ALLIANCE
------------------------------
VARIABLE PRODUCTS
------------------------------
SERIES FUND
------------------------------
INTERNATIONAL PORTFOLIO
------------------------------
SEMI-ANNUAL REPORT
JUNE 30, 2000
(UNAUDITED)
<PAGE>
Investment Products Offered
---------------------------
> Are Not FDIC Insured
> May Lose Value
> Are Not Bank Guaranteed
---------------------------
<PAGE>
INTERNATIONAL PORTFOLIO
TEN LARGEST HOLDINGS
June 30, 2000 (unaudited) Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
------------------------------------------------------------------------------------------
<S> <C> <C>
Nokia AB Corp. $ 5,036,536 5.6%
Canon, Inc. 4,229,773 4.7
Vodafone AirTouch Plc 4,004,198 4.4
British Sky Broadcasting Group Plc 3,653,950 4.0
STMicroelectronics NV 3,182,017 3.5
NTT Mobile Communications Network, Inc. 3,002,403 3.3
Banque Nationale de Paris 2,800,404 3.1
Takeda Chemical Industries, Ltd. 2,689,411 3.0
Kao Corp. 2,595,542 2.9
United Pan-Europe Communications NV 2,583,807 2.8
$33,778,041 37.3%
------------------------------------------------------------------------------------------
</TABLE>
SECTOR DIVERSIFICATION
June 30, 2000 (unaudited)
================================================================================
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
SECTOR U.S. $ VALUE PERCENT OF NET ASSETS
-------------------------------------------------------------------------------------------
<S> <C> <C>
Aerospace & Defense $ 1,277,341 1.4%
Basic Industries 539,549 0.6
Capital Goods 1,705,580 1.9
Consumer Manufacturing 1,000,464 1.1
Consumer Services 28,185,702 31.2
Consumer Staples 2,595,542 2.9
Energy 3,760,506 4.2
Finance 23,553,509 26.0
Healthcare 5,899,153 6.5
Multi Industry 2,478,026 2.7
Technology 15,778,853 17.5
Utilities 1,741,465 1.9
Total Investments* 88,515,690 97.9
Cash and receivables, net of liabilities 1,937,634 2.1
Net Assets $90,453,324 100.0%
-------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
* Excludes short-term obligations.
1
<PAGE>
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 2000 (unaudited) Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
--------------------------------------------------------------------------------
COMMON STOCKS-97.9%
FINLAND-6.0%
Nokia AB Corp. ............................... 98,700 $ 5,036,536
Sonera OYJ ................................... 7,500 341,902
-------------
5,378,438
-------------
FRANCE-11.2%
Banque Nationale de Paris .................... 29,100 2,800,404
Sanofi Synthelabo, SA ........................ 39,140 1,864,612
STMicroelectronics NV ........................ 50,500 3,182,017
Total Fina Elf Series B ...................... 14,720 2,256,942
-------------
10,103,975
-------------
HONG KONG-5.4%
Cheung Kong Holdings, Ltd. ................... 89,000 978,994
China Mobile (Hong Kong),
Ltd. (a) ................................... 268,000 2,363,543
Citic Pacific, Ltd. .......................... 299,000 1,568,739
-------------
4,911,276
-------------
IRELAND-1.3%
Bank of Ireland .............................. 26,500 165,839
CRH Plc ...................................... 55,300 1,000,464
-------------
1,166,303
-------------
ITALY-2.7%
Alleanza Assicurazioni ....................... 182,000 2,423,889
-------------
JAPAN-30.0%
Bank of Fukuoka, Ltd. ........................ 170,000 1,156,779
Bank of Tokyo-Mitsubishi,
Ltd. ....................................... 137,000 1,653,994
Banyu Pharmaceutical Co.,
Ltd. ....................................... 55,000 1,345,130
Canon, Inc. .................................. 85,000 4,229,773
Daiwa Securities Group, Inc. ................. 66,000 870,835
Fast Retailing Co., Ltd. ..................... 5,400 2,259,649
Kao Corp. .................................... 85,000 2,595,542
NEC Corp. .................................... 32,000 1,004,288
NTT Mobile Communications
Network, Inc. .............................. 111 3,002,403
Softbank Corp. ............................... 6,700 909,288
Sumitomo Trust & Banking
Co., Ltd. .................................. 274,000 1,949,673
Takeda Chemical
Industries, Ltd. ........................... 41,000 2,689,411
TDK Corp. .................................... 9,000 1,292,682
Tokyo Electron, Ltd. ......................... 16,000 2,189,529
-------------
27,148,976
-------------
MEXICO-1.6%
Telefonos de Mexico, SA de
CV (ADR) ................................... 24,500 1,399,562
-------------
NETHERLANDS-5.0%
Akzo Nobel NV ................................ 12,700 539,549
ASM Lithography Holding NV ................... 33,100 1,422,658
United Pan-Europe
