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
AB 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)
Stephen M. Woetzel
AllianceBernstein 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, 2023
Date of reporting period: December 31, 2023
ITEM 1. REPORTS TO STOCKHOLDERS.
DEC 12.31.23
ANNUAL REPORT
AB VARIABLE PRODUCTS
SERIES FUND, INC.
| + | | AB BALANCED HEDGED ALLOCATION PORTFOLIO |
Investment Products Offered
| | • | | Are Not Bank Guaranteed |
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AB family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the Adviser of the funds.
You may obtain a description of the Fund’s proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AB’s website at www.abfunds.com or go to the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov, or call AB at (800) 227 4618.
The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Commission’s website at www.sec.gov.
The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.
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| BALANCED HEDGED ALLOCATION | | |
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| PORTFOLIO | | AB Variable Products Series Fund |
LETTER TO INVESTORS
February 14, 2024
The following is an update of AB Variable Products Series Fund—Balanced Hedged Allocation Portfolio (the “Portfolio”) for the annual reporting period ended December 31, 2023.
INVESTMENT OBJECTIVE AND POLICIES
The Portfolio’s investment objective is to maximize total return consistent with the Adviser’s determination of reasonable risk.
The Portfolio invests in a balanced portfolio of equity and fixed-income securities (the “Balanced Component”) that is designed as a solution for investors who seek exposure to equity returns but also want the risk diversification offered by fixed-income securities and the broad diversification of their equity risk across styles, capitalization ranges and geographic regions. The Portfolio also utilizes a risk management portfolio intended to enhance the risk-adjusted return of the Portfolio (the “Risk Management Component”). A portfolio’s return is enhanced on a risk-adjusted basis when the portfolio achieves lower volatility with similar returns, or higher returns at similar volatility, compared to its benchmark. Both Components are actively managed by the Adviser as an integrated whole.
With respect to the Balanced Component, the Portfolio typically invests in shares of exchange-traded funds (“ETFs”), most or all of which are passively managed; in exchange-traded derivatives; and directly in securities. ETFs may provide more efficient and economical exposure to the types of companies and geographic locations in which the Portfolio seeks to invest than direct investments. Through its investments, the Portfolio gains exposure to various domestic and foreign markets, regions and countries, including emerging markets. The Portfolio normally invests at least 25% of its assets in equity investments, primarily consisting of but not limited to ETFs. The Portfolio normally invests at least 25% of its assets in US fixed-income investments, primarily consisting of but not limited to US bond ETFs and US government securities, including Treasury inflation-protected securities. The Portfolio’s fixed-income exposure consists primarily of investment-grade debt and may from time to time include lower-rated debt (“junk bonds”). The Portfolio may also seek exposure to real assets by investing in real estate-related ETFs. The Portfolio uses derivatives to gain access to or adjust its equity and fixed-income exposures.
With respect to the Risk Management Component, the Adviser seeks to enhance the risk-adjusted return of the Portfolio, attempting to enhance market exposure in rising markets and reduce risk in downturns. The Adviser employs a variety of risk management techniques in its strategy, primarily using derivative instruments. The Adviser attempts to stabilize current returns of the Portfolio by using techniques designed to limit the downside exposure of the Portfolio during periods of market declines, to add market exposure to the Portfolio during periods of normal or rising markets, and to reduce the volatility of the Portfolio. The Adviser uses risk management techniques designed to protect the Portfolio’s ability to generate future income. These techniques may use strategies including options (involving the purchase and/or writing of various combinations of call and/or put index options, and also may include options on individual securities) and futures contracts (including futures contracts on stock indices and US Treasuries).
Derivatives may provide more efficient and economical exposure to market segments than direct investments, and may also be a more efficient way to alter the Portfolio’s exposures than making direct investments. The derivative instruments may include “long” and “short” positions in futures, options and swap contracts. The Portfolio may, for example, use credit default, interest rate and total return swaps to establish exposure to the fixed-income markets or particular fixed-income securities and, as noted below, may use currency derivatives to hedge or add foreign currency exposure. The Risk Management Component may also include “long” and “short” positions in US government securities and cash instruments.
The Adviser may employ currency hedging strategies in the Portfolio, including the use of currency-related derivatives, to seek to reduce currency risk in the Portfolio, but it is not required to do so.
The Adviser considers a variety of factors in determining whether to sell a security, including changes in market conditions and changes in prospects for the security.
INVESTMENT RESULTS
The table on page 5 shows the Portfolio’s performance compared with its primary benchmark, the Morgan Stanley Capital International All Country World Index (“MSCI ACWI”) (net), and the Bloomberg US Aggregate Bond Index, for the one-, five- and 10-year periods ended December 31, 2023.
For the annual period, all share classes of the Portfolio underperformed the primary benchmark and outperformed the Bloomberg US Aggregate Bond Index. The Portfolio’s more diversified approach, which balances exposures to
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| | | AB Variable Products Series Fund |
equities, bonds and risk-management techniques is expected to underperform the all-equity primary benchmark during normal and rising markets. During the 12-month period, equities and fixed-income assets contributed to absolute performance, while the risk-management techniques detracted.
During the 12-month period, the Portfolio used derivatives for hedging and investment purposes in the form of futures, which added to absolute performance, while purchased options detracted.
MARKET REVIEW AND INVESTMENT STRATEGY
US, international and emerging-market stocks rose during the 12-month period ended December 31, 2023. Early in the period, aggressive central bank tightening—led by the US Federal Reserve—pressured global equity markets. Bouts of volatility continued as central banks reduced and then began to pause rate hikes but reiterated hawkish higher-for-longer rhetoric that weighed on sentiment. Later in the period, stronger-than-expected third-quarter economic growth triggered a rapid rise in bond yields—especially the 10-year US Treasury note, which briefly crossed the 5% threshold for the first time in 16 years. Headwinds from higher Treasury yields, conflict in the Middle East and mixed third-quarter earnings weighed on investor sentiment globally and briefly sent all major indices into correction territory in October. Equity markets rallied sharply during November and December, as optimism rose that the US Federal Reserve would begin to cut interest rates in 2024—both earlier and more than previously anticipated. Although US mega-cap technology stocks drove returns through much of the year, the rally broadened considerably during the fourth quarter as soft-landing expectations in the US continued to be underpinned by cooling inflation and moderating economic growth. Within large-cap markets, both growth- and value-oriented stocks rose, but growth significantly outperformed value, led by the technology sector and artificial intelligence optimism. Large-cap stocks outperformed small-cap stocks, although both rose in absolute terms.
Fixed-income government bond market yields were extremely volatile in all major developed markets, and developed-market government bond returns started to diverge based on individual country growth and inflation expectations and central bank decisions. Most central banks raised interest rates substantially to combat inflation, then paused further interest-rate hikes later in the period, and are now likely to begin to reduce short-term rates in 2024. Government bond returns in aggregate were strong as treasury yields fell significantly beginning in mid-October. Overall, developed-market investment-grade corporate bonds materially outperformed government bonds, including in the US and eurozone. High-yield corporate bonds advanced and significantly outperformed government bonds—especially in the eurozone and US. Emerging-market hard-currency sovereign bonds outperformed developed-market treasuries. Emerging-market hard-currency corporate bonds had strong relative positive returns. Among sovereigns and corporates, emerging-market high yield outperformed investment grade during the period. Local-currency sovereign bonds led emerging-market returns as the US dollar was mixed against all currencies over the year.
The Portfolio’s Senior Investment Management Team seeks enhanced risk-adjusted returns by utilizing a blend of US, international and emerging-market equities as well as diversifiers in the form of fixed-income, real estate investment trusts (“REITs”) and Treasury inflation-protected securities. The Portfolio also features a US Treasury futures overlay to benefit from potentially low correlation between Treasuries and equities. The blended equity and fixed-income exposures, combined with the US Treasury overlay and dynamic equity allocation (including equity index options) offer the potential to achieve higher risk-adjusted returns.
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| BALANCED HEDGED ALLOCATION PORTFOLIO |
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| DISCLOSURES AND RISKS | | AB Variable Products Series Fund |
Benchmark Disclosure
All indices are unmanaged and do not reflect fees and expenses associated with the active management of a mutual fund portfolio. The MSCI ACWI (net, free float-adjusted, market capitalization weighted) represents the equity market performance of developed and emerging markets. The Bloomberg US Aggregate Bond Index represents the performance of securities within the US investment-grade fixed-rate bond market, with index components for government and corporate securities, mortgage pass-through securities, asset-backed securities and commercial mortgage-backed securities. The Bloomberg Global Aggregate Bond Index (USD hedged) represents the performance of the global investment-grade developed fixed-income markets, hedged to the US dollar. MSCI makes no express or implied warranties or representations, and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices, any securities or financial products. This report is not approved, reviewed or produced by MSCI. Net returns reflect the reinvestment of dividends after deduction of non-US withholding tax. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Portfolio.
A Word About Risk
Market Risk: The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Allocation Risk: The allocation of investments among the different investment styles, such as growth or value, equity or debt securities, or US or non-US securities may have a more significant effect on the Portfolio’s net asset value (“NAV”) when one of these investment strategies is performing more poorly than others.
ETF Risk: ETFs are investment companies and are subject to market and selection risk. When the Portfolio invests in an ETF, the Portfolio bears its share of the ETF’s expenses and runs the risk that the ETF may not achieve its investment objective.
Foreign (Non-US) Risk: Investments in securities of non-US issuers may involve more risk than those of US issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
Emerging-Market Risk: Investments in emerging-market countries may have more risk because the markets are less developed and less liquid, and because these investments may be subject to increased economic, political, regulatory or other uncertainties.
Currency Risk: Fluctuations in currency exchange rates may negatively affect the value of the Portfolio’s investments or reduce the Portfolio’s returns.
Interest-Rate Risk: Changes in interest rates will affect the value of investments in fixed-income securities. When interest rates rise, the value of existing investments in fixed-income securities tends to fall and this decrease in value may not be offset by higher income from new investments. Interest-rate risk is generally greater for fixed-income securities with longer maturities or durations. The Portfolio may be subject to greater risk of rising interest rates than would normally be the case due to the recent end of a period of historically low rates and the effects of potential central bank monetary policy, and government fiscal policy, initiatives and resulting market reactions to those initiatives.
Credit Risk: An issuer or guarantor of a fixed-income security, or the counterparty to a derivatives or other contract, may be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. The issuer or guarantor may default, causing a loss of the full principal amount of a security and accrued interest. The degree of risk for a particular security may be reflected in its credit rating. There is the possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security.
Below Investment-Grade Security Risk: Investments in fixed-income securities with lower ratings (“junk bonds”) tend to have a higher probability that an issuer will default or fail to meet its payment obligations. These securities may be subject to greater price volatility due to such factors as specific corporate developments, interest-rate sensitivity and negative perceptions of the junk bond market generally, and may be more difficult to trade than other types of securities.
(Disclosures, Risks and Note About Historical Performance continued on next page)
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| DISCLOSURES AND RISKS |
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| (continued) | | AB Variable Products Series Fund |
Capitalization Risk: Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small- and mid-capitalization companies may have additional risks because these companies have limited product lines, markets or financial resources.
Derivatives Risk: Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
Real Assets Risk: The Portfolio’s investments in securities linked to real assets involve significant risks, including financial, operating, and competitive risks. Investments in securities linked to real assets expose the Portfolio to adverse macroeconomic conditions, such as a rise in interest rates or a downturn in the economy in which the asset is located. Changes in inflation rates or in the market’s inflation expectations may adversely affect the market value of inflation-sensitive equities. The Portfolio’s investments in real estate securities have many of the same risks as direct ownership of real estate, including the risk that the value of real estate could decline due to a variety of factors that affect the real estate market generally. Investments in REITs may have additional risks. REITs are dependent on the capability of their managers, may have limited diversification, and could be significantly affected by changes in tax laws. Some REITs may utilize leverage, which increases investment risk and may potentially increase the Portfolio’s losses.
Management Risk: The Portfolio is subject to management risk because it is an actively managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
These risks are fully discussed in the Variable Products prospectus. As with all investments, you may lose money by investing in the Portfolio.
An Important Note About Historical Performance
The investment return and principal value of an investment in the Portfolio will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Performance shown in this report represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. Please contact your financial advisor or insurance agent representative at your financial institution to obtain portfolio performance information current to the most recent month-end.
Effective May 1, 2022, the Portfolio made certain changes to its principal strategies, including the modification of the strategies to invest in ETFs, most or all of which are passively managed; reduce allocations to international securities; add the Risk Management Component; and eliminate the targets for allocation of investments in natural resource equity securities and inflation-sensitive equity securities. In light of these changes, the performance shown for periods prior to May 1, 2022, is based on the Portfolio’s prior principal strategies and may not be representative of the Portfolio’s performance under its current principal strategies.
Investors should consider the investment objectives, risks, charges and expenses of the Portfolio carefully before investing. For additional copies of the Portfolio’s prospectus or summary prospectus, which contains this and other information, call your financial advisor or (800) 227 4618. Please read the prospectus and/or summary prospectus carefully before investing.
All fees and expenses related to the operation of the Portfolio have been deducted, but no adjustment has been made for insurance company separate account or annuity contract charges, which would reduce total return to a contract owner. Performance assumes reinvestment of distributions and does not account for taxes.
There are additional fees and expenses associated with all Variable Products. These fees can include mortality and expense risk charges, administrative charges, and other charges that can significantly reduce investment returns. Those fees and expenses are not reflected in this annual report. You should consult your Variable Products prospectus for a description of those fees and expenses and speak to your insurance agent or financial representative if you have any questions. You should read the prospectus before investing or sending money.
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| BALANCED HEDGED ALLOCATION PORTFOLIO |
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| HISTORICAL PERFORMANCE | | AB Variable Products Series Fund |
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| THE PORTFOLIO VS. ITS BENCHMARKS | | Net Asset Value Returns | |
| PERIODS ENDED DECEMBER 31, 2023 (unaudited) | | 1 Year | | | 5 Years1 | | | 10 Years1 | |
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| Balanced Hedged Allocation Portfolio Class A | | | 13.04% | | | | 6.20% | | | | 5.31% | |
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| Balanced Hedged Allocation Portfolio Class B | | | 12.66% | | | | 5.92% | | | | 5.04% | |
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| Primary Benchmark: MSCI ACWI (net) | | | 22.20% | | | | 11.72% | | | | 7.93% | |
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| Bloomberg US Aggregate Bond Index2 | | | 5.53% | | | | 1.10% | | | | 1.81% | |
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| Bloomberg Global Aggregate Bond Index (USD hedged) | | | 7.15% | | | | 1.40% | | | | 2.41% | |
1 Average annual returns. 2 Effective May 1, 2022, the secondary index used for comparison with the Portfolio’s performance has changed from the Bloomberg Global Aggregate Bond Index (USD hedged) to the Bloomberg US Aggregate Bond Index to show how the Portfolio’s performance compares with the returns of an index of securities similar to those in which the Portfolio invests. | |
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The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 0.73% and 0.98% for Class A and Class B shares, respectively. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
GROWTH OF A $10,000 INVESTMENT
12/31/2013 TO 12/31/2023 (unaudited)
This chart illustrates the total value of an assumed $10,000 investment in Balanced Hedged Allocation Portfolio Class A shares (from 12/31/2013 to 12/31/2023) as compared with the performance of the Portfolio’s current and previous benchmarks. The chart assumes the reinvestment of dividends and capital gains distributions.
See Disclosures, Risks and Note About Historical Performance on pages 3-4.
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| BALANCED HEDGED ALLOCATION PORTFOLIO |
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| EXPENSE EXAMPLE (unaudited) | | AB Variable Products Series Fund |
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of each class’ table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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| | | Beginning
Account Value
July 1, 2023 | | | Ending
Account Value
December 31, 2023 | | | Expenses Paid
During Period* | | | Annualized
Expense Ratio* | | | Total
Expenses Paid
During Period+ | | | Total
Annualized
Expense Ratio+ | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,050.40 | | | $ | 3.62 | | | | 0.70 | % | | $ | 3.88 | | | | 0.75 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,021.68 | | | $ | 3.57 | | | | 0.70 | % | | $ | 3.82 | | | | 0.75 | % |
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Class B | | | | | | | | | | | | | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,049.30 | | | $ | 4.91 | | | | 0.95 | % | | $ | 5.17 | | | | 1.00 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,020.42 | | | $ | 4.84 | | | | 0.95 | % | | $ | 5.09 | | | | 1.00 | % |
| * | | Expenses are equal to each classes’ annualized expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
| ** | | Assumes 5% annual return before expenses. |
| + | | In connection with the Portfolio’s investments in affiliated/unaffiliated underlying portfolios, the Portfolio incurs no direct expenses, but bears proportionate shares of the fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated/unaffiliated underlying portfolios. The Adviser has contractually agreed to waive its fees from the Portfolio in an amount equal to the Portfolio’s pro rata share of certain acquired fund fees and expenses of the affiliated underlying portfolios. The Portfolio’s total expenses are equal to the classes’ annualized expense ratio plus the Portfolio’s pro rata share of the weighted average expense ratio of the affiliated/unaffiliated underlying portfolios in which it invests, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
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| BALANCED HEDGED ALLOCATION PORTFOLIO |
| TEN LARGEST HOLDINGS1 | | |
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| December 31, 2023 (unaudited) | | AB Variable Products Series Fund |
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| SECURITY | | U.S. $ VALUE | | | PERCENT OF NET ASSETS | |
iShares Core S&P 500 ETF | | $ | 52,146,210 | | | | 30.2 | % |
iShares Core U.S. Aggregate Bond ETF | | | 26,251,625 | | | | 15.2 | |
Vanguard Total Bond Market ETF | | | 26,198,510 | | | | 15.2 | |
iShares Core MSCI EAFE ETF | | | 20,886,915 | | | | 12.1 | |
iShares Core MSCI Emerging Markets ETF | | | 11,208,528 | | | | 6.5 | |
S&P 500 Index | | | 7,128,280 | | | | 4.1 | |
Vanguard Mid-Cap ETF | | | 5,816,000 | | | | 3.4 | |
U.S. Treasury Inflation Index | | | 4,766,149 | | | | 2.8 | |
Vanguard Real Estate ETF | | | 4,329,640 | | | | 2.5 | |
Vanguard Small-Cap ETF | | | 4,159,935 | | | | 2.4 | |
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| | | $ | 162,891,792 | | | | 94.4 | % |
SECURITY TYPE BREAKDOWN2
December 31, 2023 (unaudited)
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| SECURITY TYPE | | U.S. $ VALUE | | | PERCENT OF TOTAL INVESTMENTS | |
Investment Companies | | $ | 150,997,363 | | | | 87.1 | % |
Inflation-Linked Securities | | | 4,766,149 | | | | 2.7 | |
Purchased Options—Calls | | | 3,955,465 | | | | 2.3 | |
Purchased Options—Puts | | | 3,172,815 | | | | 1.8 | |
Corporates—Investment Grade | | | 195,495 | | | | 0.1 | |
Short-Term Investments | | | 10,352,282 | | | | 6.0 | |
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Total Investments | | $ | 173,439,569 | | | | 100.0 | % |
| 2 | | The Portfolio’s security type breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. The Portfolio also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). |
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| BALANCED HEDGED ALLOCATION PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
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| December 31, 2023 | | AB Variable Products Series Fund |
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| Company | | | | |
Shares | | | U.S. $ Value | |
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INVESTMENT COMPANIES–87.4% | | | | | | | | | | | | |
FUNDS AND INVESTMENT TRUSTS–87.4%* | | | | | | | | | | | | |
iShares Core MSCI EAFE ETF | | | | | | | 296,900 | | | $ | 20,886,915 | |
iShares Core MSCI Emerging Markets ETF | | | | | | | 221,600 | | | | 11,208,528 | |
iShares Core S&P 500 ETF | | | | | | | 109,177 | | | | 52,146,210 | |
iShares Core U.S. Aggregate Bond ETF | | | | | | | 264,500 | | | | 26,251,625 | |
Vanguard Mid-Cap ETF(a) | | | | | | | 25,000 | | | | 5,816,000 | |
Vanguard Real Estate ETF(a) | | | | | | | 49,000 | | | | 4,329,640 | |
Vanguard Small-Cap ETF(a) | | | | | | | 19,500 | | | | 4,159,935 | |
Vanguard Total Bond Market ETF | | | | | | | 356,200 | | | | 26,198,510 | |
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Total Investment Companies
(cost $146,127,521) | | | | | | | | | | | 150,997,363 | |
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| | | Principal
Amount
(000) | | | | |
INFLATION-LINKED SECURITIES–2.7% | | | | | | | | | | | | |
UNITED STATES–2.7% | | | | | | | | | | | | |
U.S. Treasury Inflation Index
0.125%, 01/15/2032(b)
(cost $5,436,229) | | | U.S.$ | | | | 5,409 | | | | 4,766,149 | |
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| | | Notional
Amount | | | | |
PURCHASED OPTIONS–CALLS–2.3% | | | | | | | | | | | | |
OPTIONS ON EQUITY INDICES–2.3% | | | | | | | | | | | | |
S&P 500 Index
Expiration: Dec 2025; Contracts: 19;
Exercise Price: USD 4,700.00;
Counterparty: Morgan Stanley & Co., Inc.(c) | | | USD | | | | 8,930,000 | | | | 1,230,725 | |
| | | | | | | | | | | | |
S&P 500 Index
Expiration: Dec 2025; Contracts: 18;
Exercise Price: USD 4,500.00;
Counterparty: Morgan Stanley & Co.,
Inc.(c) | | | USD | | | | 8,100,000 | | | | 1,403,820 | |
S&P 500 Index
Expiration: Dec 2025; Contracts: 9;
Exercise Price: USD 4,800.00;
Counterparty: Morgan Stanley & Co.,
Inc.(c) | | | USD | | | | 4,320,000 | | | | 526,275 | |
S&P 500 Index
Expiration: Dec 2025; Contracts: 7;
Exercise Price: USD 4,900.00;
Counterparty: Morgan Stanley & Co.,
Inc.(c) | | | USD | | | | 3,430,000 | | | | 366,905 | |
S&P 500 Index
Expiration: Dec 2025; Contracts: 6;
Exercise Price: USD 4,600.00;
Counterparty: Morgan Stanley & Co.,
Inc.(c) | | | USD | | | | 2,760,000 | | | | 427,740 | |
| | | | | | | | | | | | |
Total Purchased Options–Calls
(premiums paid $2,944,751) | | | | | | | | | | | 3,955,465 | |
| | | | | | | | | | | | |
PURCHASED OPTIONS–PUTS–1.8% | | | | | | | | | | | | |
OPTIONS ON EQUITY INDICES–1.8% | | | | | | | | | | | | |
S&P 500 Index
Expiration: Dec 2025; Contracts: 42;
Exercise Price: USD 4,600.00;
Counterparty: Morgan Stanley & Co.,
Inc.(c) | | | USD | | | | 19,320,000 | | | | 1,194,270 | |
S&P 500 Index
Expiration: Dec 2025; Contracts: 19;
Exercise Price: USD 4,700.00;
Counterparty: Morgan Stanley & Co.,
Inc.(c) | | | USD | | | | 8,930,000 | | | | 591,280 | |
8
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
| Company | |
Notional
Amount | | | U.S. $ Value | |
| | | | | | | | | | | | |
S&P 500 Index
Expiration: Dec 2025; Contracts: 18;
Exercise Price: USD 4,500.00;
Counterparty: Morgan Stanley & Co.,
Inc.(c) | | | USD | | | | 8,100,000 | | | $ | 466,740 | |
S&P 500 Index
Expiration: Dec 2025; Contracts: 15;
Exercise Price: USD 4,400.00;
Counterparty: Morgan Stanley & Co.,
Inc.(c) | | | USD | | | | 6,600,000 | | | | 354,225 | |
S&P 500 Index
Expiration: Dec 2025; Contracts: 9;
Exercise Price: USD 4,800.00;
Counterparty: Morgan Stanley & Co.,
Inc.(c) | | | USD | | | | 4,320,000 | | | | 306,180 | |
S&P 500 Index
Expiration: Dec 2025; Contracts: 7;
Exercise Price: USD 4,900.00;
Counterparty: Morgan Stanley & Co.,
Inc.(c) | | | USD | | | | 3,430,000 | | | | 260,120 | |
| | | | | | | | | | | | |
Total Purchased Options–Puts
(premiums paid $4,074,243) | | | | | | | | | | | 3,172,815 | |
| | | | | | | | | | | | |
| | | Principal
Amount
(000) | | | | |
CORPORATES–INVESTMENT GRADE–0.1% | | | | | | | | | | | | |
INDUSTRIAL–0.1% | | | | | | | | | | | | |
SERVICES–0.1% | | | | | | | | | | | | |
Chicago Parking Meters LLC(d)
(cost $200,000) | | | U.S.$ | | | | 200 | | | | 195,495 | |
| | | | | | | | | | | | |
| | | Shares | | | | |
COMMON STOCKS–0.0% | | | | | | | | | | | | |
ENERGY–0.0% | | | | | | | | | | | | |
OIL, GAS & CONSUMABLE FUELS–0.0% | | | | | | | | | | | | |
Gazprom PJSC(c)(d)(e) | | | | | | | 31,460 | | | | –0 | – |
LUKOIL PJSC(d)(e)(f) | | | | | | | 790 | | | | –0 | – |
| | | | | | | | | | | | |
| | | | | | | | | | | –0 | – |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
MATERIALS–0.0% | | | | | | | | | | | | |
METALS & MINING–0.0% | | | | | | | | | | | | |
MMC Norilsk Nickel PJSC (ADR)(c)(d)(e) | | | | | | | 2,540 | | | | –0 | – |
| | | | | | | | | | | | |
Total Common Stocks
(cost $272,696) | | | | | | | | | | | –0 | – |
| | | | | | | | | | | | |
SHORT-TERM INVESTMENTS–6.0% | | | | | | | | | | | | |
INVESTMENT COMPANIES–6.0% | | | | | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB, 5.27%(g)(h)*
(cost $10,352,282) | | | | | | | 10,352,282 | | | | 10,352,282 | |
| | | | | | | | | | | | |
TOTAL INVESTMENTS BEFORE SECURITY LENDING COLLATERAL FOR SECURITIES LOANED–100.3%
(cost $169,407,722) | | | | | | | | | | | 173,439,569 | |
| | | | | | | | | | | | |
INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED–3.6% | | | | | | | | | | | | |
INVESTMENT COMPANIES–3.6% | | | | | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB, 5.27%(g)(h)*
(cost $6,202,225) | | | | | | | 6,202,225 | | | | 6,202,225 | |
| | | | | | | | | | | | |
TOTAL INVESTMENTS–103.9%
(cost $175,609,947) | | | | | | | | | | | 179,641,794 | |
Other assets less liabilities–(3.9)% | | | | | | | | | | | (6,800,909 | ) |
| | | | | | | | | | | | |
NET ASSETS–100.0% | | | | | | | | | | $ | 172,840,885 | |
| | | | | | | | | | | | |
9
| | |
| BALANCED HEDGED ALLOCATION PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
FUTURES (see Note D)
| | | | | | | | | | | | | | | | |
| Description | | Number of
Contracts | | | Expiration
Month | | | Current
Notional | | | Value and
Unrealized
Appreciation
(Depreciation) | |
Purchased Contracts | |
E-Mini Russell 2000 Futures | | | 10 | | | | March 2024 | | | $ | 1,023,850 | | | $ | 79,067 | |
MSCI EAFE Futures | | | 45 | | | | March 2024 | | | | 5,067,900 | | | | 199,345 | |
MSCI Emerging Markets Futures | | | 52 | | | | March 2024 | | | | 2,687,620 | | | | 124,373 | |
S&P 500 E-Mini Futures | | | 56 | | | | March 2024 | | | | 13,496,000 | | | | 502,209 | |
S&P Mid 400 E-Mini Futures | | | 4 | | | | March 2024 | | | | 1,123,800 | | | | 63,942 | |
U.S. Long Bond (CBT) Futures | | | 50 | | | | March 2024 | | | | 6,246,875 | | | | 501,869 | |
U.S. T-Note 10 Yr (CBT) Futures | | | 516 | | | | March 2024 | | | | 58,251,563 | | | | 1,901,820 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | $ | 3,372,625 | |
| | | | | | | | | | | | | | | | |
| * | | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov. Additionally, shareholder reports for AB funds can be obtained by calling AB at (800) 227-4618. |
| (a) | | Represents entire or partial securities out on loan. See Note E for securities lending information. |
| (b) | | Position, or a portion thereof, has been segregated to collateralize margin requirements for open futures contracts. |
| (c) | | Non-income producing security. |
| (d) | | Fair valued by the Adviser. |
| (e) | | Security in which significant unobservable inputs (Level 3) were used in determining fair value. |
| (f) | | Restricted and illiquid security. |
| | | | | | | | | | | | | | | | |
| Restricted & Illiquid Securities | | Acquisition
Date | | | Cost | | | Market
Value | | | Percentage
of Net Assets | |
LUKOIL PJSC | | | 06/29/2018 | | | $ | 61,154 | | | $ | –0 | – | | | 0.00 | % |
| (g) | | Affiliated investments. |
| (h) | | The rate shown represents the 7-day yield as of period end. |
Currency Abbreviations:
USD—United States Dollar
Glossary:
ADR—American Depositary Receipt
CBT—Chicago Board of Trade
EAFE—Europe, Australia, and Far East
ETF—Exchange Traded Fund
MSCI—Morgan Stanley Capital International
PJSC—Public Joint Stock Company
See notes to financial statements.
10
| | |
| BALANCED HEDGED ALLOCATION PORTFOLIO |
| STATEMENT OF ASSETS & LIABILITIES | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
ASSETS | |
Investments in securities, at value | | | | |
Unaffiliated issuers (cost $159,055,440) | | $ | 163,087,287 | (a) |
Affiliated issuers (cost $16,554,507—including investment of cash collateral for securities loaned of $6,202,225) | | | 16,554,507 | |
Cash | | | 2,476 | |
Foreign currencies, at value (cost $6,778) | | | 6,923 | |
Affiliated dividends receivable | | | 40,660 | |
Unaffiliated interest and dividends receivable | | | 17,852 | |
Receivable due from Adviser | | | 1,478 | |
Receivable for capital stock sold | | | 103 | |
| | | | |
Total assets | | | 179,711,286 | |
| | | | |
LIABILITIES | |
Payable for collateral received on securities loaned | | | 6,202,225 | |
Payable for capital stock redeemed | | | 144,521 | |
Advisory fee payable | | | 64,886 | |
Payable for variation margin on futures | | | 64,679 | |
Distribution fee payable | | | 32,719 | |
Administrative fee payable | | | 24,090 | |
Foreign capital gains tax payable | | | 5,943 | |
Transfer Agent fee payable | | | 150 | |
Accrued expenses | | | 331,188 | |
| | | | |
Total liabilities | | | 6,870,401 | |
| | | | |
NET ASSETS | | $ | 172,840,885 | |
| | | | |
COMPOSITION OF NET ASSETS | |
Capital stock, at par | | $ | 19,993 | |
Additional paid-in capital | | | 167,328,453 | |
Distributable earnings | | | 5,492,439 | |
| | | | |
NET ASSETS | | $ | 172,840,885 | |
| | | | |
Net Asset Value Per Share—1 billion shares of capital stock authorized, $.001 par value
| | | | | | | | | | | | |
| Class | | Net Assets | | | Shares
Outstanding | | | Net Asset
Value | |
| | | |
| A | | $ | 15,842,959 | | | | 1,804,782 | | | $ | 8.78 | |
| | | |
| B | | $ | 156,997,926 | | | | 18,188,029 | | | $ | 8.63 | |
| (a) | | Includes securities on loan with a value of $24,942,897 (see Note E). |
See notes to financial statements.
