Preferred Stocks (cost $37,837,968) 45,660,140 ------------- SHORT-TERM INVESTMENT-6.7% TIME DEPOSIT-6.7% The Bank of New York 0.563%, 7/01/04 (cost $3,200,000) $3,200 3,200,000 ------------- TOTAL INVESTMENTS-102.0% (cost $41,037,968) 48,860,140 Other assets less liabilities-(2.0%) (946,524) ------------- NET ASSETS-100% $ 47,913,616 ============= (a) Non-income producing security. Glossary: ADR - American Depository Receipt See Notes to Financial Statements. 3 UTILITY INCOME PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $41,037,968) $ 48,860,140 Cash 23,494 Receivable for investment securities sold 72,070 Dividends and interest receivable 70,504 ------------- Total assets 49,026,208 ------------- LIABILITIES Payable for investment securities purchased 948,750 Advisory fee payable 21,242 Distribution fee payable 822 Accrued expenses 141,778 ------------- Total liabilities 1,112,592 ------------- NET ASSETS $ 47,913,616 ============= COMPOSITION OF NET ASSETS Capital stock, at par $ 3,117 Additional paid-in capital 56,107,749 Undistributed net investment income 631,676 Accumulated net realized loss on investment and foreign currency transactions (16,651,098) Net unrealized appreciation of investments 7,822,172 ------------- $ 47,913,616 ============= CLASS A SHARES Net assets $ 43,755,544 ============= Shares of capital stock outstanding 2,845,563 ============= Net asset value per share $ 15.38 ============= CLASS B SHARES Net assets $ 4,158,072 ============= Shares of capital stock outstanding 271,046 ============= Net asset value per share $ 15.34 ============= See Notes to Financial Statements. 4 UTILITY INCOME PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $5,534 ) $ 830,069 Interest 95,219 ----------- Total investment income 925,288 ----------- EXPENSES Advisory fee 175,516 Distribution fee -- Class B 4,358 Custodian 63,641 Administrative 34,500 Printing 26,158 Audit 18,750 Legal 5,000 Directors' fees 500 Transfer agency 450 Miscellaneous 5,229 ----------- Total expenses 334,102 Less: expenses waived and reimbursed by the Adviser (see Note B) (46,804) ----------- Net expenses 287,298 ----------- Net investment income 637,990 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS Net realized gain (loss) on: Investment transactions 1,981,277 Foreign currency transactions (694) Net change in unrealized appreciation/depreciation of investments (201,410) ----------- Net gain on investment and foreign currency transactions 1,779,173 ----------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,417,163 =========== See Notes to Financial Statements. 5 UTILITY INCOME PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS _______________________________________________________________________________ AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 ============= ============= INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 637,990 $ 1,063,207 Net realized gain (loss) on investment and foreign currency transactions 1,980,583 (373,416) Net change in unrealized appreciation/ depreciation of investment (201,410) 6,918,282 ------------- ------------- Net increase in net assets from operations 2,417,163 7,608,073 DIVIDENDS TO SHAREHOLDERS FROM Net investment income Class A (962,290) (1,261,672) Class B (85,051) (24,223) CAPITAL STOCK TRANSACTIONS Net increase (decrease) 418,650 (376,197) ------------- ------------- Total increase 1,788,472 5,945,981 NET ASSETS Beginning of period 46,125,144 40,179,163 ------------- ------------- End of period (including undistributed net investment income of $631,676 and $1,041,027 respectively) $ 47,913,616 $ 46,125,144 ============= ============= See Notes to Financial Statements. 6 UTILITY INCOME PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein Utility Income Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek current income and capital appreciation by investing primarily in equity and fixed-income securities of companies in the utilities industry. 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 Alliance Capital Management L.P. (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. 7 UTILITY INCOME PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) 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 the Adviser an investment advisory fee at an annual rate of .75% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .55% of the first $2.5 billion, .45% of the next $2.5 billion and .40% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $46,804. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. Pursuant to the advisory agreement, the Portfolio paid $34,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2004. Brokerage commissions paid on investment transactions for the six months ended June 30, 2004 amounted to $37,085, none of which 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 $450 for the six months ended June 30, 2004. 8 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 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 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. NOTE D: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2004, were as follows: PURCHASES SALES ============= ============= Investment securities (excluding U.S. government securities) $ 10,871,061 $ 11,722,199 U.S. government securities -0- -0- 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 $ 7,974,356 Gross unrealized depreciation (152,184) ------------- Net unrealized appreciation $ 7,822,172 ============= 1. FORWARD EXCHANGE CURRENCY CONTRACTS The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as unrealized appreciation and depreciation 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. 2. OPTION TRANSACTIONS For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign securities exchanges and over-the-counter markets. 9 UTILITY INCOME PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. NOTE E: 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 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. For the six months ended June 30, 2004, the Portfolio had no securities on loan. NOTE F: CAPITAL STOCK There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B shares. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS A Shares sold 194,971 318,483 $ 2,980,938 $ 4,272,481 Shares issued in reinvestment of dividends and distributions 64,195 90,572 962,290 1,261,672 Shares redeemed (312,148) (632,323) (4,786,832) (8,408,753) ----------- ----------- ------------ ------------- Net decrease (52,982) (223,268) $ (843,604) $ (2,874,600) =========== =========== ============ ============= 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS JULY 22, 2003* SIX MONTHS JULY 22, 2003* ENDED TO ENDED TO JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS B Shares sold 90,529 192,779 $ 1,376,536 $ 2,610,572 Shares issued in reinvestment of dividends and distributions 5,685 1,740 85,051 24,223 Shares redeemed (12,991) (9,754) (199,333) (136,392) ----------- ----------- ------------ ------------- Net increase 83,223 184,765 $ 1,262,254 $ 2,498,403 =========== =========== ============ ============= NOTE G: RISKS INVOLVED IN INVESTING IN THE PORTFOLIO Foreign Securities 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H: JOINT CREDIT FACILITY A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. NOTE I: DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at end of the current fiscal year. The tax character of distributions paid during the fiscal years ended December 31, 2003 and December 31, 2002 were as follows: 2003 2002 ============= ============= Distributions paid from: Ordinary income $ 1,285,895 $ 937,618 ------------- ------------- Total taxable distributions 1,285,895 937,618 ------------- ------------- Total distributions paid $ 1,285,895 $ 937,618 ============= ============= As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $ 1,041,074 Accumulated capital and other losses (18,234,766)(a) Unrealized appreciation/(depreciation) 7,626,620(b) ------------- Total accumulated earnings/(deficit) $ (9,567,072) ============= (a) On December 31, 2003, the Portfolio had a net capital loss carryforward of $18,234,719, of which $1,498,725 expires in the year 2009, $16,291,115 expires in the year 2010 and $444,879 expires in the year 2011. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. Net capital losses and foreign currency 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, 2003, the Portfolio deferred to January 1, 2004, post-October foreign currency losses of $47. (b) The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales. * Commencement of distribution. 11 UTILITY INCOME PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE J: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. 12 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 13 UTILITY INCOME 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 YEAR ENDED DECEMBER 31, JUNE 30, 2004 --------------------------------------------------------------- (UNAUDITED) 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $14.95 $12.86 $16.82 $22.65 $21.66 $18.90 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) .21(b) .35 .36 .29 1.01(b) .41(b) Net realized and unrealized gain (loss) on investment and foreign currency transactions .56 2.18 (4.06) (5.23) 1.36 3.19 Net increase (decrease) in net asset value from operations .77 2.53 (3.70) (4.94) 2.37 3.60 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.34) (.44) (.26) (.76) (.36) (.30) Distributions from net realized gain on investment transactions -0- -0- -0- (.13) (1.02) (.54) Total dividends and distributions (.34) (.44) (.26) (.89) (1.38) (.84) Net asset value, end of period $15.38 $14.95 $12.86 $16.82 $22.65 $21.66 TOTAL RETURN Total investment return based on net asset value (c) 5.24% 19.88% (22.12)% (22.50)% 11.45% 19.40% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $43,756 $43,323 $40,140 $62,684 $62,362 $46,158 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.21%(d) 1.48% 1.22% 1.02% 1.00% .95% Expenses, before waivers and reimbursements 1.41%(d) 1.48% 1.22% 1.02% 1.04% 1.14% Net investment income 2.75%(b)(d) 2.60% 2.60% 1.49% 4.63%(b) 2.07%(b) Portfolio turnover rate 24% 76% 90% 25% 18% 16%