Communications NV
Series A (a) ............................... 98,810 2,583,807
-------------
4,546,014
-------------
SINGAPORE-1.3%
DBS Group Holdings Ltd. ...................... 94,038 1,208,827
-------------
SOUTH KOREA-3.9%
Samsung Electronics .......................... 4,320 1,429,636
SK Telecom Co., Ltd. (ADR) ................... 58,350 2,118,834
-------------
3,548,470
-------------
SPAIN-2.2%
Banco Bilbao Vizcaya
Argentaria, SA ............................. 84,300 1,259,532
Repsol, SA ................................... 37,800 752,428
-------------
2,011,960
-------------
SWEDEN-2.2%
Securitas AB Series B ........................ 72,460 1,536,283
Telefonaktiebolaget LM
Ericsson AB Series B ....................... 22,700 449,110
-------------
1,985,393
-------------
SWITZERLAND-1.9%
ABB, Ltd. .................................... 14,250 1,705,580
-------------
TAIWAN-0.6%
Taiwan Semiconductor
Manufacturing Co., Ltd. .................... 99,840 474,423
(ADR) (a) .................................. 2,700 104,737
-------------
579,160
-------------
UNITED KINGDOM-22.6%
BAE Systems Plc .............................. 204,900 1,277,341
Bank of Scotland ............................. 189,503 1,802,141
BP Amoco Plc ................................. 78,300 751,136
British Airways Plc .......................... 72,900 419,159
British Sky Broadcasting
Group Plc .................................. 186,910 3,653,950
CGNU Plc ..................................... 88,500 1,473,002
Dixons Group Plc ............................. 123,557 502,906
Prudential Plc ............................... 52,700 771,887
Reuters Group Plc ............................ 131,400 2,240,716
Royal Bank of Scotland
Group Plc .................................. 65,991 1,104,352
Standard Chartered Plc ....................... 192,493 2,397,079
Vodafone AirTouch Plc ........................ 991,144 4,004,198
-------------
20,397,867
-------------
Total Common Stocks
(cost $69,632,686) ......................... 88,515,690
-------------
2
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENT-3.6%
TIME DEPOSIT-3.6%
State Street Euro Dollar
6.00%, 7/03/00
(amortized cost
$3,252,000) ................................ $3,252 $ 3,252,000
-------------
TOTAL INVESTMENTS-101.5%
(cost $72,884,686) ......................... $ 91,767,690
Other assets less
liabilities-(1.5%) ......................... (1,314,366)
-------------
NET ASSETS-100% .............................. $ 90,453,324
=============
--------------------------------------------------------------------------------
(a) Non-income producing security.
Glossary:
ADR - American Depositary Receipt
See Notes to Financial Statements.
3
<PAGE>
INTERNATIONAL PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (unaudited) Alliance Variable Products Series Fund
================================================================================
ASSETS
Investments in securities, at value (cost $72,884,686) ....... $91,767,690
Cash ......................................................... 461
Foreign cash, at value (cost $293,082) ....................... 293,322
Receivable for investment securities sold .................... 885,646
Dividends and interest receivable ............................ 152,358
-----------
Total assets ................................................. 93,099,477
-----------
LIABILITIES
Payable for investment securities purchased .................. 2,557,477
Advisory fee payable ......................................... 57,038
Accrued expenses ............................................. 31,638
-----------
Total liabilities ............................................ 2,646,153
-----------
NET ASSETS ..................................................... $90,453,324
===========
COMPOSITION OF NET ASSETS
Capital stock, at par ........................................ $ 4,720
Additional paid-in capital ................................... 70,528,304
Undistributed net investment income .......................... 108,384
Accumulated net realized gain on investments and
foreign currency transactions .............................. 965,641
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities ........ 18,846,275
-----------
$90,453,324
===========
Class A Shares
Net assets ................................................... $90,453,324
===========
Shares of capital stock outstanding .......................... 4,719,792
===========
Net asset value per share .................................... $ 19.16
===========
--------------------------------------------------------------------------------
See Notes to Financial Statements.