11
| | |
| BALANCED HEDGED ALLOCATION PORTFOLIO |
| STATEMENT OF OPERATIONS | | |
| |
| Year Ended December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
INVESTMENT INCOME | | | | |
Dividends | | | | |
Unaffiliated issuers (net of foreign taxes withheld of $8,301) | | $ | 3,864,791 | |
Affiliated issuers | | | 429,579 | |
Interest | | | 185,150 | |
Securities lending income | | | 37,429 | |
| | | | |
| | | 4,516,949 | |
| | | | |
EXPENSES | | | | |
Advisory fee (see Note B) | | | 779,924 | |
Distribution fee—Class B | | | 393,840 | |
Transfer agency—Class A | | | 490 | |
Transfer agency—Class B | | | 4,892 | |
Custody and accounting | | | 129,746 | |
Administrative | | | 96,512 | |
Audit and tax | | | 86,643 | |
Printing | | | 39,667 | |
Legal | | | 37,518 | |
Directors’ fees | | | 18,989 | |
Miscellaneous | | | 17,400 | |
| | | | |
Total expenses | | | 1,605,621 | |
Less: expenses waived and reimbursed by the Adviser (see Notes B & E) | | | (12,811 | ) |
| | | | |
Net expenses | | | 1,592,810 | |
| | | | |
Net investment income | | | 2,924,139 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS | | | | |
Net realized loss on: | | | | |
Investment transactions(a) | | | (4,552,830 | ) |
Futures | | | (1,497,512 | ) |
Foreign currency transactions | | | (116 | ) |
Net change in unrealized appreciation (depreciation) of: | | | | |
Investments | | | 19,261,607 | |
Futures | | | 4,567,585 | |
Foreign currency denominated assets and liabilities | | | 2,270 | |
| | | | |
Net gain on investment and foreign currency transactions | | | 17,781,004 | |
| | | | |
NET INCREASE IN NET ASSETS FROM OPERATIONS | | $ | 20,705,143 | |
| | | | |
| (a) | | Net of foreign realized capital gains taxes of $7,857. |
See notes to financial statements.
12
| | |
| |
| BALANCED HEDGED ALLOCATION PORTFOLIO |
| |
| STATEMENT OF CHANGES IN NET ASSETS | | AB Variable Products Series Fund |
| | | | | | | | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | |
Net investment income | | $ | 2,924,139 | | | $ | 2,576,399 | |
Net realized gain (loss) on investment and foreign currency transactions | | | (6,050,458 | ) | | | 10,294,648 | |
Net change in unrealized appreciation (depreciation) of investments and foreign currency denominated assets and liabilities | | | 23,831,462 | | | | (58,310,497 | ) |
Contributions from Affiliates (see Note B) | | | –0 | – | | | 2,636 | |
| | | | | | | | |
Net increase (decrease) in net assets from operations | | | 20,705,143 | | | | (45,436,814 | ) |
Distributions to Shareholders | |
Class A | | | (978,634 | ) | | | (2,419,129 | ) |
Class B | | | (9,515,346 | ) | | | (24,164,652 | ) |
CAPITAL STOCK TRANSACTIONS | |
Net increase (decrease) | | | (14,760,704 | ) | | | 3,638,903 | |
| | | | | | | | |
Total decrease | | | (4,549,541 | ) | | | (68,381,692 | ) |
NET ASSETS | |
Beginning of period | | | 177,390,426 | | | | 245,772,118 | |
| | | | | | | | |
End of period | | $ | 172,840,885 | | | $ | 177,390,426 | |
| | | | | | | | |
See notes to financial statements.
13
| | |
| BALANCED HEDGED ALLOCATION PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
NOTE A: Significant Accounting Policies
The AB Balanced Hedged Allocation Portfolio (the “Portfolio”) (formerly known as AB Balanced Wealth Strategy Portfolio) is a series of AB Variable Products Series Fund, Inc. (the “Fund”). The Portfolio’s investment objective is to maximize total return consistent with the determination of AllianceBernstein L.P. (the “Adviser”) of reasonable risk. The Portfolio is diversified as defined under the Investment Company Act of 1940 (the “1940 Act”). The Fund was incorporated in the State of Maryland as an open-end series investment company. The Fund offers 10 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 U.S. generally accepted accounting principles (“U.S. GAAP”), 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 Portfolio is an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Portfolio.
1. Security Valuation
Portfolio securities are valued at market value determined on the basis of market quotations or, if market quotations are not readily available or are unreliable, at “fair value” as determined in accordance with procedures approved by and under the oversight of the Fund’s Board of Directors (the “Board”). Pursuant to these procedures, the Adviser serves as the Portfolio’s valuation designee pursuant to Rule 2a-5 of the 1940 Act. In this capacity, the Adviser is responsible, among other things, for making all fair value determinations relating to the Portfolio’s portfolio investments, subject to the Board’s oversight.
In general, the market values of securities which are readily available and deemed reliable are determined as follows: securities listed on a national securities exchange (other than securities listed on the NASDAQ Stock Market, Inc. (“NASDAQ”)) 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 last traded price from the previous day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price; listed or over the counter (“OTC”) market put or call options are valued at the mid level between the current bid and ask prices. If either a current bid or current ask price is unavailable, the Adviser will have discretion to determine the best valuation (e.g., last trade price in the case of listed options); open futures 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 valuation, the last available closing settlement price is used; U.S. Government securities and any other debt instruments having 60 days or less remaining until maturity are generally valued at market by an independent pricing vendor, if a market price is available. If a market price is not available, the securities are valued at amortized cost. This methodology is commonly used for short term securities that have an original maturity of 60 days or less, as well as short term securities that had an original term to maturity that exceeded 60 days. In instances when amortized cost is utilized, the Valuation Committee (the “Committee”) must reasonably conclude that the utilization of amortized cost is approximately the same as the fair value of the security. Factors the Committee will consider include, but are not limited to, an impairment of the creditworthiness of the issuer or material changes in interest rates. 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 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. Swaps and other derivatives are valued daily, primarily using independent pricing services, independent pricing models using market inputs, as well as third party broker-dealers or counterparties. Open-end mutual funds are valued at the closing net asset value per share, while exchange traded funds are valued at the closing market price per share.
Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value as deemed appropriate by the Adviser. Factors considered in making this determination may include, but
14
| | |
| |
| | | AB Variable Products Series Fund |
are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer’s financial statements or other available documents. In addition, the Portfolio may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Portfolio values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Portfolio generally values many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available.
2. Fair Value Measurements
In accordance with U.S. GAAP regarding fair value measurements, fair value is defined as the price that the Portfolio would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability (including those valued based on their market values as described in Note A.1 above). Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Portfolio. Unobservable inputs reflect the Portfolio’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
| | • | | Level 1—quoted prices in active markets for identical investments |
| | • | | Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| | • | | Level 3—significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of investments) |
The fair value of debt instruments, such as bonds, and over-the-counter derivatives is generally based on market price quotations, recently executed market transactions (where observable) or industry recognized modeling techniques and are generally classified as Level 2. Pricing vendor inputs to Level 2 valuations may include quoted prices for similar investments in active markets, interest rate curves, coupon rates, currency rates, yield curves, option adjusted spreads, default rates, credit spreads and other unique security features in order to estimate the relevant cash flows which are then discounted to calculate fair values. If these inputs are unobservable and significant to the fair value, these investments will be classified as Level 3.
Where readily available market prices or relevant bid prices are not available for certain equity investments, such investments may be valued based on similar publicly traded investments, movements in relevant indices since last available prices or based upon underlying company fundamentals and comparable company data (such as multiples to earnings or other multiples to equity). Where an investment is valued using an observable input, such as another publicly traded security, the investment will be classified as Level 2. If management determines that an adjustment is appropriate based on restrictions on resale, illiquidity or uncertainty, and such adjustment is a significant component of the valuation, the investment will be classified as Level 3. An investment will also be classified as Level 3 where management uses company fundamentals and other significant inputs to determine the valuation.
Options are valued using market-based inputs to models, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency, where such inputs and models are available. Alternatively, the values may be obtained through unobservable management determined inputs and/or management’s proprietary models. Where models are used, the selection of a particular model to value an option depends upon the contractual terms of, and specific risks inherent in, the option as well as the availability of pricing information in the market. Valuation models require a variety of inputs, including contractual terms, market prices, measures of volatility and correlations of such inputs. Exchange traded options generally will be classified as Level 2. For options that do not trade on an exchange but trade in liquid markets, inputs can generally be verified and model selection does not involve significant management judgment. Options are classified within Level 2 on the fair value hierarchy when all of the significant inputs can be corroborated to market evidence. Otherwise such instruments are classified as Level 3.
Other fixed income investments, including non-U.S. government and corporate debt, are generally valued using quoted market prices, if available, which are typically impacted by current interest rates, maturity dates and any perceived credit risk
15
| | |
| BALANCED HEDGED ALLOCATION PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
of the issuer. Additionally, in the absence of quoted market prices, these inputs are used by pricing vendors to derive a valuation based upon industry or proprietary models which incorporate issuer specific data with relevant yield/spread comparisons with more widely quoted bonds with similar key characteristics. Those investments for which there are observable inputs are classified as Level 2. Where the inputs are not observable, the investments are classified as Level 3.
The following table summarizes the valuation of the Portfolio’s investments by the above fair value hierarchy levels as of December 31, 2023:
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Assets: | |
Investment Companies | | $ | 150,997,363 | | | $ | –0 | – | | $ | –0 | – | | $ | 150,997,363 | |
Inflation-Linked Securities | | | –0 | – | | | 4,766,149 | | | | –0 | – | | | 4,766,149 | |
Purchased Options—Calls | | | –0 | – | | | 3,955,465 | | | | –0 | – | | | 3,955,465 | |
Purchased Options—Puts | | | –0 | – | | | 3,172,815 | | | | –0 | – | | | 3,172,815 | |
Corporates—Investment Grade | | | –0 | – | | | 195,495 | | | | –0 | – | | | 195,495 | |
Common Stocks | | | –0 | – | | | –0 | – | | | 0 | (a) | | | –0 | – |
Short-Term Investments | | | 10,352,282 | | | | –0 | – | | | –0 | – | | | 10,352,282 | |
Investments of Cash Collateral for Securities Loaned in Affiliated Money Market Fund | | | 6,202,225 | | | | –0 | – | | | –0 | – | | | 6,202,225 | |
| | | | | | | | | | | | | | | | |
Total Investments in Securities | | | 167,551,870 | | | | 12,089,924 | | | | 0 | (a) | | | 179,641,794 | |
Other Financial Instruments(b): | | | | | | | | | | | | | | | | |
Assets: | |
Futures | | | 3,372,625 | | | | –0 | – | | | –0 | – | | | 3,372,625 | (c) |
| | | | | | | | | | | | | | | | |
Total | | $ | 170,924,495 | | | $ | 12,089,924 | | | $ | 0 | (a) | | $ | 183,014,419 | |
| | | | | | | | | | | | | | | | |
| (a) | | The Portfolio held securities with zero market value at period end. |
| (b) | | Other financial instruments include reverse repurchase agreements and derivative instruments, such as futures, forwards and swaps. Derivative instruments are valued at the unrealized appreciation (depreciation) on the instrument. Other financial instruments may also include swaps with upfront premiums, written options and written swaptions which are valued at market value. |
| (c) | | Only variation margin receivable (payable) at period end is reported within the statement of assets and liabilities. This amount reflects cumulative unrealized appreciation (depreciation) on futures and centrally cleared swaps as reported in the portfolio of investments. Where applicable, centrally cleared swaps with upfront premiums are presented here at market value. |
3. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under forward currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and ask 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, 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 foreign currency denominated assets and liabilities.
4. 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. The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned.
16
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| |
| | | AB Variable Products Series Fund |
In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, management has analyzed the Portfolio’s tax positions taken or expected to be taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Portfolio’s financial statements.
5. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Portfolio is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the date the securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. Non-cash dividends, if any, are recorded on the ex-dividend date at the fair value of the securities received. The Portfolio amortizes premiums and accretes discounts as adjustments to interest income. The Portfolio accounts for distributions received from REIT investments or from regulated investment companies as dividend income, realized gain, or return of capital based on information provided by the REIT or the investment company.
6. Class Allocations
All income earned and expenses incurred by the Portfolio 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 for class specific expenses which are allocated to the respective class. Expenses of the Fund are charged proportionately to each portfolio or based on other appropriate methods. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets.
7. Dividends and Distributions
Dividends and distributions to shareholders, if any, 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 U.S. GAAP. 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 the investment advisory agreement, the Portfolio pays the Adviser an advisory fee at an annual rate of .45% of the first $2.5 billion, .425% of the next $2.5 billion and .40% in excess of $5 billion, of the Portfolio’s average daily net assets. The fee is accrued daily and paid monthly. Prior to May 2, 2022, the Portfolio paid the Adviser an advisory fee at an 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 Portfolio’s average daily net assets. The Adviser has agreed to waive its fees and bear certain expenses to the extent necessary to limit total operating expenses on an annual basis (the “Expense Caps”) to .75% and 1.00% of daily average net assets for Class A and Class B shares, respectively. For the year ended December 31, 2023, there was no such reimbursement. This fee waiver and/or expense reimbursement agreement extends through May 1, 2024 and then may be extended by the Adviser for additional one-year terms.
Pursuant to the investment advisory agreement, the Portfolio may reimburse the Adviser for certain legal and accounting services provided to the Portfolio by the Adviser. For the year ended December 31, 2023, the reimbursement for such services amounted to $96,512.
The Portfolio compensates AllianceBernstein Investor Services, Inc. (“ABIS”), 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 retained by ABIS amounted to $1,800 for the year ended December 31, 2023.
The Portfolio may invest in AB Government Money Market Portfolio (the “Government Money Market Portfolio”) which has a contractual annual advisory fee rate of .20% of the portfolio’s average daily net assets and bears its own expenses. The Adviser had contractually agreed to waive .10% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .10%) until August 31, 2023. Effective September 1, 2023, the Adviser has contractually agreed to waive .05% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .15%) until August 31, 2024. In connection with the investment by the Portfolio in Government Money Market Portfolio, the Adviser has contractually agreed to waive its advisory fee from the Portfolio in an amount equal to the Portfolio’s pro rata share of the effective advisory fee of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. For the year ended December 31, 2023, such waiver amounted to $9,983.
17
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| BALANCED HEDGED ALLOCATION PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
A summary of the Portfolio’s transactions in AB mutual funds for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | |
Portfolio | | Market Value
12/31/22
(000) | | | Purchases
at Cost
(000) | | | Sales
Proceeds
(000) | | | Market Value
12/31/23
(000) | | | Dividend
Income
(000) | |
Government Money Market Portfolio | | $ | 7,692 | | | $ | 51,889 | | | $ | 49,228 | | | $ | 10,353 | | | $ | 430 | |
Government Money Market Portfolio* | | | 1,978 | | | | 308,531 | | | | 304,307 | | | | 6,202 | | | | 12 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | $ | 16,555 | | | $ | 442 | |
| | | | | | | | | | | | | | | | | | | | |
| * | | Investments of cash collateral for securities lending transactions (see Note E). |
During the year ended December 31, 2022, the Adviser reimbursed the Portfolio $2,636 for trading losses incurred due to a trade entry error.
NOTE C: Distribution Plan
The Portfolio has adopted a Distribution Plan (the “Plan”) for Class B shares pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Portfolio pays distribution and servicing fees to AllianceBernstein Investments, Inc. (the “Distributor”), 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 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 or 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 year ended December 31, 2023 were as follows:
| | | | | | | | |
| | | Purchases | | | Sales | |
Investment securities (excluding U.S. government securities) | | $ | 7,018,994 | | | $ | 28,938,893 | |
U.S. government securities | | | –0 | – | | | –0 | – |
The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation are as follows:
| | | | |
Cost | | $ | 175,609,947 | |
| | | | |
Gross unrealized appreciation | | $ | 12,737,265 | |
Gross unrealized depreciation | | | (8,705,418 | ) |
| | | | |
Net unrealized appreciation | | $ | 4,031,847 | |
| | | | |
1. Derivative Financial Instruments
The Portfolio may use derivatives in an effort to earn income and enhance returns, to replace more traditional direct investments, to obtain exposure to otherwise inaccessible markets (collectively, “investment purposes”), or to hedge or adjust the risk profile of its portfolio.
The principal types of derivatives utilized by the Portfolio, as well as the methods in which they may be used are:
The Portfolio may buy or sell futures for investment purposes or for the purpose of hedging its portfolio against adverse effects of potential movements in the market. The Portfolio bears the market risk that arises from changes in
18
| | |
| |
| | | AB Variable Products Series Fund |
the value of these instruments and the imperfect correlation between movements in the price of the futures and movements in the price of the assets, reference rates or indices which they are designed to track. Among other things, the Portfolio may purchase or sell futures for foreign currencies or options thereon for non-hedging purposes as a means of making direct investment in foreign currencies, as described below under “Currency Transactions”.
At the time the Portfolio enters into futures, the Portfolio deposits and maintains as collateral an initial margin with the broker, as required by the exchange on which the transaction is effected. Such amount is shown as cash collateral due from broker on the statement of assets and liabilities. 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. The credit/counterparty risk for exchange-traded futures is generally less than privately negotiated futures, since the clearinghouse, which is the issuer or counterparty to each exchange-traded future, has robust risk mitigation standards, including the requirement to provide initial and variation margin. 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.
Use of long futures subjects the Portfolio to risk of loss in excess of the amounts shown on the statement of assets and liabilities, up to the notional value of the futures. Use of short futures subjects the Portfolio to unlimited risk of loss. Under some circumstances, futures exchanges may establish daily limits on the amount that the price of futures can vary from the previous day’s settlement price, which could effectively prevent liquidation of unfavorable positions.
During the year ended December 31, 2023, the Portfolio held futures for hedging and non-hedging purposes.
For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign securities, including government securities, and foreign currencies that are traded on U.S. and foreign securities exchanges and over-the-counter markets. Among other things, the Portfolio may use options transactions for non-hedging purposes as a means of making direct investments in foreign currencies, as described below under “Currency Transactions” and may use options strategies involving the purchase and/or writing of various combinations of call and/or put options, for hedging and investment purposes.
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 the premium and change in market value should the counterparty not perform under the contract. If a put or call purchased option by the Portfolio were permitted to expire without being sold or exercised, its premium would represent a loss to the Portfolio. Put and call purchased options 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 written option. The Portfolio’s maximum payment for written put options equates to the number of shares multiplied by the strike price. In certain circumstances maximum payout amounts may be partially offset by recovery values of the respective referenced assets and upfront premium received upon entering into the contract. Premiums received from written options which 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. 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 the written option by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value.
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| | |
| BALANCED HEDGED ALLOCATION PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
During the year ended December 31, 2023, the Portfolio held purchased options for hedging and non-hedging purposes.
During the year ended December 31, 2023, the Portfolio had entered into the following derivatives:
| | | | | | | | | | | | |
| | | Asset Derivatives | | | Liability Derivatives | |
Derivative Type | | Statement of
Assets and Liabilities Location | | Fair Value | | | Statement of
Assets and Liabilities Location | | Fair Value | |
Interest rate contracts | | Receivable for variation margin on futures | | $ | 2,403,689 | * | | | | | | |
| | | | |
Equity contracts | | Receivable for variation margin on futures | | | 968,936 | * | | | | | | |
| | | | |
Equity contracts | | Investments in securities, at value | | | 7,128,280 | | | | | | | |
| | | | | | | | | | | | |
Total | | | | $ | 10,500,905 | | | | | | | |
| | | | | | | | | | | | |
| * | | Only variation margin receivable/payable at period end is reported within the statement of assets and liabilities. This amount reflects cumulative unrealized appreciation (depreciation) on futures and centrally cleared swaps as reported in the portfolio of investments. |
| | | | | | | | | | |
Derivative Type | | Location of Gain or (Loss) on Derivatives
Within Statement of Operations | | Realized Gain or
(Loss) on
Derivatives | | | Change in Unrealized
Appreciation or
(Depreciation) | |
Interest rate contracts | | Net realized gain (loss) on futures; Net change in unrealized appreciation (depreciation) of futures | | $ | (3,923,823 | ) | | $ | 2,869,782 | |
| | | |
Equity contracts | | Net realized gain (loss) on futures; Net change in unrealized appreciation (depreciation) of futures | | | 2,426,311 | | | | 1,697,803 | |
| | | |
Equity contracts | | Net realized gain (loss) on investment transactions; Net change in unrealized appreciation (depreciation) of investments | | | (4,498,171 | ) | | | 926,466 | |
| | | | | | | | | | |
Total | | | | $ | (5,995,683 | ) | | $ | 5,494,051 | |
| | | | | | | | | | |
The following table represents the average monthly volume of the Portfolio’s derivative transactions during the year ended December 31, 2023:
| | | | |
Futures: | | | | |
Average notional amount of buy contracts | | $ | 92,668,322 | |
Average notional amount of sale contracts | | $ | 11,027,693 | (a) |
Purchased Options: | | | | |
Average notional amount | | $ | 72,151,538 | |
| (a) | | Positions were open for one month during the year. |
2. Currency Transactions
The Portfolio may invest in non-U.S. Dollar-denominated securities on a currency hedged or unhedged basis. The Portfolio may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and other options. The Portfolio may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Portfolio and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Portfolio may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).
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| | | AB Variable Products Series Fund |
NOTE E: Securities Lending
The Portfolio may enter into securities lending transactions. Under the Portfolio’s securities lending program, all loans of securities will be collateralized continually by cash collateral and/or non-cash collateral. Non-cash collateral will include only securities issued or guaranteed by the U.S. government or its agencies or instrumentalities. If the Portfolio cannot sell or repledge any non-cash collateral, such collateral will not be reflected in the portfolio of investments. If a loan is collateralized by cash, the Portfolio will be compensated for the loan from a portion of the net return from the income earned on cash collateral after a rebate is paid to the borrower (in some cases, this rebate may be a “negative rebate” or fee paid by the borrower to the Portfolio in connection with the loan), and payments are made for fees of the securities lending agent and for certain other administrative expenses. If the Portfolio receives non-cash collateral, the Portfolio will receive a fee from the borrower generally equal to a negotiated percentage of the market value of the loaned securities. The Portfolio will have the right to call a loan and obtain the securities loaned at any time on notice to the borrower within the normal and customary settlement time for the securities. While the securities are on loan, the borrower is obligated to pay the Portfolio amounts equal to any dividend income or other distributions from the securities; however, these distributions will not be afforded the same preferential tax treatment as qualified dividends. The Portfolio will not be able to exercise voting rights with respect to any securities during the existence of a loan, but will have the right to regain ownership of loaned securities in order to exercise voting or other ownership rights. Collateral received and securities loaned are marked to market daily to ensure that the securities loaned are secured by collateral. The lending agent currently invests the cash collateral received in Government Money Market Portfolio, an eligible money market vehicle, in accordance with the investment restrictions of the Portfolio, and as approved by the Board. The collateral received on securities loaned is recorded as an asset as well as a corresponding liability in the statement of assets and liabilities. The collateral will be adjusted the next business day to maintain the required collateral amount. The amounts of securities lending income from the borrowers and Government Money Market Portfolio are reflected in the statement of operations. When the Portfolio earns net securities lending income from Government Money Market Portfolio, the income is inclusive of a rebate expense paid to the borrower. In connection with the cash collateral investment by the Portfolio in Government Money Market Portfolio, the Adviser has agreed to waive a portion of the Portfolio’s share of the advisory fees of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. When the Portfolio lends securities, its investment performance will continue to reflect changes in the value of the securities loaned. A principal risk of lending portfolio securities is that the borrower may fail to return the loaned securities upon termination of the loan and that the collateral will not be sufficient to replace the loaned securities. The lending agent has agreed to indemnify the Portfolio in the case of default of any securities borrower.
A summary of the Portfolio’s transactions surrounding securities lending for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Government Money Market
Portfolio | |
Market Value of
Securities on Loan* | | | Cash Collateral* | | | Market Value of
Non-Cash
Collateral* | | | Income from
Borrowers | | | Income Earned | | | Advisory Fee
Waived | |
| $ | 24,942,897 | | | $ | 6,202,225 | | | $ | 19,388,944 | | | $ | 25,581 | | | $ | 11,848 | | | $ | 2,828 | |
| * | | As of December 31, 2023. |
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| BALANCED HEDGED ALLOCATION PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
NOTE F: Capital Stock
Each class consists of 500,000,000 authorized shares. Transactions in capital shares for each class were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | SHARES | | | | | | AMOUNT | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | | | | | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
Class A | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 15,409 | | | | 124,450 | | | | | | | $ | 134,466 | | | $ | 1,307,388 | |
Shares issued in reinvestment of dividends and distributions | | | 117,766 | | | | 264,675 | | | | | | | | 978,634 | | | | 2,419,127 | |
Shares redeemed | | | (289,545 | ) | | | (289,813 | ) | | | | | | | (2,475,377 | ) | | | (2,886,339 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (156,370 | ) | | | 99,312 | | | | | | | $ | (1,362,277 | ) | | $ | 840,176 | |
| | | | | | | | | | | | | | | | | | | | |
Class B | |
Shares sold | | | 503,184 | | | | 888,386 | | | | | | | $ | 4,219,796 | | | $ | 8,974,615 | |
Shares issued on reinvestment of dividends and distributions | | | 1,163,245 | | | | 2,684,961 | | | | | | | | 9,515,346 | | | | 24,164,652 | |
Shares redeemed | | | (3,256,453 | ) | | | (3,131,166 | ) | | | | | | | (27,133,569 | ) | | | (30,340,540 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (1,590,024 | ) | | | 442,181 | | | | | | | $ | (13,398,427 | ) | | $ | 2,798,727 | |
| | | | | | | | | | | | | | | | | | | | |
At December 31, 2023, certain shareholders of the Portfolio owned 69% in aggregate of the Portfolio’s outstanding shares. Significant transactions by such shareholders, if any, may impact the Portfolio’s performance.
NOTE G: Risks Involved in Investing in the Portfolio
Market Risk—The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Allocation Risk—The allocation of investments among the different investment styles, such as growth or value, equity or debt securities, or U.S. or non-U.S. securities may have a more significant effect on the Portfolio’s net asset value, or NAV, when one of these investment strategies is performing more poorly than others.
ETF Risk—ETFs are investment companies and are subject to market and selection risk. When the Portfolio invests in an ETF, the Portfolio bears its share of the ETF’s expenses and runs the risk that the ETF may not achieve its investment objective.
Foreign (Non-U.S.) Risk—Investments in securities of non-U.S. issuers may involve more risk than those of U.S. issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
Emerging-Market Risk—Investments in emerging market countries may have more risk because the markets are less developed and less liquid, and because these investments may be subject to increased economic, political, regulatory or other uncertainties.
Currency Risk—Fluctuations in currency exchange rates may negatively affect the value of the Portfolio’s investments or reduce the Portfolio’s returns.
Interest-Rate Risk—Changes in interest rates will affect the value of investments in fixed-income securities. When interest rates rise, the value of existing investments in fixed-income securities tends to fall and this decrease in value may not be offset by higher income from new investments. Interest-rate risk is generally greater for fixed-income securities with longer maturities or durations. The Portfolio may be subject to a greater risk of rising interest rates than would normally be the case due to the recent end of a period of historically low rates and the effects of potential central bank monetary policy, and government fiscal policy, initiatives and resulting market reactions to those initiatives.
22
| | |
| |
| | | AB Variable Products Series Fund |
Credit Risk—An issuer or guarantor of a fixed-income security, or the counterparty to a derivatives or other contract, may be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. The issuer or guarantor may default, causing a loss of the full principal amount of a security and accrued interest. The degree of risk for a particular security may be reflected in its credit rating. There is the possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security.
Below Investment-Grade Securities Risk—Investments in fixed-income securities with lower ratings (“junk bonds”) tend to have a higher probability that an issuer will default or fail to meet its payment obligations. These securities may be subject to greater price volatility due to such factors as specific corporate developments, interest rate sensitivity and negative perceptions of the junk bond market generally, and may be more difficult to trade than other types of securities.
Capitalization Risk—Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small- and mid-capitalization companies may have additional risks because these companies have limited product lines, markets or financial resources.
Derivatives Risk—Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
Real Assets Risk—The Portfolio’s investments in securities linked to real assets involve significant risks, including financial, operating, and competitive risks. Investments in securities linked to real assets expose the Portfolio to adverse macroeconomic conditions, such as a rise in interest rates or a downturn in the economy in which the asset is located. Changes in inflation rates or in the market’s inflation expectations may adversely affect the market value of inflation-sensitive equities. The Portfolio’s investments in real estate securities have many of the same risks as direct ownership of real estate, including the risk that the value of real estate could decline due to a variety of factors that affect the real estate market generally. Investments in real estate investment trusts, or REITs, may have additional risks. REITs are dependent on the capability of their managers, may have limited diversification, and could be significantly affected by changes in tax laws. Some REITs may utilize leverage, which increases investment risk and may potentially increase the Portfolio’s losses.
LIBOR Replacement Risk—The Portfolio may be exposed to debt securities, derivatives or other financial instruments that recently transitioned from the London Interbank Offered Rate, or “LIBOR,” as a “benchmark” or “reference rate” for various interest rate calculations. LIBOR’s administrator, ICE Benchmark Administration, ceased publishing most LIBOR settings (including some U.S. LIBOR settings) by the end of 2021 and the remaining (and most widely used) U.S. Dollar LIBOR settings after June 30, 2023. The United Kingdom Financial Conduct Authority, which regulates LIBOR, will permit the use of synthetic U.S. Dollar LIBOR rates for non-U.S. contracts through September 30, 2024, but any such rates would be considered non-representative of the underlying market. Since 2018 the Federal Reserve Bank of New York has published the Secured Overnight Financing Rate (referred to as SOFR), which is intended to replace U.S. Dollar LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities in the repurchase agreement (repo) market. There is no assurance that the composition or characteristics of SOFR or any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that the market for SOFR-linked financial instruments will have the same volume or liquidity as did the market for LIBOR-linked financial instruments prior to LIBOR’s discontinuance or unavailability. Neither the long-term effects of the LIBOR transition process nor its ultimate success can yet be known.
Indemnification Risk—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. Therefore, the Portfolio has not accrued any liability in connection with these indemnification provisions.
Management Risk—The Portfolio is subject to management risk because it is an actively-managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
23
| | |
| BALANCED HEDGED ALLOCATION PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB 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 $325 million revolving credit facility (the “Facility”) intended to provide short-term financing related to redemptions and other short term liquidity requirements, subject to certain restrictions. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Portfolio did not utilize the Facility during the year ended December 31, 2023.
NOTE I: Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended December 31, 2023 and December 31, 2022 were as follows:
| | | | | | | | |
| | | 2023 | | | 2022 | |
Distributions paid from: | | | | | | | | |
Ordinary income | | $
| 1,598,559
|
| | $ | 8,298,483 | |
Net long-term capital gains | | | 8,895,421 | | | | 18,285,298 | |
| | | | | | | | |
Total taxable distributions paid | | $ | 10,493,980 | | | $ | 26,583,781 | |
| | | | | | | | |
As of December 31, 2023, the components of accumulated earnings (deficit) on a tax basis were as follows:
| | | | |
Undistributed ordinary income | | $ | 4,667,559 | |
Undistributed capital gains | | | 1,628,849 | |
Other losses | | | (4,831,773 | )(a) |
Unrealized appreciation (depreciation) | | | 4,033,747 | (b) |
| | | | |
Total accumulated earnings (deficit) | | $ | 5,498,382 | |
| | | | |
| (a) | | As of December 31, 2023, the cumulative deferred loss on straddles was $4,831,773. |
| (b) | | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable primarily to the recognition for tax purposes of unrealized gains/losses on certain derivative instruments. |
For tax purposes, net realized capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses for an indefinite period, and such losses will retain their character as either short-term or long-term capital losses. As of December 31, 2023, the Portfolio did not have any capital loss carryforwards.
During the current fiscal year, there were no permanent differences that resulted in adjustments to distributable earnings or additional paid-in capital.
NOTE J: Recent Accounting Pronouncements
In December 2022, the Financial Accounting Standards Board issued an Accounting Standards Update, ASU 2022-06, “Reference Rate Reform (Topic 848)—Deferral of the Sunset Date of Topic 848”. ASU 2022-06 is an amendment to ASU 2020-04, which provided optional guidance to ease the potential accounting burden due to the discontinuation of the LIBOR and other interbank-offered based reference rates and which was effective as of March 12, 2020 through December 31, 2022. ASU 2022-06 extends the effective period through December 31, 2024. Management is currently evaluating the impact, if any, of applying ASU 2022-06.
NOTE K: Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Portfolio’s financial statements through this date.