See footnote summary on page 15. 14 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period CLASS B ------------------------------------ SIX MONTHS JULY 22, 2002(e) ENDED YEAR ENDED TO JUNE 30, 2004 DECEMBER 31, DECEMBER 31, (UNAUDITED) 2003 2002 ----------- ----------- ----------- Net asset value, beginning of period $14.92 $12.86 $11.40 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) .19(b) .28 .07 Net realized and unrealized gain on investment and foreign currency transactions .56 2.21 1.39 Net increase in net asset value from operations .75 2.49 1.46 LESS: DIVIDENDS Dividends from net investment income (.33) (.43) -0- Net asset value, end of period $15.34 $14.92 $12.86 TOTAL RETURN Total investment return based on net asset value (c) 5.10% 19.64% 12.81% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $4,158 $2,802 $39 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.45%(d) 1.73% 1.45%(d) Expenses, before waivers and reimbursements 1.65%(d) 1.73% 1.45%(d) Net investment income 2.49%(b)(d) 2.07% 1.92%(d) Portfolio turnover rate 24% 76% 90% (a) Based on average shares outstanding. (b) Net of expenses reimbursed or waived by the Adviser. (c) 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. (d) Annualized. (e) Commencement of distribution. 15 (This page left intentionally blank.) (This page left intentionally blank.) - ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN U.S. LARGE CAP BLENDED STYLE PORTFOLIO - ------------------------------------------------------------------------------- SEMI-ANNUAL REPORT JUNE 30, 2004 - --------------------------- INVESTMENT PRODUCTS OFFERED o ARE NOT FDIC INSURED o MAY LOSE VALUE o ARE NOT BANK GUARANTEED - --------------------------- You may obtain a description of the Fund's proxy voting policies and procedures, without charge, upon request by visiting Alliance Capital's web site at www.alliancebernstein.com (click on Investors, then the "proxy voting policies and procedures" link on the left side of the page), or by going to the Securities and Exchange Commission's web site at www.sec.gov, or by calling Alliance Capital at (800) 227-4618. U.S. LARGE CAP BLENDED STYLE PORTFOLIO TEN LARGEST HOLDINGS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PERCENT OF COMPANY U.S. $ VALUE NET ASSETS - ------------------------------------------------------------------------------- General Electric Co. $ 689,310 4.8% CITIGROUP, INC. 660,299 4.6 Pfizer, Inc. 639,322 4.5 Dell, Inc. 537,299 3.8 Intel Corp. 513,360 3.6 American International Group, Inc. 484,704 3.4 Lowe's Cos., Inc. 436,164 3.1 Cisco Systems, Inc. 434,895 3.1 Microsoft Corp. 414,120 2.9 Bank of America Corp. 396,191 2.8 - ------------------------------------------------------------------------------- $5,205,664 36.6% 1 U.S. LARGE CAP BLENDED STYLE PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------- COMMON STOCKS-99.4% FINANCE-22.7% BANKING - MONEY CENTER-2.1% JP Morgan Chase & Co. 7,600 $ 294,652 BANKING - REGIONAL-3.7% Bank of America Corp. 4,682 396,191 SunTrust Banks, Inc. 1,900 123,481 ------------ 519,672 BROKERAGE & MONEY MANAGEMENT-0.7% Lehman Brothers Holdings, Inc. 1,425 107,231 INSURANCE-7.2% American International Group, Inc. 6,800 484,704 Manulife Financial Corp. (Canada) 4,974 201,447 MetLife, Inc. 3,700 132,645 The Chubb Corp. 2,950 201,131 ------------ 1,019,927 MORTGAGE BANKING-2.3% Fannie Mae 3,500 249,760 Freddie Mac 1,200 75,960 ------------ 325,720 MISCELLANEOUS-6.7% Citigroup, Inc. 14,200 660,299 MBNA Corp. 11,400 294,006 ------------ 954,305 ------------ 3,221,507 TECHNOLOGY-21.6% COMMUNICATION EQUIPMENT-4.9% ADC Telecommunications, Inc. (a) 17,700 50,268 Cisco Systems, Inc. (a) 18,350 434,895 Juniper Networks, Inc. (a) 8,800 216,216 ------------ 701,379 COMPUTER HARDWARE/STORAGE-6.1% Dell, Inc. (a) 15,000 537,299 Hewlett-Packard Co. 15,700 331,270 ------------ 868,569 CONTRACT MANUFACTURING-2.3% Cooper Industries Ltd. Cl.A (Bermuda) 2,025 120,305 Flextronics International Ltd. (Singapore) (a) 5,100 81,345 Solectron Corp. (a) 18,700 120,989 ------------ 322,639 SEMI-CONDUCTOR COMPONENTS-3.6% Intel Corp. 18,600 513,360 SOFTWARE-4.7% Electronic Arts, Inc. (a) 4,500 245,475 Microsoft Corp. 14,500 414,120 ------------ 659,595 ------------ 3,065,542 CONSUMER SERVICES-15.3% BROADCASTING & CABLE-3.9% Comcast Corp. Special Cl.A (a) 6,050 167,041 Time Warner, Inc. (a) 12,300 216,234 Viacom, Inc. Cl.B 4,800 171,456 ------------ 554,731 PRINTING & PUBLISHING-1.1% The Interpublic Group of Cos., Inc. (a) 12,000 164,760 RETAIL - GENERAL MERCHANDISE-7.5% eBay, Inc. (a) 2,850 262,058 Lowe's Cos., Inc. 8,300 436,164 Office Depot, Inc. (a) 4,500 80,595 Wal-Mart Stores, Inc. 5,400 284,904 ------------ 1,063,721 MISCELLANEOUS-2.8% Yahoo!, Inc. (a) 10,900 395,997 ------------ 2,179,209 HEALTHCARE-12.9% BIOTECHNOLOGY-2.5% Amgen, Inc. (a) 6,625 361,526 DRUGS-5.5% GlaxoSmithKline Plc. (ADR) (United Kingdom) 3,500 145,110 Pfizer, Inc. 18,650 639,322 ------------ 784,432 MEDICAL PRODUCTS-2.7% Boston Scientific Corp. (a) 4,400 188,320 St. Jude Medical, Inc. (a) 2,500 189,125 ------------ 377,445 MEDICAL SERVICES-2.2% UnitedHealth Group, Inc. 5,000 311,250 ------------ 1,834,653 2 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------- ENERGY-7.8% DOMESTIC INTEGRATED-1.4% Occidental Petroleum Corp. 4,000 $ 193,640 INTERNATIONAL-4.3% BP p.l.c. (ADR) (United Kingdom) 6,250 334,813 ChevronTexaco Corp. 3,000 282,330 ------------ 617,143 MISCELLANEOUS-2.1% ConocoPhillips 3,900 297,531 ------------ 1,108,314 CONSUMER STAPLES-5.8% BEVERAGES-1.5% PepsiCo, Inc. 3,800 204,744 RETAIL - FOOD & DRUG-2.7% Safeway, Inc. (a) 7,925 200,820 The Kroger Co. (a) 10,100 183,820 ------------ 384,640 TOBACCO-1.6% Altria Group, Inc. 4,600 230,230 ------------ 819,614 CAPITAL GOODS-4.8% MISCELLANEOUS-4.8% General Electric Co. 21,275 689,310 UTILITIES-3.6% ELECTRIC & GAS UTILITY-2.6% American Electric Power Co., Inc. 5,350 171,200 Entergy Corp. 1,200 67,212 PPL Corp. 2,975 136,553 ------------ 374,965 TELEPHONE UTILITY-1.0% Sprint Corp. (FON Group) 7,900 139,040 ------------ 514,005 MULTI-INDUSTRY COMPANIES-1.5% Textron, Inc. 3,550 210,693 CONSUMER MANUFACTURING-1.4% AUTO & RELATED-1.4% Lear Corp. 550 32,445 Magna International, Inc. Cl.A (Canada) 1,900 161,823 ------------ 194,268 TRANSPORTATION-1.1% RAILROAD-1.1% CSX Corp. 1,800 58,986 Norfolk Southern Corp. 3,700 98,124 ------------ 157,110 AEROSPACE & DEFENSE-0.9% AEROSPACE-0.9% Boeing Co. 2,500 127,725 Total Common Stocks (cost $13,398,267) 14,121,950 TOTAL INVESTMENTS-99.4% (cost $13,398,267) 14,121,950 Other assets less liabilities-0.6% 89,318 NET ASSETS-100% $14,211,268 (a) Non-income producing security. Glossary: ADR-American Depositary Receipt See Notes to Financial Statements. 3 U.S. LARGE CAP BLENDED STYLE PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $13,398,267) $ 14,121,950 Cash 190,505 Dividends and interest receivable 16,387 Total assets 14,328,842 LIABILITIES Advisory fee payable 3,254 Distribution fee payable 2,628 Accrued expenses 111,692 Total liabilities 117,574 NET ASSETS $ 14,211,268 COMPOSITION OF NET ASSETS Capital stock, at par $ 1,279 Additional paid-in capital 13,514,145 Undistributed net investment income 1,612 Accumulated net realized loss on investment transactions (29,451) Net unrealized appreciation of investments 723,683 $ 14,211,268 CLASS A SHARES Net assets $ 1,119,224 Shares of capital stock outstanding 100,109 Net asset value per share $ 11.18 CLASS B SHARES Net assets $ 13,092,044 Shares of capital stock outstanding 1,178,813 Net asset value per share $ 11.11 See Notes to Financial Statements. 4 U.S. LARGE CAP BLENDED STYLE PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $775) $ 81,146 Interest 559 Total investment income 81,705 EXPENSES Advisory fee 51,576 Distribution fee--Class B 12,203 Custodian 64,269 Administrative 34,500 Audit 19,635 Legal 12,275 Printing 3,727 Directors' fees 500 Transfer agency 450 Miscellaneous 4,236 Total expenses 203,371 Less: expenses waived and reimbursed by the Adviser (see Note B) (126,021) Net expenses 77,350 Net investment income 4,355 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS Net realized loss on investment transactions (15,079) Net change in unrealized appreciation/ depreciation of investments 239,756 Net gain on investment transactions 224,677 NET INCREASE IN NET ASSETS FROM OPERATIONS $ 229,032 See Notes to Financial Statements. 5 U.S. LARGE CAP BLENDED STYLE PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SIX MONTHS ENDED MAY 2, 2003(a) TO JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 ---------------- ------------ INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 4,355 $ 7,358 Net realized loss on investment transactions (15,079) (14,372) Net change in unrealized appreciation/ depreciation of investments 239,756 483,927 Net increase in net assets from operations 229,032 476,913 DIVIDENDS TO SHAREHOLDERS FROM Net investment income Class A (1,200) -0- Class B (8,901) -0- CAPITAL STOCK TRANSACTIONS Net increase 6,295,889 7,219,535 Total increase 6,514,820 7,696,448 NET ASSETS Beginning of period 7,696,448 -0- End of period (including undistributed net investment income of $1,612 and $7,358, respectively) $14,211,268 $7,696,448 (a) Commencement of operations. See Notes to Financial Statements. 6 U.S. LARGE CAP BLENDED STYLE PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein U.S.Large Cap Blended Style Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek long-term growth of capital. The Fund was incorporated in the State of Maryland on November 17, 1987, as an open-end series investment company. The Fund offers twenty separately managed pools of assets which have differing investment objectives and policies. The Portfolio commenced operations on May 2, 2003. 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 Alliance Capital Management L.P. (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. Purchases and sales of portfolio securities are translated into U.S. dollars at the rates of exchange prevailing when such 7 U.S. LARGE CAP BLENDED STYLE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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 policy of the Portfolio 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 trade 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. 7. REPURCHASE AGREEMENTS It is the policy of the Portfolio that its custodian or designated subcustodian take control of securities as collateral under repurchase agreements and to determine on a daily basis that the value of such securities are sufficient to cover the value of the repurchase agreements. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of collateral by the Portfolio may be delayed or limited. NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of an investment advisory agreement, the Portfolio pays the Adviser an investment advisory fee at an annual rate of .95% of the first $5 billion, .90% of the next $2.5 billion, .85% of the next $2.5 billion and .80% of the excess over $10 billion of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. During the period ended June 30, 2004, the Adviser voluntarily agreed to waive its fee and to reimburse the additional operating expenses to the extent necessary to limit total operating expenses on an annual basis to 1.20% and 1.45% of the average daily net assets of Class A and Class B shares, respectively. Any expense waivers or reimbursements are accrued daily and paid monthly. For the period ended June 30, 2004, the Adviser waived fees in the amount of $75,234. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .65% of the first $2.5 billion, .55% of the next $2.5 billion and .50% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $16,287. 8 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. Pursuant to the terms of the investment advisory agreement, the Portfolio has voluntarily agreed to reimburse the Adviser for the cost of providing the Portfolio with certain legal and accounting services. Due to the Adviser's agreement to limit total operating expenses as described above, the Adviser waived reimbursement for such services in the amount of $34,500 for the period ended June 30, 2004. Brokerage commissions paid on investment transactions for the period ended June 30, 2004, amounted to $11,314, of which $5,641 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 $450 for the period ended June 30, 2004. 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 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 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. NOTE D: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments) for the period ended June 30, 2004 were as follows: PURCHASES SALES ----------- ------------ Investment securities (excluding U.S. government securities) $7,754,426 $1,034,557 U.S. GOVERNMENT SECURITIES -0- -0- 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 $ 943,697 Gross unrealized depreciation (220,014) Net unrealized appreciation $ 723,683 1. FORWARD EXCHANGE CURRENCY CONTRACTS The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the differ- 9 U.S. LARGE CAP BLENDED STYLE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ence between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as net unrealized appreciation or depreciation 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 the 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. 2. OPTION TRANSACTIONS For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. NOTE E: CAPITAL STOCK There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B shares. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT --------------------------- ------------------------------ SIX MONTHS JUNE 6, SIX MONTHS JUNE 6, ENDED 2003(a) TO ENDED 2003(a) TO JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ------------ ------------ -------------- -------------- CLASS A Shares sold -0- 100,000 $ -0- $ 1,000,000 Shares issued in reinvestment of dividends 109 -0- 1,200 -0- Net increase 109 100,000 $ 1,200 $ 1,000,000 (a) Commencement of distribution. 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SHARES AMOUNT --------------------------- ------------------------------ SIX MONTHS MAY 2, SIX MONTHS MAY 2, ENDED 2003(b) TO ENDED 2003(b) TO JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ------------ ------------ -------------- -------------- CLASS B Shares sold 620,963 614,483 $ 6,808,386 $ 6,314,718 Shares issued in reinvestment of dividends 812 -0- 8,902 -0- Shares redeemed (48,345) (9,100) (522,599) (95,183) Net increase 573,430 605,383 $ 6,294,689 $ 6,219,535 NOTE F: RISK INVOLVED IN INVESTING IN THE PORTFOLIO In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE G: COMPONENT OF ACCUMULATED EARNINGS (DEFICIT) The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $ 7,358 Accumulated capital and other losses (14,372)(a) Unrealized appreciation/(depreciation) 483,927 Total accumulated earnings/(deficit) $ 476,913 (a) On December 31, 2003, the Portfolio had a net capital loss carryforward of $8,021 all of which will expire in the year 2011. 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, 2003, the Portfolio deferred to January 1, 2004, post October capital losses of $6,351. NOTE H: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (b) Commencement of operations. 11 U.S. LARGE CAP BLENDED STYLE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 12 U.S. LARGE CAP BLENDED STYLE PORTFOLIO FINANCIAL HIGHLIGHTS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period CLASS A ------------------------------ SIX MONTHS JUNE 6, ENDED 2003(a) TO JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 -------------- ------------- Net asset value, beginning of period $10.96 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (b)(c) .02 .03 Net realized and unrealized gain on investment transactions .21 .93 Net increase in net asset value from operations .23 .96 LESS: DIVIDENDS Dividends from net investment income (.01) -0- Net asset value, end of period $11.18 $10.96 TOTAL RETURN Total investment return based on net asset value (d) 2.12% 9.60% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $1,119 $1,096 Ratio to average net assets of: Expenses, net of waivers and reimbursements (e) 1.20% 1.20% Expenses, before waivers and reimbursements (e) 3.50% 6.65% Net investment income (c)(e) .28% .45% Portfolio turnover rate 10% 13% See footnote summary on page 14. 13 U.S. LARGE CAP BLENDED STYLE PORTFOLIO FINANCIAL HIGHLIGHTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period CLASS B ------------------------------ SIX MONTHS MAY 2, ENDED 2003(g) TO JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 -------------- ------------- Net asset value, beginning of period $10.90 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (b)(c) -0-(f) .01 Net realized and unrealized gain on investment transactions .22 .89 Net increase in net asset value from operations .22 .90 LESS: DIVIDENDS Dividends from net investment income (.01) -0- Net asset value, end of period $11.11 $10.90 TOTAL RETURN Total investment return based on net asset value (d) 2.00% 9.00% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $13,092 $6,600 Ratio to average net assets of: Expenses, net of waivers and reimbursements (e) 1.45% 1.43% Expenses, before waivers and reimbursements (e) 3.77% 8.25% Net investment income (c)(e) .06% .27% Portfolio turnover rate 10% 13% (a) Commencement of distribution. (b) Based on average shares outstanding. (c) Net of expenses waived 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 redemption of Portfolio shares. Total investment return calculated for a period of less than one year is not annualized. (e) Annualized. (f) Amount is less than $.01 per share. (g) Commencement of operations. 14 ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN VALUE PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2004 INVESTMENT PRODUCTS OFFERED - --------------------------- > ARE NOT FDIC INSURED > MAY LOSE VALUE > ARE NOT BANK GUARANTEED - --------------------------- YOU MAY OBTAIN A DESCRIPTION OF THE FUND'S PROXY VOTING POLICIES AND PROCEDURES, WITHOUT CHARGE, UPON REQUEST BY VISITING ALLIANCE CAPITAL'S WEB SITE AT WWW.ALLIANCEBERNSTEIN.COM (CLICK ON INVESTORS, THEN THE "PROXY VOTING POLICIES AND PROCEDURES" LINK ON THE LEFT SIDE OF THE PAGE), OR BY GOING TO THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT WWW.SEC.GOV, OR BY CALLING ALLIANCE CAPITAL AT (800) 227-4618. VALUE PORTFOLIO TEN LARGEST HOLDINGS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PERCENT OF COMPANY U.S. $ VALUE NET ASSETS _______________________________________________________________________________ Citigroup, Inc. $ 5,761,349 4.4% - ------------------------------------------------------------------------------- Exxon Mobil Corp. 5,657,834 4.3 - ------------------------------------------------------------------------------- Bank of America Corp. 4,862,011 3.7 - ------------------------------------------------------------------------------- General Electric Co. 3,434,400 2.6 - ------------------------------------------------------------------------------- ChevronTexaco Corp. 2,973,876 2.3 - ------------------------------------------------------------------------------- Altria Group, Inc. 2,780,277 2.1 - ------------------------------------------------------------------------------- JP Morgan Chase & Co. 2,415,371 1.8 - ------------------------------------------------------------------------------- Hewlett-Packard Co. 2,097,930 1.6 - ------------------------------------------------------------------------------- ConocoPhillips 1,876,734 1.4 - ------------------------------------------------------------------------------- U.S. Bancorp 1,645,332 1.2 ------------ ---- - ------------------------------------------------------------------------------- $ 33,505,114 25.4% - ------------------------------------------------------------------------------- 1 VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- COMMON STOCKS-97.2% FINANCIAL-33.2% BANKS-NYC-6.2% Citigroup, Inc. 123,900 $ 5,761,349 JP Morgan Chase & Co. 62,300 2,415,371 ------------- 8,176,720 ------------- FINANCE-PERSONAL LOANS-0.5% Capital One Financial Corp. 1,900 129,922 Countrywide Credit Industries, Inc. 6,734 473,064 ------------- 602,986 ------------- LIFE INSURANCE-2.0% Jefferson-Pilot Corp. 15,600 792,480 Manulife Financial Corp. 22,757 921,659 MetLife, Inc. 24,800 889,080 Torchmark Corp. 1,300 69,940 ------------- 2,673,159 ------------- MAJOR REGIONAL BANKS-11.3% Bank of America Corp. 57,457 4,862,011 Bank One Corp. 18,100 923,100 Comerica, Inc. 14,500 795,760 Huntington Bancshares, Inc. 14,000 320,600 KeyCorp. 27,950 835,426 National City Corp. 31,800 1,113,318 PNC Financial Services Group 14,700 780,276 Suntrust Banks, Inc. 14,700 955,353 U.S. Bancorp 59,700 1,645,332 Wachovia Corp. 36,550 1,626,475 Wells Fargo & Co. 19,000 1,087,370 ------------- 14,945,021 ------------- MULTI-LINE INSURANCE-1.7% American International Group, Inc. 11,725 835,758 Humana, Inc.