4
<PAGE>
INTERNATIONAL PORTFOLIO
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2000 (unaudited)
Alliance Variable Products Series Fund
================================================================================
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $71,202) ......... $ 421,009
Interest ..................................................... 117,925
-----------
Total investment income ...................................... 538,934
-----------
EXPENSES
Advisory fee ................................................. 441,833
Custodian .................................................... 87,900
Administrative ............................................... 31,500
Audit and legal .............................................. 5,467
Printing ..................................................... 4,699
Directors' fees .............................................. 683
Transfer agency .............................................. 474
Miscellaneous ................................................ 2,114
-----------
Total expenses ............................................... 574,670
Less: expenses waived and reimbursed ......................... (154,928)
-----------
Net expenses ................................................. 419,742
-----------
Net investment income ........................................ 119,192
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions ................. 1,070,369
Net realized loss on foreign currency transactions ........... (526)
Net change in unrealized appreciation/depreciation of:
Investments ................................................ (3,658,133)
Foreign currency denominated assets and liabilities ........ (36,697)
-----------
Net loss on investments and foreign currency transactions .... (2,624,987)
-----------
NET DECREASE IN NET ASSETS FROM OPERATIONS ..................... $(2,505,795)
===========
--------------------------------------------------------------------------------
See Notes to Financial Statements.
5
<PAGE>
INTERNATIONAL PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 2000 December 31,
(unaudited) 1999
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income ................................................ $ 119,192 $ 446,080
Net realized gain on investments and foreign currency transactions ... 1,069,843 8,077,628
Net change in unrealized appreciation/depreciation of investments
and foreign currency denominated assets and liabilities ............ (3,694,830) 15,904,515
------------- -------------
Net increase (decrease) in net assets from operations ................ (2,505,795) 24,428,223
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ............................................................ (105,625) (553,389)
Net realized gain on investments
Class A ............................................................ (7,359,954) (1,787,594)
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) .............................................. 19,054,443 (5,768,778)
------------- -------------
Total increase ....................................................... 9,083,069 16,318,462
NET ASSETS
Beginning of period .................................................. 81,370,255 65,051,793
------------- -------------
End of period (including undistributed net investment income of
$108,384 and $94,817, respectively) ................................ $ 90,453,324 $ 81,370,255
============= =============
</TABLE>
--------------------------------------------------------------------------------
See Notes to Financial Statements.
6
<PAGE>
INTERNATIONAL PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 (unaudited) Alliance Variable Products Series Fund
================================================================================
NOTE A: Significant Accounting Policies
The International Portfolio (the "Portfolio") is a series of Alliance 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 had no
operations prior to November 28, 1990. The Fund offers nineteen separately
managed pools of assets which have differing investment objectives and policies.
The Fund currently issues shares of the Conservative Investors Portfolio, Growth
Investors Portfolio, Total Return Portfolio, Growth and Income Portfolio, Growth
Portfolio, International Portfolio, Premier Growth Portfolio, Quasar Portfolio,
Real Estate Investment Portfolio, Technology Portfolio, Utility Income
Portfolio, Worldwide Privatization Portfolio, Global Bond Portfolio, Global
Dollar Government Portfolio, High-Yield Portfolio, North American Government
Income Portfolio, Short-Term Multi-Market Portfolio, U.S. Government/High Grade
Securities Portfolio and Money Market Portfolio (the "Portfolios"). On January
5, 1999, the creation of a second class of shares, Class B shares, was approved
by the Board of Directors. The Fund 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. As of June 30, 2000, the
following Portfolios had Class B shares issued and outstanding: Growth and
Income Portfolio, Growth Portfolio, Premier Growth Portfolio, Technology
Portfolio, Global Bond Portfolio, U.S. Government/High Grade Securities
Portfolio and Money Market Portfolio.
The Fund 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 each
Portfolio's net asset value per share.
The financial statements have been prepared in conformity with accounting
principles generally accepted in the United States, which require management to
make certain estimates and assumptions that affect the reported amounts of
assets and liabilities in the financial statements and amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates. The following is a summary of significant accounting policies
followed by the Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) or on The
Nasdaq Stock Market, Inc., are generally valued at the last reported sales price
or if no sale occurred, at the mean of the closing bid and asked price on that
day. Readily marketable securities traded in the over-the-counter market,
securities listed on a foreign securities exchange whose operations are similar
to the U.S. over-the-counter market, and securities listed on a national
securities exchange whose primary market is believed to be over-the-counter (but
excluding securities traded on The Nasdaq Stock Market, Inc.), are valued at the
mean of the current bid and asked price. U.S. government and fixed income
securities which mature in 60 days or less are valued at amortized cost, unless
this method does not represent fair value. Securities for which current market
quotations are not readily available are valued at their fair value as
determined in good faith by, or in accordance with procedures adopted by, the
Board of Directors. Fixed income securities may be valued on the basis of prices
obtained from a pricing service when such prices are believed to reflect the
fair market value of such securities.