24
| | |
|
| BALANCED HEDGED ALLOCATION PORTFOLIO |
| |
| FINANCIAL HIGHLIGHTS | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS A | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | | $8.28 | | | | $11.75 | | | | $10.61 | | | | $10.24 | | | | $10.10 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment income(a)(b) | | | .16 | | | | .15 | | | | .16 | | | | .13 | | | | .19 | |
Net realized and unrealized gain (loss) on investment and foreign currency transactions | | | .89 | | | | (2.25 | ) | | | 1.29 | | | | .78 | | | | 1.58 | |
Contributions from Affiliates | | | –0 | – | | | .00 | (c) | | | .00 | (c) | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 1.05 | | | | (2.10 | ) | | | 1.45 | | | | .91 | | | | 1.77 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Dividends and Distributions | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (.10 | ) | | | (.35 | ) | | | (.06 | ) | | | (.24 | ) | | | (.29 | ) |
Distributions from net realized gain on investment transactions | | | (.45 | ) | | | (1.02 | ) | | | (.25 | ) | | | (.30 | ) | | | (1.34 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (.55 | ) | | | (1.37 | ) | | | (.31 | ) | | | (.54 | ) | | | (1.63 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $8.78 | | | | $8.28 | | | | $11.75 | | | | $10.61 | | | | $10.24 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset value(d)* | | | 13.04 | % | | | (18.99 | )% | | | 13.73 | % | | | 9.41 | % | | | 18.53 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | | $15,843 | | | | $16,241 | | | | $21,879 | | | | $21,252 | | | | $24,347 | |
Ratio to average net assets of: | | | | | | | | | | | | | | | | | | | | |
Expenses, net of waivers/reimbursements(e)(f)‡ | | | .69 | % | | | .63 | % | | | .56 | % | | | .55 | % | | | .55 | % |
Expenses, before waivers/reimbursements(e)(f)‡ | | | .70 | % | | | .71 | % | | | .75 | % | | | .77 | % | | | .75 | % |
Net investment income(b) | | | 1.92 | % | | | 1.50 | % | | | 1.43 | % | | | 1.38 | % | | | 1.81 | % |
Portfolio turnover rate | | | 4 | % | | | 135 | %** | | | 63 | %** | | | 66 | %** | | | 63 | %** |
| | | | | | | | | | | | | | | | | | | | |
‡ Expense ratios exclude the estimated acquired fund fees of the affiliated/unaffiliated underlying | |
portfolios | | | .04 | % | | | .09 | % | | | .20 | % | | | .22 | % | | | .22 | % |
See footnote summary on page 27.
25
| | |
| BALANCED HEDGED ALLOCATION PORTFOLIO |
| FINANCIAL HIGHLIGHTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS B | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | | $8.15 | | | | $11.58 | | | | $10.47 | | | | $10.10 | | | | $9.98 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment income(a)(b) | | | .14 | | | | .12 | | | | .13 | | | | .11 | | | | .16 | |
Net realized and unrealized gain (loss) on investment and foreign currency transactions | | | .87 | | | | (2.22 | ) | | | 1.26 | | | | .78 | | | | 1.56 | |
Contributions from Affiliates | | | –0 | – | | | .00 | (c) | | | .00 | (c) | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 1.01 | | | | (2.10 | ) | | | 1.39 | | | | .89 | | | | 1.72 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Dividends and Distributions | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (.08 | ) | | | (.31 | ) | | | (.03 | ) | | | (.22 | ) | | | (.26 | ) |
Distributions from net realized gain on investment transactions | | | (.45 | ) | | | (1.02 | ) | | | (.25 | ) | | | (.30 | ) | | | (1.34 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (.53 | ) | | | (1.33 | ) | | | (.28 | ) | | | (.52 | ) | | | (1.60 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $8.63 | | | | $8.15 | | | | $11.58 | | | | $10.47 | | | | $10.10 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset value(d)* | | | 12.66 | % | | | (19.17 | )% | | | 13.36 | % | | | 9.25 | % | | | 18.20 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | | $156,998 | | | | $161,149 | | | | $223,893 | | | | $222,427 | | | | $231,071 | |
Ratio to average net assets of: | | | | | | | | | | | | | | | | | | | | |
Expenses, net of waivers/reimbursements(e)(f)‡ | | | .94 | % | | | .88 | % | | | .81 | % | | | .80 | % | | | .80 | % |
Expenses, before waivers/reimbursements(e)(f)‡ | | | .95 | % | | | .96 | % | | | 1.00 | % | | | 1.02 | % | | | 1.00 | % |
Net investment income(b) | | | 1.66 | % | | | 1.24 | % | | | 1.20 | % | | | 1.14 | % | | | 1.57 | % |
Portfolio turnover rate | | | 4 | % | | | 135 | %** | | | 63 | %** | | | 66 | %** | | | 63 | %** |
| | | | | | | | | | | | | | | | | | | | |
‡ Expense ratios exclude the estimated acquired fund fees of the affiliated/unaffiliated underlying | |
Portfolios | | | .04 | % | | | .09 | % | | | .20 | % | | | .22 | % | | | .22 | % |
See footnote summary on page 27.
26
| | |
| |
| | | AB Variable Products Series Fund |
| (a) | | Based on average shares outstanding. |
| (b) | | Net of expenses waived/reimbursed by the Adviser. |
| (c) | | Amount is less than $.005. |
| (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 (i) insurance company’s separate account related expense charges and (ii) the deductions 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) | | In connection with the Portfolio’s investments in affiliated underlying portfolios, the Portfolio incurs no direct expenses, but bears proportionate shares of the fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated underlying portfolios. The Adviser has contractually agreed to waive its fees from the Portfolio in an amount equal to the Portfolio’s pro rata share of certain acquired fund fees and expenses, and for the years ended December 31, 2023, December 31, 2022, December 31, 2021, December 31, 2020 and December 31, 2019, such waiver amounted to .01%, .08%, .19%, .20% and .20%, respectively. |
| (f) | | The expense ratios presented below exclude interest/bank overdraft expense: |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Class A | | | | | | | | | | | | | | | | | | | | |
Net of waivers/reimbursements | | | .69 | % | | | .63 | % | | | .56 | % | | | .55 | % | | | .54 | % |
Before waivers/reimbursements | | | .70 | % | | | .71 | % | | | .75 | % | | | .77 | % | | | .75 | % |
Class B | | | | | | | | | | | | | | | | | | | | |
Net of waivers/reimbursements | | | .94 | % | | | .88 | % | | | .81 | % | | | .80 | % | | | .79 | % |
Before waivers/reimbursements | | | .95 | % | | | .96 | % | | | 1.00 | % | | | 1.02 | % | | | 1.00 | % |
| * | | Includes the impact of proceeds received and credited to the Portfolio resulting from class action settlements, which enhanced the Portfolio’s performance for the year ended December 31, 2022 by .02%. |
| ** | | The Portfolio accounts for dollar roll transactions as purchases and sales. |
See notes to financial statements.
27
| | |
| | |
| REPORT OF INDEPENDENT REGISTERED |
| |
| PUBLIC ACCOUNTING FIRM | | AB Variable Products Series Fund |
To the Shareholders and the Board of Directors of AB Balanced Hedged Allocation Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of AB Balanced Hedged Allocation Portfolio (the “Portfolio”) (one of the series constituting AB Variable Products Series Fund, Inc. (the “Fund”)), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Portfolio (one of the series constituting AB Variable Products Series Fund, Inc.) at December 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Portfolio’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers or others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the AB investment companies since 1968.
New York, New York
February 14, 2024
28
| | |
| | |
| | |
| |
| 2023 TAX INFORMATION (unaudited) | | AB Variable Products Series Fund |
For Federal income tax purposes, the following information is furnished with respect to the distributions paid by the Portfolio during the taxable year ended December 31, 2023. For corporate shareholders, 3.63% of dividends paid qualify for the dividends received deduction. The Portfolio designates $8,895,421 of dividends paid as long-term capital gain dividends.
29
| | |
| | | |
| BALANCED HEDGED ALLOCATION | | |
| |
| PORTFOLIO | | AB Variable Products Series Fund |
| | |
| BOARD OF DIRECTORS | | |
Garry L. Moody(1), Chairman Jorge A. Bermudez(1) Michael J. Downey(1) Onur Erzan, President and
Chief Executive Officer | | Nancy P. Jacklin(1) Jeanette W. Loeb(1) Carol C. McMullen(1) Marshall C. Turner, Jr.(1) Emilie D. Wrapp, Advisory Board Member |
| | |
| OFFICERS | | |
Rohith Eggidi(2), Vice President Daniel J. Loewy(2), Vice President Marshall Greenbaum(2), Vice President Nancy E. Hay, Secretary Michael B. Reyes, Senior Vice President | | Stephen M. Woetzel, Treasurer and
Chief Financial Officer Phyllis J. Clarke, Controller Jennifer Friedland, Chief Compliance Officer |
| | |
CUSTODIANAND ACCOUNTING AGENT State Street Bank and Trust Company One Congress Street Suite 1 Boston, MA 02114 | | LEGAL COUNSEL Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 |
| | |
DISTRIBUTOR AllianceBernstein Investments, Inc. 501 Commerce Street Nashville, TN 37203 | | TRANSFER AGENT AllianceBernstein Investor Services, Inc. P.O. Box 786003 San Antonio, TX 78278 Toll-Free (800) 221-5672 |
|
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP One Manhattan West New York, NY 10001 | | |
| (1) | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
| (2) | The day-to-day management of, and investment decisions for, the Portfolio’s portfolio are made by the Adviser’s Multi-Asset Solutions Team. Messrs. Eggidi, Loewy and Greenbaum are the investment professionals with the most significant responsibility for the day-to-day management of the Portfolio’s portfolio. |
30
| | |
| | |
| BALANCED HEDGED ALLOCATION PORTFOLIO |
| |
| MANAGEMENT OF THE FUND | | AB Variable Products Series Fund |
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund’s Directors and Advisory Board member is set forth below.
| | | | | | | | |
NAME, ADDRESS*, AGE AND (YEAR FIRST ELECTED)** | | PRINCIPAL
OCCUPATION(S), DURING PAST FIVE YEARS AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
| | | | | | | | |
| INTERESTED DIRECTOR | | | | | | |
| | | | | | | | |
Onur Erzan,# 1345 Avenue of the Americas New York, NY 10105 48 (2021) | | Senior Vice President of the Adviser**, Head of Global Client Group and Head of Private Wealth. He oversees AB’s entire private wealth management business and third-party institutional and retail franchise, where he is responsible for all client services, sales and marketing, as well as product strategy, management and development worldwide. Director, President and Chief Executive Officer of the AB Mutual Funds as of April 1, 2021. He is also a member of the Equitable Holdings Management Committee. Prior to joining the firm in January 2021, he spent 19 years with McKinsey (management consulting firm), most recently as a senior partner and co-leader of its Wealth & Asset Management practice. In addition, he co-led McKinsey’s Banking & Securities Solutions (a portfolio of data, analytics, and digital assets and capabilities) globally. | | | 82 | | | None |
| | | | | | | | |
| INDEPENDENT DIRECTORS | | | | | | |
| | | | | | | | |
Garry L. Moody## Chairman of the Board 71 (2008) | | Private Investor since prior to 2019. Formerly, Partner, Deloitte & Touche LLP (1995-2008) where he held a number of senior positions, including Vice Chairman, and U.S. and Global Investment Management Practice Managing Partner; President, Fidelity Accounting and Custody Services Company (1993-1995), where he was responsible for accounting, pricing, custody and reporting for the Fidelity mutual funds; and Partner, Ernst & Young LLP (1975-1993), where he served as the National Director of Mutual Fund Tax Services and Managing Partner of its Chicago Office Tax department. He served as a member of the Investment Company Institute’s Board of Governors and the Independent Directors Council’s Governing Council from October 2019 through September 2023, where he also served as Chairman of the Governance Committee from October 2021 through September 2023. He is Chairman of the AB Funds and Chairman of the Independent Directors Committees since January 2023; he has served as a director or trustee since 2008, and served as Chairman of the Audit Committee of such funds from 2008 to February 2023. | | | 82 | | | None |
| | | | | | | | |
Jorge A. Bermudez,## 72 (2020) | | Private Investor since prior to 2019. Formerly, Chief Risk Officer of Citigroup, Inc., a global financial services company, from November 2007 to March 2008, Chief Executive Officer of Citigroup’s Commercial Business Group in North America and Citibank Texas from 2005 to 2007, and a variety of other executive and leadership roles at various businesses within Citigroup prior to then; Chairman (2017–2018) of the Texas A&M Foundation Board of Trustees (Trustee 2014–2021) and Chairman of the Smart Grid Center Board at Texas A&M University since 2012; director of, among others, Citibank N.A. from 2005 to 2008, the Federal Reserve Bank of Dallas, Houston Branch from 2009 to 2011, the Federal Reserve Bank of Dallas from 2011 to 2017, and the Electric Reliability Council of Texas from 2010 to 2016; and Chair of the Audit Committee of the Board of Directors of Moody’s Corporation since December 2022. He has served as director or trustee of the AB Funds since January 2020. | | | 82 | | | Moody’s Corporation since April 2011 |
31
| | |
| BALANCED HEDGED ALLOCATION PORTFOLIO |
MANAGEMENT OF THE FUND | | |
| |
(continued) | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*, AGE AND (YEAR FIRST ELECTED)** | | PRINCIPAL
OCCUPATION(S), DURING PAST FIVE YEARS AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
INDEPENDENT DIRECTORS (continued) | | | | | | |
| | | | | | | | |
Michael J. Downey,## 80 (2005) | | Private Investor since prior to 2019. Formerly, Chairman of The Asia Pacific Fund, Inc. (registered investment company) from 2002 until January 2019. From 1987 until 1993, Chairman and CEO of Prudential Mutual Fund Management, director of the Prudential mutual funds, and member of the Executive Committee of Prudential Securities, Inc. He has served as a director or trustee of the AB Funds since 2005. | | | 82 | | | None |
| | | | | | | | |
Nancy P. Jacklin,## 75 (2006) | | Private Investor since prior to 2019. Professorial Lecturer at the Johns Hopkins School of Advanced International Studies (2008–2015). U.S. Executive Director of the International Monetary Fund (which is responsible for ensuring the stability of the international monetary system), (December 2002–May 2006); Partner, Clifford Chance (1992–2002); Sector Counsel, International Banking and Finance, and Associate General Counsel, Citicorp (1985–1992); Assistant General Counsel (International), Federal Reserve Board of Governors (1982–1985); and Attorney Advisor, U.S. Department of the Treasury (1973–1982). Member of the Bar of the District of Columbia and of New York; and member of the Council on Foreign Relations. She has served as a director or trustee of the AB Funds since 2006 and served as Chair of the Governance and Nominating Committees of the AB Funds from 2014 to August 2023. | | | 82 | | | None |
| | | | | | | | |
Jeanette W. Loeb,## 71 (2020) | | Private Investor since prior to 2019. Director of New York City Center since 2005. Formerly, Chief Executive Officer of PetCareRx (e-commerce pet pharmacy) from 2002 to 2011 and 2015 to April 2023. She was a director of MidCap Financial Investment Corporation (business development company) from August 2011 to July 2023 and a director of AB Multi-Manager Alternative Fund (fund of hedge funds) from 2012 to 2018. Formerly, affiliated with Goldman Sachs Group, Inc. (financial services) from 1977 to 1994, including as a partner thereof from 1986 to 1994. She has served as director or trustee of the AB Funds since April 2020 and serves as Chair of the Governance and Nominating Committees of the AB Funds since August 2023. | | | 82 | | | None |
| | | | | | | | |
32
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*, AGE AND (YEAR FIRST ELECTED)** | | PRINCIPAL
OCCUPATION(S), DURING PAST FIVE YEARS AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
INDEPENDENT DIRECTORS (continued) | | | | | | |
| | | | | | | | |
Carol C . McMullen,## 68 (2016) | | Private Investor and a member of the Advisory Board of Butcher Box (since 2018) and serves as Advisory Board Chair as of June 2023. Formerly, Managing Director of Slalom Consulting (consulting) from 2014 until July 2023; member, Mass General Brigham (formerly, Partners Healthcare) Investment Committee (2010-2019); Director of Norfolk & Dedham Group (mutual property and casualty insurance) from 2011 until November 2016; Director of Partners Community Physicians Organization (healthcare) from 2014 until December 2016; and Managing Director of The Crossland Group (consulting) from 2012 until 2013. She has held a number of senior positions in the asset and wealth management industries, including at Eastern Bank (where her roles included President of Eastern Wealth Management), Thomson Financial (Global Head of Sales for Investment Management), and Putnam Investments (where her roles included Chief Investment Officer, Core and Growth and Head of Global Investment Research). She has served on a number of private company and non-profit boards, and as a director or trustee of the AB Funds since June 2016, and serves as Chair of the Audit Committees of such funds since February 2023. | | | 82 | | | None |
| | | | | | | | |
Marshall C. Turner, Jr.## 82 (2005) | | Private Investor since prior to 2019. He was a Director of Xilinx, Inc. (programmable logic semi-conductors and adaptable, intelligent computing) from 2007 through August 2020, and is a former director of 33 other companies and organizations. Former Chairman and CEO of Dupont Photomasks, Inc. (semi-conductor manufacturing equipment) from 2003 through 2006. He has extensive operating leadership and venture capital investing experience, including five interim or full-time CEO roles, and prior service as general partner of institutional venture capital partnerships. He also has extensive non-profit board leadership experience, and currently serves on the board of the George Lucas Educational Foundation. He has served as a director of one AB Fund since 1992, and director or trustee of all AB Funds since 2005. He has served as both Chairman of the AB Funds and Chairman of the Independent Directors Committees from 2014 through December 2022. | | | 82 | | | None |
| | | | | | | | |
| ADVISORY BOARD MEMBER | | | | | | |
Emilie D. Wrapp,# 68 (2024) | | Former Senior Vice President, Counsel, Assistant Secretary & Senior Mutual Fund Legal Advisor of the Adviser (January 2023–June 2023). Prior thereto, Senior Vice President, Assistant Secretary, Counsel, and Head of Mutual Fund & Retail Legal of the Adviser; Assistant General Counsel and Assistant Secretary of ABI since prior to 2019 until June 2023. | | | 82 | | | None |
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| BALANCED HEDGED ALLOCATION PORTFOLIO |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
| * | The address for each of the Company’s Directors and Advisory Board member is c/o AllianceBernstein L.P., Attention: Legal and Compliance Department—Mutual Fund Legal, 1345 Avenue of the Americas, New York, NY 10105. |
| ** | There is no stated term of office for the Fund’s Directors or Advisory Board member. |
| *** | The information above includes each Director’s principal occupation during the last five years and other information relating to the experience, attributes and skills relevant to each Director’s qualifications to serve as a Director, which led to the conclusion that each Director should serve as a Director for the Fund. |
| # | Mr. Erzan is an “interested person” of the Fund, as defined in the “1940 Act”, due to his position as a Senior Vice President of the Adviser. Ms. Wrapp is an “interested person” of the Fund, as defined in the 1940 Act, due to her former role with the Adviser. |
| ## | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
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Officer Information
Certain information concerning the Portfolio’s Officers is listed below.
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NAME, ADDRESS*
AND AGE | | PRINCIPAL POSITION(S)
HELD WITH FUND | | PRINCIPAL OCCUPATION
DURING PAST FIVE YEARS |
Onur Erzan 48 | | President and Chief
Executive Officer | | See biography above. |
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Rohith Eggidi 36 | | Vice President | | Vice President of the Adviser** since 2020. Prior thereto, he was associated in a substantially similar capacity to his current position as an Associate Portfolio Manager since prior to 2019 at AnchorPath Financial, LLC, an investment management firm specializing in risk management solutions which was acquired by the Adviser in 2020. |
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Daniel J. Loewy 49 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated since prior to 2019. He is also Chief Investment Officer and Head of Multi-Asset and Hedge Fund Solutions; and Chief Investment Officer for Dynamic Asset Allocation. |
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Marshall Greenbaum 55 | | Vice President | | Senior Vice President of the Adviser** since 2020. Prior thereto, principal (and founder) of AnchorPath Financial, LLC, an investment management firm specializing in risk management solutions which was acquired by the Adviser in 2020. |
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Nancy E. Hay 51 | | Secretary | | Senior Vice President and Counsel of the Adviser,** with which she has been associated since prior to 2019 and Assistant Secretary of ABI**. |
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Michael B. Reyes 47 | | Senior Vice President | | Vice President of the Adviser**, with which he has been associated since prior to 2019. |
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Stephen M. Woetzel 52 | | Treasurer and Chief
Financial Officer | | Senior Vice President of ABIS**, with which he has been associated since prior to 2019. |
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Phyllis J. Clarke 63 | | Controller | | Vice President of the ABIS**, with which she has been associated since prior to 2019. |
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Jennifer Friedland 49 | | Chief Compliance Officer | | Vice President of the Adviser** since 2020 and Mutual Fund Chief Compliance Officer (of all Funds since January 2023 and of the ETF Funds since 2022). Before joining the Adviser in 2020, she was Chief Compliance Officer at WestEnd Advisors, LLC from 2013 until 2019. |
| * | | The address for each of the Portfolio’s Officers is 1345 Avenue of the Americas, New York, NY 10105. |
| ** | | The Adviser, ABI, and ABIS are affiliates of the Fund. |
| | | The Fund’s Statement of Additional Information (“SAI”) has additional information about the Fund’s Directors and Officers and is available without charge upon request. Contact your financial representative or the Adviser at (800) 227-4618, or visit www.abfunds.com, for a free prospectus or SAI. |
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| BALANCED HEDGED ALLOCATION PORTFOLIO | | AB Variable Products Series Fund |
OPERATION AND EFFECTIVENESS OF THE PORTFOLIO’S LIQUIDITY RISK MANAGEMENT PROGRAM:
In October 2016, the Securities and Exchange Commission (“SEC”) adopted the open-end fund liquidity rule (the “Liquidity Rule”). In June 2018 the SEC adopted a requirement that funds disclose information about the operation and effectiveness of their Liquidity Risk Management Program (“LRMP”) in their reports to shareholders.
One of the requirements of the Liquidity Rule is for the Portfolio to designate an Administrator of the Portfolio’s Liquidity Risk Management Program. The Administrator of the Portfolio’s LRMP is AllianceBernstein L.P., the Portfolio’s investment adviser (the “Adviser”). The Adviser has delegated the responsibility to its Liquidity Risk Management Committee (the “Committee”).
Another requirement of the Liquidity Rule is for the Portfolio’s Board of Directors/Trustees (the “Fund Board”) to receive an annual written report from the Administrator of the LRMP, which addresses the operation of the Portfolio’s LRMP and assesses its adequacy and effectiveness. The Adviser provided the Fund Board with such annual report during the first quarter of 2024, which covered the period January 1, 2023 through December 31, 2023 (the “Program Reporting Period”).
The LRMP’s principal objectives include supporting the Portfolio’s compliance with limits on investments in illiquid assets and mitigating the risk that the Portfolio will be unable to meet its redemption obligations in a timely manner.
Pursuant to the LRMP, the Portfolio classifies the liquidity of its portfolio investments into one of the four categories defined by the SEC: Highly Liquid, Moderately Liquid, Less Liquid, and Illiquid. These classifications are reported to the SEC on Form N-PORT.
During the Program Reporting Period, the Committee reviewed whether the Portfolio’s strategy is appropriate for an open-end structure, incorporating any holdings of less liquid and illiquid assets. If the Portfolio participated in derivative transactions, the exposure from such transactions were considered in the LRMP.
The Committee also performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum (“HLIM”). The Committee also incorporated the following information when determining the Portfolio’s reasonably anticipated trading size for purposes of liquidity monitoring: historical net redemption activity, a Portfolio’s concentration in an issuer, shareholder concentration, investment performance, total net assets, and distribution channels.
The Adviser informed the Fund Board that the Committee believes the Portfolio’s LRMP is adequately designed, has been implemented as intended, and has operated effectively since its inception. No material exceptions have been noted since the implementation of the LRMP. During the Program Reporting Period, liquidity in all markets was challenged due to rising rates and economic uncertainty. However, markets also remained orderly during the Program Reporting Period. There were no liquidity events that impacted the Portfolio or its ability to timely meet redemptions during the Program Reporting Period.
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| BALANCED HEDGED ALLOCATION PORTFOLIO | | AB Variable Products Series Fund |
INFORMATION REGARDING THE REVIEW AND APPROVAL OF THE FUND’S ADVISORY AGREEMENT
The disinterested directors (the “directors”) of AB Variable Products Series Fund, Inc. (the “Company”) unanimously approved the continuance of the Company’s Advisory Agreement with the Adviser in respect of AB Balanced Hedged Allocation Portfolio (formerly AB Balanced Wealth Strategy Portfolio) (the “Fund”) at meetings held in-person on August 1-2, 2023 and October 31-November 2, 2023 (the “Meetings”).
Prior to approval of the continuance of the Advisory Agreement, the directors had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The directors also reviewed additional materials, including comparative analytical data prepared by the Senior Vice President of the Fund. The directors also discussed the proposed continuance in private sessions with counsel.
The directors considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as directors or trustees of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the directors and its responsiveness, frankness and attention to concerns raised by the directors in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AB Funds. The directors noted that they have four regular meetings each year, at each of which they review extensive materials and information from the Adviser, including information on the investment performance of the Fund and the money market fund advised by the Adviser in which the Fund invests a portion of its assets.
The directors also considered all factors they believed relevant, including the specific matters discussed below. During the course of their deliberations, the directors evaluated, among other things, the reasonableness of the advisory fee. The directors did not identify any particular information that was all-important or controlling, and different directors may have attributed different weights to the various factors. The directors determined that the selection of the Adviser to manage the Fund and the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors’ determinations included the following:
Nature, Extent and Quality of Services Provided
The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. The directors noted that the Adviser from time to time reviews the Fund’s investment strategies and from time to time proposes changes intended to improve the Fund’s relative or absolute performance for the directors’ consideration. They also noted the professional experience and qualifications of the Fund’s portfolio management team and other senior personnel of the Adviser. The directors also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services to the Fund by employees of the Adviser or its affiliates. Requests for these reimbursements are made on a quarterly basis and subject to approval by the directors. Reimbursements, to the extent requested and paid, result in a higher rate of total compensation from the Fund to the Adviser than the fee rate stated in the Advisory Agreement. The directors noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant at the request of the directors. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of the Fund’s other service providers, also was considered. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement.
Costs of Services Provided and Profitability
The directors reviewed a schedule of the revenues and expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2021 and 2022 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant at the request of the directors. The directors noted the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and understood that there are a number of potentially acceptable allocation methodologies for information of this type. The directors noted that the profitability information reflected all revenues and expenses of the Adviser’s relationship with the Fund, including those relating to its subsidiaries that provide transfer agency, distribution and brokerage services to the Fund. The directors recognized that it is
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| (continued) | | AB Variable Products Series Fund |
difficult to make comparisons of the profitability of the Advisory Agreement with the profitability of fund advisory contracts for unaffiliated funds because comparative information is not generally publicly available and is affected by numerous factors. The directors focused on the profitability of the Adviser’s relationship with the Fund before taxes and distribution expenses. The directors noted that the Fund was not profitable to the Adviser in the periods reviewed.
Fall-Out Benefits
The directors considered the other benefits to the Adviser and its affiliates from their relationships with the Fund and the money market fund advised by the Adviser in which the Fund invests, including, but not limited to, benefits relating to soft dollar arrangements (whereby investment advisers receive brokerage and research services from brokers that execute agency transactions for their clients); 12b-1 fees and sales charges received by the Fund’s principal underwriter (which is a wholly owned subsidiary of the Adviser) in respect of the Fund’s Class B shares; brokerage commissions paid by the Fund to brokers affiliated with the Adviser; and transfer agency fees paid by the Fund to a wholly owned subsidiary of the Adviser. The directors recognized that the Fund’s unprofitability to the Adviser would be exacerbated without these benefits. The directors understood that the Adviser also might derive reputational and other benefits from its association with the Fund.
Investment Results
In addition to the information reviewed by the directors in connection with the Meetings, the directors receive detailed performance information for the Fund at each regular Board meeting during the year.
At the Meetings, the directors reviewed performance information prepared by an independent service provider (the “15(c) service provider”), showing the performance of the Class A shares of the Fund against a group of similar funds (“peer group”) and a larger group of similar funds (“peer universe”), each selected by the 15(c) service provider, and information prepared by the Adviser showing performance of the Class A shares against a broad-based securities market index, in each case for the 1-, 3-, 5- and 10-year periods ended May 31, 2023 and July 31, 2023 and (in the case of comparisons with the broad-based securities market index) for the period from inception. Based on their review, the directors concluded that the Fund’s investment performance was acceptable.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate payable by the Fund to the Adviser and information prepared by the 15(c) service provider concerning advisory fee rates payable by other funds in the same category as the Fund. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The directors compared the Fund’s contractual effective advisory fee rate with a peer group median and noted that it was lower than the median. They also noted that the Adviser’s total rate of compensation, taking into account the impact of the administrative expense reimbursement paid to the Adviser in the latest fiscal year, was lower than the median.
The directors considered the schedule of fees charged by the Adviser for services to any sub-advised funds utilizing investment strategies similar to those of the Fund.
In connection with their review of the Fund’s advisory fee, the directors also considered the total expense ratio of the Class B shares of the Fund in comparison to the medians for a peer group and a peer universe selected by the 15(c) service provider. The Class B expense ratio of the Fund was based on the Fund’s latest fiscal year and reflected the impact of the Adviser’s expense cap for the Fund. The directors noted that it was likely that the expense ratios of some of the other funds in the Fund’s category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases might be voluntary or temporary. The directors view expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Fund by others. The directors noted that the Fund’s expense ratio was above a median. After reviewing and discussing the Adviser’s explanation for this, the directors concluded that the Fund’s expense ratio was acceptable.
Economies of Scale
The directors noted that the advisory fee schedule for the Fund contains breakpoints that reduce the fee rates on assets above specified levels. The directors took into consideration prior presentations by an independent consultant on economies of scale in the mutual fund industry and for the AB Funds, and presentations from time to time by the Adviser concerning certain of its views on economies of scale. The directors also had requested and received from the Adviser certain updates on economies of scale in advance of the Meetings. The directors believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there
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is no established methodology for setting breakpoints that give effect to the fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Fund’s shareholders would benefit from a sharing of economies of scale in the event the Fund’s net assets exceed a breakpoint in the future.
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VPS-BHA- 0151-1223
DEC 12.31.23
ANNUAL REPORT
AB VARIABLE PRODUCTS SERIES FUND, INC.
| + | | AB DYNAMIC ASSET ALLOCATION PORTFOLIO |
Investment Products Offered
| | • | | Are Not Bank Guaranteed |
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AB family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the Adviser of the funds.
You may obtain a description of the Fund’s proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AB’s website at www.abfunds.com or go to the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov, or call AB at (800) 227 4618.
The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Commission’s website at www.sec.gov.
The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.
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| DYNAMIC ASSET ALLOCATION |
| |
| PORTFOLIO | | AB Variable Products Series Fund |
LETTER TO INVESTORS
February 14, 2024
The following is an update of AB Variable Products Series Fund—Dynamic Asset Allocation Portfolio (the “Portfolio”) for the annual reporting period ended December 31, 2023.
INVESTMENT OBJECTIVE AND POLICIES
The Portfolio’s investment objective is to maximize total return consistent with the Adviser’s determination of reasonable risk. The Portfolio invests in a globally diversified portfolio of equity and debt securities, including exchange-traded funds (“ETFs”) and other financial instruments, and expects to enter into derivatives transactions, such as options, futures contracts, forwards and swaps to achieve market exposure. The Portfolio’s neutral weighting, from which it will make its tactical asset allocations, is 60% equity exposure and 40% debt exposure. Within these broad components, the Portfolio may invest in any type of security, including common and preferred stocks, warrants and convertible securities, government and corporate fixed-income securities, commodities, currencies, real estate-related securities, and inflation-indexed securities. The Portfolio may invest in US, non-US and emerging-market issuers. The Portfolio may invest in securities of companies across the capitalization spectrum, including smaller capitalization companies. The Portfolio expects its investments in fixed-income securities to have a broad range of maturities and quality levels. The Portfolio is expected to be highly diversified across industries, sectors and countries, and will choose its positions from several market indices worldwide in a manner that is intended to track the performance (before fees and expenses) of those indices.