(a) 18,100 305,890 The Hartford Financial Services Group, Inc. 16,000 1,099,840 ------------- 2,241,488 ------------- PROPERTY-CASUALTY INSURANCE-3.2% ACE Ltd. 6,000 253,680 Allstate Corp. 25,350 1,180,043 Chubb Corp. 12,500 852,250 PartnerRe Ltd. 4,300 243,939 RenaissanceRe Holdings Ltd. 4,200 226,590 St. Paul Cos., Inc. 31,533 1,278,348 XL Capital Ltd. Cl.A 3,300 249,018 ------------- 4,283,868 ------------- SAVINGS AND LOAN-3.6% Astoria Financial Corp. 14,500 530,410 Freddie Mac 23,400 1,481,220 Fannie Mae 8,800 627,968 Golden West Financial Corp. 6,600 701,910 Washington Mutual, Inc. 36,000 1,391,040 ------------- 4,732,548 ------------- MISCELLANEOUS FINANCIAL-4.7% Goldman Sachs Group, Inc. 12,975 1,221,726 Lehman Brothers Holdings, Inc. 13,700 1,030,925 MBIA, Inc. 11,800 674,016 Merrill Lynch & Co., Inc. 21,100 1,138,978 MGIC Investment Corp. 11,900 902,734 Morgan Stanley 22,800 1,203,156 ------------- 6,171,535 ------------- 43,827,325 ------------- ENERGY-12.0% GAS PIPELINES-0.7% El Paso Corp. 90,100 709,988 The Williams Cos., Inc. 11,400 135,660 ------------- 845,648 ------------- OILS-INTEGRATED DOMESTIC-4.3% Ashland, Inc. 11,300 596,753 ConocoPhillips 24,600 1,876,734 Marathon Oil Corp. 27,100 1,025,464 Occidental Petroleum Corp. 22,100 1,069,861 Valero Energy Corp. 14,700 1,084,272 ------------- 5,653,084 ------------- OILS-INTEGRATED INTERNATIONAL-7.0% BP p.l.c. (ADR) 12,300 658,911 ChevronTexaco Corp. 31,600 2,973,876 Exxon Mobil Corp. 127,400 5,657,834 ------------- 9,290,621 ------------- 15,789,353 ------------- UTILITIES-8.7% ELECTRIC COMPANIES-5.1% Alliant Energy Corp. 20,600 537,248 American Electric Power Co., Inc. 28,075 898,400 CMS Energy Corp. (a) 33,300 304,029 Constellation Energy Group, Inc. 14,500 549,550 Edison International 5,600 143,192 Entergy Corp. 12,300 688,923 Exelon Corp. 26,200 872,198 FirstEnergy Corp. 21,700 811,797 Northeast Utilities 24,400 475,068 PG&E Corp. (a) 8,100 226,314 PPL Corp. 11,000 504,900 Sempra Energy 17,300 595,639 Xcel Energy, Inc. 9,700 162,087 ------------- 6,769,345 ------------- 2 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- TELEPHONE-3.6% BellSouth Corp. 19,300 $ 506,046 Qwest Communications International, Inc. (a) 72,800 261,352 SBC Communications, Inc. 48,600 1,178,550 Sprint Corp. 93,250 1,641,200 Verizon Communications 33,000 1,194,270 ------------- 4,781,418 ------------- 11,550,763 ------------- CONSUMER CYCLICALS-8.2% AUTOS & AUTO PARTS-3.3% American Axle & Manufacturing Holdings, Inc. 10,500 381,780 Autoliv Inc. (Sweden) 15,700 662,540 Borg Warner, Inc. 10,800 472,716 Dana Corp. 15,900 311,640 Delphi Corp. 36,700 391,956 General Motors Corp. 20,400 950,436 Lear Corp. 9,200 542,708 Magna International, Inc. Cl.A 8,200 698,394 ------------- 4,412,170 ------------- HOME FURNISHINGS-0.4% Mohawk Industries, Inc. (a) 7,500 549,975 ------------- HOUSEHOLD-APPLIANCES/ DURABLES-0.4% WHIRLPOOL CORP. 8,100 555,660 ------------- RETAILERS-2.3% AutoNation, Inc. (a) 12,900 220,590 Federated Department Stores, Inc. 16,500 810,150 May Department Stores Co. 27,200 747,728 Nordstrom, Inc. 7,900 336,619 Office Depot, Inc. (a) 40,800 730,728 Sears, Roebuck & Co. 5,600 211,456 ------------- 3,057,271 ------------- TEXTILES/SHOES-APPAREL MFG.-1.5% Jones Apparel Group, Inc. 20,600 813,288 Liz Claiborne, Inc. 6,200 223,076 Reebok International Ltd. 5,600 201,488 V.F. Corp. 15,450 752,415 ------------- 1,990,267 ------------- TIRES & RUBBER GOODS-0.3% Cooper Tire & Rubber Co. 14,100 324,300 ------------- 10,889,643 ------------- TECHNOLOGY-7.3% COMMUNICATION-EQUIP. MFRS.-1.3% ADC Telecommunications, Inc. (a) 117,700 334,268 Corning, Inc. (a) 56,000 731,360 Nortel Networks Corp. (a) 126,500 631,235 ------------- 1,696,863 ------------- COMPUTERS-2.1% Hewlett-Packard Co. 99,428 2,097,930 International Business Machines Corp. 7,840 691,096 Quantum Corp. (a) 6,250 19,375 ------------- 2,808,401 ------------- COMPUTER/INSTRUMENTATION-0.7% Flextronics International Ltd. (Singapore) (a) 39,400 628,430 Sanmina-SCI Corp. (a) 26,700 242,970 ------------- 871,400 ------------- COMPUTER SERVICES/SOFTWARE-0.5% Electronic Data Systems Corp. 32,400 620,460 ------------- SEMICONDUCTORS-0.4% Vishay Intertechnology, Inc. (a) 30,550 567,619 ------------- SOFTWARE-0.2% Microsoft Corp. 9,500 271,320 ------------- MISCELLANEOUS INDUSTRIAL TECHNOLOGY-2.1% Arrow Electronics, Inc. (a) 24,200 649,044 Avnet, Inc. (a) 19,500 442,650 Ingram Micro, Inc. Cl.A (a) 18,200 263,354 Solectron Corp. (a) 97,510 630,890 Tech Data Corp. (a) 5,550 217,172 Tellabs, Inc. (a) 65,400 571,596 ------------- 2,774,706 ------------- 9,610,769 ------------- CONSUMER GROWTH-6.1% ADVERTISING-0.5% Interpublic Group of Cos., Inc. (a) 47,200 648,056 ------------- DRUGS-2.1% Bristol-Myers Squibb Co. 18,850 461,825 GlaxoSmithKline Plc (ADR) (United Kingdom) 16,400 679,944 Merck & Co., Inc. 29,400 1,396,500 Pfizer, Inc. 4,900 167,972 Wyeth 2,400 86,784 ------------- 2,793,025 ------------- ENTERAINMENT-1.3% Time Warner, Inc. (a) 83,400 1,466,172 Viacom, Inc. Cl.B 3,050 108,946 Walt Disney Co. 6,300 160,587 ------------- 1,735,705 ------------- OTHER MEDICAL-0.2% IMS HEALTH, INC. 8,800 206,272 ------------- PUBLISHING-0.6% R. R. Donnelley & Sons Co. 26,150 863,473 ------------- 3 VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- RADIO-TV BROADCASTING-1.1% COMCAST CORP. Cl.A (A) 50,934 $ 1,427,680 ------------- MISCELLANEOUS CONSUMER GROWTH-0.3% Cendant Corp. 16,300 399,024 ------------- 8,073,235 ------------- CAPITAL EQUIPMENT-6.0% AEROSPACE-DEFENSE-1.5% B.F. Goodrich Corp. 21,700 701,561 Boeing Co. 16,300 832,767 General Dynamics Corp. 4,200 417,060 ------------- 1,951,388 ------------- AUTO TRUCKS-PARTS-0.9% Eaton Corp. 13,500 873,990 PACCAR, Inc. 5,900 342,141 ------------- 1,216,131 ------------- ELECTRICAL EQUIPMENT-1.6% Cooper Industries Ltd. Cl.A 7,000 415,870 Honeywell International, Inc. 37,100 1,358,973 Hubbell Inc. Cl.B 6,600 308,286 ------------- 2,083,129 ------------- MISCELLANEOUS CAPITAL GOODS-2.0% Ingersoll-Rand Co. 9,400 642,114 Parker-Hannifin Corp. 6,000 356,760 Textron, Inc. 14,300 848,705 Tyco International Ltd. (Bermuda) 23,500 778,790 ------------- 2,626,369 ------------- 7,877,017 ------------- CONSUMER STAPLES-6.0% BEVERAGES-SOFT, LITE & HARD-0.4% Adolph Coors Co. Cl.B 7,500 542,550 ------------- RESTAURANTS-1.2% Darden Restaurants, Inc. 9,700 199,335 McDonald's Corp. 51,800 1,346,800 ------------- 1,546,135 ------------- RETAIL STORES-FOOD-1.0% Safeway, Inc. (a) 27,000 684,180 SUPERVALU, Inc. 500 15,305 The Kroger Co. (a) 34,100 620,620 ------------- 1,320,105 ------------- SOAPS-0.5% Unilever NV (ADR) 9,200 630,292 ------------- SUGAR REFINERS-0.3% Archer-Daniels-Midland Co. 19,805 332,328 ------------- TOBACCO-2.6% Altria Group, Inc. 55,550 2,780,277 UST, Inc. 20,100 723,600 ------------- 3,503,877 ------------- 7,875,287 ------------- INDUSTRIAL COMMODITIES-2.8% ALUMINUM-1.1% Alcan, Inc. (Canada) 12,900 534,060 Alcoa, Inc. 29,600 977,688 ------------- 1,511,748 ------------- FERTILIZERS-0.8% Monsanto Co. 26,000 1,001,000 ------------- STEEL-0.9% United States Steel Corp. 23,800 835,856 Worthington Industries, Inc. 18,200 373,646 ------------- 1,209,502 ------------- 3,722,250 ------------- CAPITAL GOODS-2.6% MISCELLANEOUS-2.6% General Electric Co. 106,000 3,434,400 ------------- COMMODITIES-2.2% CHEMICALS-0.9% E.I. du Pont de Nemours and Co. 6,100 270,962 Eastman Chemical Co. 15,400 711,942 The Dow Chemical Co. 4,000 162,800 The Lubrizol Corp. 1,050 38,451 ------------- 1,184,155 ------------- PAPER-1.3% Boise Cascade Corp. 11,200 421,568 Georgia-Pacific Group 24,950 922,651 Temple-Inland, Inc. 4,500 311,625 ------------- 1,655,844 ------------- 2,839,999 ------------- SERVICES-1.5% RAILROADS-1.5% Burlington Northern Santa Fe Corp. 19,900 697,893 CSX Corp. 16,600 543,982 Norfolk Southern Corp. 27,050 717,366 ------------- 1,959,241 ------------- NON-FINANCIAL-0.6% BUILDING MATERIALS-CEMENT-0.3% Martin Marietta Materials, Inc. 9,600 425,568 ------------- HOME BUILDING-0.3% Pulte Homes, Inc. 6,300 327,789 ------------- 753,357 ------------- Total Common Stocks (cost $109,353,120) 128,202,639 ------------- 4 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PRINCIPAL AMOUNT COMPANY (000) U.S. $ VALUE - ------------------------------------------------------------------------------- SHORT-TERM INVESTMENT-2.8% TIME DEPOSIT-2.8% The Bank of New York 0.563%, 7/01/04 (cost $3,707,000) $ 3,707 $ 3,707,000 ------------- TOTAL INVESTMENTS-100.0% (cost $113,060,120) 131,909,639 Other assets less liabilities-0.0% 45,400 ------------- NET ASSETS-100% $ 131,955,039 ============= (a) Non-income producing security. Glossary: ADR - American Depositary Receipt See Notes to Financial Statements. 5 VALUE PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $113,060,120) $ 131,909,639 Cash 3,718 Dividends and interest receivable 184,391 ------------- Total assets 132,097,748 ------------- LIABILITIES Advisory fee payable 35,893 Distribution fee payable 26,333 Accrued expenses 80,483 ------------- Total liabilities 142,709 ------------- NET ASSETS $ 131,955,039 ============= COMPOSITION OF NET ASSETS Capital stock, at par $ 11,536 Additional paid-in capital 112,925,133 Undistributed net investment income 802,126 Accumulated net realized loss on investment transactions (633,275) Net unrealized appreciation of investments 18,849,519 ------------- $ 131,955,039 ============= CLASS B SHARES Net assets $ 131,955,039 ============= Shares of capital stock outstanding 11,535,877 ============= Net asset value per share $ 11.44 ============= See Notes to Financial Statements. 6 VALUE PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $4,548) $ 1,396,873 Interest 12,678 ------------- Total investment income 1,409,551 ------------- EXPENSES Advisory fee 469,148 Distribution fee -- Class B 156,383 Custodian 58,288 Administrative 34,500 Audit and legal 23,750 Printing 943 Directors' fees 500 Transfer agency 450 Miscellaneous 1,060 ------------- Total expenses 745,022 Less: expenses waived and reimbursed by the Adviser (see Note B) (159,606) ------------- Net expenses 585,416 ------------- Net investment income 824,135 ------------- REALIZED AND UNREALIZED GAIN ON INVESTMENT TRANSACTIONS Net realized gain on investment transactions 2,237,915 Net change in unrealized appreciation/depreciation of investments 1,031,348 ------------- Net gain on investment transactions 3,269,263 ------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 4,093,398 ============= See Notes to Financial Statements. 7 VALUE PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 ============= ============= INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 824,135 $ 1,132,568 Net realized gain (loss) on investment transactions 2,237,915 (1,657,272) Net change in unrealized appreciation/ depreciation of investments 1,031,348 24,092,056 ------------- ------------- Net increase in net assets from operations 4,093,398 23,567,352 DIVIDENDS TO SHAREHOLDERS FROM Net investment income Class A -0- (2) Class B (1,139,004) (642,210) CAPITAL STOCK TRANSACTIONS Net increase 11,438,952 26,270,250 ------------- ------------- Total increase 14,393,346 49,195,390 NET ASSETS Beginning of period 117,561,693 68,366,303 ------------- ------------- End of period (including undistributed net investment income of $802,126 and $1,116,995, respectively) $ 131,955,039 $ 117,561,693 ============= ============= See Notes to Financial Statements. 8 VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein Value Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek long-term growth of capital. The Portfolio commenced operations on May 1, 2001. 