Securities in which the Money Market 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. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the mean
of the quoted bid and asked price of such currencies against the U.S. dollar.
Purchases and sales of portfolio securities are translated at the rates of
exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at rates of exchange prevailing when accrued.
The Portfolios isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuations arising
from changes in market prices of securities held.
Net realized gains and losses on foreign currency transactions represent foreign
exchange gains and losses from
7
<PAGE>
INTERNATIONAL PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(continued) Alliance Variable Products Series Fund
================================================================================
sales and maturities of securities and forward exchange currency contracts,
holdings of foreign currencies, exchange gains and losses realized between the
trade and settlement dates on investment transactions, and the difference
between the amounts of interest, dividends and foreign witholding tax reclaims
recorded on the Portfolio's books and the U.S. dollar equivalent amounts
actually received or paid. Net 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 (depreciation) of
investments and foreign currency denominated assets and liabilities.
3. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
4. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. The Fund accretes discounts as adjustments to interest income
and in the case of the Money Market Portfolio, amortizes premium as well.
Investment gains and losses are determined on the identified cost basis.
5. Dividends and Distributions
Each Portfolio declares and distributes dividends and distributions from net
investment income and net realized gains, respectively, if any, at least
annually, except for dividends on the Money Market Portfolio, which are declared
daily and paid monthly. Income dividends and capital gains distributions to
shareholders are recorded on the ex-dividend date.
Income dividends and capital gains distributions are determined in accordance
with federal tax regulations and may differ from those determined in accordance
with accounting principles generally accepted in the United States. To the
extent these differences are permanent, such amounts are reclassified within the
capital accounts based on their federal tax basis treatment; temporary
differences do not require such reclassification.
--------------------------------------------------------------------------------
NOTE B: Advisory Fee and Other Transactions with Affiliates
Under the terms of an investment advisory agreement, the Portfolio pays Alliance
Capital Management L.P. (the "Adviser"), an investment advisory fee at an
annualized rate of 1% of the Portfolio's average daily net assets.
During the six months ended June 30, 2000, the Adviser agreed to waive its fee
and to reimburse the additional operating expenses to the extent necessary to
limit total operating expenses on an annual basis to .95% and 1.20% of the
average daily net assets for Class A and Class B shares, respectively. Expense
waivers/reimbursements, if any, are accrued daily and paid monthly. For the six
months ended June 30, 2000, such waivers/reimbursements amounted to $154,928.
Brokerage commissions paid on investment transactions for the six months ended
June 30, 2000, amounted to $119,130, none of which was paid to brokers utilizing
the services of the Pershing Division of Donaldson, Lufkin & Jenrette Securities
Corp. ("DLJ"), an affiliate of the Adviser, nor to DLJ directly.
The Fund compensates Alliance Fund 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 Fund. For the six months
ended June 30, 2000, the Fund paid a total of $9,000 which was allocated evenly
among the Portfolios.
--------------------------------------------------------------------------------
NOTE C: Distribution Plan
The Portfolios have each adopted a Plan for Class B shares of the Fund pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (each a "Plan" and
collectively the "Plans"). Under the Plans, the Portfolios pay distribution and
servicing fees to the Distributor at an annual rate of up to .50% of each
portfolio's average daily net assets attributable to the Class B shares. The
fees are accrued daily and paid monthly. The Board of Directors currently limit
payments under the Plan to .25% of each Portfolio's average daily net assets
attributable to Class B shares. The Plans provide that the Distributor will use
such payments in their entirety for distribution assistance and promotional
activities.
The Portfolios are not obligated under the Plans to pay any distribution
services fee in excess of the amounts set forth above. The purpose of the
payments to the Distribu-
8
<PAGE>
Alliance Variable Products Series Fund
================================================================================
tor under the Plans is to compensate the Distributor for its distribution
services with respect to the sale of each Portfolio's shares. Since the
Distributor's compensation is not directly tied to its expenses, the amount of
compensation received by it under the Plan during any year may be more or less
than its actual expenses. For this reason, the Plans are characterized by the
staff of the Commission as being of the "compensation" variety.