The Adviser will continuously monitor the risks presented by the Portfolio’s asset allocation and may make frequent adjustments to the Portfolio’s exposures to different asset classes. Using its proprietary Dynamic Asset Allocation (“DAA”) techniques, the Adviser employs a discretionary volatility reduction/management strategy intended to reduce overall volatility and limit downside exposure. The Adviser adjusts the Portfolio’s exposure to the equity and debt markets, and to segments within those markets, in response to the Adviser’s assessment of the relative risks and returns of those segments. For example, when the Adviser determines that equity market volatility is particularly low and that, therefore, the equity markets present reasonable return opportunities, the Adviser may increase the Portfolio’s equity exposure to as much as 80%. Conversely, when the Adviser determines that the risks in the equity markets are disproportionately greater than the potential returns offered, the Adviser may reduce the Portfolio’s equity exposure significantly below the target percentage or may even decide to eliminate equity exposure altogether by increasing the Portfolio’s fixed-income exposure to 100%. This investment strategy is intended to reduce the Portfolio’s overall investment risk, but may at times result in the Portfolio underperforming the markets.
The Portfolio expects to utilize derivatives and to invest in ETFs to a significant extent. Derivatives and ETFs may provide more efficient and economical exposure to market segments than direct investments, and the Portfolio’s market exposures may at times be achieved almost entirely through the use of derivatives or through the investments in ETFs. Derivatives transactions and ETFs may also be a quicker and more efficient way to alter the Portfolio’s exposure than buying and selling direct investments. As a result, the Adviser expects to use derivatives as one of the primary tools for adjusting the Portfolio’s exposure levels from its neutral weighting. The Adviser also expects to use direct investments and ETFs to adjust the Portfolio’s exposure levels. In determining when and to what extent to enter into derivatives transactions or to invest in ETFs, the Adviser considers factors such as the relative risks and returns expected of potential investments and the cost of such transactions. The Adviser considers the impact of derivatives and ETFs in making its assessment of the Portfolio’s risks.
Currency exchange-rate fluctuations can have a dramatic impact on returns, significantly adding to returns in some years and greatly diminishing them in others. To the extent that the Portfolio invests in non-US dollar-denominated investments, the Adviser will integrate the risks of foreign currency exposures into its investment and asset-allocation decision-making. The Adviser may seek to hedge all or a portion of the currency exposure resulting from the Portfolio’s investments. The Adviser may also seek investment opportunities through currencies and currency-related derivatives.
INVESTMENT RESULTS
The table on page 5 shows the Portfolio’s performance compared with its primary benchmark, the Morgan Stanley Capital International (“MSCI”) World Index, the Bloomberg US Treasury Index and its blended benchmark, a 60%/40% blend of the MSCI World Index and the Bloomberg US Treasury Index, respectively, for the one-, five- and 10-year periods ended December 31, 2023.
For the 12-month period, all share classes of the Portfolio underperformed the primary and blended benchmarks, but outperformed the Bloomberg US Treasury Index. The Portfolio’s diversified approach, which targets a 60%/40% allocation to equities and bonds, underperformed due to
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multiple detractors over the 12-month period. Underperformance related to equity timing and the Portfolio’s strategic hedges, primarily an extension to duration and a long volatility option, detracted from performance.
The Portfolio began the year modestly underweight to equity, which was motivated by the uncertainty surrounding headline inflation and the hawkish tone by the US Federal Reserve (the “Fed”) leading many to believe significant tightening will continue in the future. The Portfolio was overweight to bonds, which added additional diversification and defensiveness.
By the beginning of February, the Portfolio moved to an overweight to equities. As recent economic data raised expectations that inflation could be curbed without triggering a significant recession, the optimism and less defensive positions for investors were short lived as a potential financial collapse became reality in late March. The Portfolio closed the overweight to equites, which was motivated by the collapse of US-based Silicon Valley Bank and Signature Bank, and later, Credit Suisse, triggered fears of broader financial contagion. Banking industry turmoil, concern over a potential credit crunch, and uncertainty around the direction of central bank policy revived recessionary fears. After the financial disruption, the Portfolio closed the underweight to equites. During the second half of the year, the Portfolio carried a modest overweight to equities with the exception of October. October brought uncertainty as stronger-than-expected third-quarter economic growth supported the Fed’s commitment to higher-for-longer rates and quantitative tightening. This triggered a rapid rise in bond yields—especially the 10-year US Treasury note, which briefly crossed the 5% threshold for the first time in 16 years. Headwinds from higher Treasury yields, conflict in the Middle East and mixed third-quarter earnings weighed on investor sentiment. Equity markets rallied sharply during November and December, as optimism rose that the Fed would begin to cut interest rates in 2024—both earlier and more than previously anticipated.
The Portfolio’s Senior Investment Management Team (the “Team”) ended the 12-month period with a modest overweight to risk assets including developed-market equities. The Team also ended the period with an overweight to both the Australian and US dollars, as well as the British pound.
During the 12-month period, an underweight US Large-Cap equity, international equity and strategic hedges detracted from performance, while equity country selection contributed to performance.
During the 12-month period, the Portfolio used derivatives for hedging and investment purposes in the form of futures, currency forwards, purchased options and total return swaps, which detracted from absolute returns, while credit default swaps added.
MARKET REVIEW AND INVESTMENT STRATEGY
US, international and emerging-market stocks declined during the 12-month period ended December 31, 2022. In response to persistently high inflation, central banks—led by the Fed—took a hawkish pivot, which raised concerns that rapidly rising borrowing costs would slow economic growth significantly and tip global economies into recession. Volatility increased and stocks pulled back after the Fed announced its first interest-rate hike in March 2022, which was followed by six additional rate raises, including four consecutive 0.75% increases. Equity markets rebounded briefly at the end of the period, after some early evidence of easing inflationary pressures raised hopes that the Fed and other key central banks would soon slow the pace of rate hikes. Optimism faded and equity markets gave back gains after the Fed downshifted to a 0.50% rate hike but strongly reaffirmed its higher-for-longer conviction. Both value- and growth-oriented stocks declined for the year. Value stocks significantly outperformed growth stocks, as growth stocks have been pressured more by rising interest rates throughout most of the year. Large-cap stocks narrowly outperformed small-cap stocks on a relative basis, but both declined in absolute terms.
Fixed-income government bond market yields rose sharply, and bond prices fell significantly in all major developed markets, as most central banks raised interest rates to combat high and persistent inflation. Lower-than-expected inflation numbers late in the period led to optimism that central bank policy rate increases would moderate. Longer-term bonds fell the most in the UK and eurozone, and by the least in Japan. Securitized assets generally outperformed other credit-risk sectors. Global investment-grade corporate bonds, which typically have longer maturities and are more sensitive to changes in yields than high-yield corporates, underperformed global treasuries—trailing US Treasury bonds in the US while outperforming eurozone treasuries in the euro bloc. Developed-market high-yield corporate bonds modestly outperformed global treasuries, trailing in the US and outperforming in the eurozone relative to respective treasury markets. Emerging-market sovereign bonds trailed as the US dollar gained on the vast majority of currencies. Emerging-market corporate bonds and local-currency bonds also fell sharply. Brent crude oil prices were extremely volatile and rose during the period.
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| DYNAMIC ASSET ALLOCATION PORTFOLIO |
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| DISCLOSURES AND RISKS | | AB Variable Products Series Fund |
Benchmark Disclosure
The MSCI World Index and the Bloomberg US Treasury Index are unmanaged and do not reflect fees and expenses associated with the active management of a mutual fund portfolio. The MSCI World Index (free float-adjusted, market capitalization weighted) represents the equity market performance of developed markets. The Bloomberg US Treasury Index represents the performance of US Treasuries within the US government fixed-income market. MSCI makes no express or implied warranties or representations, and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices, any securities or financial products. This report is not approved, reviewed or produced by MSCI. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Portfolio.
A Word About Risk
Market Risk: The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Interest-Rate Risk: Changes in interest rates will affect the value of investments in fixed-income securities. When interest rates rise, the value of existing investments in fixed-income securities tends to fall and this decrease in value may not be offset by higher income from new investments. Interest-rate risk is generally greater for fixed-income securities with longer maturities or durations. The Portfolio may be subject to greater risk of rising interest rates than would normally be the case due to the recent end of a period of historically low rates and the effects of potential central bank monetary policy, and government fiscal policy, initiatives and resulting market reactions to those initiatives.
Credit Risk: An issuer or guarantor of a fixed-income security, or the counterparty to a derivatives or other contract, may be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. The issuer or guarantor may default, causing a loss of the full principal amount of a security and accrued interest. The degree of risk for a particular security may be reflected in its credit rating. There is the possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security. Investments in fixed-income securities with lower ratings tend to have a higher probability that an issuer will default or fail to meet its payment obligations.
Allocation Risk: The allocation of investments among different global asset classes may have a significant effect on the Portfolio’s net asset value (“NAV”) when one of these asset classes is performing more poorly than others. As both the direct investments and derivatives positions will be periodically adjusted to reflect the Adviser’s view of market and economic conditions, there will be transaction costs that may be, over time, significant. In addition, there is a risk that certain asset allocation decisions may not achieve the desired results and, as a result, the Portfolio may incur significant losses.
Foreign (Non-US) Risk: The Portfolio’s investments in securities of non-US issuers may involve more risk than those of US issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
Emerging-Market Risk: Investments in emerging-market countries may have more risk because the markets are less developed and less liquid, and because these investments may be subject to increased economic, political, regulatory or other uncertainties.
Currency Risk: Fluctuations in currency exchange rates may negatively affect the value of the Portfolio’s investments or reduce its returns.
ETF Risk: ETFs are investment companies. When the Portfolio invests in an ETF, the Portfolio bears its share of the ETF’s expenses and runs the risk that the ETF may not achieve its investment objective.
Derivatives Risk: Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss.
(Disclosures, Risks and Note About Historical Performance continued on next page)
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| DISCLOSURES AND RISKS | | |
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| (continued) | | AB Variable Products Series Fund |
Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
Leverage Risk: When the Portfolio borrows money or otherwise leverages its portfolio, its NAV may be more volatile because leverage tends to exaggerate the effect of changes in interest rates and any increase or decrease in the value of the Portfolio’s investments. The Portfolio may create leverage through the use of reverse repurchase agreements, forward commitments, or by borrowing money.
Illiquid Investments Risk: Illiquid investments risk exists when certain investments are or become difficult to purchase or sell. Difficulty in selling such investments may result in sales at disadvantageous prices affecting the value of your investment in the Portfolio. Causes of illiquid investments risk may include low trading volumes, large positions and heavy redemptions of Portfolio shares.
Capitalization Risk: Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small- and mid-capitalization companies may have additional risks because these companies have limited product lines, markets or financial resources.
Real Estate Risk: The Portfolio’s investments in real estate securities have many of the same risks as direct ownership of real estate, including the risk that the value of real estate could decline due to a variety of factors that affect the real estate market generally. Investments in real estate investment trusts (“REITs”) may have additional risks. REITs are dependent on the capability of their managers, may have limited diversification, and could be significantly affected by changes in taxes. Some REITs may utilize leverage, which increases investment risk and may potentially increase the Portfolio’s losses.
Management Risk: The Portfolio is subject to management risk because it is an actively managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
These risks are fully discussed in the Variable Products prospectus. As with all investments, you may lose money by investing in the Portfolio.
An Important Note About Historical Performance
The investment return and principal value of an investment in the Portfolio will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Performance shown in this report represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. Please contact your financial advisor or insurance agent representative at your financial institution to obtain portfolio performance information current to the most recent month-end.
Investors should consider the investment objectives, risks, charges and expenses of the Portfolio carefully before investing. For additional copies of the Portfolio’s prospectus or summary prospectus, which contains this and other information, call your financial advisor or (800) 227 4618. Please read the prospectus and/or summary prospectus carefully before investing.
All fees and expenses related to the operation of the Portfolio have been deducted, but no adjustment has been made for insurance company separate account or annuity contract charges, which would reduce total return to a contract owner. Performance assumes reinvestment of distributions and does not account for taxes.
There are additional fees and expenses associated with all Variable Products. These fees can include mortality and expense risk charges, administrative charges, and other charges that can significantly reduce investment returns. Those fees and expenses are not reflected in this annual report. You should consult your Variable Products prospectus for a description of those fees and expenses and speak to your insurance agent or financial representative if you have any questions. You should read the prospectus before investing or sending money.
4
| | |
|
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| |
| HISTORICAL PERFORMANCE | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| THE PORTFOLIO VS. ITS BENCHMARKS | | Net Asset Value Returns | |
| PERIODS ENDED DECEMBER 31, 2023 (unaudited) | | 1 Year | | | 5 Years1 | | | 10 Years1 | |
| | | |
| Dynamic Asset Allocation Portfolio Class A | | | 13.70% | | | | 4.29% | | | | 3.47% | |
| | | |
| Dynamic Asset Allocation Portfolio Class B | | | 13.48% | | | | 4.03% | | | | 3.22% | |
| | | |
| Primary Benchmark: MSCI World Index | | | 23.79% | | | | 12.80% | | | | 8.60% | |
| | | |
| Bloomberg US Treasury Index | | | 4.05% | | | | 0.53% | | | | 1.27% | |
| | | |
Blended Benchmark: 60% MSCI World Index/
40% Bloomberg US Treasury Index | | | 15.65% | | | | 8.15% | | | | 5.91% | |
1 Average annual returns. | | | | | | | | | | | | |
| | | | | | | | | | | | |
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 0.92% and 1.18% for Class A and Class B shares, respectively, gross of any fee waivers or expense reimbursements. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
GROWTH OF A $10,000 INVESTMENT
12/31/2013 TO 12/31/2023 (unaudited)
This chart illustrates the total value of an assumed $10,000 investment in Dynamic Asset Allocation Portfolio Class A shares (from 12/31/2013 to 12/31/2023) as compared with the performance of the Portfolio’s benchmarks. The chart assumes the reinvestment of dividends and capital gains distributions.
See Disclosures, Risks and Note About Historical Performance on pages 3-4.
5
| | |
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| |
| EXPENSE EXAMPLE (unaudited) | | AB Variable Products Series Fund |
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of each class’ table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | | | | | | | | | | | | | | |
| | | Beginning
Account Value
July 1, 2023 | | | Ending
Account Value
December 31, 2023 | | | Expenses Paid
During Period* | | | Annualized
Expense Ratio* | |
Class A | | | | | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,049.70 | | | $ | 4.39 | | | | 0.85 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,020.92 | | | $ | 4.33 | | | | 0.85 | % |
| | | | | | | | | | | | | | | | |
Class B | | | | | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,048.40 | | | $ | 5.68 | | | | 1.10 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,019.66 | | | $ | 5.60 | | | | 1.10 | % |
| * | | Expenses are equal to each classes’ annualized expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
| ** | | Assumes 5% annual return before expenses. |
6
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| TEN LARGEST HOLDINGS1 | | |
| |
| December 31, 2023 (unaudited) | | AB Variable Products Series Fund |
| | | | | | | | |
| SECURITY | | U.S. $ VALUE | | | PERCENT OF NET ASSETS | |
U.S. Treasury Notes & Bonds | | $ | 87,020,873 | | | | 34.3 | % |
Apple, Inc. | | | 7,831,735 | | | | 3.1 | |
Microsoft Corp. | | | 6,905,975 | | | | 2.7 | |
Amazon.com, Inc. | | | 3,671,022 | | | | 1.4 | |
NVIDIA Corp. | | | 3,182,779 | | | | 1.3 | |
Alphabet, Inc.—Class A | | | 2,156,395 | | | | 0.8 | |
Meta Platforms, Inc.—Class A | | | 2,046,951 | | | | 0.8 | |
Alphabet, Inc.—Class C | | | 1,914,393 | | | | 0.8 | |
Tesla, Inc. | | | 1,846,952 | | | | 0.7 | |
Broadcom, Inc. | | | 1,291,501 | | | | 0.5 | |
| | | | | | | | | |
| | | $ | 117,868,576 | | | | 46.4 | % |
PORTFOLIO BREAKDOWN2
December 31, 2023 (unaudited)
| | | | |
| ASSET CLASSES | | ALLOCATION | |
Equities | | | | |
US Large Cap | | | 46.3 | % |
International Large Cap | | | 18.4 | |
| | | | | |
Sub-total | | | 64.7 | |
| | | | | |
Fixed Income | | | | |
U.S. Bonds | | | 35.1 | |
International Bonds | | | 0.2 | |
| | | | | |
Sub-total | | | 35.3 | |
| | | | | |
Total | | | 100.0 | % |
SECURITY TYPE BREAKDOWN3
December 31, 2023 (unaudited)
| | | | | | | | |
| SECURITY TYPE | | U.S. $ VALUE | | | PERCENT OF TOTAL INVESTMENTS | |
Common Stocks | | $ | 156,575,088 | | | | 62.3 | % |
Governments—Treasuries | | | 87,020,873 | | | | 34.6 | |
Agencies | | | 811,848 | | | | 0.3 | |
Purchased Options—Puts | | | 729,943 | | | | 0.3 | |
Short-Term Investments | | | 6,267,808 | | | | 2.5 | |
| | | | | | | | | |
Total Investments | | $ | 251,405,560 | | | | 100.0 | % |
| 2 | | The Portfolio breakdown is expressed as an approximate percentage of the Portfolio’s total investments inclusive of derivative exposure, based on the Adviser’s internal classification guidelines. |
| 3 | | The Portfolio’s security type breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. The Portfolio also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). |
7
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
COMMON STOCKS–61.7% | | | | | | | | | |
| | | | | | | | | | | | |
INFORMATION TECHNOLOGY–14.2% | | | | | | | | | | | | |
COMMUNICATIONS EQUIPMENT–0.4% | | | | | | | | | | | | |
Arista Networks, Inc.(a) | | | | | | | 685 | | | $ | 161,324 | |
Cisco Systems, Inc. | | | | | | | 10,539 | | | | 532,430 | |
F5, Inc.(a) | | | | | | | 155 | | | | 27,742 | |
Juniper Networks, Inc. | | | | | | | 836 | | | | 24,645 | |
Motorola Solutions, Inc. | | | | | | | 435 | | | | 136,194 | |
Nokia Oyj | | | | | | | 14,068 | | | | 47,915 | |
Telefonaktiebolaget LM Ericsson–Class B | | | | | | | 7,618 | | | | 47,942 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 978,192 | |
| | | | | | | | | | | | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS–0.5% | | | | | | | | | | | | |
Amphenol Corp.–Class A | | | | | | | 1,552 | | | | 153,850 | |
Azbil Corp. | | | | | | | 299 | | | | 9,862 | |
CDW Corp./DE | | | | | | | 349 | | | | 79,335 | |
Corning, Inc. | | | | | | | 2,108 | | | | 64,189 | |
Halma PLC | | | | | | | 987 | | | | 28,698 | |
Hamamatsu Photonics KK | | | | | | | 349 | | | | 14,319 | |
Hexagon AB–Class B | | | | | | | 5,401 | | | | 64,873 | |
Hirose Electric Co., Ltd. | | | | | | | 89 | | | | 10,052 | |
Ibiden Co., Ltd. | | | | | | | 241 | | | | 13,295 | |
Jabil, Inc. | | | | | | | 341 | | | | 43,443 | |
Keyence Corp. | | | | | | | 524 | | | | 230,223 | |
Keysight Technologies, Inc.(a) | | | | | | | 462 | | | | 73,500 | |
Kyocera Corp. | | | | | | | 3,436 | | | | 50,028 | |
Murata Manufacturing Co., Ltd. | | | | | | | 4,451 | | | | 94,058 | |
Omron Corp. | | | | | | | 453 | | | | 21,079 | |
Shimadzu Corp. | | | | | | | 578 | | | | 16,116 | |
TDK Corp. | | | | | | | 962 | | | | 45,622 | |
TE Connectivity Ltd. | | | | | | | 817 | | | | 114,789 | |
Teledyne Technologies, Inc.(a) | | | | | | | 123 | | | | 54,894 | |
Trimble, Inc.(a) | | | | | | | 646 | | | | 34,367 | |
Yaskawa Electric Corp.(b) | | | | | | | 607 | | | | 25,264 | |
Yokogawa Electric Corp. | | | | | | | 534 | | | | 10,150 | |
Zebra Technologies Corp.–Class A(a) | | | | | | | 134 | | | | 36,626 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 1,288,632 | |
| | | | | | | | | | | | |
IT SERVICES–0.9% | | | | | | | | | | | | |
Accenture PLC–Class A | | | | | | | 1,633 | | | | 573,036 | |
Akamai Technologies, Inc.(a) | | | | | | | 395 | | | | 46,748 | |
Bechtle AG | | | | | | | 213 | | | | 10,669 | |
Capgemini SE | | | | | | | 407 | | | | 85,059 | |
CGI, Inc.(a) | | | | | | | 544 | | | | 58,278 | |
Cognizant Technology Solutions Corp.–Class A | | | | | | | 1,314 | | | | 99,246 | |
EPAM Systems, Inc.(a) | | | | | | | 151 | | | | 44,898 | |
Fujitsu Ltd. | | | | | | | 451 | | | | 67,873 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Gartner, Inc.(a) | | | | | | | 206 | | | $ | 92,929 | |
GoDaddy, Inc.–Class A(a) | | | | | | | 363 | | | | 38,536 | |
International Business Machines Corp. | | | | | | | 2,371 | | | | 387,777 | |
MongoDB, Inc.(a) | | | | | | | 186 | | | | 76,046 | |
NEC Corp. | | | | | | | 609 | | | | 35,983 | |
Nomura Research Institute Ltd. | | | | | | | 954 | | | | 27,707 | |
NTT Data Group Corp. | | | | | | | 1,622 | | | | 22,928 | |
Obic Co., Ltd. | | | | | | | 221 | | | | 38,024 | |
Okta, Inc.(a) | | | | | | | 408 | | | | 36,936 | |
Otsuka Corp.(b) | | | | | | | 230 | | | | 9,466 | |
SCSK Corp. | | | | | | | 392 | | | | 7,761 | |
Shopify, Inc.–Class A(a) | | | | | | | 3,131 | | | | 243,760 | |
Snowflake, Inc.–Class A(a) | | | | | | | 729 | | | | 145,071 | |
TIS, Inc. | | | | | | | 494 | | | | 10,858 | |
Twilio, Inc.–Class A(a) | | | | | | | 448 | | | | 33,990 | |
VeriSign, Inc.(a) | | | | | | | 242 | | | | 49,842 | |
Wix.com Ltd.(a) | | | | | | | 141 | | | | 17,346 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 2,260,767 | |
| | | | | | | | | | | | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT–4.0% | | | | | | | | | | | | |
Advanced Micro Devices, Inc.(a) | | | | | | | 4,204 | | | | 619,712 | |
Advantest Corp. | | | | | | | 1,908 | | | | 64,291 | |
Analog Devices, Inc. | | | | | | | 1,291 | | | | 256,341 | |