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. Class B shares bear a distribution expense and have 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 Alliance Capital Management L.P. (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. 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. 9 VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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 policy of the Portfolio 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 trade 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 the Adviser an investment advisory fee at an annual rate of .75% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. On May 1, 2002, the Adviser agreed to waive its fee and to reimburse additional operating expenses to the extent necessary to limit total operating expenses on an annual basis to 1.20% and 1.45% of the average daily net assets for Class A and Class B shares, respectively. Any expense waivers or reimbursements are accrued daily and paid monthly. For the six months ended June 30, 2004, the Portfolio received no such waivers/reimbursements. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .55% of the first $2.5 billion, .45% of the next $2.5 billion and .40% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $125,106. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. 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 six months ended June 30, 2004, the Adviser voluntarily waived such reimbursement in the amount of $34,500. Brokerage commissions paid on investment transactions for the six months ended June 30, 2004, amounted to $64,148, of which $27,002 was paid to Sanford C. Bernstein & Co. LLC, an affiliate of the Adviser. 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ The Portfolio compensates Alliance Global Investors 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 $450 for the six months ended June 30, 2004. 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 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 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. NOTE D: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2004, were as follows: PURCHASES SALES ============= ============= Investment securities (excluding U.S. government securities) $ 27,451,731 $ 14,954,625 U.S. government securities -0- -0- 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 $ 20,365,495 Gross unrealized depreciation (1,515,976) ------------- Net unrealized appreciation $ 18,849,519 ============= 1. FORWARD EXCHANGE CURRENCY CONTRACTS The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as unrealized appreciation and depreciation 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. 11 VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Risks may arise from the potential inability of the 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. 2. OPTION TRANSACTIONS For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. NOTE E: 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 ------------------------- ------------------------------ JANUARY 1, 2004 YEAR JANUARY 1, 2004 YEAR TO ENDED TO ENDED JUNE 30, 2004(a) DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS A Shares sold -0- -0- $ -0- $ -0- Shares issued in reinvestment of dividends -0- -0-(b) -0- 2 Shares redeemed (21) -0-(b) (237) (2) ----------- ----------- ------------ ------------- Net decrease (21) -0- $ (237) $ -0- =========== =========== ============ ============= (a) For the period May 10, 2004 through June 30, 2004, there were no Class A shares outstanding. (b) Share amount is less than one full share. 12 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS B Shares sold 1,770,823 4,251,131 $ 20,214,073 $ 40,598,585 Shares issued in reinvestment of dividends 101,244 65,001 1,139,004 642,210 Shares redeemed (872,239) (1,591,340) (9,913,888) (14,970,545) ----------- ----------- ------------ ------------- Net increase 999,828 2,724,792 $ 11,439,189 $ 26,270,250 =========== =========== ============ ============= NOTE F: RISKS INVOLVED IN INVESTING IN THE PORTFOLIO Foreign Securities 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE G: JOINT CREDIT FACILITY A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. NOTE H: DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended December 31, 2003 and December 31, 2002 were as follows: 2003 2002 ============= ============= Distributions paid from: Ordinary income $ 642,212 $ 93,486 ------------- ------------- Total distributions paid $ 642,212 $ 93,486 ============= ============= As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $ 1,116,995 Accumulated capital and other losses (2,866,923)(a) Unrealized appreciation/(depreciation) 17,813,904(b) ------------- Total accumulated earnings/(deficit) $ 16,063,976 ============= (a) On December 31, 2003, the Portfolio had a net capital loss carryforward of $2,866,923 of which $89,959 expires in the year 2009, $1,034,044 expires in the year 2010, and $1,742,920 expires in the year 2011. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. (b) The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales. 13 VALUE PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE I: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affiliated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. 14 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 15 VALUE PORTFOLIO FINANCIAL HIGHLIGHTS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period CLASS A ------------------------------------ JANUARY 1, 2004 YEAR JULY 22, TO ENDED 2002(b) TO MAY 10, 2004(a) DECEMBER 31, DECEMBER 31, (UNAUDITED) 2003 2002 ----------- ----------- ----------- Net asset value, beginning of period $11.20 $8.76 $8.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (c)(d) .07 .16 .07 Net realized and unrealized gain (loss) on investment transactions (.19) 2.36 .69 Net increase (decrease) in net asset value from operations (.12) 2.52 .76 LESS: DIVIDENDS Dividends from net investment income -0- (.08) -0- Net asset value, end of period $11.08 $11.20 $8.76 TOTAL RETURN Total investment return based on net asset value (e) (1.07)% 28.94% 9.50% RATIOS/SUPPLEMENTAL DATA Net assets, end of period $236 $239 $187 Ratio to average net assets of: Expenses, net of waivers and reimbursements .69%(f) .99% 1.20%(f) Expenses, before waivers and reimbursements 1.04%(f) 1.06% 2.28%(f) Net investment income (d) 1.29%(f) 1.51% 4.22%(f) Portfolio turnover rate 12% 27% 12% See footnote summary on page 17. 16 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS B -------------------------------------------------- SIX MONTHS YEAR ENDED MAY 1, ENDED DECEMBER 31, 2001(g) TO JUNE 30, 2004 ------------------------ DECEMBER 31, (UNAUDITED) 2003 2002 2001 ----------- ----------- ----------- ----------- Net asset value, beginning of period $11.16 $8.75 $10.07 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (c)(d) .07 .12 .12 .08 Net realized and unrealized gain (loss) on investment transactions .31 2.36 (1.42) (.01) Net increase (decrease) in net asset value from operations .38 2.48 (1.30) .07 LESS: DIVIDENDS Dividends from net investment income (.10) (.07) (.02) -0- Net asset value, end of period $11.44 $11.16 $8.75 $10.07 TOTAL RETURN Total investment return based on net asset value (e) 3.43% 28.46% (12.95)% 0.70% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $131,955 $117,561 $68,366 $27,286 Ratio to average net assets of: Expenses, net of waivers and reimbursements .94%(f) 1.24% 1.21% 1.20%(f) Expenses, before waivers and reimbursements 1.19%(f) 1.33% 1.43% 2.47%(f) Net investment income (d) 1.32%(f) 1.29% 1.27% 1.29%(f) Portfolio turnover rate 12% 27% 12% 4%
(a) There were no Class A shares outstanding as of June 30, 2004. (b) Commencement of distribution. (c) Based on average shares outstanding. (d) Net of expenses waived or reimbursed by the Adviser. (e) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total return does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Total investment return calculated for a period of less than one year is not annualized. (f) Annualized. (g) Commencement of operations. 17 ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND ALLIANCEBERNSTEIN WORLDWIDE PRIVATIZATION PORTFOLIO SEMI-ANNUAL REPORT JUNE 30, 2004 INVESTMENT PRODUCTS OFFERED - --------------------------- > ARE NOT FDIC INSURED > MAY LOSE VALUE > ARE NOT BANK GUARANTEED - --------------------------- YOU MAY OBTAIN A DESCRIPTION OF THE FUND'S PROXY VOTING POLICIES AND PROCEDURES, WITHOUT CHARGE, UPON REQUEST BY VISITING ALLIANCE CAPITAL'S WEB SITE AT WWW.ALLIANCEBERNSTEIN.COM (CLICK ON INVESTORS, THEN THE "PROXY VOTING POLICIES AND PROCEDURES" LINK ON THE LEFT SIDE OF THE PAGE), OR BY GOING TO THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT WWW.SEC.GOV, OR BY CALLING ALLIANCE CAPITAL AT (800) 227-4618. WORLDWIDE PRIVATIZATION PORTFOLIO TEN LARGEST HOLDINGS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ PERCENT OF COMPANY U.S. $ VALUE NET ASSETS _______________________________________________________________________________ Mitsubishi Tokyo Financial Group, Inc. $ 1,120,010 2.7% - ------------------------------------------------------------------------------- East Japan Railway Co. 1,003,968 2.4 - ------------------------------------------------------------------------------- Deutsche Post AG 936,912 2.3 - ------------------------------------------------------------------------------- Vodafone Group Plc 906,860 2.2 - ------------------------------------------------------------------------------- KDDI Corp. 892,123 2.2 - ------------------------------------------------------------------------------- Kookmin Bank (Common & ADR) 881,936 2.1 - ------------------------------------------------------------------------------- Eni S.p.A. 837,017 2.0 - ------------------------------------------------------------------------------- ING Groep NV 772,856 1.9 - ------------------------------------------------------------------------------- Veolia Environment 767,479 1.9 - ------------------------------------------------------------------------------- Pfizer, Inc. 753,474 1.8 ------------ ---- - ------------------------------------------------------------------------------- $ 8,872,635 21.5% - ------------------------------------------------------------------------------- SECTOR DIVERSIFICATION June 30, 2004 (unaudited) PERCENT OF SECTOR U.S. $ VALUE NET ASSETS _______________________________________________________________________________ Finance $ 8,766,908 21.2% - ------------------------------------------------------------------------------- Utilities 8,495,207 20.6 - ------------------------------------------------------------------------------- Consumer Services 6,639,915 16.1 - ------------------------------------------------------------------------------- Energy 4,350,238 10.5 - ------------------------------------------------------------------------------- Transportation 3,423,029 8.3 - ------------------------------------------------------------------------------- Technology 2,937,911 7.1 - ------------------------------------------------------------------------------- Basic Industry 2,109,552 5.1 - ------------------------------------------------------------------------------- Healthcare 1,788,742 4.3 - ------------------------------------------------------------------------------- Consumer Staples 820,074 2.0 - ------------------------------------------------------------------------------- Multi Industry Companies 538,368 1.3 - ------------------------------------------------------------------------------- Capital Goods 152,008 0.4 - ------------------------------------------------------------------------------- Consumer Manufacturing 85,974 0.2 ------------ ---- - ------------------------------------------------------------------------------- Total Investments 40,107,926 97.1 - ------------------------------------------------------------------------------- Cash and receivables, net of liabilities 1,218,002 2.9 ------------ ---- - ------------------------------------------------------------------------------- Net Assets $ 41,325,928 100.0% - ------------------------------------------------------------------------------- 1 WORLDWIDE PRIVATIZATION PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- COMMON & PREFERRED STOCKS-97.1% ARGENTINA-0.5% Tenaris, SA (ADR) 6,146 $ 201,282 ------------- AUSTRALIA-2.2% CSL, Ltd. 31,239 485,274 Qantas Airways, Ltd. 65,981 161,788 Telestra Corp. Ltd. 69,899 244,920 ------------- 891,982 ------------- AUSTRIA-2.3% Bank Austria Creditanstalt (a) 10,605 621,903 Boehler-Uddeholm AG 4,200 348,497 ------------- 970,400 ------------- BRAZIL-4.0% Banco Bradesco, SA (ADR) 900 41,355 Companhia de Concessoes Rodoviarias 13,000 146,916 Companhia Energetica de Minas Gerais (ADR) 2,800 42,056 Companhia Vale do Rio Doce (ADR) 8,300 376,920 Gerdau, SA (ADR) 24,000 290,880 Itausa-Investimentos Itau, SA Pfd. 278,088 323,254 Petroleo Brasilerio, SA (ADR) 9,300 234,360 Tele Celular Sul Participacoes, SA (ADR) 10,700 138,030 Telesp Celular Participacoes, SA (ADR) (a) 6,800 53,584 ------------- 1,647,355 ------------- CHILE-0.1% Enersis, SA (ADR) (a) 6,000 35,760 ------------- EGYPT-0.9% Eastern Co. for Tobacco & Cigarettes 13,374 175,030 Egyptian Co. for Mobile Services 15,618 187,998 ------------- 363,028 ------------- FINLAND-2.5% Fortum Oyj 26,988 344,767 Sampo Oyj 22,544 218,876 TietoEnator Oyj 15,527 471,328 ------------- 1,034,971 ------------- FRANCE-9.0% BNP Paribas, SA 9,001 553,576 Dassault Systemes, SA 8,500 394,115 France Telecom, SA (a) 20,015 521,603 Sanofi-Synthelabo, SA 4,983 315,859 Societe Television Francaise 1 14,079 443,475 STMicroelectronics NV 6,851 150,285 TotalFinaElf, SA 2,856 544,493 Veolia Environnement 27,202 767,479 ------------- 3,690,885 ------------- GERMANY-4.7% Deutsche Lufthansa AG (a) 12,086 164,836 Deutsche Post AG (a) 43,458 936,912 Deutsche Telekom AG (a) 12,487 219,529 Fraport AG 14,363 401,569 Rhon-Klinikum AG 4,211 234,135 ------------- 1,956,981 ------------- GREECE-1.3% Greek Organization of Football Prognostics 16,070 303,440 Public Power Corp. 10,310 245,856 ------------- 549,296 ------------- HONG KONG-0.5% Sinotrans, Ltd. 606,000 217,544 ------------- HUNGARY-1.8% Magyar Tavkozlesi Rt. 57,791 231,311 MOL Magyar Olaj-es Gazipari Rt. 6,165 245,410 OTP Bank Rt. 13,202 269,652 ------------- 746,373 ------------- INDIA-1.3% Canara Bank, Ltd. 81,972 215,472 Maruti Udyog, Ltd. 9,819 85,974 Oil & Natural Gas, Corp. 16,600 227,201 ------------- 528,647 ------------- INDONESIA-0.3% Bank Rakyat Indonesia 689,500 122,830 ------------- IRELAND-0.4% Eircom Group Plc (a) 102,395 184,377 ------------- ISRAEL-1.3% Bank Hapoalim, Ltd. 203,200 540,392 ------------- ITALY-4.2% Acegas SpA 10,307 79,002 Eni S.p.A. 42,155 837,017 Telecom Italia Mobile SpA 39,555 224,260 Telecom Italia SpA 142,144 441,860 Terna SpA (a) 80,700 174,767 ------------- 1,756,906 ------------- JAPAN-13.5% Daiwa Securities Group, Inc. 93,000 668,212 East Japan Railway Co. 179 1,003,968 Japan Airlines System Corp. 72,000 230,289 Japan Tobacco, Inc. 83 645,044 JSAT Corp. 46 139,541 KDDI Corp. 156 892,123 Mitsubishi Tokyo Financial Group, Inc. 121 1,120,010 Nippon Telegraph & Telephone Corp. 55 293,864 NTT Docomo, Inc. 119 212,666 West Japan Railway Co. 91 366,952 ------------- 5,572,669 ------------- 2 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- LUXEMBOURG-0.7% SES Global 32,200 $ 272,274 ------------- MALAYSIA-0.7% Astro All Asia Networks Plc (a) 48,300 58,214 Maxis Communications Berhad 109,500 253,579 ------------- 311,793 ------------- MEXICO-2.6% America Movil, SA de CV Series L (ADR) 13,800 501,906 Grupo Aeroportuario del Sureste, SA de CV Series B (ADR) 3,000 55,500 Grupo Financiero Banorte SA de CV Cl.B 52,100 184,268 Telefonos de Mexico, SA de CV Cl.L (ADR) 10,000 332,700 ------------- 1,074,374 ------------- NETHERLANDS-1.9% ING Groep NV 32,744 772,856 ------------- NORWAY-1.0% Norsk Hydro ASA (a) 6,243 405,752 ------------- PEOPLES REPUBLIC OF CHINA-3.6% China Petroleum Chemical Corp. (Sinopec) (a) 586,000 214,121 China Resources Enterprise, Ltd. 238,000 288,354 China Telecommunication Corp. 506,000 176,780 CNOOC, Ltd. 600,000 253,853 Datang Power Generation Co., Ltd. 310,000 240,455 Ping An Insurance Group Co. of China, Ltd. (a) 219,000 297,623 ------------- 1,471,186 ------------- PERU-0.4% Explosivios, SA Cl.C (b) 248,986 152,008 ------------- RUSSIA-3.4% Jsc Mmc Norilsk Nickel (ADR) 3,345 185,648 Lukoil Holdings (ADR) 3,871 407,229 Mobile Telesystems (ADR) 2,300 280,600 AO VimpelCom (ADR) (a) 5,500 530,475 ------------- 1,403,952 ------------- SINGAPORE-0.7% DBS Group Holdings Ltd. 35,172 294,044 ------------- SOUTH AFRICA-2.4% Anglogold Ashanti, Ltd. (ADR) 6,322 203,316 Mtn Group, Ltd. (a) 110,800 508,318 Telkom South Africa, Ltd. 20,200 258,668 ------------- 970,302 ------------- SOUTH KOREA-5.5% Kookmin Bank (a) 15,120 469,760 Kookmin Bank (ADR) (a) 13,135 412,176 KT Freetel Co., Ltd. 13,910 241,363 POSCO 4,180 539,005 SK Telecom Co., Ltd. (a) 2,000 328,862 SK Telecom Co., Ltd. (ADR) (a) 13,900 291,761 ------------- 2,282,927 ------------- SPAIN-4.5% Amadeus Global Travel Distribution, SA 38,928 255,280 Banco Bilbao Vizcaya Argentaria, SA 56,126 749,776 Indra Sistemas, SA 13,903 177,270 Red Electrica de Espana 13,870 235,911 Telefonica, SA 29,949 442,715 ------------- 1,860,952 ------------- SWEDEN-0.4% Eniro AB 22,916 174,921 ------------- TAIWAN-3.0% Cathay Financial Holding Co., Ltd. (GDR) (a) 11,496 206,750 Chunghwa Telecom Co., Ltd. (ADR) 19,200 338,688 Fubon Financial Holding Co., Ltd. 251,149 218,747 Taiwan Semiconductor Co. 299,433 430,813 Taiwan Semiconductor Manufacturing Co., Ltd. (ADR) 3,650 30,332 ------------- 1,225,330 ------------- THAILAND-1.6% Airports of Thailand Plc (a) 148,100 186,551 Ratchaburi Electricity Generating Holding Public Co., Ltd. 180,700 163,529 Siam Commercial Bank Public Co., Ltd. 275,400 311,538 ------------- 661,618 ------------- TURKEY-0.8% Dogan Yayin Holding AS 58,979,397 180,833 Turkiye Is Bankasi 42,276,931 153,838 ------------- 334,671 ------------- 3 WORLDWIDE PRIVATIZATION PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ COMPANY SHARES U.S. $ VALUE - ------------------------------------------------------------------------------- UNITED KINGDOM-10.8% Associated British Ports Holdings Plc 40,058 $ 293,668 BP p.l.c. (ADR) 40,281 355,751 British Airways Plc (a) 68,314 341,310 British Sky Broadcast Group Plc (a) 43,954 495,800 Centrica Plc (a) 178,855 728,174 Compass Group Plc 51,918 316,826 National Grid Transco Plc 78,200 603,071 Vedanta Resources Plc (a) 31,674 165,286 Vodafone Group Plc 414,129 906,860 Wolfson Microelectronics Plc (a) 46,892 250,014 ------------- 4,456,760 ------------- UNITED STATES-2.3% Affiliated Computer Services, Inc. Cl.A (a) 4,100 217,054 Pfizer, Inc. 21,980 753,474 ------------- 970,528 ------------- TOTAL INVESTMENTS-97.1% (cost $31,540,206) 40,107,926 Other assets less liabilities-2.9% 1,218,002 ------------- NET ASSETS-100% $ 41,325,928 ============= (a) Non-income producing security. (b) Illiquid security valued at fair value (see Note A). Glossary of Terms: ADR - American Depositary Receipt GDR - Global Depositary Receipt See Notes to Financial Statements. 4 WORLDWIDE PRIVATIZATION PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $31,540,206) $ 40,107,926 Cash 226,583 Foreign cash, at value (cost $1,211,547) 1,209,779 Dividends and interest receivable 95,104 Receivable for investment securities sold 51,545 ------------- Total assets 41,690,937 ------------- LIABILITIES Payable for investment securities purchased 195,967 Advisory fee payable 25,025 Distribution fee payable 1,878 Accrued expenses 142,139 ------------- Total liabilities 365,009 ------------- NET ASSETS $ 41,325,928 ============= COMPOSITION OF NET ASSETS Capital stock, at par $ 2,476 Additional paid-in capital. 38,867,021 Undistributed net investment income 230,679 Accumulated net realized loss on investment and foreign currency transactions (6,340,673) Net unrealized appreciation of investments and foreign currency denominated assets and liabilities 8,566,425 ------------- $ 41,325,928 ============= CLASS A SHARES Net assets $ 31,826,296 ============= Shares of capital stock outstanding 1,905,521 ============= Net asset value per share $ 16.70 ============= CLASS B SHARES Net assets $ 9,499,632 ============= Shares of capital stock outstanding 570,057 ============= Net asset value per share $ 16.66 ============= See Notes to Financial Statements. 5 WORLDWIDE PRIVATIZATION PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ INVESTMENT INCOME Dividends (net of foreign taxes withheld of $76,825) $ 584,585 Interest 10,778 ------------- Total investment income 595,363 ------------- EXPENSES Advisory fee 210,713 Distribution fee -- Class B 10,523 Custodian 124,666 Administrative 34,500 Audit and legal 23,750 Printing 4,952 Directors' fees 500 Transfer agency 450 Miscellaneous 1,897 ------------- Total expenses 411,951 Less: expenses waived and reimbursed by the Adviser (see Note B) (52,678) ------------- Net expenses 359,273 ------------- Net investment income 236,090 ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS Net realized gain (loss) on: Investment transactions 2,033,220 Foreign currency transactions (63,656) Net change in unrealized appreciation/depreciation of: Investments (1,104,898) Foreign currency denominated assets and liabilities 66,891 ------------- Net gain on investment and foreign currency transactions 931,557 ------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 1,167,647 ============= See Notes to Financial Statements. 