In the event that a Plan is terminated or not continued, no distribution
services fees (other than current amounts accrued but not yet paid) would be
owed by the Portfolios to the Distributor with respect to the relevant Plan.
The Plan also provides that the Adviser may use its own resources to finance the
distribution of each Portfolio's shares.
--------------------------------------------------------------------------------
NOTE D: Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the six months ended June 30, 2000, were as follows:
Purchases:
Stocks and debt obligations ............................. $37,484,352
U.S. government and agencies ............................ -0-
Sales:
Stocks and debt obligations ............................. $25,193,424
U.S. government and agencies ............................ -0-
At June 30, 2000, 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 .......................... $ 21,043,195
Gross unrealized depreciation .......................... (2,160,191)
------------
Net unrealized appreciation ............................ $ 18,883,004
============
1. Forward Exchange Currency Contracts
All Portfolios (except for the Global Dollar Government Portfolio, U.S.
Government/High Grade Securities Portfolio and Money Market Portfolio) may enter
into forward exchange currency contracts to hedge exposure to changes in foreign
currency exchange rates on foreign portfolio holdings, to hedge certain firm
purchase and sales commitments denominated in foreign currencies and for
investment purposes. A forward exchange currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate.
The Portfolios may enter into contracts to deliver or receive foreign currency
it will receive from or require for its normal investment activities. It may
also use contracts in a manner intended to protect foreign currency denominated
securities from declines in value due to unfavorable exchange rate movements.
The gain or loss arising from the difference between the original contracts and
the closing of such contracts is included in realized gains or losses from
foreign currency transactions. Fluctuations in the value of forward exchange
currency contracts are recorded for financial reporting purposes as unrealized
gains or losses by the Portfolio.
Each Portfolio's custodian will place and maintain cash not available for
investment or other liquid assets in a separate account of the Portfolio having
an approximate value equal to the aggregate amount of the respective 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 each Portfolio has in that particular
currency contract.
At June 30, 2000, the Portfolio had no outstanding forward exchange currency
contracts.
2. Option Transactions
For hedging and investment purposes, all Portfolios (except for the Money Market
Portfolio) may purchase and write call options and purchase put options on U.S.
securities that are traded on U.S. securities exchanges and over-the-counter
markets.
9
<PAGE>
INTERNATIONAL PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(continued) Alliance 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 which written options expire
unexercised are recorded by the Portfolio on the expiration date as realized
gains from written options. The difference between the premium received and the
amount paid on effecting a closing purchase transaction, including brokerage
commissions, is also treated as a realized gain, or if the premium received is
less than the amount paid for the closing purchase transaction, as a realized
loss. If a call option is exercised, the premium received is added to the
proceeds from the sale of the underlying security or currency in determining
whether the Portfolio has realized a gain or loss. In writing an option, the
Portfolio bears the market risk of an unfavorable change in the price of the
security or currency underlying the written option. Exercise of an option
written by the Portfolio could result in the Portfolio selling or buying a
security or currency at a price different from the current market value.
The Portfolio had no transactions in options written for the six months ended
June 30, 2000.
--------------------------------------------------------------------------------
NOTE E: Capital Stock
There are 20,000,000,000 shares of capital stock, $.001 par value per share of
the Fund authorized divided into two classes, designated Class A and Class B.
Each class consists of 10,000,000,000 authorized shares. Transactions in capital
stock were as follows:
<TABLE>
<CAPTION>
---------------------------------- ---------------------------------
SHARES AMOUNT
---------------------------------- ---------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
June 30, 2000 December 31, June 30, 2000 December 31,
(unaudited) 1999 (unaudited) 1999
---------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C>
Class A
Shares sold ....................... 7,512,015 7,048,844 $ 159,034,913 $ 122,548,001
Shares issued in reinvestment of
dividends and distributions ..... 381,286 149,679 7,465,579 2,340,983
Shares redeemed ................... (6,910,053) (7,485,752) (147,446,049) (130,657,762)
------------- ------------- ------------- -------------
Net increase (decrease) ........... 983,248 (287,229) $ 19,054,443 $ (5,768,778)
============= ============= ============= =============
</TABLE>
--------------------------------------------------------------------------------
NOTE F: Concentration of Risk
Investing in securities of foreign companies or foreign governments involves
special risks which include changes in foreign exchange rates and the
possibility of future political and economic developments which could adversely
affect the value of such securities. Moreover, securities of many foreign
companies or foreign governments and their markets may be less liquid and their
prices more volatile than those of comparable United States companies or of the
United States government.