Applied Materials, Inc. | | | | | | | 2,177 | | | | 352,826 | |
ASM International NV | | | | | | | 123 | | | | 64,018 | |
ASML Holding NV | | | | | | | 1,049 | | | | 791,877 | |
BE Semiconductor Industries NV(b) | | | | | | | 201 | | | | 30,346 | |
Broadcom, Inc. | | | | | | | 1,157 | | | | 1,291,501 | |
Disco Corp. | | | | | | | 268 | | | | 66,187 | |
Enphase Energy, Inc.(a) | | | | | | | 355 | | | | 46,910 | |
Entegris, Inc. | | | | | | | 391 | | | | 46,850 | |
First Solar, Inc.(a) | | | | | | | 264 | | | | 45,482 | |
Infineon Technologies AG | | | | | | | 3,397 | | | | 141,868 | |
Intel Corp. | | | | | | | 10,896 | | | | 547,524 | |
KLA Corp. | | | | | | | 355 | | | | 206,361 | |
Lam Research Corp. | | | | | | | 344 | | | | 269,441 | |
Lasertec Corp.(b) | | | | | | | 271 | | | | 71,145 | |
Lattice Semiconductor Corp.(a) | | | | | | | 359 | | | | 24,767 | |
Marvell Technology, Inc. | | | | | | | 2,245 | | | | 135,396 | |
Microchip Technology, Inc. | | | | | | | 1,416 | | | | 127,695 | |
Micron Technology, Inc. | | | | | | | 2,857 | | | | 243,816 | |
Monolithic Power Systems, Inc. | | | | | | | 119 | | | | 75,063 | |
NVIDIA Corp. | | | | | | | 6,427 | | | | 3,182,779 | |
NXP Semiconductors NV | | | | | | | 671 | | | | 154,115 | |
ON Semiconductor Corp.(a) | | | | | | | 1,123 | | | | 93,804 | |
Qorvo, Inc.(a) | | | | | | | 255 | | | | 28,716 | |
QUALCOMM, Inc. | | | | | | | 2,904 | | | | 420,006 | |
Renesas Electronics Corp.(a) | | | | | | | 3,817 | | | | 68,252 | |
Rohm Co., Ltd. | | | | | | | 816 | | | | 15,578 | |
Skyworks Solutions, Inc. | | | | | | | 415 | | | | 46,654 | |
8
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
STMicroelectronics NV | | | | | | | 1,778 | | | $ | 89,183 | |
SUMCO Corp.(b) | | | | | | | 834 | | | | 12,476 | |
Teradyne, Inc. | | | | | | | 401 | | | | 43,517 | |
Texas Instruments, Inc. | | | | | | | 2,363 | | | | 402,797 | |
Tokyo Electron Ltd.(b) | | | | | | | 1,290 | | | | 229,284 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 10,306,578 | |
| | | | | | | | | | | | |
SOFTWARE–5.1% | | | | | | | | | | | | |
Adobe, Inc.(a) | | | | | | | 1,185 | | | | 706,971 | |
ANSYS, Inc.(a) | | | | | | | 226 | | | | 82,011 | |
Aspen Technology, Inc.(a) | | | | | | | 76 | | | | 16,731 | |
Atlassian Corp., Ltd.–Class A(a) | | | | | | | 404 | | | | 96,095 | |
Autodesk, Inc.(a) | | | | | | | 557 | | | | 135,618 | |
Bentley Systems, Inc.– Class B | | | | | | | 552 | | | | 28,803 | |
BILL Holdings, Inc.(a) | | | | | | | 250 | | | | 20,398 | |
Cadence Design Systems, Inc.(a) | | | | | | | 708 | | | | 192,838 | |
Check Point Software Technologies Ltd.(a) | | | | | | | 244 | | | | 37,281 | |
Cloudflare, Inc.–Class A(a) | | | | | | | 723 | | | | 60,197 | |
Coinbase Global, Inc.–Class A(a) | | | | | | | 445 | | | | 77,394 | |
Confluent, Inc.–Class A(a) | | | | | | | 471 | | | | 11,021 | |
Constellation Software, Inc./Canada(b) | | | | | | | 53 | | | | 131,406 | |
Crowdstrike Holdings, Inc.–Class A(a) | | | | | | | 589 | | | | 150,383 | |
CyberArk Software Ltd.(a) | | | | | | | 109 | | | | 23,876 | |
Dassault Systemes SE | | | | | | | 1,738 | | | | 85,070 | |
Datadog, Inc.–Class A(a) | | | | | | | 662 | | | | 80,354 | |
Descartes Systems Group, Inc. (The)(a) | | | | | | | 222 | | | | 18,652 | |
DocuSign, Inc.(a) | | | | | | | 528 | | | | 31,390 | |
Dropbox, Inc.–Class A(a) | | | | | | | 675 | | | | 19,899 | |
Fair Isaac Corp.(a) | | | | | | | 65 | | | | 75,661 | |
Fortinet, Inc.(a) | | | | | | | 1,737 | | | | 101,667 | |
Gen Digital, Inc. | | | | | | | 1,497 | | | | 34,162 | |
HubSpot, Inc.(a) | | | | | | | 124 | | | | 71,987 | |
Intuit, Inc. | | | | | | | 730 | | | | 456,272 | |
Manhattan Associates, Inc.(a) | | | | | | | 161 | | | | 34,667 | |
Microsoft Corp. | | | | | | | 18,365 | | | | 6,905,975 | |
Monday.com Ltd.(a) | | | | | | | 69 | | | | 12,959 | |
Nemetschek SE | | | | | | | 150 | | | | 12,950 | |
Nice Ltd.(a) | | | | | | | 165 | | | | 32,815 | |
Open Text Corp. | | | | | | | 705 | | | | 29,630 | |
Oracle Corp. | | | | | | | 4,277 | | | | 450,924 | |
Oracle Corp. Japan | | | | | | | 142 | | | | 10,931 | |
Palantir Technologies, Inc.–Class A(a) | | | | | | | 4,801 | | | | 82,433 | |
Palo Alto Networks, Inc.(a) | | | | | | | 803 | | | | 236,789 | |
PTC, Inc.(a) | | | | | | | 309 | | | | 54,063 | |
Roper Technologies, Inc. | | | | | | | 278 | | | | 151,557 | |
Sage Group PLC (The) | | | | | | | 2,671 | | | | 39,875 | |
Salesforce, Inc.(a) | | | | | | | 2,532 | | | | 666,270 | |
SAP SE | | | | | | | 2,717 | | | | 418,205 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
ServiceNow, Inc.(a) | | | | | | | 532 | | | $ | 375,853 | |
Splunk, Inc.(a) | | | | | | | 417 | | | | 63,530 | |
Synopsys, Inc.(a) | | | | | | | 396 | | | | 203,904 | |
Temenos AG (REG) | | | | | | | 166 | | | | 15,469 | |
Trend Micro, Inc./Japan(a) | | | | | | | 289 | | | | 15,424 | |
Tyler Technologies, Inc.(a) | | | | | | | 110 | | | | 45,993 | |
UiPath, Inc.–Class A(a) | | | | | | | 1,008 | | | | 25,039 | |
Unity Software, Inc.(a)(b) | | | | | | | 648 | | | | 26,497 | |
WiseTech Global Ltd.(b) | | | | | | | 433 | | | | 22,193 | |
Workday, Inc.–Class A(a) | | | | | | | 539 | | | | 148,796 | |
Xero Ltd.(a) | | | | | | | 374 | | | | 28,532 | |
Zoom Video Communications, Inc.–Class A(a) | | | | | | | 620 | | | | 44,584 | |
Zscaler, Inc.(a) | | | | | | | 230 | | | | 50,959 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 12,952,953 | |
| | | | | | | | | | | | |
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS–3.3% | | | | | | | | | | | | |
Apple, Inc. | | | | | | | 40,678 | | | | 7,831,735 | |
Brother Industries Ltd. | | | | | | | 585 | | | | 9,316 | |
Canon, Inc.(b) | | | | | | | 2,511 | | | | 64,417 | |
Dell Technologies, Inc.–Class C | | | | | | | 666 | | | | 50,949 | |
FUJIFILM Holdings Corp. | | | | | | | 1,009 | | | | 60,469 | |
Hewlett Packard Enterprise Co. | | | | | | | 3,337 | | | | 56,662 | |
HP, Inc. | | | | | | | 2,314 | | | | 69,628 | |
Logitech International SA (REG) | | | | | | | 428 | | | | 40,698 | |
NetApp, Inc. | | | | | | | 543 | | | | 47,871 | |
Ricoh Co., Ltd. | | | | | | | 1,372 | | | | 10,508 | |
Seagate Technology Holdings PLC | | | | | | | 514 | | | | 43,880 | |
Seiko Epson Corp. | | | | | | | 692 | | | | 10,332 | |
Super Micro Computer, Inc.(a)(b) | | | | | | | 124 | | | | 35,248 | |
Western Digital Corp.(a) | | | | | | | 843 | | | | 44,148 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 8,375,861 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 36,162,983 | |
| | | | | | | | | | | | |
FINANCIALS–9.3% | | | | | | | | | | | | |
BANKS–3.5% | | | | | | | | | | | | |
ABN AMRO Bank NV | | | | | | | 1,238 | | | | 18,618 | |
AIB Group PLC | | | | | | | 4,088 | | | | 17,508 | |
ANZ Group Holdings Ltd. | | | | | | | 7,819 | | | | 138,146 | |
Banco Bilbao Vizcaya Argentaria SA | | | | | | | 15,521 | | | | 141,462 | |
Banco BPM SpA | | | | | | | 3,153 | | | | 16,708 | |
Banco Santander SA | | | | | | | 42,108 | | | | 176,124 | |
Bank Hapoalim BM | | | | | | | 3,305 | | | | 29,691 | |
Bank Leumi Le-Israel BM | | | | | | | 3,965 | | | | 31,910 | |
Bank of America Corp. | | | | | | | 18,607 | | | | 626,498 | |
Bank of Ireland Group PLC | | | | | | | 2,749 | | | | 24,957 | |
Bank of Montreal | | | | | | | 1,876 | | | | 185,625 | |
Bank of Nova Scotia (The)(b) | | | | | | | 3,136 | | | | 152,652 | |
9
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Banque Cantonale Vaudoise (REG)(b) | | | | | | | 79 | | | $ | 10,188 | |
Barclays PLC | | | | | | | 39,303 | | | | 76,958 | |
BNP Paribas SA | | | | | | | 2,733 | | | | 189,795 | |
BOC Hong Kong Holdings Ltd. | | | | | | | 9,031 | | | | 24,533 | |
CaixaBank SA | | | | | | | 10,735 | | | | 44,210 | |
Canadian Imperial Bank of Commerce(b) | | | | | | | 2,405 | | | | 115,799 | |
Chiba Bank Ltd. (The) | | | | | | | 1,314 | | | | 9,467 | |
Citigroup, Inc. | | | | | | | 5,010 | | | | 257,714 | |
Citizens Financial Group, Inc. | | | | | | | 1,228 | | | | 40,696 | |
Commerzbank AG | | | | | | | 2,742 | | | | 32,591 | |
Commonwealth Bank of Australia(b) | | | | | | | 4,361 | | | | 332,382 | |
Concordia Financial Group Ltd.(b) | | | | | | | 2,721 | | | | 12,403 | |
Credit Agricole SA | | | | | | | 2,779 | | | | 39,508 | |
Danske Bank A/S | | | | | | | 1,794 | | | | 47,956 | |
DBS Group Holdings Ltd. | | | | | | | 4,175 | | | | 105,581 | |
DNB Bank ASA | | | | | | | 2,408 | | | | 51,197 | |
Erste Group Bank AG | | | | | | | 894 | | | | 36,211 | |
Fifth Third Bancorp | | | | | | | 1,771 | | | | 61,082 | |
FinecoBank Banca Fineco SpA | | | | | | | 1,588 | | | | 23,890 | |
First Citizens BancShares, Inc./NC–Class A | | | | | | | 29 | | | | 41,150 | |
Hang Seng Bank Ltd. | | | | | | | 1,305 | | | | 15,236 | |
HSBC Holdings PLC | | | | | | | 50,697 | | | | 410,137 | |
Huntington Bancshares, Inc./OH | | | | | | | 3,767 | | | | 47,916 | |
ING Groep NV | | | | | | | 9,417 | | | | 141,203 | |
Intesa Sanpaolo SpA | | | | | | | 40,433 | | | | 118,323 | |
Israel Discount Bank Ltd.–Class A | | | | | | | 3,218 | | | | 16,112 | |
Japan Post Bank Co., Ltd. | | | | | | | 3,718 | | | | 37,838 | |
JPMorgan Chase & Co. | | | | | | | 7,561 | | | | 1,286,126 | |
KBC Group NV | | | | | | | 651 | | | | 42,249 | |
KeyCorp | | | | | | | 2,435 | | | | 35,064 | |
Lloyds Banking Group PLC | | | | | | | 165,335 | | | | 100,282 | |
M&T Bank Corp. | | | | | | | 432 | | | | 59,219 | |
Mediobanca Banca di Credito Finanziario SpA(b) | | | | | | | 1,436 | | | | 17,795 | |
Mitsubishi UFJ Financial Group, Inc. | | | | | | | 29,687 | | | | 254,778 | |
Mizrahi Tefahot Bank Ltd. | | | | | | | 402 | | | | 15,562 | |
Mizuho Financial Group, Inc. | | | | | | | 6,254 | | | | 106,679 | |
National Australia Bank Ltd. | | | | | | | 8,140 | | | | 170,133 | |
National Bank of Canada(b) | | | | | | | 879 | | | | 67,000 | |
NatWest Group PLC | | | | | | | 14,987 | | | | 41,745 | |
Nordea Bank Abp (Helsinki) | | | | | | | 8,309 | | | | 103,155 | |
Oversea-Chinese Banking Corp., Ltd. | | | | | | | 8,327 | | | | 81,933 | |
PNC Financial Services Group, Inc. (The) | | | | | | | 1,036 | | | | 160,425 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Regions Financial Corp. | | | | | | | 2,441 | | | $ | 47,307 | |
Resona Holdings, Inc. | | | | | | | 5,522 | | | | 27,993 | |
Royal Bank of Canada | | | | | | | 3,630 | | | | 367,096 | |
Shizuoka Financial Group, Inc. | | | | | | | 1,194 | | | | 10,096 | |
Skandinaviska Enskilda Banken AB–Class A | | | | | | | 4,128 | | | | 56,969 | |
Societe Generale SA | | | | | | | 1,921 | | | | 51,109 | |
Standard Chartered PLC | | | | | | | 5,962 | | | | 50,594 | |
Sumitomo Mitsui Financial Group, Inc. | | | | | | | 3,333 | | | | 162,183 | |
Sumitomo Mitsui Trust Holdings, Inc. | | | | | | | 1,634 | | | | 31,294 | |
Svenska Handelsbanken AB–Class A | | | | | | | 3,794 | | | | 41,231 | |
Swedbank AB–Class A | | | | | | | 2,208 | | | | 44,641 | |
Toronto-Dominion Bank (The) | | | | | | | 4,733 | | | | 305,829 | |
Truist Financial Corp. | | | | | | | 3,465 | | | | 127,928 | |
UniCredit SpA | | | | | | | 4,179 | | | | 113,793 | |
United Overseas Bank Ltd. | | | | | | | 2,692 | | | | 58,102 | |
US Bancorp | | | | | | | 3,988 | | | | 172,601 | |
Wells Fargo & Co. | | | | | | | 9,519 | | | | 468,525 | |
Westpac Banking Corp. | | | | | | | 9,129 | | | | 142,435 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 8,721,846 | |
| | | | | | | | | | | | |
CAPITAL MARKETS–1.9% | | | | | | | | | | | | |
3i Group PLC | | | | | | | 2,532 | | | | 77,934 | |
abrdn PLC(b) | | | | | | | 4,906 | | | | 11,154 | |
Ameriprise Financial, Inc. | | | | | | | 267 | | | | 101,415 | |
Amundi SA | | | | | | | 160 | | | | 10,914 | |
Ares Management Corp.–Class A | | | | | | | 425 | | | | 50,541 | |
ASX Ltd. | | | | | | | 503 | | | | 21,610 | |
Bank of New York Mellon Corp. (The) | | | | | | | 2,026 | | | | 105,453 | |
BlackRock, Inc. | | | | | | | 389 | | | | 315,790 | |
Blackstone, Inc. | | | | | | | 1,847 | | | | 241,809 | |
Brookfield Asset Management Ltd.–Class A (Toronto)(b) | | | | | | | 912 | | | | 36,630 | |
Brookfield Corp. (Toronto)(b) | | | | | | | 3,624 | | | | 145,365 | |
Carlyle Group, Inc. (The) | | | | | | | 561 | | | | 22,827 | |
Cboe Global Markets, Inc. | | | | | | | 275 | | | | 49,104 | |
Charles Schwab Corp. (The) | | | | | | | 3,915 | | | | 269,352 | |
CME Group, Inc. | | | | | | | 936 | | | | 197,122 | |
Daiwa Securities Group, Inc. | | | | | | | 3,463 | | | | 23,244 | |
Deutsche Bank AG (REG) | | | | | | | 5,042 | | | | 68,829 | |
Deutsche Boerse AG | | | | | | | 495 | | | | 101,938 | |
EQT AB(b) | | | | | | | 925 | | | | 26,190 | |
Euronext NV(c) | | | | | | | 223 | | | | 19,380 | |
FactSet Research Systems, Inc. | | | | | | | 100 | | | | 47,705 | |
Franklin Resources, Inc. | | | | | | | 778 | | | | 23,177 | |
Futu Holdings Ltd. (ADR)(a) | | | | | | | 150 | | | | 8,195 | |
10
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Goldman Sachs Group, Inc. (The) | | | | | | | 858 | | | $ | 330,991 | |
Hargreaves Lansdown PLC | | | | | | | 925 | | | | 8,645 | |
Hong Kong Exchanges & Clearing Ltd. | | | | | | | 2,601 | | | | 89,215 | |
IGM Financial, Inc.(b) | | | | | | | 216 | | | | 5,707 | |
Intercontinental Exchange, Inc. | | | | | | | 1,489 | | | | 191,232 | |
Japan Exchange Group, Inc. | | | | | | | 1,288 | | | | 27,184 | |
Julius Baer Group Ltd. | | | | | | | 536 | | | | 30,069 | |
KKR & Co., Inc. | | | | | | | 1,496 | | | | 123,944 | |
London Stock Exchange Group PLC | | | | | | | 1,084 | | | | 128,141 | |
LPL Financial Holdings, Inc. | | | | | | | 197 | | | | 44,841 | |
Macquarie Group Ltd. | | | | | | | 955 | | | | 119,549 | |
MarketAxess Holdings, Inc. | | | | | | | 98 | | | | 28,699 | |
Moody’s Corp. | | | | | | | 430 | | | | 167,941 | |
Morgan Stanley | | | | | | | 3,233 | | | | 301,477 | |
MSCI, Inc. | | | | | | | 206 | | | | 116,524 | |
Nasdaq, Inc. | | | | | | | 895 | | | | 52,035 | |
Nomura Holdings, Inc. | | | | | | | 7,721 | | | | 34,772 | |
Northern Trust Corp. | | | | | | | 539 | | | | 45,481 | |
Onex Corp. | | | | | | | 175 | | | | 12,220 | |
Partners Group Holding AG | | | | | | | 60 | | | | 86,757 | |
Raymond James Financial, Inc. | | | | | | | 516 | | | | 57,534 | |
Robinhood Markets, Inc.–Class A(a) | | | | | | | 1,122 | | | | 14,294 | |
S&P Global, Inc. | | | | | | | 847 | | | | 373,120 | |
SBI Holdings, Inc. | | | | | | | 595 | | | | 13,354 | |
Schroders PLC | | | | | | | 2,097 | | | | 11,466 | |
SEI Investments Co. | | | | | | | 293 | | | | 18,620 | |
Singapore Exchange Ltd. | | | | | | | 1,635 | | | | 12,163 | |
St. James’s Place PLC | | | | | | | 1,427 | | | | 12,415 | |
State Street Corp. | | | | | | | 829 | | | | 64,214 | |
T. Rowe Price Group, Inc. | | | | | | | 584 | | | | 62,891 | |
TMX Group Ltd. | | | | | | | 724 | | | | 17,512 | |
Tradeweb Markets, Inc.–Class A | | | | | | | 284 | | | | 25,810 | |
UBS Group AG (REG)(a) | | | | | | | 8,557 | | | | 265,794 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 4,870,289 | |
| | | | | | | | | | | | |
CONSUMER FINANCE–0.2% | | | | | | | | | | | | |
Ally Financial, Inc. | | | | | | | 706 | | | | 24,653 | |
American Express Co. | | | | | | | 1,629 | | | | 305,177 | |
Capital One Financial Corp. | | | | | | | 993 | | | | 130,202 | |
Discover Financial Services | | | | | | | 650 | | | | 73,060 | |
Synchrony Financial | | | | | | | 1,088 | | | | 41,551 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 574,643 | |
| | | | | | | | | | | | |
FINANCIAL SERVICES–1.8% | | | | | | | | | | | | |
Adyen NV(a)(b) | | | | | | | 57 | | | | 73,584 | |
Apollo Global Management, Inc. | | | | | | | 1,033 | | | | 96,265 | |
Berkshire Hathaway, Inc.–Class B(a) | | | | | | | 3,404 | | | | 1,214,071 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Block, Inc.(a) | | | | | | | 1,430 | | | $ | 110,611 | |
Edenred SE | | | | | | | 649 | | | | 38,839 | |
Equitable Holdings, Inc. | | | | | | | 903 | | | | 30,070 | |
Eurazeo SE | | | | | | | 113 | | | | 8,985 | |
EXOR NV | | | | | | | 244 | | | | 24,424 | |
Fidelity National Information Services, Inc. | | | | | | | 1,541 | | | | 92,568 | |
Fiserv, Inc.(a) | | | | | | | 1,586 | | | | 210,684 | |
FleetCor Technologies, Inc.(a) | | | | | | | 183 | | | | 51,718 | |
Global Payments, Inc. | | | | | | | 677 | | | | 85,979 | |
Groupe Bruxelles Lambert NV | | | | | | | 229 | | | | 18,034 | |
Industrivarden AB–Class A | | | | | | | 338 | | | | 11,051 | |
Industrivarden AB– Class C(b) | | | | | | | 380 | | | | 12,399 | |
Investor AB–Class B | | | | | | | 4,503 | | | | 104,423 | |
Jack Henry & Associates, Inc. | | | | | | | 190 | | | | 31,048 | |
L E Lundbergforetagen AB–Class B | | | | | | | 198 | | | | 10,782 | |
M&G PLC | | | | | | | 5,836 | | | | 16,517 | |
Mastercard, Inc.–Class A | | | | | | | 2,189 | | | | 933,630 | |
Mitsubishi HC Capital, Inc. | | | | | | | 2,023 | | | | 13,554 | |
Nexi SpA(a)(b) | | | | | | | 1,536 | | | | 12,584 | |
ORIX Corp. | | | | | | | 3,031 | | | | 56,926 | |
PayPal Holdings, Inc.(a) | | | | | | | 2,714 | | | | 166,667 | |
Sofina SA(b) | | | | | | | 40 | | | | 9,973 | |
Toast, Inc.–Class A(a)(b) | | | | | | | 855 | | | | 15,612 | |
Visa, Inc.–Class A | | | | | | | 4,181 | | | | 1,088,523 | |
Wise PLC–Class A(a) | | | | | | | 1,599 | | | | 17,783 | |
Worldline SA/France(a) | | | | | | | 625 | | | | 10,869 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 4,568,173 | |
| | | | | | | | | | | | |
INSURANCE–1.9% | | | | | | | | | | | | |
Admiral Group PLC | | | | | | | 677 | | | | 23,146 | |
Aegon Ltd.(b) | | | | | | | 4,224 | | | | 24,559 | |
Aflac, Inc. | | | | | | | 1,468 | | | | 121,110 | |
Ageas SA/NV | | | | | | | 415 | | | | 18,040 | |
AIA Group Ltd. | | | | | | | 29,637 | | | | 257,927 | |
Allianz SE (REG) | | | | | | | 1,050 | | | | 280,603 | |
Allstate Corp. (The) | | | | | | | 681 | | | | 95,326 | |
American Financial Group, Inc./OH | | | | | | | 188 | | | | 22,351 | |
American International Group, Inc. | | | | | | | 1,852 | | | | 125,473 | |
Aon PLC–Class A | | | | | | | 528 | | | | 153,659 | |
Arch Capital Group Ltd.(a) | | | | | | | 970 | | | | 72,042 | |
Arthur J Gallagher & Co. | | | | | | | 561 | | | | 126,158 | |
ASR Nederland NV | | | | | | | 412 | | | | 19,463 | |
Assicurazioni Generali SpA | | | | | | | 2,637 | | | | 55,713 | |
Assurant, Inc. | | | | | | | 138 | | | | 23,252 | |
Aviva PLC | | | | | | | 7,125 | | | | 39,426 | |
AXA SA | | | | | | | 4,693 | | | | 153,257 | |
Baloise Holding AG (REG) | | | | | | | 119 | | | | 18,658 | |
Brown & Brown, Inc. | | | | | | | 627 | | | | 44,586 | |
Chubb Ltd. | | | | | | | 1,069 | | | | 241,594 | |
Cincinnati Financial Corp. | | | | | | | 408 | | | | 42,212 | |
11
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Dai-ichi Life Holdings, Inc. | | | | | | | 2,413 | | | $ | 51,187 | |
Erie Indemnity Co.–Class A | | | | | | | 66 | | | | 22,105 | |
Everest Group Ltd. | | | | | | | 113 | | | | 39,955 | |
Fairfax Financial Holdings Ltd. | | | | | | | 56 | | | | 51,666 | |
Fidelity National Financial, Inc. | | | | | | | 673 | | | | 34,336 | |
Gjensidige Forsikring ASA | | | | | | | 520 | | | | 9,596 | |
Globe Life, Inc. | | | | | | | 247 | | | | 30,065 | |
Great-West Lifeco, Inc.(b) | | | | | | | 726 | | | | 24,031 | |
Hannover Rueck SE | | | | | | | 157 | | | | 37,539 | |
Hartford Financial Services Group, Inc. (The) | | | | | | | 796 | | | | 63,982 | |
Helvetia Holding AG (REG)(b) | | | | | | | 97 | | | | 13,375 | |
iA Financial Corp., Inc. | | | | | | | 264 | | | | 17,997 | |
Insurance Australia Group Ltd. | | | | | | | 6,339 | | | | 24,503 | |
Intact Financial Corp. | | | | | | | 463 | | | | 71,233 | |
Japan Post Holdings Co., Ltd. | | | | | | | 5,367 | | | | 47,914 | |
Japan Post Insurance Co., Ltd. | | | | | | | 492 | | | | 8,733 | |
Legal & General Group PLC | | | | | | | 15,555 | | | | 49,709 | |
Loews Corp. | | | | | | | 499 | | | | 34,725 | |
Manulife Financial Corp. | | | | | | | 4,729 | | | | 104,498 | |
Markel Group, Inc.(a) | | | | | | | 33 | | | | 46,857 | |
Marsh & McLennan Cos., Inc. | | | | | | | 1,286 | | | | 243,658 | |
Medibank Pvt Ltd. | | | | | | | 7,165 | | | | 17,395 | |
MetLife, Inc. | | | | | | | 1,663 | | | | 109,974 | |
MS&AD Insurance Group Holdings, Inc. | | | | | | | 1,092 | | | | 42,936 | |
Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen (REG) | | | | | | | 355 | | | | 147,259 | |
NN Group NV(b) | | | | | | | 704 | | | | 27,823 | |
Phoenix Group Holdings PLC | | | | | | | 1,954 | | | | 13,305 | |
Poste Italiane SpA(b) | | | | | | | 1,359 | | | | 15,447 | |
Power Corp. of Canada(b) | | | | | | | 1,497 | | | | 42,807 | |
Principal Financial Group, Inc. | | | | | | | 629 | | | | 49,483 | |
Progressive Corp. (The) | | | | | | | 1,523 | | | | 242,583 | |
Prudential Financial, Inc. | | | | | | | 945 | | | | 98,006 | |
Prudential PLC | | | | | | | 7,163 | | | | 80,818 | |
QBE Insurance Group Ltd. | | | | | | | 3,886 | | | | 39,375 | |
Sampo Oyj–Class A | | | | | | | 1,174 | | | | 51,436 | |
Sompo Holdings, Inc. | | | | | | | 722 | | | | 35,326 | |
Sun Life Financial, Inc.(b) | | | | | | | 1,527 | | | | 79,194 | |
Suncorp Group Ltd. | | | | | | | 3,304 | | | | 31,287 | |
Swiss Life Holding AG (REG) | | | | | | | 77 | | | | 53,511 | |
Swiss Re AG | | | | | | | 785 | | | | 88,336 | |
T&D Holdings, Inc. | | | | | | | 1,296 | | | | 20,575 | |
Talanx AG(a) | | | | | | | 168 | | | | 12,006 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Tokio Marine Holdings, Inc. | | | | | | | 4,612 | | | $ | 114,843 | |
Travelers Cos., Inc. (The) | | | | | | | 596 | | | | 113,532 | |
Tryg A/S | | | | | | | 908 | | | | 19,760 | |
Willis Towers Watson PLC | | | | | | | 273 | | | | 65,848 | |
WR Berkley Corp. | | | | | | | 536 | | | | 37,906 | |
Zurich Insurance Group AG | | | | | | | 381 | | | | 199,197 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 4,836,187 | |
| | | | | | | | | | | | |
MORTGAGE REAL ESTATE INVESTMENT TRUSTS (REITS)–0.0% | | | | | | | | | | | | |
Annaly Capital Management, Inc. | | | | | | | 1,285 | | | | 24,891 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 23,596,029 | |
| | | | | | | | | | | | |
HEALTH CARE–7.5% | | | | | | | | | | | | |
BIOTECHNOLOGY–1.1% | | | | | | | | | | | | |
AbbVie, Inc. | | | | | | | 4,593 | | | | 711,777 | |
Alnylam Pharmaceuticals, Inc.(a) | | | | | | | 326 | | | | 62,400 | |
Amgen, Inc. | | | | | | | 1,392 | | | | 400,924 | |
Argenx SE(a) | | | | | | | 154 | | | | 58,577 | |
Biogen, Inc.(a) | | | | | | | 377 | | | | 97,556 | |
BioMarin Pharmaceutical, Inc.(a) | | | | | | | 490 | | | | 47,246 | |
CSL Ltd. | | | | | | | 1,257 | | | | 245,051 | |
Exact Sciences Corp.(a) | | | | | | | 470 | | | | 34,771 | |
Genmab A/S(a) | | | | | | | 172 | | | | 54,843 | |
Gilead Sciences, Inc. | | | | | | | 3,242 | | | | 262,634 | |
Grifols SA(a)(b) | | | | | | | 776 | | | | 13,275 | |
Incyte Corp.(a) | | | | | | | 495 | | | | 31,081 | |
Moderna, Inc.(a) | | | | | | | 842 | | | | 83,737 | |
Neurocrine Biosciences, Inc.(a) | | | | | | | 254 | | | | 33,467 | |
Regeneron Pharmaceuticals, Inc.(a) | | | | | | | 278 | | | | 244,165 | |
Swedish Orphan Biovitrum AB(a) | | | | | | | 506 | | | | 13,395 | |
United Therapeutics Corp.(a) | | | | | | | 122 | | | | 26,826 | |
Vertex Pharmaceuticals, Inc.(a) | | | | | | | 672 | | | | 273,430 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 2,695,155 | |
| | | | | | | | | | | | |
HEALTH CARE EQUIPMENT & SUPPLIES–1.4% | | | | | | | | | | | | |
Abbott Laboratories | | | | | | | 4,515 | | | | 496,966 | |
Alcon, Inc. | | | | | | | 1,300 | | | | 101,707 | |
Align Technology, Inc.(a) | | | | | | | 190 | | | | 52,060 | |
Asahi Intecc Co., Ltd.(b) | | | | | | | 541 | | | | 10,971 | |
Avantor, Inc.(a) | | | | | | | 1,758 | | | | 40,135 | |
Baxter International, Inc. | | | | | | | 1,317 | | | | 50,915 | |
Becton Dickinson & Co. | | | | | | | 755 | | | | 184,092 | |
BioMerieux | | | | | | | 108 | | | | 12,016 | |
Boston Scientific Corp.(a) | | | | | | | 3,810 | | | | 220,256 | |
Carl Zeiss Meditec AG | | | | | | | 105 | | | | 11,430 | |
Cochlear Ltd.(b) | | | | | | | 171 | | | | 34,789 | |
12
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Coloplast A/S–Class B | | | | | | | 356 | | | $ | 40,679 | |
Cooper Cos., Inc. (The) | | | | | | | 129 | | | | 48,819 | |
Demant A/S(a) | | | | | | | 262 | | | | 11,491 | |
Dexcom, Inc.(a) | | | | | | | 1,009 | | | | 125,207 | |
DiaSorin SpA(b) | | | | | | | 58 | | | | 5,978 | |
Edwards Lifesciences Corp.(a) | | | | | | | 1,582 | | | | 120,627 | |
EssilorLuxottica SA | | | | | | | 767 | | | | 154,013 | |
Fisher & Paykel Healthcare Corp., Ltd. | | | | | | | 1,514 | | | | 22,579 | |
GE Healthcare, Inc.(a) | | | | | | | 1,065 | | | | 82,346 | |
Getinge AB–Class B | | | | | | | 595 | | | | 13,249 | |
Hologic, Inc.(a) | | | | | | | 637 | | | | 45,514 | |
Hoya Corp. | | | | | | | 948 | | | | 118,063 | |
IDEXX Laboratories, Inc.(a) | | | | | | | 216 | | | | 119,891 | |
Insulet Corp.(a) | | | | | | | 182 | | | | 39,490 | |
Intuitive Surgical, Inc.(a) | | | | | | | 915 | | | | 308,684 | |
Koninklijke Philips NV(a) | | | | | | | 2,053 | | | | 48,045 | |
Medtronic PLC | | | | | | | 3,462 | | | | 285,200 | |
Olympus Corp. | | | | | | | 3,080 | | | | 44,457 | |
ResMed, Inc. | | | | | | | 383 | | | | 65,884 | |
Siemens Healthineers AG | | | | | | | 734 | | | | 42,615 | |
Smith & Nephew PLC | | | | | | | 2,272 | | | | 31,211 | |
Sonova Holding AG (REG) | | | | | | | 132 | | | | 43,170 | |
STERIS PLC | | | | | | | 257 | | | | 56,501 | |
Straumann Holding AG (REG) | | | | | | | 291 | | | | 47,026 | |
Stryker Corp. | | | | | | | 890 | | | | 266,519 | |
Sysmex Corp. | | | | | | | 391 | | | | 21,736 | |
Teleflex, Inc. | | | | | | | 123 | | | | 30,669 | |
Terumo Corp. | | | | | | | 1,751 | | | | 57,259 | |