6 WORLDWIDE PRIVATIZATION PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 ============= ============= INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income $ 236,090 $ 99,709 Net realized gain on investment and foreign currency transactions 1,969,564 1,228,799 Net change in unrealized appreciation/ depreciation of investments and foreign currency denominated assets and liabilities (1,038,007) 11,164,967 ------------- ------------- Net increase in net assets from operations 1,167,647 12,493,475 DIVIDENDS TO SHAREHOLDERS FROM Net investment income Class A (80,328) (314,453) Class B (10,540) (50,361) CAPITAL STOCK TRANSACTIONS Net decrease (1,429,240) (1,195,358) ------------- ------------- Total increase (decrease) (352,461) 10,933,303 NET ASSETS Beginning of period 41,678,389 30,745,086 ------------- ------------- End of period (including undistributed net investment income of $230,679 and $85,457, respectively) $ 41,325,928 $ 41,678,389 ============= ============= See Notes to Financial Statements. 7 WORLDWIDE PRIVATIZATION PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2004 (unaudited) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES The AllianceBernstein Worldwide Privatization Portfolio (the "Portfolio") is a series of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek long-term capital appreciation. 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 Alliance Capital Management L.P. (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 policy of the Portfolio 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 trade 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 the Adviser an investment advisory fee at an annual rate of 1% of the Portfolio's average daily net assets. Such fee is accrued daily and paid monthly. Effective January 1, 2004, the Adviser began waiving a portion of its advisory fee so as to charge the Portfolio at the reduced annual rate of .75% of the first $2.5 billion, .65% of the next $2.5 billion and .60% in excess of $5 billion, of the average daily net assets of the Portfolio. For the six months ended June 30, 2004, such waiver amounted to $52,678. The amount of the fee waiver may increase or decrease as a result of a final, definitive agreement with the New York Attorney General's Office ("NYAG"). For a more complete discussion of the Adviser's settlement with the NYAG, please see "Legal Proceedings" below. Pursuant to the advisory agreement, the Portfolio paid $34,500 to the Adviser representing the cost of certain legal and accounting services provided to the Portfolio by the Adviser for the six months ended June 30, 2004. Brokerage commissions paid on investment transactions for the six months ended June 30, 2004, amounted to $56,132, none of which was paid to Sanford C. Bernstein & Co. LLC, an affiliate of the Adviser. 9 WORLDWIDE PRIVATIZATION PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ The Portfolio compensates Alliance Global Investor Services, Inc. (AGIS), 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 $450 for the six months ended June 30, 2004. 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 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 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. NOTE D: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2004, were as follows: PURCHASES SALES ============= ============= Investment securities (excluding U.S. government securities) $ 10,973,164 $ 12,028,532 U.S. government securities -0- -0- 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 (excluding foreign currency transactions) are as follows: Gross unrealized appreciation $ 9,137,086 Gross unrealized depreciation (569,366) ------------- Net unrealized appreciation $ 8,567,720 ============= 1. FORWARD EXCHANGE CURRENCY CONTRACTS The Portfolio may enter into forward exchange currency contracts in order 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 gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward exchange currency contracts are recorded for financial reporting purposes as unrealized appreciation and depreciation by the Portfolio. 10 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ 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 the 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. 2. OPTION TRANSACTIONS For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign 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 written options which expire unexercised are recorded by the Portfolio on the expiration date as realized gains from options written. 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. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. NOTE E: 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, 2004, the Portfolio had no securities on loan. For the six months ended June 30, 2004, the Portfolio earned fee income of $2,654 which is included in interest income in the accompanying statement of operations. 11 WORLDWIDE PRIVATIZATION PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ NOTE F: CAPITAL STOCK There are 1,000,000,000 shares of $.001 par value capital stock authorized, divided into two classes, designated Class A and Class B shares. Each class consists of 500,000,000 authorized shares. Transactions in capital stock were as follows: SHARES AMOUNT ------------------------- ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ----------- ----------- ------------ ------------- CLASS A Shares sold 110,578 248,320 $ 1,876,303 $ 3,364,408 Shares issued in reivestment of dividends 4,857 24,741 80,327 314,453 Shares redeemed (317,353) (528,562) (5,317,049) (6,616,864) ----------- ----------- ------------ ------------- Net decrease (201,918) (255,501) $ (3,360,419) $ (2,938,003) =========== =========== ============ ============= CLASS B Shares sold 204,617 1,379,770 $ 3,426,192 $ 16,268,671 Shares issued in reivestment of dividends 639 3,965 10,540 50,361 Shares redeemed (89,460) (1,244,071) (1,505,553) (14,576,387) ----------- ----------- ------------ ------------- Net increase 115,796 139,664 $ 1,931,179 $ 1,742,645 =========== =========== ============ ============= NOTE G: RISKS INVOLVED IN INVESTING IN THE PORTFOLIO 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. In the ordinary course of business, the Portfolio enters into contracts that contain a variety of indemnifications. The Portfolio's maximum exposure under these arrangements is unknown. However, the Portfolio has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H: JOINT CREDIT FACILITY A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $500 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, 2004. NOTE I: DISTRIBUTIONS TO SHAREHOLDERS The tax character of distributions to be paid for the year ending December 31, 2004 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended December 31, 2003 and December 31, 2002 were as follows: 2003 2002 ============= ============= Distributions paid from: Ordinary income $ 364,814 $ 633,898 ------------- ------------- Total taxable distributions 364,814 633,898 ------------- ------------- Total distributions paid $ 364,814 $ 633,898 ============= ============= 12 AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ As of December 31, 2003, the components of accumulated earnings/(deficit) on a tax basis were as follows: Undistributed ordinary income $ 85,457 Accumulated capital and other losses (8,240,295)(a) Unrealized appreciation/(depreciation) 9,534,490(b) ------------- Total accumulated earnings/(deficit) $ 1,379,652 ============= (a) On December 31, 2003, the Portfolio had a net capital loss carryforward of $8,240,295 of which $934,059 expires in the year 2009 and $7,306,236 expires in the year 2010. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. During the fiscal year, the fund utilized capital loss carryforwards of $1,208,600. (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 J: LEGAL PROCEEDINGS As has been previously reported in the press, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject to final, definitive documentation. Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds, commencing January 1, 2004, for a period of at least five years. The determination of which funds will have their fees reduced and to what degree is subject to the terms of the definitive agreement with the NYAG; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order contemplates that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. For a more complete description of this waiver, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a putative class action complaint entitled Hindo et al. v. AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran (collectively, the "Alliance Capital defendants"); and certain other defendants not affil- 13 WORLDWIDE PRIVATIZATION PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ iated with the Adviser. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the Alliance Capital defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in late trading and market timing of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations similar to those in the Hindo Complaint were filed against the Adviser and certain other defendants, some of which name the Fund as a defendant. All of these lawsuits seek an unspecified amount of damages. As a result of the matters discussed above, investors in the AllianceBernstein Mutual Funds may choose to redeem their investments. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. 14 WORLDWIDE PRIVATIZATION 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 YEAR ENDED DECEMBER 31, JUNE 30, 2004 --------------------------------------------------------------- (UNAUDITED) 2003 2002 2001 2000 1999 ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $16.28 $11.48 $12.18 $15.64 $21.74 $14.81 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) .09(b) .04 .07(b) .20(b) .05(b) 0.15(b) Net realized and unrealized gain (loss) on investment and foreign currency transactions .37 4.91 (.56) (2.82) (4.81) 8.00 Net increase (decrease) in net asset value from operations .46 4.95 (.49) (2.62) (4.76) 8.15 LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.04) (.15) (.21) (.03) (.12) (.31) Distributions from net realized gain on investment transactions -0- -0- -0- (.81) (1.22) (.91) Total dividends and distributions (.04) (.15) (.21) (.84) (1.34) (1.22) Net asset value, end of period $16.70 $16.28 $11.48 $12.18 $15.64 $21.74 TOTAL RETURN Total investment return based on net asset value (c) 2.84% 43.46% (4.19)% (17.29)% (23.00)% 58.83% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $31,826 $34,302 $27,136 $37,411 $56,181 $64,059 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.65%(d) 2.17% 1.54% .95% .95% .95% Expenses, before waivers and reimbursements 1.90%(d) 2.17% 1.98% 1.65% 1.43% 1.46% Net investment income 1.13%(b)(d) .34% .61%(b) 1.50%(b) .29%(b) .93%(b) Portfolio turnover rate 27% 44% 46% 35% 65% 54%