--------------------------------------------------------------------------------
NOTE G: Bank Borrowing
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility")
intended to provide short-term financing if necessary, subject to certain
restrictions in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
the miscellaneous expenses in the statement of operations. The Fund did not
utilize the Facility during the six months ended June 30, 2000.
10
<PAGE>
INTERNATIONAL PORTFOLIO
FINANCIAL HIGHLIGHTS Alliance Variable Products Series Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
CLASS A
-------------------------------------------------------------------------
Six Months
Ended Year Ended December 31,
June 30, 2000 -------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 21.78 $ 16.17 $ 15.02 $ 14.89 $ 14.07 $ 12.88
------- ------- ------- ------- ------- -------
Income From Investment Operations
Net investment income (a)(b) ................ .03 .12 .17 .13 .19 .18
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions .............................. (.88) 6.13 1.80 .39 .83 1.08
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value
from operations ........................... (.85) 6.25 1.97 .52 1.02 1.26
------- ------- ------- ------- ------- -------
Less: Dividends and Distributions
Dividends from net investment income ........ (.03) (.15) (.33) (.15) (.08) (.03)
Distributions from net realized gains ....... (1.74) (.49) (.49) (.24) (.12) (.04)
------- ------- ------- ------- ------- -------
Total dividends and distributions ........... (1.77) (.64) (.82) (.39) (.20) (.07)
------- ------- ------- ------- ------- -------
Net asset value, end of period .............. $ 19.16 $ 21.78 $ 16.17 $ 15.02 $ 14.89 $ 14.07
======= ======= ======= ======= ======= =======
Total Return
Total investment return based on
net asset value (c) ....................... (4.09)% 40.23% 13.02% 3.33% 7.25% 9.86%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ........................... $90,453 $81,370 $65,052 $60,710 $44,324 $16,542
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .......................... .95%(d) .95% .95% .95% .95% .95%
Expenses, before waivers and
reimbursements .......................... 1.30%(d) 1.36% 1.37% 1.42% 1.91% 2.99%
Net investment income (a) ................ .27%(d) .69% 1.08% .87% 1.29% 1.41%
Portfolio turnover rate ..................... 30% 111% 117% 134% 60% 87%
</TABLE>
--------------------------------------------------------------------------------
(a) Net of expenses reimbursed or waived by the Adviser.
(b) Based on average shares outstanding.
(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 investment return
calculated for a period of less than one year is not annualized.
(d) Annualized.
11
<PAGE>
Alliance Variable Products Series Fund
================================================================================
BOARD OF DIRECTORS
John D. Carifa, Chairman and President
Ruth Block (1)
David H. Dievler (1)
John H. Dobkin (1)
William H. Foulk, Jr. (1)
Dr. James M. Hester (1)
Clifford L. Michel (1)
Donald J. Robinson (1)
OFFICERS
Andrew Aran, Senior Vice President
Kathleen A. Corbet, Senior Vice President
Gregory Dube, Senior Vice President
Alfred L. Harrison, Senior Vice President
Nelson Jantzen, Senior Vice President
Wayne D. Lyski, Senior Vice President
Raymond J. Papera, Senior Vice President
Peter Anastos, Vice President
Bruce K. Aronow, Vice President
Edward Baker, Vice President
Thomas J. Bardong, Vice President
Matthew Bloom, Vice President
Mark H. Breedon, Vice President
Russell Brody, Vice President
Nicholas D.P. Carn, Vice President
Paul J. DeNoon, Vice President
Joseph C. Dona, Vice President
Vicki L. Fuller, Vice President
F. Jeanne Goetz, Vice President
Gerald T. Malone, Vice President
Michael Mon, Vice President
Douglas J. Peebles, Vice President
Daniel G. Pine, Vice President
Paul C. Rissman, Vice President
Tyler J. Smith, Vice President
Jean Van De Walle, Vice President
Sandra Yeager, Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Thomas Manley, Controller
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
DISTRIBUTOR
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas
New York, NY 10105
INDEPENDENT AUDITORS
Ernst & Young LLP
787 Seventh Avenue
New York, NY 10019
LEGAL COUNSEL
Seward & Kissel
One Battery Park Plaza
New York, NY 10004
TRANSFER AGENT
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-free 1-(800) 221-5672
--------------------------------------------------------------------------------
(1) Member of the Audit Committee.
12
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