Zimmer Biomet Holdings, Inc. | | | | | | | 544 | | | | 66,205 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 3,578,464 | |
| | | | | | | | | | | | |
HEALTH CARE PROVIDERS & SERVICES–1.2% | | | | | | | | | | | | |
Amplifon SpA(b) | | | | | | | 323 | | | | 11,192 | |
Cardinal Health, Inc. | | | | | | | 641 | | | | 64,613 | |
Cencora, Inc. | | | | | | | 445 | | | | 91,394 | |
Centene Corp.(a) | | | | | | | 1,409 | | | | 104,562 | |
Cigna Group (The) | | | | | | | 770 | | | | 230,577 | |
CVS Health Corp. | | | | | | | 3,342 | | | | 263,884 | |
DaVita, Inc.(a) | | | | | | | 143 | | | | 14,981 | |
EBOS Group Ltd. | | | | | | | 399 | | | | 8,949 | |
Elevance Health, Inc. | | | | | | | 614 | | | | 289,538 | |
Fresenius Medical Care AG | | | | | | | 530 | | | | 22,158 | |
Fresenius SE & Co. KGaA | | | | | | | 1,099 | | | | 34,064 | |
HCA Healthcare, Inc. | | | | | | | 531 | | | | 143,731 | |
Henry Schein, Inc.(a) | | | | | | | 340 | | | | 25,741 | |
Humana, Inc. | | | | | | | 323 | | | | 147,873 | |
Laboratory Corp. of America Holdings | | | | | | | 231 | | | | 52,504 | |
McKesson Corp. | | | | | | | 351 | | | | 162,506 | |
Molina Healthcare, Inc.(a) | | | | | | | 152 | | | | 54,919 | |
Quest Diagnostics, Inc. | | | | | | | 292 | | | | 40,261 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Ramsay Health Care Ltd.(b) | | | | | | | 477 | | | $ | 17,111 | |
Sonic Healthcare Ltd. | | | | | | | 1,172 | | | | 25,609 | |
UnitedHealth Group, Inc. | | | | | | | 2,402 | | | | 1,264,581 | |
Universal Health Services, Inc.–Class B | | | | | | | 162 | | | | 24,695 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 3,095,443 | |
| | | | | | | | | | | | |
HEALTH CARE TECHNOLOGY–0.0% | | | | | | | | | | | | |
M3, Inc. | | | | | | | 1,130 | | | | 18,648 | |
Veeva Systems, Inc.–Class A(a) | | | | | | | 397 | | | | 76,430 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 95,078 | |
| | | | | | | | | | | | |
LIFE SCIENCES TOOLS & SERVICES–0.7% | | | | | | | | | | | | |
Agilent Technologies, Inc. | | | | | | | 762 | | | | 105,941 | |
Bachem Holding AG (REG)(b) | | | | | | | 88 | | | | 6,815 | |
Bio-Rad Laboratories, Inc.–Class A(a) | | | | | | | 57 | | | | 18,405 | |
Bio-Techne Corp. | | | | | | | 412 | | | | 31,790 | |
Charles River Laboratories International, Inc.(a) | | | | | | | 134 | | | | 31,678 | |
Danaher Corp. | | | | | | | 1,825 | | | | 422,195 | |
Eurofins Scientific SE | | | | | | | 351 | | | | 22,897 | |
Illumina, Inc.(a) | | | | | | | 412 | | | | 57,367 | |
IQVIA Holdings, Inc.(a) | | | | | | | 477 | | | | 110,368 | |
Lonza Group AG (REG) | | | | | | | 194 | | | | 81,788 | |
Mettler-Toledo International, Inc.(a) | | | | | | | 57 | | | | 69,139 | |
QIAGEN NV(a) | | | | | | | 593 | | | | 25,781 | |
Repligen Corp.(a) | | | | | | | 138 | | | | 24,812 | |
Revvity, Inc. | | | | | | | 323 | | | | 35,307 | |
Sartorius AG | | | | | | | 69 | | | | 25,338 | |
Sartorius Stedim Biotech | | | | | | | 72 | | | | 19,093 | |
Thermo Fisher Scientific, Inc. | | | | | | | 1,005 | | | | 533,444 | |
Waters Corp.(a) | | | | | | | 154 | | | | 50,701 | |
West Pharmaceutical Services, Inc. | | | | | | | 193 | | | | 67,959 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 1,740,818 | |
| | | | | | | | | | | | |
PHARMACEUTICALS–3.1% | | | | | | | | | | | | |
Astellas Pharma, Inc. | | | | | | | 4,685 | | | | 55,720 | |
AstraZeneca PLC | | | | | | | 4,033 | | | | 544,011 | |
Bayer AG (REG) | | | | | | | 2,556 | | | | 94,838 | |
Bristol-Myers Squibb Co. | | | | | | | 5,435 | | | | 278,870 | |
Catalent, Inc.(a) | | | | | | | 469 | | | | 21,072 | |
Chugai Pharmaceutical Co., Ltd. | | | | | | | 1,683 | | | | 63,581 | |
Daiichi Sankyo Co., Ltd. | | | | | | | 4,758 | | | | 130,259 | |
Eisai Co., Ltd. | | | | | | | 645 | | | | 32,115 | |
Eli Lilly & Co. | | | | | | | 2,100 | | | | 1,224,132 | |
GSK PLC | | | | | | | 10,654 | | | | 196,771 | |
Hikma Pharmaceuticals PLC | | | | | | | 431 | | | | 9,821 | |
Ipsen SA | | | | | | | 98 | | | | 11,690 | |
Jazz Pharmaceuticals PLC(a) | | | | | | | 156 | | | | 19,188 | |
13
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Johnson & Johnson | | | | | | | 6,265 | | | $ | 981,976 | |
Kyowa Kirin Co., Ltd. | | | | | | | 605 | | | | 10,151 | |
Merck & Co., Inc. | | | | | | | 6,602 | | | | 719,750 | |
Merck KGaA | | | | | | | 337 | | | | 53,655 | |
Novartis AG (REG) | | | | | | | 5,333 | | | | 538,689 | |
Novo Nordisk A/S–Class B | | | | | | | 8,491 | | | | 879,932 | |
Ono Pharmaceutical Co., Ltd. | | | | | | | 994 | | | | 17,683 | |
Orion Oyj–Class B | | | | | | | 280 | | | | 12,133 | |
Otsuka Holdings Co., Ltd. | | | | | | | 1,078 | | | | 40,314 | |
Pfizer, Inc. | | | | | | | 14,689 | | | | 422,896 | |
Recordati Industria Chimica e Farmaceutica SpA(b) | | | | | | | 272 | | | | 14,667 | |
Roche Holding AG (BR) | | | | | | | 84 | | | | 26,101 | |
Roche Holding AG (Genusschein) | | | | | | | 1,828 | | | | 531,388 | |
Royalty Pharma PLC– Class A | | | | | | | 992 | | | | 27,865 | |
Sandoz Group AG(a) | | | | | | | 1,065 | | | | 34,265 | |
Sanofi SA | | | | | | | 2,962 | | | | 294,342 | |
Shionogi & Co., Ltd. | | | | | | | 659 | | | | 31,716 | |
Takeda Pharmaceutical Co., Ltd. | | | | | | | 4,043 | | | | 115,945 | |
Teva Pharmaceutical Industries Ltd. (Sponsored ADR)(a) | | | | | | | 2,916 | | | | 30,443 | |
UCB SA | | | | | | | 329 | | | | 28,680 | |
Viatris, Inc. | | | | | | | 3,120 | | | | 33,790 | |
Zoetis, Inc. | | | | | | | 1,198 | | | | 236,449 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 7,764,898 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 18,969,856 | |
| | | | | | | | | | | | |
INDUSTRIALS–6.8% | | | | | | | | | | | | |
AEROSPACE & DEFENSE–1.0% | | | | | | | | | | | | |
Airbus SE | | | | | | | 1,543 | | | | 238,376 | |
Axon Enterprise, Inc.(a) | | | | | | | 185 | | | | 47,791 | |
BAE Systems PLC | | | | | | | 7,911 | | | | 111,980 | |
Boeing Co. (The)(a) | | | | | | | 1,491 | | | | 388,644 | |
CAE, Inc.(a) | | | | | | | 827 | | | | 17,850 | |
Dassault Aviation SA | | | | | | | 53 | | | | 10,501 | |
Elbit Systems Ltd. | | | | | | | 70 | | | | 14,846 | |
General Dynamics Corp. | | | | | | | 604 | | | | 156,841 | |
HEICO Corp. | | | | | | | 114 | | | | 20,391 | |
HEICO Corp.–Class A | | | | | | | 196 | | | | 27,918 | |
Howmet Aerospace, Inc. | | | | | | | 1,019 | | | | 55,148 | |
Huntington Ingalls Industries, Inc. | | | | | | | 104 | | | | 27,003 | |
Kongsberg Gruppen ASA | | | | | | | 229 | | | | 10,484 | |
L3Harris Technologies, Inc. | | | | | | | 492 | | | | 103,625 | |
Leonardo SpA | | | | | | | 1,052 | | | | 17,382 | |
Lockheed Martin Corp. | | | | | | | 581 | | | | 263,333 | |
Melrose Industries PLC | | | | | | | 3,502 | | | | 25,314 | |
MTU Aero Engines AG | | | | | | | 140 | | | | 30,162 | |
Northrop Grumman Corp. | | | | | | | 374 | | | | 175,084 | |
Rheinmetall AG | | | | | | | 114 | | | | 36,154 | |
Rolls-Royce Holdings PLC(a) | | | | | | | 21,898 | | | | 83,527 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
RTX Corp. | | | | | | | 3,787 | | | $ | 318,638 | |
Saab AB–Class B | | | | | | | 208 | | | | 12,535 | |
Safran SA | | | | | | | 890 | | | | 156,916 | |
Singapore Technologies Engineering Ltd. | | | | | | | 3,908 | | | | 11,508 | |
Textron, Inc. | | | | | | | 515 | | | | 41,416 | |
Thales SA | | | | | | | 274 | | | | 40,572 | |
TransDigm Group, Inc. | | | | | | | 144 | | | | 145,670 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 2,589,609 | |
| | | | | | | | | | | | |
AIR FREIGHT & LOGISTICS–0.3% | | | | | | | | | | | | |
CH Robinson Worldwide, Inc. | | | | | | | 303 | | | | 26,176 | |
Deutsche Post AG (REG) | | | | | | | 2,579 | | | | 127,650 | |
DSV A/S | | | | | | | 485 | | | | 85,218 | |
Expeditors International of Washington, Inc. | | | | | | | 385 | | | | 48,972 | |
FedEx Corp. | | | | | | | 622 | | | | 157,348 | |
Nippon Express Holdings, Inc. | | | | | | | 141 | | | | 8,000 | |
SG Holdings Co., Ltd. | | | | | | | 752 | | | | 10,781 | |
United Parcel Service, Inc.–Class B | | | | | | | 1,882 | | | | 295,907 | |
Yamato Holdings Co., Ltd. | | | | | | | 596 | | | | 10,998 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 771,050 | |
| | | | | | | | | | | | |
BUILDING PRODUCTS–0.5% | | | | | | | | | | | | |
A O Smith Corp. | | | | | | | 324 | | | | 26,711 | |
AGC, Inc.(b) | | | | | | | 422 | | | | 15,641 | |
Allegion PLC | | | | | | | 229 | | | | 29,012 | |
Assa Abloy AB–Class B | | | | | | | 2,607 | | | | 75,132 | |
Builders FirstSource, Inc.(a) | | | | | | | 326 | | | | 54,422 | |
Carlisle Cos., Inc. | | | | | | | 130 | | | | 40,616 | |
Carrier Global Corp. | | | | | | | 2,179 | | | | 125,184 | |
Cie de Saint-Gobain SA | | | | | | | 1,186 | | | | 87,464 | |
Daikin Industries Ltd. | | | | | | | 719 | | | | 116,636 | |
Fortune Brands Innovations, Inc. | | | | | | | 330 | | | | 25,126 | |
Geberit AG (REG) | | | | | | | 87 | | | | 55,847 | |
Johnson Controls International PLC | | | | | | | 1,770 | | | | 102,023 | |
Kingspan Group PLC | | | | | | | 403 | | | | 34,829 | |
Lennox International, Inc. | | | | | | | 84 | | | | 37,592 | |
Masco Corp. | | | | | | | 585 | | | | 39,183 | |
Nibe Industrier AB–Class B(b) | | | | | | | 3,943 | | | | 27,689 | |
Otis Worldwide Corp. | | | | | | | 1,071 | | | | 95,822 | |
Owens Corning | | | | | | | 234 | | | | 34,686 | |
ROCKWOOL A/S–Class B | | | | | | | 24 | | | | 7,022 | |
TOTO Ltd.(b) | | | | | | | 261 | | | | 6,856 | |
Trane Technologies PLC | | | | | | | 595 | | | | 145,121 | |
Xinyi Glass Holdings Ltd. | | | | | | | 4,186 | | | | 4,702 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 1,187,316 | |
| | | | | | | | | | | | |
COMMERCIAL SERVICES & SUPPLIES–0.4% | | | | | | | | | | | | |
Brambles Ltd. | | | | | | | 3,615 | | | | 33,507 | |
14
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Cintas Corp. | | | | | | | 239 | | | $ | 144,036 | |
Copart, Inc.(a) | | | | | | | 2,242 | | | | 109,858 | |
Dai Nippon Printing Co., Ltd. | | | | | | | 466 | | | | 13,762 | |
Element Fleet Management Corp.(b) | | | | | | | 1,013 | | | | 16,483 | |
GFL Environmental, Inc.(b) | | | | | | | 604 | | | | 20,836 | |
RB Global, Inc.(b) | | | | | | | 474 | | | | 31,719 | |
Rentokil Initial PLC | | | | | | | 6,563 | | | | 36,991 | |
Republic Services, Inc. | | | | | | | 576 | | | | 94,988 | |
Rollins, Inc. | | | | | | | 757 | | | | 33,058 | |
Secom Co., Ltd. | | | | | | | 570 | | | | 41,006 | |
Securitas AB–Class B | | | | | | | 1,279 | | | | 12,539 | |
TOPPAN Holdings, Inc. | | | | | | | 636 | | | | 17,712 | |
Veralto Corp. | | | | | | | 609 | | | | 50,096 | |
Waste Connections, Inc. | | | | | | | 671 | | | | 100,160 | |
Waste Management, Inc. | | | | | | | 1,054 | | | | 188,772 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 945,523 | |
| | | | | | | | | | | | |
CONSTRUCTION & ENGINEERING–0.2% | | | | | | | | | | | | |
ACS Actividades de Construccion y Servicios SA | | | | | | | 542 | | | | 24,073 | |
AECOM | | | | | | | 343 | | | | 31,704 | |
Bouygues SA | | | | | | | 496 | | | | 18,714 | |
Eiffage SA | | | | | | | 191 | | | | 20,504 | |
Epiroc AB–Class A | | | | | | | 1,714 | | | | 34,501 | |
Epiroc AB–Class B | | | | | | | 1,014 | | | | 17,783 | |
Ferrovial SE(b) | | | | | | | 1,334 | | | | 48,692 | |
Kajima Corp. | | | | | | | 1,003 | | | | 16,724 | |
Obayashi Corp. | | | | | | | 1,684 | | | | 14,547 | |
Quanta Services, Inc. | | | | | | | 378 | | | | 81,572 | |
Shimizu Corp. | | | | | | | 1,317 | | | | 8,736 | |
Skanska AB–Class B | | | | | | | 885 | | | | 16,034 | |
Stantec, Inc. | | | | | | | 289 | | | | 23,202 | |
Taisei Corp. | | | | | | | 400 | | | | 13,659 | |
Vinci SA | | | | | | | 1,321 | | | | 166,242 | |
WSP Global, Inc.(b) | | | | | | | 325 | | | | 45,557 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 582,244 | |
| | | | | | | | | | | | |
ELECTRICAL EQUIPMENT–0.6% | | | | | | | | | | | | |
ABB Ltd. (REG) | | | | | | | 4,162 | | | | 184,785 | |
AMETEK, Inc. | | | | | | | 601 | | | | 99,099 | |
Eaton Corp. PLC | | | | | | | 1,038 | | | | 249,971 | |
Emerson Electric Co. | | | | | | | 1,487 | | | | 144,730 | |
Fuji Electric Co., Ltd. | | | | | | | 330 | | | | 14,144 | |
Hubbell, Inc. | | | | | | | 140 | | | | 46,050 | |
Legrand SA | | | | | | | 690 | | | | 71,854 | |
Mitsubishi Electric Corp. | | | | | | | 4,958 | | | | 70,126 | |
NIDEC Corp. | | | | | | | 1,083 | | | | 43,653 | |
Prysmian SpA | | | | | | | 683 | | | | 31,135 | |
Rockwell Automation, Inc. | | | | | | | 299 | | | | 92,833 | |
Schneider Electric SE | | | | | | | 1,416 | | | | 285,050 | |
Siemens Energy AG(a) | | | | | | | 1,351 | | | | 17,855 | |
Vertiv Holdings Co.– Class A | | | | | | | 891 | | | | 42,795 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Vestas Wind Systems A/S(a) | | | | | | | 2,627 | | | $ | 83,123 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 1,477,203 | |
| | | | | | | | | | | | |
GROUND TRANSPORTATION–0.7% | | | | | | | | | | | | |
Aurizon Holdings Ltd. | | | | | | | 4,789 | | | | 12,398 | |
Canadian National Railway Co. | | | | | | | 1,450 | | | | 182,255 | |
Canadian Pacific Kansas City Ltd. (Toronto)(b) | | | | | | | 2,424 | | | | 191,791 | |
Central Japan Railway Co. | | | | | | | 1,835 | | | | 46,573 | |
CSX Corp. | | | | | | | 5,220 | | | | 180,977 | |
East Japan Railway Co.(b) | | | | | | | 793 | | | | 45,647 | |
Grab Holdings Ltd.–Class A(a) | | | | | | | 4,203 | | | | 14,164 | |
Hankyu Hanshin Holdings, Inc. | | | | | | | 538 | | | | 17,098 | |
JB Hunt Transport Services, Inc. | | | | | | | 215 | | | | 42,944 | |
Keisei Electric Railway Co., Ltd. | | | | | | | 351 | | | | 16,564 | |
Kintetsu Group Holdings Co., Ltd.(b) | | | | | | | 428 | | | | 13,561 | |
Knight-Swift Transportation Holdings, Inc. | | | | | | | 420 | | | | 24,213 | |
MTR Corp., Ltd. | | | | | | | 3,764 | | | | 14,609 | |
Norfolk Southern Corp. | | | | | | | 591 | | | | 139,701 | |
Odakyu Electric Railway Co., Ltd. | | | | | | | 726 | | | | 11,055 | |
Old Dominion Freight Line, Inc. | | | | | | | 256 | | | | 103,765 | |
TFI International, Inc. | | | | | | | 212 | | | | 28,837 | |
Tobu Railway Co., Ltd. | | | | | | | 482 | | | | 12,932 | |
Tokyu Corp. | | | | | | | 1,253 | | | | 15,278 | |
U-Haul Holding Co. (Non-Voting) | | | | | | | 252 | | | | 17,751 | |
Uber Technologies, Inc.(a) | | | | | | | 4,785 | | | | 294,613 | |
Union Pacific Corp. | | | | | | | 1,586 | | | | 389,553 | |
West Japan Railway Co. | | | | | | | 548 | | | | 22,834 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 1,839,113 | |
| | | | | | | | | | | | |
INDUSTRIAL CONGLOMERATES–0.6% | | | | | | | | | | | | |
3M Co. | | | | | | | 1,436 | | | | 156,984 | |
CK Hutchison Holdings Ltd. | | | | | | | 6,047 | | | | 32,488 | |
DCC PLC | | | | | | | 257 | | | | 18,910 | |
General Electric Co. | | | | | | | 2,832 | | | | 361,448 | |
Hikari Tsushin, Inc. | | | | | | | 86 | | | | 14,213 | |
Hitachi Ltd. | | | | | | | 2,422 | | | | 174,214 | |
Honeywell International, Inc. | | | | | | | 1,728 | | | | 362,379 | |
Investment AB Latour–Class B(b) | | | | | | | 385 | | | | 10,043 | |
Jardine Cycle & Carriage Ltd. | | | | | | | 1,000 | | | | 22,537 | |
Jardine Matheson Holdings Ltd. | | | | | | | 640 | | | | 26,344 | |
15
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Keppel Corp., Ltd. | | | | | | | 2,974 | | | $ | 15,913 | |
Lifco AB–Class B | | | | | | | 606 | | | | 14,878 | |
Siemens AG (REG) | | | | | | | 1,978 | | | | 371,091 | |
Smiths Group PLC | | | | | | | 904 | | | | 20,291 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 1,601,733 | |
| | | | | | | | | | | | |
MACHINERY–1.2% | | | | | | | | | | | | |
Alfa Laval AB | | | | | | | 752 | | | | 30,106 | |
Alstom SA | | | | | | | 749 | | | | 10,100 | |
Atlas Copco AB–Class A | | | | | | | 6,988 | | | | 120,411 | |
Atlas Copco AB–Class B | | | | | | | 4,061 | | | | 60,250 | |
Caterpillar, Inc. | | | | | | | 1,328 | | | | 392,650 | |
CNH Industrial NV | | | | | | | 2,603 | | | | 31,705 | |
Cummins, Inc. | | | | | | | 369 | | | | 88,401 | |
Daifuku Co., Ltd. | | | | | | | 706 | | | | 14,236 | |
Daimler Truck Holding AG | | | | | | | 1,391 | | | | 52,252 | |
Deere & Co. | | | | | | | 712 | | | | 284,707 | |
Dover Corp. | | | | | | | 364 | | | | 55,987 | |
FANUC Corp. | | | | | | | 2,470 | | | | 72,492 | |
Fortive Corp. | | | | | | | 916 | | | | 67,445 | |
GEA Group AG | | | | | | | 426 | | | | 17,711 | |
Graco, Inc. | | | | | | | 440 | | | | 38,174 | |
Hitachi Construction Machinery Co., Ltd. | | | | | | | 258 | | | | 6,792 | |
Hoshizaki Corp.(b) | | | | | | | 202 | | | | 7,379 | |
Husqvarna AB–Class B(b) | | | | | | | 909 | | | | 7,498 | |
IDEX Corp. | | | | | | | 197 | | | | 42,771 | |
Illinois Tool Works, Inc. | | | | | | | 787 | | | | 206,147 | |
Indutrade AB | | | | | | | 710 | | | | 18,504 | |
Ingersoll Rand, Inc. | | | | | | | 1,052 | | | | 81,362 | |
Knorr-Bremse AG | | | | | | | 189 | | | | 12,207 | |
Komatsu Ltd. | | | | | | | 2,400 | | | | 62,456 | |
Kone Oyj–Class B | | | | | | | 884 | | | | 44,219 | |
Kubota Corp. | | | | | | | 2,551 | | | | 38,285 | |
Makita Corp. | | | | | | | 495 | | | | 13,615 | |
Metso Oyj(b) | | | | | | | 1,725 | | | | 17,512 | |
MINEBEA MITSUMI, Inc. | | | | | | | 933 | | | | 19,097 | |
MISUMI Group, Inc. | | | | | | | 730 | | | | 12,325 | |
Mitsubishi Heavy Industries Ltd. | | | | | | | 863 | | | | 50,247 | |
Nordson Corp. | | | | | | | 134 | | | | 35,397 | |
PACCAR, Inc. | | | | | | | 1,360 | | | | 132,804 | |
Parker-Hannifin Corp. | | | | | | | 335 | | | | 154,334 | |
Pentair PLC | | | | | | | 430 | | | | 31,265 | |
Rational AG | | | | | | | 14 | | | | 10,803 | |
Sandvik AB | | | | | | | 2,774 | | | | 60,266 | |
Schindler Holding AG | | | | | | | 106 | | | | 26,538 | |
Schindler Holding AG (REG) | | | | | | | 61 | | | | 14,486 | |
Seatrium Ltd.(a) | | | | | | | 114,843 | | | | 10,254 | |
SKF AB–Class B | | | | | | | 886 | | | | 17,756 | |
SMC Corp. | | | | | | | 210 | | | | 112,337 | |
Snap-on, Inc. | | | | | | | 138 | | | | 39,860 | |
Spirax-Sarco Engineering PLC | | | | | | | 192 | | | | 25,689 | |
Stanley Black & Decker, Inc. | | | | | | | 399 | | | | 39,142 | |
Techtronic Industries Co., Ltd. | | | | | | | 3,244 | | | | 38,652 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Toro Co. (The) | | | | | | | 270 | | | $ | 25,917 | |
Toyota Industries Corp. | | | | | | | 406 | | | | 33,004 | |
VAT Group AG(c) | | | | | | | 71 | | | | 35,660 | |
Volvo AB–Class A | | | | | | | 520 | | | | 13,797 | |
Volvo AB–Class B | | | | | | | 3,926 | | | | 102,154 | |
Wartsila OYJ Abp(b) | | | | | | | 1,231 | | | | 17,891 | |
Westinghouse Air Brake Technologies Corp. | | | | | | | 466 | | | | 59,135 | |
Xylem, Inc./NY | | | | | | | 627 | | | | 71,704 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 3,085,888 | |
| | | | | | | | | | | | |
MARINE TRANSPORTATION–0.1% | | | | | | | | | | | | |
AP Moller–Maersk A/S–Class A | | | | | | | 8 | | | | 14,210 | |
AP Moller–Maersk A/S–Class B | | | | | | | 13 | | | | 23,400 | |
Kawasaki Kisen Kaisha Ltd. | | | | | | | 300 | | | | 12,839 | |
Kuehne + Nagel International AG (REG) | | | | | | | 142 | | | | 49,004 | |
Mitsui OSK Lines Ltd. | | | | | | | 817 | | | | 26,120 | |
Nippon Yusen KK | | | | | | | 1,189 | | | | 36,721 | |
SITC International Holdings Co., Ltd. | | | | | | | 3,000 | | | | 5,178 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 167,472 | |
| | | | | | | | | | | | |
PASSENGER AIRLINES–0.0% | | | | | | | | | | | | |
Air Canada(a) | | | | | | | 457 | | | | 6,446 | |
ANA Holdings, Inc.(a) | | | | | | | 395 | | | | 8,558 | |
Delta Air Lines, Inc. | | | | | | | 418 | | | | 16,816 | |
Deutsche Lufthansa AG (REG)(a) | | | | | | | 1,556 | | | | 13,833 | |
Japan Airlines Co., Ltd. | | | | | | | 358 | | | | 7,033 | |
Qantas Airways Ltd.(a) | | | | | | | 2,198 | | | | 8,051 | |
Singapore Airlines Ltd.(b) | | | | | | | 2,936 | | | | 14,578 | |
Southwest Airlines Co. | | | | | | | 387 | | | | 11,177 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 86,492 | |
| | | | | | | | | | | | |
PROFESSIONAL SERVICES–0.6% | | | | | | | | | | | | |
Adecco Group AG (REG) | | | | | | | 416 | | | | 20,431 | |
Automatic Data Processing, Inc. | | | | | | | 1,072 | | | | 249,744 | |
BayCurrent Consulting, Inc. | | | | | | | 300 | | | | 10,502 | |
Booz Allen Hamilton Holding Corp. | | | | | | | 341 | | | | 43,617 | |
Broadridge Financial Solutions, Inc. | | | | | | | 308 | | | | 63,371 | |
Bureau Veritas SA | | | | | | | 767 | | | | 19,405 | |
Ceridian HCM Holding, Inc.(a) | | | | | | | 385 | | | | 25,841 | |
Computershare Ltd. | | | | | | | 1,413 | | | | 23,534 | |
Equifax, Inc. | | | | | | | 320 | | | | 79,133 | |
Experian PLC | | | | | | | 2,393 | | | | 97,623 | |
Intertek Group PLC | | | | | | | 420 | | | | 22,737 | |
Jacobs Solutions, Inc. | | | | | | | 328 | | | | 42,574 | |
Leidos Holdings, Inc. | | | | | | | 340 | | | | 36,802 | |
16
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Paychex, Inc. | | | | | | | 846 | | | $ | 100,767 | |
Paycom Software, Inc. | | | | | | | 142 | | | | 29,354 | |
Paylocity Holding Corp.(a) | | | | | | | 117 | | | | 19,288 | |
Randstad NV | | | | | | | 287 | | | | 18,012 | |
Recruit Holdings Co., Ltd. | | | | | | | 3,686 | | | | 154,116 | |
RELX PLC (London) | | | | | | | 4,915 | | | | 194,997 | |
Robert Half, Inc. | | | | | | | 279 | | | | 24,530 | |
SGS SA (REG) | | | | | | | 390 | | | | 33,669 | |
SS&C Technologies Holdings, Inc. | | | | | | | 581 | | | | 35,505 | |
Teleperformance SE | | | | | | | 155 | | | | 22,693 | |
Thomson Reuters Corp. | | | | | | | 415 | | | | 60,676 | |
TransUnion | | | | | | | 503 | | | | 34,561 | |
Verisk Analytics, Inc. | | | | | | | 378 | | | | 90,289 | |
Wolters Kluwer NV(b) | | | | | | | 647 | | | | 92,048 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 1,645,819 | |
| | | | | | | | | | | | |
TRADING COMPANIES & DISTRIBUTORS–0.5% | | | | | | | | | | | | |
AerCap Holdings NV(a) | | | | | | | 521 | | | | 38,721 | |
Ashtead Group PLC | | | | | | | 1,139 | | | | 79,169 | |
Beijer Ref AB(b) | | | | | | | 1,001 | | | | 13,432 | |
Brenntag SE | | | | | | | 362 | | | | 33,270 | |
Bunzl PLC | | | | | | | 879 | | | | 35,719 | |
Fastenal Co. | | | | | | | 1,486 | | | | 96,248 | |
Ferguson PLC | | | | | | | 531 | | | | 102,520 | |
ITOCHU Corp. | | | | | | | 3,101 | | | | 126,334 | |
Marubeni Corp. | | | | | | | 3,708 | | | | 58,381 | |
Mitsubishi Corp. | | | | | | | 9,033 | | | | 143,889 | |
Mitsui & Co., Ltd. | | | | | | | 3,331 | | | | 124,792 | |
MonotaRO Co., Ltd.(b) | | | | | | | 632 | | | | 6,877 | |
Reece Ltd.(b) | | | | | | | 588 | | | | 8,969 | |
Sumitomo Corp. | | | | | | | 2,689 | | | | 58,517 | |
Toromont Industries Ltd. | | | | | | | 214 | | | | 18,751 | |
Toyota Tsusho Corp. | | | | | | | 592 | | | | 34,740 | |
United Rentals, Inc. | | | | | | | 178 | | | | 102,069 | |
Watsco, Inc. | | | | | | | 88 | | | | 37,705 | |
WW Grainger, Inc. | | | | | | | 118 | | | | 97,785 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 1,217,888 | |
| | | | | | | | | | | | |
TRANSPORTATION INFRASTRUCTURE–0.1% | | | | | | | | | | | | |
Aena SME SA | | | | | | | 195 | | | | 35,395 | |
Aeroports de Paris SA | | | | | | | 90 | | | | 11,678 | |
Auckland International Airport Ltd. | | | | | | | 3,448 | | | | 19,181 | |
Getlink SE | | | | | | | 930 | | | | 17,033 | |
Transurban Group | | | | | | | 8,033 | | | | 75,063 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 158,350 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 17,355,700 | |
| | | | | | | | | | | | |
CONSUMER DISCRETIONARY–6.7% | | | | | | | | | | | | |
AUTOMOBILE COMPONENTS–0.2% | | | | | | | | | | | | |
Aisin Corp. | | | | | | | 343 | | | | 11,958 | |
Aptiv PLC(a) | | | | | | | 736 | | | | 66,034 | |
BorgWarner, Inc. | | | | | | | 611 | | | | 21,904 | |
Bridgestone Corp.(b) | | | | | | | 1,468 | | | | 60,630 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Cie Generale des Etablissements Michelin SCA | | | | | | | 1,765 | | | $ | 63,410 | |
Continental AG | | | | | | | 286 | | | | 24,290 | |
Denso Corp. | | | | | | | 4,440 | | | | 66,655 | |
Koito Manufacturing Co., Ltd. | | | | | | | 462 | | | | 7,179 | |
Lear Corp. | | | | | | | 153 | | | | 21,605 | |
Magna International, Inc. | | | | | | | 708 | | | | 41,832 | |
Sumitomo Electric Industries Ltd. | | | | | | | 1,819 | | | | 23,081 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 408,578 | |
| | | | | | | | | | | | |
AUTOMOBILES–1.4% | | | | | | | | | | | | |
Bayerische Motoren Werke AG | | | | | | | 830 | | | | 92,355 | |
Bayerische Motoren Werke AG (Preference Shares) | | | | | | | 153 | | | | 15,224 | |
Dr Ing hc F Porsche AG (Preference Shares)(c) | | | | | | | 296 | | | | 26,071 | |
Ferrari NV | | | | | | | 328 | | | | 110,735 | |
Ford Motor Co. | | | | | | | 10,228 | | | | 124,679 | |
General Motors Co. | | | | | | | 3,579 | | | | 128,558 | |
Honda Motor Co., Ltd. | | | | | | | 11,969 | | | | 123,463 | |
Isuzu Motors Ltd. | | | | | | | 1,512 | | | | 19,383 | |
Lucid Group, Inc.(a)(b) | | | | | | | 2,375 | | | | 9,999 | |
Mazda Motor Corp. | | | | | | | 1,465 | | | | 15,659 | |
Mercedes-Benz Group AG | | | | | | | 2,088 | | | | 144,067 | |
Nissan Motor Co., Ltd. | | | | | | | 5,979 | | | | 23,377 | |
Porsche Automobil Holding SE (Preference Shares) | | | | | | | 398 | | | | 20,339 | |
Renault SA | | | | | | | 500 | | | | 20,450 | |
Rivian Automotive, Inc.–Class A(a)(b) | | | | | | | 1,712 | | | | 40,164 | |
Stellantis NV (Milan) | | | | | | | 5,756 | | | | 134,867 | |
Subaru Corp. | | | | | | | 1,581 | | | | 28,836 | |
Suzuki Motor Corp. | | | | | | | 884 | | | | 37,673 | |
Tesla, Inc.(a) | | | | | | | 7,433 | | | | 1,846,952 | |
Toyota Motor Corp. | | | | | | | 27,570 | | | | 505,185 | |
Volkswagen AG | | | | | | | 77 | | | | 10,076 | |