See footnote summary on page 16. 15 WORLDWIDE PRIVATIZATION PORTFOLIO FINANCIAL HIGHLIGHTS (continued) AllianceBernstein Variable Products Series Fund _______________________________________________________________________________ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
CLASS B --------------------------------------------------------------- SIX MONTHS JULY 5, 2000 (e) ENDED YEAR ENDED DECEMBER 31, TO JUNE 30, 2004 ------------------------------------- DECEMBER 31, (UNAUDITED) 2003 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $16.24 $11.47 $12.17 $15.62 $19.09 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (a) .09(b) .02 .03(b) .10(b) (.04)(b) Net realized and unrealized gain (loss) on investment and foreign currency transactions .35 4.88 (.53) (2.71) (3.43) Net increase (decrease) in net asset value from operations .44 4.90 (.50) (2.61) (3.47) LESS: DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (.02) (.13) (.20) (.03) -0- Distributions from net realized gain on investment transactions -0- -0- -0- (.81) -0- Total distributions (.02) (.13) (.20) (.84) -0- Net asset value, end of period $16.66 $16.24 $11.47 $12.17 $15.62 TOTAL RETURN Total investment return based on net asset value (c) 2.70% 43.07% (4.26)% (17.28)% (18.43)% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $9,500 $7,376 $3,609 $1,092 $238 Ratio to average net assets of: Expenses, net of waivers and reimbursements 1.91%(d) 2.41% 1.79% 1.19% 1.20%(d) Expenses, before waivers and reimbursements 2.16%(d) 2.41% 2.23% 1.93% 1.80%(d) Net investment income (loss) 1.08%(b)(d) .13% .28%(b) .80%(b) (.26)%(b)(d) Portfolio turnover rate 27% 44% 46% 35% 65%
(a) Based on average shares outstanding. (b) Net of expenses waived or reimbursed by the Adviser. (c) 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. (d) Annualized. (e) Commencement of distributions. 16 (This page left intentionally blank.) 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. SCHEDULE OF INVESTMENTS. Form N-CSR disclosure requirement not yet effective with respect to the registrant. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the registrant. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to the registrant. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. On March 17, 2004 the Fund adopted procedures effective April 1, 2004, by which shareholders may recommend nominees to the Fund's Board of Directors. Prior thereto, the Fund's Board did not accept shareholder recommendations for nominees to the Fund's Board. ITEM 10. 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 11. EXHIBITS. The following exhibits are attached to this Form N-CSR: EXHIBIT NO. DESCRIPTION OF EXHIBIT ----------- ---------------------- 11 (b) (1) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 11 (b) (2) Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 11 (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/Marc O. Mayer -------------------------------- Marc O. Mayer President Date: August 18, 2004 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/Marc O. Mayer -------------------------------- Marc O. Mayer President Date: August 18, 2004 By: /s/Mark D. Gersten ------------------------------- Mark D. Gersten Treasurer and Chief Financial Officer Date: August 18, 2004 Exhibit 11(b)(1) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Marc O. Mayer, certify that: 1. I have reviewed this report on Form N-CSR (the "Report") of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"); 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Fund as of, and for, the periods presented in this Report; 4. The Fund's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) for the Fund and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Fund, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b) evaluated the effectiveness of the Fund's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this Report based on such evaluation; and c) disclosed in this Report any change in the Fund's internal control over financial reporting that occurred during the Fund's most recent fiscal half-year [or second fiscal half-year in the case of an annual report] that has materially affected, or is reasonably likely to materially affect, the Fund's internal control over financial reporting; and 5. The Fund's other certifying officer and I have disclosed to the Fund's auditors and the audit committee of the Fund's board of directors: a) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Fund's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Fund's internal controls. Date: August 18, 2004 /s/Marc O. Mayer ---------------- Marc O. Mayer President Exhibit 11(b)(2) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Mark D. Gersten, certify that: 1. I have reviewed this report on Form N-CSR (the "Report") of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"); 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Fund as of, and for, the periods presented in this Report; 4. The Fund's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) for the Fund and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Fund, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b) evaluated the effectiveness of the Fund's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this Report based on such evaluation; and c) disclosed in this Report any change in the Fund's internal control over financial reporting that occurred during the Fund's most recent fiscal half-year [or second fiscal half-year in the case of an annual report] that has materially affected, or is reasonably likely to materially affect, the Fund's internal control over financial reporting; and 5. The Fund's other certifying officer and I have disclosed to the Fund's auditors and the audit committee of the Fund's board of directors: a) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Fund's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Fund's internal controls. Date: August 18, 2004 /s/ Mark D. Gersten ------------------- Mark D. Gersten Treasurer and Chief Financial Officer Exhibit 11 (c) CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to 18 U.S.C. 1350, each of the undersigned, being the Principal Executive Officer and Principal Financial Officer of AllianceBernstein Variable Series Fund, Inc. (the "Registrant"), hereby certifies that the Registrant's report on Form N-CSR for the period ended June 30, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: August 18, 2004 By: /s/ Marc O. Mayer ---------------------- Marc O. Mayer President By: /s/ Mark D. Gersten ---------------------- Mark D. Gersten Treasurer and Chief Financial Officer This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. EX-99.CERT 2 edgvarp_302b.txt Exhibit 11(b)(1) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Marc O. Mayer, certify that: 1. I have reviewed this report on Form N-CSR (the "Report") of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"); 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Fund as of, and for, the periods presented in this Report; 4. The Fund's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) for the Fund and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Fund, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b) evaluated the effectiveness of the Fund's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this Report based on such evaluation; and c) disclosed in this Report any change in the Fund's internal control over financial reporting that occurred during the Fund's most recent fiscal half-year [or second fiscal half-year in the case of an annual report] that has materially affected, or is reasonably likely to materially affect, the Fund's internal control over financial reporting; and 5. The Fund's other certifying officer and I have disclosed to the Fund's auditors and the audit committee of the Fund's board of directors: a) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Fund's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Fund's internal controls. Date: August 18, 2004 /s/Marc O. Mayer ---------------- Marc O. Mayer President Exhibit 11(b)(2) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Mark D. Gersten, certify that: 1. I have reviewed this report on Form N-CSR (the "Report") of AllianceBernstein Variable Products Series Fund, Inc. (the "Fund"); 2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Fund as of, and for, the periods presented in this Report; 4. The Fund's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) for the Fund and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Fund, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b) evaluated the effectiveness of the Fund's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this Report based on such evaluation; and c) disclosed in this Report any change in the Fund's internal control over financial reporting that occurred during the Fund's most recent fiscal half-year [or second fiscal half-year in the case of an annual report] that has materially affected, or is reasonably likely to materially affect, the Fund's internal control over financial reporting; and 5. The Fund's other certifying officer and I have disclosed to the Fund's auditors and the audit committee of the Fund's board of directors: a) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Fund's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Fund's internal controls. Date: August 18, 2004 /s/ Mark D. Gersten ------------------- Mark D. Gersten Treasurer and Chief Financial Officer EX-99.906 CERT 3 edgvarp_906c.txt Exhibit 11 (c) CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to 18 U.S.C. 1350, each of the undersigned, being the Principal Executive Officer and Principal Financial Officer of AllianceBernstein Variable Series Fund, Inc. (the "Registrant"), hereby certifies that the Registrant's report on Form N-CSR for the period ended June 30, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: August 18, 2004 By: /s/ Marc O. Mayer ---------------------- Marc O. Mayer President By: /s/ Mark D. Gersten ---------------------- Mark D. Gersten Treasurer and Chief Financial Officer This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----