Volkswagen AG (Preference Shares) | | | | | | | 537 | | | | 66,189 | |
Volvo Car AB– Class B(a)(b) | | | | | | | 1,550 | | | | 5,027 | |
Yamaha Motor Co., Ltd.(b) | | | | | | | 2,085 | | | | 18,553 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 3,567,881 | |
| | | | | | | | | | | | |
BROADLINE RETAIL–1.8% | | | | | | | | | | | | |
Amazon.com, Inc.(a) | | | | | | | 24,161 | | | | 3,671,022 | |
Canadian Tire Corp., Ltd.–Class A(b) | | | | | | | 137 | | | | 14,549 | |
Cie Financiere Richemont SA (REG) | | | | | | | 1,358 | | | | 187,573 | |
Dollarama, Inc.(b) | | | | | | | 735 | | | | 52,968 | |
eBay, Inc. | | | | | | | 1,384 | | | | 60,370 | |
Etsy, Inc.(a) | | | | | | | 320 | | | | 25,936 | |
Global-e Online Ltd.(a) | | | | | | | 235 | | | | 9,313 | |
MercadoLibre, Inc.(a) | | | | | | | 118 | | | | 185,442 | |
Next PLC | | | | | | | 314 | | | | 32,460 | |
17
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Pan Pacific International Holdings Corp. | | | | | | | 971 | | | $ | 23,114 | |
Prosus NV(a) | | | | | | | 3,805 | | | | 113,351 | |
Rakuten Group, Inc.(a)(b) | | | | | | | 3,813 | | | | 17,000 | |
Wesfarmers Ltd. | | | | | | | 2,951 | | | | 114,761 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 4,507,859 | |
| | | | | | | | | | | | |
DISTRIBUTORS–0.1% | | | | | | | | | | | | |
D’ieteren Group | | | | | | | 56 | | | | 10,954 | |
Genuine Parts Co. | | | | | | | 366 | | | | 50,691 | |
LKQ Corp. | | | | | | | 696 | | | | 33,262 | |
Pool Corp. | | | | | | | 102 | | | | 40,668 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 135,575 | |
| | | | | | | | | | | | |
DIVERSIFIED CONSUMER SERVICES–0.0% | | | | | | | | | | | | |
IDP Education Ltd.(b) | | | | | | | 687 | | | | 9,371 | |
Pearson PLC | | | | | | | 1,663 | | | | 20,427 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 29,798 | |
| | | | | | | | | | | | |
HOTELS, RESTAURANTS & LEISURE–1.3% | | | | | | | | | | | | |
Accor SA | | | | | | | 516 | | | | 19,751 | |
Airbnb, Inc.–Class A(a) | | | | | | | 1,110 | | | | 151,115 | |
Amadeus IT Group SA | | | | | | | 1,172 | | | | 84,175 | |
Aristocrat Leisure Ltd. | | | | | | | 1,518 | | | | 42,175 | |
Booking Holdings, Inc.(a) | | | | | | | 93 | | | | 329,892 | |
Caesars Entertainment, Inc.(a) | | | | | | | 560 | | | | 26,253 | |
Carnival Corp.(a) | | | | | | | 2,621 | | | | 48,593 | |
Chipotle Mexican Grill, Inc.(a) | | | | | | | 72 | | | | 164,661 | |
Compass Group PLC | | | | | | | 4,459 | | | | 122,013 | |
Darden Restaurants, Inc. | | | | | | | 313 | | | | 51,426 | |
Delivery Hero SE(a) | | | | | | | 457 | | | | 12,578 | |
Domino’s Pizza, Inc. | | | | | | | 91 | | | | 37,513 | |
DoorDash, Inc.–Class A(a) | | | | | | | 666 | | | | 65,861 | |
DraftKings, Inc.–Class A(a) | | | | | | | 1,086 | | | | 38,282 | |
Entain PLC | | | | | | | 1,661 | | | | 20,947 | |
Evolution AB | | | | | | | 477 | | | | 56,816 | |
Expedia Group, Inc.(a) | | | | | | | 359 | | | | 54,493 | |
Flutter Entertainment PLC(a) | | | | | | | 460 | | | | 81,186 | |
Galaxy Entertainment Group Ltd. | | | | | | | 5,343 | | | | 29,925 | |
Genting Singapore Ltd. | | | | | | | 14,869 | | | | 11,263 | |
Hilton Worldwide Holdings, Inc. | | | | | | | 681 | | | | 124,003 | |
Hyatt Hotels Corp.– Class A(b) | | | | | | | 120 | | | | 15,649 | |
InterContinental Hotels Group PLC | | | | | | | 430 | | | | 38,776 | |
La Francaise des Jeux SAEM | | | | | | | 273 | | | | 9,917 | |
Las Vegas Sands Corp. | | | | | | | 895 | | | | 44,043 | |
Lottery Corp., Ltd. (The)(b) | | | | | | | 5,791 | | | | 19,108 | |
Marriott International, Inc./MD–Class A | | | | | | | 660 | | | | 148,837 | |
McDonald’s Corp. | | | | | | | 1,896 | | | | 562,183 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
McDonald’s Holdings Co. Japan Ltd.(b) | | | | | | | 192 | | | $ | 8,317 | |
MGM Resorts International(a) | | | | | | | 730 | | | | 32,616 | |
Oriental Land Co., Ltd./Japan | | | | | | | 2,805 | | | | 104,257 | |
Restaurant Brands International, Inc. | | | | | | | 748 | | | | 58,443 | |
Royal Caribbean Cruises Ltd.(a) | | | | | | | 633 | | | | 81,967 | |
Sands China Ltd.(a) | | | | | | | 6,020 | | | | 17,620 | |
Sodexo SA | | | | | | | 230 | | | | 25,320 | |
Starbucks Corp. | | | | | | | 2,980 | | | | 286,110 | |
Vail Resorts, Inc. | | | | | | | 100 | | | | 21,347 | |
Whitbread PLC | | | | | | | 503 | | | | 23,418 | |
Wynn Resorts Ltd. | | | | | | | 267 | | | | 24,326 | |
Yum! Brands, Inc. | | | | | | | 729 | | | | 95,251 | |
Zensho Holdings Co., Ltd. | | | | | | | 200 | | | | 10,465 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 3,200,891 | |
| | | | | | | | | | | | |
HOUSEHOLD DURABLES–0.3% | | | | | | | | | | | | |
Barratt Developments PLC | | | | | | | 2,535 | | | | 18,160 | |
Berkeley Group Holdings PLC | | | | | | | 277 | | | | 16,537 | |
DR Horton, Inc. | | | | | | | 792 | | | | 120,368 | |
Garmin Ltd. | | | | | | | 399 | | | | 51,287 | |
Iida Group Holdings Co., Ltd. | | | | | | | 311 | | | | 4,645 | |
Lennar Corp.–Class A | | | | | | | 651 | | | | 97,025 | |
NVR, Inc.(a) | | | | | | | 9 | | | | 63,004 | |
Open House Group Co., Ltd. | | | | | | | 200 | | | | 5,916 | |
Panasonic Holdings Corp. | | | | | | | 5,671 | | | | 55,846 | |
Persimmon PLC | | | | | | | 831 | | | | 14,689 | |
PulteGroup, Inc. | | | | | | | 571 | | | | 58,939 | |
SEB SA | | | | | | | 65 | | | | 8,140 | |
Sekisui Chemical Co., Ltd. | | | | | | | 983 | | | | 14,138 | |
Sekisui House Ltd. | | | | | | | 1,489 | | | | 33,005 | |
Sharp Corp./Japan(a) | | | | | | | 597 | | | | 4,249 | |
Sony Group Corp. | | | | | | | 3,334 | | | | 315,506 | |
Taylor Wimpey PLC | | | | | | | 9,190 | | | | 17,203 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 898,657 | |
| | | | | | | | | | | | |
LEISURE PRODUCTS–0.0% | | | | | | | | | | | | |
Bandai Namco Holdings, Inc. | | | | | | | 1,537 | | | | 30,737 | |
BRP, Inc.(b) | | | | | | | 90 | | | | 6,440 | |
Hasbro, Inc. | | | | | | | 343 | | | | 17,514 | |
Shimano, Inc. | | | | | | | 260 | | | | 40,052 | |
Yamaha Corp. | | | | | | | 294 | | | | 6,772 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 101,515 | |
| | | | | | | | | | | | |
SPECIALTY RETAIL–1.0% | | | | | | | | | | | | |
AutoZone, Inc.(a) | | | | | | | 47 | | | | 121,524 | |
Avolta AG (REG)(a) | | | | | | | 254 | | | | 10,000 | |
Bath & Body Works, Inc. | | | | | | | 562 | | | | 24,256 | |
Best Buy Co., Inc. | | | | | | | 510 | | | | 39,923 | |
Burlington Stores, Inc.(a) | | | | | | | 169 | | | | 32,867 | |
18
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
CarMax, Inc.(a) | | | | | | | 413 | | | $ | 31,694 | |
Dick’s Sporting Goods, Inc. | | | | | | | 160 | | | | 23,512 | |
Dynatrace, Inc.(a) | | | | | | | 649 | | | | 35,494 | |
Fast Retailing Co., Ltd. | | | | | | | 457 | | | | 113,006 | |
H & M Hennes & Mauritz AB–Class B | | | | | | | 1,680 | | | | 29,467 | |
Home Depot, Inc. (The) | | | | | | | 2,602 | | | | 901,723 | |
Industria de Diseno Textil SA | | | | | | | 2,838 | | | | 123,833 | |
JD Sports Fashion PLC | | | | | | | 6,742 | | | | 14,228 | |
Kingfisher PLC | | | | | | | 4,922 | | | | 15,250 | |
Lowe’s Cos., Inc. | | | | | | | 1,502 | | | | 334,270 | |
Nitori Holdings Co., Ltd. | | | | | | | 213 | | | | 28,601 | |
O’Reilly Automotive, Inc.(a) | | | | | | | 157 | | | | 149,163 | |
Ross Stores, Inc. | | | | | | | 881 | | | | 121,922 | |
TJX Cos., Inc. (The) | | | | | | | 2,977 | | | | 279,272 | |
Tractor Supply Co. | | | | | | | 283 | | | | 60,853 | |
Ulta Beauty, Inc.(a) | | | | | | | 129 | | | | 63,209 | |
USS Co., Ltd. | | | | | | | 453 | | | | 9,095 | |
Zalando SE(a) | | | | | | | 583 | | | | 13,802 | |
ZOZO, Inc.(b) | | | | | | | 271 | | | | 6,116 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 2,583,080 | |
| | | | | | | | | | | | |
TEXTILES, APPAREL & LUXURY GOODS–0.6% | | | | | | | | | | | | |
adidas AG | | | | | | | 422 | | | | 85,753 | |
Burberry Group PLC | | | | | | | 945 | | | | 17,045 | |
Deckers Outdoor Corp.(a) | | | | | | | 68 | | | | 45,453 | |
Gildan Activewear, Inc.(b) | | | | | | | 456 | | | | 15,080 | |
Hermes International SCA | | | | | | | 83 | | | | 176,418 | |
Kering SA | | | | | | | 194 | | | | 85,922 | |
Lululemon Athletica, Inc.(a) | | | | | | | 301 | | | | 153,899 | |
LVMH Moet Hennessy Louis Vuitton SE | | | | | | | 719 | | | | 584,214 | |
Moncler SpA | | | | | | | 536 | | | | 33,001 | |
NIKE, Inc.–Class B | | | | | | | 3,174 | | | | 344,601 | |
Pandora A/S | | | | | | | 220 | | | | 30,416 | |
Puma SE | | | | | | | 275 | | | | 15,298 | |
Swatch Group AG (The) | | | | | | | 76 | | | | 20,679 | |
Swatch Group AG (The) (REG) | | | | | | | 137 | | | | 7,183 | |
VF Corp. | | | | | | | 859 | | | | 16,149 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 1,631,111 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 17,064,945 | |
| | | | | | | | | | | | |
COMMUNICATION SERVICES–4.4% | | | | | | | | | | | | |
DIVERSIFIED TELECOMMUNICATION SERVICES–0.8% | | | | | | | | | | | | |
AT&T, Inc. | | | | | | | 18,600 | | | | 312,108 | |
BCE, Inc. | | | | | | | 190 | | | | 7,481 | |
BT Group PLC | | | | | | | 16,815 | | | | 26,493 | |
Cellnex Telecom SA(a) | | | | | | | 1,470 | | | | 57,878 | |
Charter Communications, Inc.–Class A(a) | | | | | | | 254 | | | | 98,725 | |
Comcast Corp.–Class A | | | | | | | 10,708 | | | | 469,546 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Deutsche Telekom AG (REG) | | | | | | | 8,432 | | | $ | 202,733 | |
Elisa Oyj | | | | | | | 370 | | | | 17,102 | |
HKT Trust & HKT Ltd.–Class SS | | | | | | | 9,744 | | | | 11,634 | |
Infrastrutture Wireless Italiane SpA(b) | | | | | | | 874 | | | | 11,066 | |
Koninklijke KPN NV | | | | | | | 8,729 | | | | 30,072 | |
Liberty Global Ltd.–Class C(a)(b) | | | | | | | 593 | | | | 11,053 | |
Nippon Telegraph & Telephone Corp. | | | | | | | 77,675 | | | | 94,848 | |
Orange SA | | | | | | | 4,844 | | | | 55,210 | |
Quebecor, Inc.–Class B(b) | | | | | | | 400 | | | | 9,515 | |
Singapore Telecommunications Ltd. | | | | | | | 21,333 | | | | 39,935 | |
Sirius XM Holdings, Inc.(b) | | | | | | | 1,999 | | | | 10,935 | |
Spark New Zealand Ltd. | | | | | | | 4,783 | | | | 15,662 | |
Swisscom AG (REG) | | | | | | | 68 | | | | 40,927 | |
Telecom Italia SpA/Milano(a)(b) | | | | | | | 25,924 | | | | 8,420 | |
Telefonica SA(b) | | | | | | | 12,717 | | | | 49,722 | |
Telenor ASA | | | | | | | 1,638 | | | | 18,798 | |
Telia Co. AB | | | | | | | 6,138 | | | | 15,661 | |
Telstra Group Ltd. | | | | | | | 10,521 | | | | 28,431 | |
TELUS Corp. | | | | | | | 1,248 | | | | 22,209 | |
Verizon Communications, Inc. | | | | | | | 10,938 | | | | 412,363 | |
Washington H Soul Pattinson & Co., Ltd.(b) | | | | | | | 610 | | | | 13,627 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 2,092,154 | |
| | | | | | | | | | | | |
ENTERTAINMENT–0.7% | | | | | | | | | | | | |
Bollore SE | | | | | | | 1,919 | | | | 12,009 | |
Capcom Co., Ltd. | | | | | | | 368 | | | | 11,876 | |
Electronic Arts, Inc. | | | | | | | 670 | | | | 91,663 | |
Koei Tecmo Holdings Co., Ltd. | | | | | | | 246 | | | | 2,802 | |
Konami Group Corp. | | | | | | | 230 | | | | 12,015 | |
Liberty Media Corp.-Liberty Formula One–Class C(a) | | | | | | | 513 | | | | 32,386 | |
Live Nation Entertainment, Inc.(a) | | | | | | | 419 | | | | 39,218 | |
Netflix, Inc.(a) | | | | | | | 1,153 | | | | 561,373 | |
Nexon Co., Ltd.(b) | | | | | | | 840 | | | | 15,279 | |
Nintendo Co., Ltd. | | | | | | | 2,660 | | | | 138,410 | |
ROBLOX Corp.–Class A(a) | | | | | | | 1,105 | | | | 50,520 | |
Roku, Inc.(a) | | | | | | | 323 | | | | 29,606 | |
Sea Ltd. (ADR)(a) | | | | | | | 944 | | | | 38,232 | |
Square Enix Holdings Co., Ltd. | | | | | | | 218 | | | | 7,815 | |
Take-Two Interactive Software, Inc.(a) | | | | | | | 442 | | | | 71,140 | |
Toho Co., Ltd./Tokyo | | | | | | | 296 | | | | 9,993 | |
Universal Music Group NV | | | | | | | 2,132 | | | | 60,862 | |
Walt Disney Co. (The) | | | | | | | 4,761 | | | | 429,871 | |
Warner Bros Discovery, Inc.(a) | | | | | | | 6,024 | | | | 68,553 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 1,683,623 | |
| | | | | | | | | | | | |
19
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
INTERACTIVE MEDIA & SERVICES–2.5% | | | | | | | | | | | | |
Adevinta ASA(a) | | | | | | | 909 | | | $ | 10,042 | |
Alphabet, Inc.–Class A(a) | | | | | | | 15,437 | | | | 2,156,395 | |
Alphabet, Inc.–Class C(a) | | | | | | | 13,584 | | | | 1,914,393 | |
Auto Trader Group PLC | | | | | | | 2,380 | | | | 21,864 | |
CAR Group Ltd. | | | | | | | 931 | | | | 19,729 | |
LY Corp.(b) | | | | | | | 6,935 | | | | 24,524 | |
Match Group, Inc.(a) | | | | | | | 723 | | | | 26,389 | |
Meta Platforms, Inc.–Class A(a) | | | | | | | 5,783 | | | | 2,046,951 | |
Pinterest, Inc.–Class A(a) | | | | | | | 1,513 | | | | 56,041 | |
REA Group Ltd.(b) | | | | | | | 138 | | | | 17,017 | |
Scout24 SE | | | | | | | 195 | | | | 13,789 | |
SEEK Ltd.(b) | | | | | | | 926 | | | | 16,847 | |
Snap, Inc.–Class A(a) | | | | | | | 2,670 | | | | 45,203 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 6,369,184 | |
| | | | | | | | | | | | |
MEDIA–0.2% | | | | | | | | | | | | |
Dentsu Group, Inc.(b) | | | | | | | 526 | | | | 13,467 | |
Fox Corp.–Class A | | | | | | | 650 | | | | 19,286 | |
Fox Corp.–Class B | | | | | | | 367 | | | | 10,148 | |
Informa PLC | | | | | | | 3,600 | | | | 35,807 | |
Interpublic Group of Cos., Inc. (The) | | | | | | | 1,001 | | | | 32,673 | |
Liberty Broadband Corp.–Class C(a) | | | | | | | 311 | | | | 25,064 | |
Liberty Media Corp.-Liberty SiriusXM–Class A(a) | | | | | | | 426 | | | | 12,260 | |
News Corp.–Class A | | | | | | | 991 | | | | 24,329 | |
Omnicom Group, Inc. | | | | | | | 514 | | | | 44,466 | |
Paramount Global–Class B | | | | | | | 1,270 | | | | 18,783 | |
Publicis Groupe SA | | | | | | | 596 | | | | 55,375 | |
Trade Desk, Inc. (The)–Class A(a) | | | | | | | 1,161 | | | | 83,546 | |
Vivendi SE | | | | | | | 1,741 | | | | 18,637 | |
WPP PLC | | | | | | | 2,796 | | | | 26,707 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 420,548 | |
| | | | | | | | | | | | |
WIRELESS TELECOMMUNICATION SERVICES–0.2% | | | | | | | | | | | | |
KDDI Corp. | | | | | | | 3,868 | | | | 122,687 | |
Rogers Communications, Inc.–Class B(b) | | | | | | | 923 | | | | 43,209 | |
SoftBank Corp. | | | | | | | 7,387 | | | | 92,055 | |
SoftBank Group Corp. | | | | | | | 2,662 | | | | 117,497 | |
T-Mobile US, Inc. | | | | | | | 1,378 | | | | 220,935 | |
Tele2 AB–Class B | | | | | | | 1,389 | | | | 11,939 | |
Vodafone Group PLC | | | | | | | 59,882 | | | | 52,297 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 660,619 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 11,226,128 | |
| | | | | | | | | | | | |
CONSUMER STAPLES–4.3% | | | | | | | | | | | | |
BEVERAGES–1.0% | | | | | | | | | | | | |
Anheuser-Busch InBev SA/NV | | | | | | | 2,260 | | | | 145,879 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Asahi Group Holdings Ltd.(b) | | | | | | | 1,264 | | | $ | 47,067 | |
Brown-Forman Corp.–Class B(b) | | | | | | | 807 | | | | 46,080 | |
Budweiser Brewing Co. APAC Ltd.(c) | | | | | | | 4,137 | | | | 7,756 | |
Carlsberg AS–Class B | | | | | | | 256 | | | | 32,124 | |
Celsius Holdings, Inc.(a)(b) | | | | | | | 390 | | | | 21,263 | |
Coca-Cola Co. (The) | | | | | | | 10,689 | | | | 629,903 | |
Coca-Cola Europacific Partners PLC | | | | | | | 537 | | | | 35,839 | |
Coca-Cola HBC AG–Class SS(a) | | | | | | | 574 | | | | 16,854 | |
Constellation Brands, Inc.–Class A | | | | | | | 430 | | | | 103,952 | |
Davide Campari-Milano NV(b) | | | | | | | 1,360 | | | | 15,358 | |
Diageo PLC | | | | | | | 5,848 | | | | 212,254 | |
Heineken Holding NV | | | | | | | 337 | | | | 28,535 | |
Heineken NV(b) | | | | | | | 749 | | | | 76,098 | |
Keurig Dr Pepper, Inc. | | | | | | | 2,726 | | | | 90,830 | |
Kirin Holdings Co., Ltd.(b) | | | | | | | 1,928 | | | | 28,226 | |
Molson Coors Beverage Co.–Class B | | | | | | | 494 | | | | 30,238 | |
Monster Beverage Corp.(a) | | | | | | | 2,044 | | | | 117,755 | |
PepsiCo, Inc. | | | | | | | 3,577 | | | | 607,518 | |
Pernod Ricard SA | | | | | | | 532 | | | | 94,016 | |
Remy Cointreau SA | | | | | | | 60 | | | | 7,653 | |
Suntory Beverage & Food Ltd. | | | | | | | 338 | | | | 11,113 | |
Treasury Wine Estates Ltd.(b) | | | | | | | 2,076 | | | | 15,274 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 2,421,585 | |
| | | | | | | | | | | | |
CONSUMER STAPLES DISTRIBUTION & RETAIL–1.1% | | | | | | | | | | | | |
Aeon Co., Ltd. | | | | | | | 1,625 | | | | 36,261 | |
Albertsons Cos., Inc.– Class A | | | | | | | 898 | | | | 20,654 | |
Alimentation Couche-Tard, Inc. | | | | | | | 2,011 | | | | 118,424 | |
Carrefour SA | | | | | | | 1,498 | | | | 27,435 | |
Coles Group Ltd. | | | | | | | 3,482 | | | | 38,250 | |
Costco Wholesale Corp. | | | | | | | 1,152 | | | | 760,412 | |
Dollar General Corp. | | | | | | | 571 | | | | 77,627 | |
Dollar Tree, Inc.(a) | | | | | | | 544 | | | | 77,275 | |
Empire Co., Ltd.–Class A | | | | | | | 375 | | | | 9,919 | |
Endeavour Group Ltd./Australia(b) | | | | | | | 3,727 | | | | 13,236 | |
George Weston Ltd. | | | | | | | 162 | | | | 20,112 | |
HelloFresh SE(a) | | | | | | | 404 | | | | 6,370 | |
J Sainsbury PLC | | | | | | | 4,312 | | | | 16,625 | |
Jeronimo Martins SGPS SA | | | | | | | 736 | | | | 18,732 | |
Kesko Oyj–Class B | | | | | | | 710 | | | | 14,075 | |
Kobe Bussan Co., Ltd. | | | | | | | 296 | | | | 8,744 | |
Koninklijke Ahold Delhaize NV | | | | | | | 2,499 | | | | 71,900 | |
20
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Kroger Co. (The) | | | | | | | 1,778 | | | $ | 81,272 | |
Loblaw Cos., Ltd. | | | | | | | 409 | | | | 39,596 | |
MatsukiyoCocokara & Co. | | | | | | | 800 | | | | 14,139 | |
Metro, Inc./CN(b) | | | | | | | 598 | | | | 30,955 | |
Ocado Group PLC(a)(b) | | | | | | | 1,507 | | | | 14,557 | |
Seven & i Holdings Co., Ltd. | | | | | | | 1,912 | | | | 75,619 | |
Sysco Corp. | | | | | | | 1,312 | | | | 95,947 | |
Target Corp. | | | | | | | 1,201 | | | | 171,046 | |
Tesco PLC | | | | | | | 18,489 | | | | 68,497 | |
Walgreens Boots Alliance, Inc. | | | | | | | 1,910 | | | | 49,870 | |
Walmart, Inc. | | | | | | | 3,852 | | | | 607,268 | |
Woolworths Group Ltd.(b) | | | | | | | 3,178 | | | | 80,626 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 2,665,443 | |
| | | | | | | | | | | | |
FOOD PRODUCTS–0.9% | | | | | | | | | | | | |
Ajinomoto Co., Inc. | | | | | | | 1,158 | | | | 44,576 | |
Archer-Daniels-Midland Co. | | | | | | | 1,395 | | | | 100,747 | |
Associated British Foods PLC | | | | | | | 896 | | | | 27,004 | |
Barry Callebaut AG (REG) | | | | | | | 10 | | | | 16,882 | |
Bunge Global SA | | | | | | | 392 | | | | 39,572 | |
Campbell Soup Co. | | | | | | | 504 | | | | 21,788 | |
Chocoladefabriken Lindt & Spruengli AG | | | | | | | 3 | | | | 36,011 | |
Chocoladefabriken Lindt & Spruengli AG (REG) | | | | | | | 1 | | | | 121,318 | |
Conagra Brands, Inc. | | | | | | | 1,243 | | | | 35,624 | |
Danone SA | | | | | | | 1,675 | | | | 108,671 | |
Darling Ingredients, Inc.(a) | | | | | | | 415 | | | | 20,684 | |
General Mills, Inc. | | | | | | | 1,512 | | | | 98,492 | |
Hershey Co. (The) | | | | | | | 390 | | | | 72,712 | |
Hormel Foods Corp. | | | | | | | 782 | | | | 25,110 | |
J M Smucker Co. (The) | | | | | | | 263 | | | | 33,238 | |
JDE Peet’s NV(b) | | | | | | | 253 | | | | 6,804 | |
Kellanova | | | | | | | 712 | | | | 39,808 | |
Kerry Group PLC–Class A | | | | | | | 415 | | | | 36,022 | |
Kikkoman Corp. | | | | | | | 337 | | | | 20,593 | |
Kraft Heinz Co. (The) | | | | | | | 2,237 | | | | 82,724 | |
Lamb Weston Holdings, Inc. | | | | | | | 377 | | | | 40,750 | |
Lotus Bakeries NV | | | | | | | 2 | | | | 18,171 | |
McCormick & Co., Inc./MD | | | | | | | 654 | | | | 44,747 | |
MEIJI Holdings Co., Ltd. | | | | | | | 540 | | | | 12,827 | |
Mondelez International, Inc.–Class A | | | | | | | 3,540 | | | | 256,402 | |
Mowi ASA | | | | | | | 1,210 | | | | 21,668 | |
Nestle SA (REG) | | | | | | | 6,947 | | | | 805,295 | |
Nissin Foods Holdings Co., Ltd. | | | | | | | 492 | | | | 17,180 | |
Orkla ASA | | | | | | | 1,823 | | | | 14,157 | |
Salmar ASA | | | | | | | 189 | | | | 10,585 | |
Saputo, Inc.(b) | | | | | | | 659 | | | | 13,344 | |
Tyson Foods, Inc.–Class A | | | | | | | 743 | | | | 39,936 | |
WH Group Ltd. | | | | | | | 21,359 | | | | 13,794 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Wilmar International Ltd. | | | | | | | 4,113 | | | $ | 11,111 | |
Yakult Honsha Co., Ltd. | | | | | | | 584 | | | | 13,109 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 2,321,456 | |
| | | | | | | | | | | | |
HOUSEHOLD PRODUCTS–0.6% | | | | | | | | | | | | |
Church & Dwight Co., Inc. | | | | | | | 640 | | | | 60,518 | |
Clorox Co. (The) | | | | | | | 323 | | | | 46,057 | |
Colgate-Palmolive Co. | | | | | | | 2,043 | | | | 162,848 | |
Essity AB–Class B | | | | | | | 1,584 | | | | 39,255 | |
Henkel AG & Co. KGaA | | | | | | | 270 | | | | 19,372 | |
Henkel AG & Co. KGaA (Preference Shares) | | | | | | | 440 | | | | 35,395 | |
Kimberly-Clark Corp. | | | | | | | 880 | | | | 106,929 | |
Procter & Gamble Co. (The) | | | | | | | 6,132 | | | | 898,583 | |
Reckitt Benckiser Group PLC | | | | | | | 1,867 | | | | 128,829 | |
Unicharm Corp.(b) | | | | | | | 994 | | | | 35,950 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 1,533,736 | |
| | | | | | | | | | | | |
PERSONAL CARE PRODUCTS–0.4% | | | | | | | | | | | | |
Beiersdorf AG | | | | | | | 263 | | | | 39,386 | |
Estee Lauder Cos., Inc. (The)–Class A | | | | | | | 604 | | | | 88,335 | |
Haleon PLC | | | | | | | 14,415 | | | | 59,019 | |
Kao Corp.(b) | | | | | | | 1,193 | | | | 49,039 | |
Kenvue, Inc. | | | | | | | 4,483 | | | | 96,519 | |
Kose Corp. | | | | | | | 96 | | | | 7,176 | |
L’Oreal SA | | | | | | | 628 | | | | 313,058 | |
Shiseido Co., Ltd.(b) | | | | | | | 963 | | | | 29,027 | |
Unilever PLC | | | | | | | 6,505 | | | | 314,913 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 996,472 | |
| | | | | | | | | | | | |
TOBACCO–0.3% | | | | | | | | | | | | |
Altria Group, Inc. | | | | | | | 4,617 | | | | 186,250 | |
British American Tobacco PLC | | | | | | | 5,527 | | | | 161,715 | |
Imperial Brands PLC | | | | | | | 2,215 | | | | 51,007 | |
Japan Tobacco, Inc.(b) | | | | | | | 3,090 | | | | 79,800 | |
Philip Morris International, Inc. | | | | | | | 4,039 | | | | 379,989 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 858,761 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 10,797,453 | |
| | | | | | | | | | | | |
ENERGY–2.8% | | | | | | | | | | | | |
ENERGY EQUIPMENT & SERVICES–0.2% | | | | | | | | | | | | |
Baker Hughes Co. | | | | | | | 2,626 | | | | 89,757 | |
Halliburton Co. | | | | | | | 2,337 | | | | 84,482 | |
Schlumberger NV | | | | | | | 3,698 | | | | 192,444 | |
Tenaris SA | | | | | | | 1,228 | | | | 21,359 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 388,042 | |
| | | | | | | | | | | | |
OIL, GAS & CONSUMABLE FUELS–2.6% | | | | | | | | | | | | |
Aker BP ASA | | | | | | | 822 | | | | 23,877 | |
Ampol Ltd. | | | | | | | 620 | | | | 15,280 | |
21
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
APA Corp. | | | | | | | 799 | | | $ | 28,668 | |
ARC Resources Ltd.(b) | | | | | | | 1,576 | | | | 23,395 | |
BP PLC | | | | | | | 44,403 | | | | 263,224 | |
Cameco Corp. | | | | | | | 1,127 | | | | 48,591 | |
Canadian Natural Resources Ltd.(b) | | | | | | | 2,837 | | | | 185,865 | |
Cenovus Energy, Inc. | | | | | | | 3,700 | | | | 61,655 | |
Cheniere Energy, Inc. | | | | | | | 626 | | | | 106,865 | |
Chesapeake Energy Corp.(b) | | | | | | | 293 | | | | 22,543 | |
Chevron Corp. | | | | | | | 4,721 | | | | 704,184 | |
ConocoPhillips | | | | | | | 3,116 | | | | 361,674 | |
Coterra Energy, Inc. | | | | | | | 1,964 | | | | 50,121 | |
Devon Energy Corp. | | | | | | | 1,667 | | | | 75,515 | |
Diamondback Energy, Inc. | | | | | | | 442 | | | | 68,545 | |
Enbridge, Inc. | | | | | | | 5,530 | | | | 199,073 | |
ENEOS Holdings, Inc. | | | | | | | 7,437 | | | | 29,497 | |
Eni SpA | | | | | | | 6,148 | | | | 104,279 | |
EOG Resources, Inc. | | | | | | | 1,515 | | | | 183,239 | |
EQT Corp. | | | | | | | 1,016 | | | | 39,279 | |
Equinor ASA | | | | | | | 2,344 | | | | 74,286 | |
Exxon Mobil Corp. | | | | | | | 10,423 | | | | 1,042,092 | |
Galp Energia SGPS SA | | | | | | | 1,181 | | | | 17,377 | |
Hess Corp. | | | | | | | 719 | | | | 103,651 | |
HF Sinclair Corp. | | | | | | | 383 | | | | 21,283 | |
Idemitsu Kosan Co., Ltd. | | | | | | | 2,120 | | | | 11,513 | |
Imperial Oil Ltd. | | | | | | | 517 | | | | 29,450 | |
Inpex Corp.(b) | | | | | | | 2,518 | | | | 33,695 | |
Keyera Corp.(b) | | | | | | | 596 | | | | 14,407 | |
Kinder Morgan, Inc. | | | | | | | 5,217 | | | | 92,028 | |
Marathon Oil Corp. | | | | | | | 1,575 | | | | 38,052 | |
Marathon Petroleum Corp. | | | | | | | 1,041 | | | | 154,443 | |
MEG Energy Corp.(a) | | | | | | | 742 | | | | 13,255 | |
Neste Oyj | | | | | | | 1,100 | | | | 39,105 | |
Occidental Petroleum Corp. | | | | | | | 1,726 | | | | 103,059 | |
OMV AG | | | | | | | 383 | | | | 16,803 | |
ONEOK, Inc. | | | | | | | 1,516 | | | | 106,454 | |
Ovintiv, Inc. (New York) | | | | | | | 674 | | | | 29,602 | |
Parkland Corp. | | | | | | | 366 | | | | 11,797 | |
Pembina Pipeline Corp. | | | | | | | 1,428 | | | | 49,164 | |
Phillips 66 | | | | | | | 1,159 | | | | 154,309 | |
Pioneer Natural Resources Co. | | | | | | | 607 | | | | 136,502 | |
Repsol SA | | | | | | | 3,323 | | | | 49,293 | |
Santos Ltd. | | | | | | | 8,450 | | | | 43,936 | |
Shell PLC | | | | | | | 17,216 | | | | 563,550 | |
Suncor Energy, Inc. | | | | | | | 3,383 | | | | 108,380 | |
Targa Resources Corp. | | | | | | | 553 | | | | 48,039 | |
TC Energy Corp.(b) | | | | | | | 2,677 | | | | 104,571 | |
Texas Pacific Land Corp. | | | | | | | 16 | | | | 25,159 | |
TotalEnergies SE | | | | | | | 5,962 | | | | 405,410 | |
Tourmaline Oil Corp. | | | | | | | 840 | | | | 37,776 | |
Valero Energy Corp. | | | | | | | 919 | | | | 119,470 | |
Williams Cos., Inc. (The) | | | | | | | 3,165 | | | | 110,237 | |
Woodside Energy Group Ltd. | | | | | | | 4,940 | | | | 104,316 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 6,607,833 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 6,995,875 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
MATERIALS–2.6% | | | | | | | | | | | | |
CHEMICALS–1.3% | | | | | | | | | | | | |
Air Liquide SA | | | | | | | 1,363 | | | $ | 265,370 | |
Air Products and Chemicals, Inc. | | | | | | | 578 | | | | 158,256 | |
Akzo Nobel NV(b) | | | | | | | 444 | | | | 36,766 | |
Albemarle Corp.(b) | | | | | | | 306 | | | | 44,211 | |
Arkema SA | | | | | | | 156 | | | | 17,771 | |
Asahi Kasei Corp. | | | | | | | 3,175 | | | | 23,433 | |
BASF SE | | | | | | | 2,322 | | | | 125,033 | |
Celanese Corp.(b) | | | | | | | 269 | | | | 41,794 | |
CF Industries Holdings, Inc. | | | | | | | 502 | | | | 39,909 | |
Chr Hansen Holding A/S | | | | | | | 275 | | | | 23,063 | |
Clariant AG (REG)(a) | | | | | | | 561 | | | | 8,289 | |
Corteva, Inc. | | | | | | | 1,846 | | | | 88,460 | |
Covestro AG(a) | | | | | | | 503 | | | | 29,311 | |
Croda International PLC | | | | | | | 363 | | | | 23,350 | |
Dow, Inc. | | | | | | | 1,829 | | | | 100,302 | |
DSM-Firmenich AG | | | | | | | 484 | | | | 49,220 | |
DuPont de Nemours, Inc. | | | | | | | 1,194 | | | | 91,854 | |
Eastman Chemical Co. | | | | | | | 309 | | | | 27,754 | |
Ecolab, Inc. | | | | | | | 668 | | | | 132,498 | |
EMS-Chemie Holding AG (REG) | | | | | | | 19 | | | | 15,406 | |
Evonik Industries AG | | | | | | | 606 | | | | 12,380 | |
FMC Corp. | | | | | | | 324 | | | | 20,428 | |
Givaudan SA (REG) | | | | | | | 25 | | | | 103,668 | |
ICL Group Ltd. | | | | | | | 2,012 | | | | 10,116 | |
IMCD NV(b) | | | | | | | 149 | | | | 25,950 | |
International Flavors & Fragrances, Inc. | | | | | | | 664 | | | | 53,764 | |
JSR Corp. | | | | | | | 412 | | | | 11,723 | |
Linde PLC | | | | | | | 1,266 | | | | 519,959 | |
LyondellBasell Industries NV–Class A | | | | | | | 675 | | | | 64,179 | |
Mitsubishi Chemical Group Corp. | | | | | | | 3,305 | | | | 20,204 | |
Mitsui Chemicals, Inc. | | | | | | | 440 | | | | 13,012 | |
Mosaic Co. (The) | | | | | | | 864 | | | | 30,871 | |
Nippon Paint Holdings Co., Ltd. | | | | | | | 2,422 | | | | 19,537 | |
Nippon Sanso Holdings Corp.(b) | | | | | | | 450 | | | | 12,016 | |
Nissan Chemical Corp. | | | | | | | 297 | | | | 11,565 | |
Nitto Denko Corp. | | | | | | | 414 | | | | 30,895 | |
Novozymes A/S–Class B | | | | | | | 532 | | | | 29,246 | |
Nutrien Ltd.(b) | | | | | | | 1,287 | | | | 72,506 | |
OCI NV(b) | | | | | | | 274 | | | | 7,941 | |
Orica Ltd. | | | | | | | 1,185 | | | | 12,881 | |
PPG Industries, Inc. | | | | | | | 613 | | | | 91,674 | |
RPM International, Inc. | | | | | | | 335 | | | | 37,396 | |
Sherwin-Williams Co. (The) | | | | | | | 636 | | | | 198,368 | |
Shin-Etsu Chemical Co., Ltd. | | | | | | | 4,745 | | | | 198,451 | |
Sika AG (REG) | | | | | | | 397 | | | | 129,452 | |
Sumitomo Chemical Co., Ltd. | | | | | | | 3,572 | | | | 8,683 | |
22
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Syensqo SA(a) | | | | | | | 193 | | | $ | 20,083 | |
Symrise AG | | | | | | | 346 | | | | 38,024 | |
Toray Industries, Inc. | | | | | | | 3,553 | | | | 18,405 | |
Tosoh Corp. | | | | | | | 616 | | | | 7,853 | |
Umicore SA | | | | | | | 544 | | | | 14,964 | |
Wacker Chemie AG | | | | | | | 48 | | | | 6,052 | |
Westlake Corp. | | | | | | | 100 | | | | 13,996 | |
Yara International ASA | | | | | | | 430 | | | | 15,276 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 3,223,568 | |
| | | | | | | | | | | | |
CONSTRUCTION MATERIALS–0.2% | | | | | | | | | | | | |
CRH PLC (London) | | | | | | | 1,841 | | | | 126,696 | |
Heidelberg Materials AG | | | | | | | 363 | | | | 32,448 | |
Holcim AG(a) | | | | | | | 1,356 | | | | 106,502 | |
James Hardie Industries PLC(a) | | | | | | | 1,145 | | | | 44,147 | |
Martin Marietta Materials, Inc. | | | | | | | 161 | | | | 80,325 | |
Vulcan Materials Co. | | | | | | | 346 | | | | 78,545 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 468,663 | |
| | | | | | | | | | | | |
CONTAINERS & PACKAGING–0.1% | | | | | | | | | | | | |
Amcor PLC | | | | | | | 3,763 | | | | 36,275 | |
Avery Dennison Corp. | | | | | | | 210 | | | | 42,454 | |
Ball Corp. | | | | | | | 820 | | | | 47,166 | |
CCL Industries, Inc.–
Class B | | | | | | | 388 | | | | 17,449 | |
Crown Holdings, Inc. | | | | | | | 314 | | | | 28,916 | |
International Paper Co. | | | | | | | 855 | | | | 30,908 | |
Packaging Corp. of America | | | | | | | 234 | | | | 38,121 | |
SIG Group AG(a) | | | | | | | 795 | | | | 18,310 | |
Smurfit Kappa Group PLC | | | | | | | 677 | | | | 26,837 | |
Westrock Co. | | | | | | | 667 | | | | 27,694 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 314,130 | |
| | | | | | | | | | | | |
METALS & MINING–0.9% | | | | | | | | | | | | |
Agnico Eagle Mines Ltd. | | | | | | | 1,287 | | | | 70,564 | |
Anglo American PLC | | | | | | | 3,306 | | | | 82,738 | |
Antofagasta PLC | | | | | | | 1,026 | | | | 21,938 | |
ArcelorMittal SA | | | | | | | 1,331 | | | | 37,774 | |
Barrick Gold Corp. (Toronto) | | | | | | | 4,567 | | | | 82,513 | |
BHP Group Ltd. | | | | | | | 13,187 | | | | 450,529 | |
BlueScope Steel Ltd. | | | | | | | 1,175 | | | | 18,732 | |
Boliden AB(a) | | | | | | | 711 | | | | 22,254 | |
Cleveland-Cliffs, Inc.(a) | | | | | | | 1,323 | | | | 27,016 | |
Endeavour Mining PLC | | | | | | | 480 | | | | 10,741 | |
First Quantum Minerals Ltd. | | | | | | | 1,533 | | | | 12,553 | |
Fortescue Ltd. | | | | | | | 4,367 | | | | 86,106 | |
Franco-Nevada Corp. | | | | | | | 500 | | | | 55,383 | |
Freeport-McMoRan, Inc. | | | | | | | 3,730 | | | | 158,786 | |
Glencore PLC | | | | | | | 27,234 | | | | 163,705 | |
IGO Ltd.(b) | | | | | | | 1,773 | | | | 10,927 | |
Ivanhoe Mines Ltd.–Class A(a)(b) | | | | | | | 1,585 | | | | 15,371 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
JFE Holdings, Inc. | | | | | | | 1,478 | | | $ | 22,866 | |
Kinross Gold Corp. | | | | | | | 3,193 | | | | 19,326 | |
Lundin Mining Corp. | | | | | | | 1,710 | | | | 13,989 | |
Mineral Resources Ltd.(b) | | | | | | | 457 | | | | 21,769 | |
Newmont Corp. (New York) | | | | | | | 2,972 | | | | 123,011 | |
Nippon Steel Corp. | | | | | | | 2,195 | | | | 50,142 | |
Norsk Hydro ASA | | | | | | | 3,452 | | | | 23,203 | |
Northern Star Resources Ltd. | | | | | | | 2,990 | | | | 27,742 | |
Nucor Corp. | | | | | | | 647 | | | | 112,604 | |
Pan American Silver Corp.(b) | | | | | | | 948 | | | | 15,475 | |
Pilbara Minerals Ltd.(b) | | | | | | | 7,438 | | | | 19,964 | |
Reliance Steel & Aluminum Co. | | | | | | | 153 | | | | 42,791 | |
Rio Tinto Ltd. | | | | | | | 966 | | | | 89,449 | |
Rio Tinto PLC | | | | | | | 2,930 | | | | 217,937 | |
South32 Ltd. | | | | | | | 11,800 | | | | 26,687 | |
Steel Dynamics, Inc. | | | | | | | 410 | | | | 48,421 | |
Sumitomo Metal Mining Co., Ltd. | | | | | | | 572 | | | | 16,987 | |
Teck Resources Ltd.– Class B | | | | | | | 1,199 | | | | 50,682 | |
voestalpine AG | | | | | | | 301 | | | | 9,477 | |
Wheaton Precious Metals Corp. | | | | | | | 1,178 | | | | 58,115 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 2,338,267 | |
| | | | | | | | | | | | |
PAPER & FOREST PRODUCTS–0.1% | | | | | | | | | | | | |
Holmen AB–Class B | | | | | | | 198 | | | | 8,363 | |
Mondi PLC | | | | | | | 1,263 | | | | 24,710 | |
Oji Holdings Corp. | | | | | | | 2,181 | | | | 8,384 | |
Stora Enso Oyj–Class R(b) | | | | | | | 1,513 | | | | 20,963 | |
Svenska Cellulosa AB SCA–Class B(b) | | | | | | | 1,576 | | | | 23,675 | |
UPM-Kymmene Oyj(b) | | | | | | | 1,388 | | | | 52,356 | |
West Fraser Timber Co., Ltd. | | | | | | | 148 | | | | 12,662 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 151,113 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 6,495,741 | |
| | | | | | | | | | | | |
UTILITIES–1.6% | | | | | | | | | | | | |
ELECTRIC UTILITIES–0.9% | | | | | | | | | | | | |
Acciona SA(b) | | | | | | | 64 | | | | 9,424 | |
Alliant Energy Corp. | | | | | | | 657 | | | | 33,704 | |
American Electric Power Co., Inc. | | | | | | | 1,340 | | | | 108,835 | |
BKW AG | | | | | | | 55 | | | | 9,783 | |
Chubu Electric Power Co., Inc. | | | | | | | 1,639 | | | | 21,162 | |
CK Infrastructure Holdings Ltd. | | | | | | | 903 | | | | 4,997 | |
CLP Holdings Ltd. | | | | | | | 3,629 | | | | 29,983 | |
Constellation Energy Corp. | | | | | | | 837 | | | | 97,837 | |
Duke Energy Corp. | | | | | | | 2,005 | | | | 194,565 | |
Edison International | | | | | | | 997 | | | | 71,276 | |
23
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
EDP–Energias de Portugal SA | | | | | | | 8,164 | | | $ | 41,089 | |
Elia Group SA/NV(b) | | | | | | | 77 | | | | 9,638 | |
Emera, Inc. | | | | | | | 710 | | | | 26,952 | |
Endesa SA(b) | | | | | | | 826 | | | | 16,851 | |
Enel SpA | | | | | | | 21,161 | | | | 157,434 | |
Entergy Corp. | | | | | | | 550 | | | | 55,654 | |
Evergy, Inc. | | | | | | | 598 | | | | 31,216 | |
Eversource Energy | | | | | | | 908 | | | | 56,042 | |
Exelon Corp. | | | | | | | 2,589 | | | | 92,945 | |
FirstEnergy Corp. | | | | | | | 1,417 | | | | 51,947 | |
Fortis, Inc./Canada(b) | | | | | | | 1,265 | | | | 52,040 | |
Fortum Oyj | | | | | | | 1,167 | | | | 16,856 | |
Hydro One Ltd.(c) | | | | | | | 857 | | | | 25,677 | |
Iberdrola SA | | | | | | | 15,696 | | | | 205,881 | |
Kansai Electric Power Co., Inc. (The) | | | | | | | 1,771 | | | | 23,505 | |
Mercury NZ Ltd. | | | | | | | 1,809 | | | | 7,547 | |
NextEra Energy, Inc. | | | | | | | 5,336 | | | | 324,109 | |
NRG Energy, Inc. | | | | | | | 596 | | | | 30,813 | |
Origin Energy Ltd. | | | | | | | 4,482 | | | | 25,864 | |
Orsted AS | | | | | | | 492 | | | | 27,275 | |
PG&E Corp. | | | | | | | 5,272 | | | | 95,054 | |
Power Assets Holdings Ltd. | | | | | | | 2,858 | | | | 16,570 | |
PPL Corp. | | | | | | | 1,917 | | | | 51,951 | |
Redeia Corp. SA | | | | | | | 1,055 | | | | 17,385 | |
Southern Co. (The) | | | | | | | 2,837 | | | | 198,930 | |
SSE PLC | | | | | | | 2,841 | | | | 67,065 | |
Terna–Rete Elettrica Nazionale(b) | | | | | | | 3,660 | | | | 30,534 | |
Tokyo Electric Power Co. Holdings, Inc.(a) | | | | | | | 3,884 | | | | 20,325 | |
Verbund AG | | | | | | | 177 | | | | 16,403 | |
Xcel Energy, Inc. | | | | | | | 1,435 | | | | 88,841 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 2,463,959 | |
| | | | | | | | | | | | |
GAS UTILITIES–0.1% | | | | | | | | | | | | |
AltaGas Ltd.(b) | | | | | | | 733 | | | | 15,390 | |
APA Group(b) | | | | | | | 3,338 | | | | 19,426 | |
Atmos Energy Corp. | | | | | | | 386 | | | | 44,737 | |
Enagas SA(b) | | | | | | | 647 | | | | 10,914 | |
Hong Kong & China Gas Co., Ltd. | | | | | | | 28,787 | | | | 22,073 | |
Naturgy Energy Group SA | | | | | | | 327 | | | | 9,754 | |
Osaka Gas Co., Ltd. | | | | | | | 940 | | | | 19,622 | |
Snam SpA(b) | | | | | | | 5,246 | | | | 26,990 | |
Tokyo Gas Co., Ltd. | | | | | | | 950 | | | | 21,792 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 190,698 | |
| | | | | | | | | | | | |
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS–0.1% | | | | | | | | | | | | |
AES Corp. (The) | | | | | | | 1,742 | | | | 33,533 | |
Brookfield Renewable Corp.–Class A | | | | | | | 352 | | | | 10,132 | |
Corp. ACCIONA Energias Renovables SA(b) | | | | | | | 171 | | | | 5,307 | |
EDP Renovaveis SA(b) | | | | | | | 799 | | | | 16,357 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Meridian Energy Ltd. | | | | | | | 3,365 | | | $ | 11,783 | |
Northland Power, Inc.(b) | | | | | | | 658 | | | | 11,953 | |
RWE AG | | | | | | | 1,645 | | | | 74,869 | |
Vistra Corp. | | | | | | | 860 | | | | 33,127 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 197,061 | |
| | | | | | | | | | | | |
MULTI-UTILITIES–0.4% | | | | | | | | | | | | |
Algonquin Power & Utilities Corp.(b) | | | | | | | 1,702 | | | | 10,738 | |
Ameren Corp. | | | | | | | 684 | | | | 49,480 | |
Canadian Utilities Ltd.–Class A | | | | | | | 341 | | | | 8,207 | |
CenterPoint Energy, Inc. | | | | | | | 1,642 | | | | 46,912 | |
Centrica PLC | | | | | | | 14,256 | | | | 25,557 | |
CMS Energy Corp. | | | | | | | 759 | | | | 44,075 | |
Consolidated Edison, Inc. | | | | | | | 898 | | | | 81,691 | |
Dominion Energy, Inc. | | | | | | | 2,177 | | | | 102,319 | |
DTE Energy Co. | | | | | | | 537 | | | | 59,210 | |
E.ON SE | | | | | | | 5,841 | | | | 78,474 | |
Engie SA | | | | | | | 4,752 | | | | 83,713 | |
National Grid PLC | | | | | | | 9,595 | | | | 129,257 | |
NiSource, Inc. | | | | | | | 1,075 | | | | 28,541 | |
Public Service Enterprise Group, Inc. | | | | | | | 1,299 | | | | 79,434 | |
Sembcorp Industries Ltd. | | | | | | | 2,000 | | | | 8,039 | |
Sempra | | | | | | | 1,637 | | | | 122,333 | |
Veolia Environnement SA | | | | | | | 1,768 | | | | 55,881 | |
WEC Energy Group, Inc. | | | | | | | 821 | | | | 69,104 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 1,082,965 | |
| | | | | | | | | | | | |
WATER UTILITIES–0.1% | | | | | | | | | | | | |
American Water Works Co., Inc. | | | | | | | 507 | | | | 66,919 | |
Essential Utilities, Inc. | | | | | | | 653 | | | | 24,389 | |
Severn Trent PLC | | | | | | | 700 | | | | 23,019 | |
United Utilities Group PLC | | | | | | | 1,774 | | | | 23,964 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 138,291 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 4,072,974 | |
| | | | | | | | | | | | |
REAL ESTATE–1.5% | | | | | | | | | | | | |
DIVERSIFIED REITS–0.1% | | | | | | | | | | | | |
Daiwa House REIT Investment Corp. | | | | | | | 7 | | | | 12,482 | |
GPT Group (The) | | | | | | | 4,983 | | | | 15,726 | |
KDX Realty Investment Corp. | | | | | | | 11 | | | | 12,529 | |
Land Securities Group PLC | | | | | | | 1,841 | | | | 16,522 | |
Mirvac Group(b) | | | | | | | 10,266 | | | | 14,605 | |
Nomura Real Estate Master Fund, Inc.(a) | | | | | | | 13 | | | | 15,204 | |
Stockland | | | | | | | 6,210 | | | | 18,833 | |
WP Carey, Inc. | | | | | | | 557 | | | | 36,099 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 142,000 | |
| | | | | | | | | | | | |
HEALTH CARE REITS–0.1% | | | | | | | | | | | | |
Healthpeak Properties, Inc. | | | | | | | 1,423 | | | | 28,175 | |
Ventas, Inc. | | | | | | | 1,047 | | | | 52,182 | |
Welltower, Inc. | | | | | | | 1,350 | | | | 121,730 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 202,087 | |
| | | | | | | | | | | | |
24
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
HOTEL & RESORT REITS–0.0% | | | | | | | | | | | | |
Host Hotels & Resorts, Inc. | | | | | | | 1,851 | | | $ | 36,039 | |
| | | | | | | | | | | | |
INDUSTRIAL REITS–0.2% | | | | | | | | | | | | |
CapitaLand Ascendas REIT | | | | | | | 9,639 | | | | 22,098 | |
GLP J-Reit(a) | | | | | | | 13 | | | | 12,941 | |
Goodman Group(b) | | | | | | | 4,447 | | | | 76,563 | |
Mapletree Logistics Trust | | | | | | | 8,093 | | | | 10,656 | |
Nippon Prologis REIT, Inc.(a) | | | | | | | 6 | | | | 11,537 | |
Prologis, Inc. | | | | | | | 2,404 | | | | 320,453 | |
Segro PLC | | | | | | | 3,034 | | | | 34,215 | |
Warehouses De Pauw CVA | | | | | | | 431 | | | | 13,567 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 502,030 | |
| | | | | | | | | | | | |
OFFICE REITS–0.1% | | | | | | | | | | | | |
Alexandria Real Estate Equities, Inc. | | | | | | | 428 | | | | 54,257 | |
Boston Properties, Inc. | | | | | | | 388 | | | | 27,226 | |
Covivio SA/France | | | | | | | 131 | | | | 7,049 | |
Dexus(b) | | | | | | | 2,798 | | | | 14,623 | |
Gecina SA | | | | | | | 120 | | | | 14,609 | |
Japan Real Estate Investment Corp. | | | | | | | 4 | | | | 16,548 | |
Nippon Building Fund, Inc.(b) | | | | | | | 5 | | | | 21,644 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 155,956 | |
| | | | | | | | | | | | |
REAL ESTATE MANAGEMENT & DEVELOPMENT–0.3% | | | | | | | | | | | | |
Azrieli Group Ltd. | | | | | | | 110 | | | | 7,115 | |
Capitaland Investment Ltd./Singapore(b) | | | | | | | 6,504 | | | | 15,550 | |
CBRE Group, Inc.– Class A(a) | | | | | | | 806 | | | | 75,030 | |
City Developments Ltd.(b) | | | | | | | 1,050 | | | | 5,287 | |
CK Asset Holdings Ltd. | | | | | | | 5,031 | | | | 25,251 | |
CoStar Group, Inc.(a) | | | | | | | 1,063 | | | | 92,896 | |
Daito Trust Construction Co., Ltd. | | | | | | | 183 | | | | 21,182 | |
Daiwa House Industry Co., Ltd. | | | | | | | 1,444 | | | | 43,653 | |
ESR Group Ltd.(c) | | | | | | | 4,748 | | | | 6,566 | |
Fastighets AB Balder–Class B(a)(b) | | | | | | | 1,696 | | | | 12,028 | |
FirstService Corp.(b) | | | | | | | 105 | | | | 17,009 | |
Hang Lung Properties Ltd. | | | | | | | 4,030 | | | | 5,603 | |
Henderson Land Development Co., Ltd. | | | | | | | 2,938 | | | | 9,047 | |
Hongkong Land Holdings Ltd. | | | | | | | 2,395 | | | | 8,330 | |
Hulic Co., Ltd.(b) | | | | | | | 901 | | | | 9,412 | |
LEG Immobilien SE(a) | | | | | | | 193 | | | | 16,889 | |
Mitsubishi Estate Co., Ltd. | | | | | | | 2,835 | | | | 38,862 | |
Mitsui Fudosan Co., Ltd. | | | | | | | 2,269 | | | | 55,476 | |
New World Development Co., Ltd.(b) | | | | | | | 3,625 | | | | 5,621 | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
Nomura Real Estate Holdings, Inc. | | | | | | | 231 | | | $ | 6,062 | |
Sagax AB–Class B | | | | | | | 513 | | | | 14,120 | |
Sino Land Co., Ltd. | | | | | | | 9,242 | | | | 10,050 | |
Sumitomo Realty & Development Co., Ltd. | | | | | | | 656 | | | | 19,440 | |
Sun Hung Kai Properties Ltd. | | | | | | | 3,616 | | | | 39,130 | |
Swire Pacific Ltd.–Class A | | | | | | | 435 | | | | 3,684 | |
Swire Properties Ltd. | | | | | | | 2,422 | | | | 4,903 | |
Swiss Prime Site AG (REG) | | | | | | | 200 | | | | 21,369 | |
Unibail-Rodamco-Westfield(a) | | | | | | | 307 | | | | 22,707 | |
UOL Group Ltd. | | | | | | | 370 | | | | 1,758 | |
Vonovia SE | | | | | | | 1,907 | | | | 59,921 | |
Wharf Holdings Ltd. (The)(b) | | | | | | | 2,000 | | | | 6,443 | |
Wharf Real Estate Investment Co., Ltd. | | | | | | | 3,876 | | | | 13,103 | |
Zillow Group, Inc.–
Class C(a) | | | | | | | 398 | | | | 23,028 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 716,525 | |
| | | | | | | | | | | | |
RESIDENTIAL REITS–0.1% | | | | | | | | | | | | |
American Homes 4 Rent–Class A | | | | | | | 846 | | | | 30,422 | |
AvalonBay Communities, Inc. | | | | | | | 370 | | | | 69,271 | |
Camden Property Trust | | | | | | | 278 | | | | 27,603 | |
Canadian Apartment Properties REIT | | | | | | | 213 | | | | 7,845 | |
Equity LifeStyle Properties, Inc. | | | | | | | 460 | | | | 32,448 | |
Equity Residential | | | | | | | 937 | | | | 57,307 | |
Essex Property Trust, Inc. | | | | | | | 167 | | | | 41,406 | |
Invitation Homes, Inc. | | | | | | | 1,592 | | | | 54,303 | |
Mid-America Apartment Communities, Inc. | | | | | | | 304 | | | | 40,876 | |
Sun Communities, Inc. | | | | | | | 324 | | | | 43,303 | |
UDR, Inc. | | | | | | | 814 | | | | 31,168 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 435,952 | |
| | | | | | | | | | | | |
RETAIL REITS–0.1% | | | | | | | | | | | | |
CapitaLand Integrated Commercial Trust | | | | | | | 13,593 | | | | 21,189 | |
Japan Metropolitan Fund Invest | | | | | | | 21 | | | | 15,158 | |
Kimco Realty Corp. | | | | | | | 1,612 | | | | 34,352 | |
Klepierre SA(a) | | | | | | | 559 | | | | 15,261 | |
Link REIT | | | | | | | 6,173 | | | | 34,662 | |
Mapletree Pan Asia Commercial Trust | | | | | | | 5,196 | | | | 6,173 | |
Realty Income Corp. | | | | | | | 1,844 | | | | 105,882 | |
Regency Centers Corp. | | | | | | | 432 | | | | 28,944 | |
RioCan Real Estate Investment Trust | | | | | | | 382 | | | | 5,368 | |
Scentre Group | | | | | | | 13,504 | | | | 27,500 | |
Simon Property Group, Inc. | | | | | | | 852 | | | | 121,529 | |
Vicinity Ltd. | | | | | | | 10,067 | | | | 13,984 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 430,002 | |
| | | | | | | | | | | | |
25
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
SPECIALIZED REITS–0.5% | | | | | | | | | | | | |
American Tower Corp. | | | | | | | 1,213 | | | $ | 261,862 | |
Crown Castle, Inc. | | | | | | | 1,129 | | | | 130,050 | |
Digital Realty Trust, Inc. | | | | | | | 788 | | | | 106,049 | |
Equinix, Inc. | | | | | | | 244 | | | | 196,515 | |
Extra Space Storage, Inc. | | | | | | | 550 | | | | 88,181 | |
Gaming and Leisure Properties, Inc. | | | | | | | 683 | | | | 33,706 | |
Iron Mountain, Inc. | | | | | | | 759 | | | | 53,115 | |
Public Storage | | | | | | | 412 | | | | 125,660 | |
SBA Communications Corp. | | | | | | | 282 | | | | 71,541 | |
VICI Properties, Inc. | | | | | | | 2,636 | | | | 84,036 | |
Weyerhaeuser Co. | | | | | | | 1,901 | | | | 66,098 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 1,216,813 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 3,837,404 | |
| | | | | | | | | | | | |
Total Common Stocks
(cost $82,844,508) | | | | | | | | | | | 156,575,088 | |
| | | | | | | | | | | | |
| | | | | | Principal
Amount
(000) | | | | |
GOVERNMENTS–TREASURIES–34.3% | | | | | | | | | | | | |
UNITED STATES–34.3% | | | | | | | | | | | | |
U.S. Treasury Bonds
1.25%, 05/15/2050 | | | $ | | | | 552 | | | | 299,191 | |
2.25%, 08/15/2046 | | | | | | | 3,477 | | | | 2,481,637 | |
2.25%, 08/15/2049 | | | | | | | 287 | | | | 201,259 | |
2.25%, 02/15/2052 | | | | | | | 2,286 | | | | 1,591,279 | |
2.375%, 11/15/2049 | | | | | | | 584 | | | | 420,302 | |
2.375%, 05/15/2051 | | | | | | | 1,859 | | | | 1,332,599 | |
2.50%, 02/15/2045 | | | | | | | 288 | | | | 218,486 | |
2.50%, 05/15/2046 | | | | | | | 42 | | | | 31,778 | |
2.75%, 08/15/2047 | | | | | | | 143 | | | | 112,043 | |
2.875%, 05/15/2043 | | | | | | | 300 | | | | 246,573 | |
2.875%, 08/15/2045 | | | | | | | 2,897 | | | | 2,343,725 | |
2.875%, 11/15/2046 | | | | | | | 187 | | | | 149,921 | |
2.875%, 05/15/2049 | | | | | | | 313 | | | | 250,053 | |
2.875%, 05/15/2052 | | | | | | | 417 | | | | 333,710 | |
3.00%, 05/15/2045 | | | | | | | 265 | | | | 219,288 | |
3.00%, 02/15/2047 | | | | | | | 238 | | | | 194,988 | |
3.00%, 05/15/2047 | | | | | | | 409 | | | | 335,562 | |
3.00%, 02/15/2048 | | | | | | | 350 | | | | 286,589 | |
3.00%, 08/15/2048 | | | | | | | 792 | | | | 647,539 | |
3.00%, 02/15/2049 | | | | | | | 257 | | | | 209,772 | |
3.125%, 02/15/2043 | | | | | | | 521 | | | | 446,415 | |
3.50%, 02/15/2039 | | | | | | | 12 | | | | 11,582 | |
3.625%, 08/15/2043 | | | | | | | 1,869 | | | | 1,723,584 | |
3.625%, 05/15/2053 | | | | | | | 1,236 | | | | 1,147,649 | |
3.75%, 11/15/2043 | | | | | | | 48 | | | | 44,696 | |
4.00%, 11/15/2052 | | | | | | | 208 | | | | 205,852 | |
4.25%, 05/15/2039 | | | | | | | 134 | | | | 138,253 | |
4.375%, 11/15/2039 | | | | | | | 502 | | | | 524,642 | |
4.375%, 08/15/2043 | | | | | | | 128 | | | | 131,427 | |
4.50%, 08/15/2039 | | | | | | | 179 | | | | 189,752 | |
4.75%, 02/15/2037 | | | | | | | 465 | | | | 510,486 | |
| | | | | | | | | | | | |
Company | | | | | Principal
Amount
(000) | | | U.S. $ Value | |
| | | | | | | | | | | | |
5.25%, 11/15/2028 | | | $ | | | | 2,017 | | | $ | 2,136,341 | |
5.375%, 02/15/2031 | | | | | | | 359 | | | | 392,659 | |
5.50%, 08/15/2028 | | | | | | | 762 | | | | 813,484 | |
6.00%, 02/15/2026 | | | | | | | 1,336 | | | | 1,377,649 | |
6.125%, 11/15/2027 | | | | | | | 1,389 | | | | 1,495,561 | |
6.25%, 05/15/2030 | | | | | | | 374 | | | | 422,842 | |
6.875%, 08/15/2025 | | | | | | | 471 | | | | 487,529 | |
U.S. Treasury Notes | | | | | | | | | | | | |
0.25%, 08/31/2025 | | | | | | | 850 | | | | 794,061 | |
0.375%, 01/31/2026 | | | | | | | 2,433 | | | | 2,247,761 | |
0.50%, 02/28/2026 | | | | | | | 1,120 | | | | 1,034,765 | |
0.625%, 05/15/2030 | | | | | | | 934 | | | | 764,239 | |
0.625%, 08/15/2030 | | | | | | | 997 | | | | 810,306 | |
0.75%, 04/30/2026 | | | | | | | 629 | | | | 581,461 | |
0.75%, 05/31/2026 | | | | | | | 1,952 | | | | 1,802,088 | |
0.75%, 08/31/2026 | | | | | | | 1,015 | | | | 930,854 | |
0.875%, 09/30/2026 | | | | | | | 1,513 | | | | 1,389,977 | |
1.00%, 07/31/2028 | | | | | | | 2,116 | | | | 1,861,816 | |
1.125%, 10/31/2026 | | | | | | | 1,163 | | | | 1,073,594 | |
1.25%, 12/31/2026 | | | | | | | 919 | | | | 848,126 | |
1.375%, 11/15/2031 | | | | | | | 73 | | | | 60,311 | |
1.50%, 08/15/2026 | | | | | | | 1,541 | | | | 1,442,520 | |
1.50%, 02/15/2030 | | | | | | | 523 | | | | 456,143 | |
1.625%, 02/15/2026 | | | | | | | 2,203 | | | | 2,088,031 | |
1.625%, 08/15/2029 | | | | | | | 937 | | | | 834,987 | |
1.625%, 05/15/2031 | | | | | | | 3,081 | | | | 2,646,772 | |
1.75%, 11/15/2029 | | | | | | | 984 | | | | 879,693 | |
1.875%, 02/15/2032 | | | | | | | 1,787 | | | | 1,539,054 | |
2.00%, 08/15/2025 | | | | | | | 811 | | | | 780,268 | |
2.00%, 11/15/2026 | | | | | | | 4,808 | | | | 4,546,754 | |
2.125%, 05/15/2025 | | | | | | | 2,550 | | | | 2,467,836 | |
2.25%, 11/15/2025 | | | | | | | 909 | | | | 875,770 | |
2.25%, 08/15/2027 | | | | | | | 2,292 | | | | 2,162,076 | |
2.25%, 11/15/2027 | | | | | | | 3,588 | | | | 3,375,899 | |
2.375%, 05/15/2027 | | | | | | | 4,367 | | | | 4,150,110 | |
2.375%, 05/15/2029 | | | | | | | 1,327 | | | | 1,231,715 | |
2.625%, 02/15/2029 | | | | | | | 451 | | | | 424,855 | |
2.75%, 02/15/2024 | | | | | | | 3,213 | | | | 3,202,756 | |
2.75%, 02/15/2028 | | | | | | | 129 | | | | 123,069 | |
2.75%, 08/15/2032 | | | | | | | 949 | | | | 870,340 | |
2.875%, 05/15/2028 | | | | | | | 400 | | | | 384,163 | |
2.875%, 05/15/2032 | | | | | | | 2,242 | | | | 2,081,835 | |
3.125%, 11/15/2028 | | | | | | | 912 | | | | 881,978 | |
3.125%, 08/31/2029 | | | | | | | 727 | | | | 698,995 | |
3.375%, 05/15/2033 | | | | | | | 1,329 | | | | 1,277,643 | |
3.50%, 04/30/2028 | | | | | | | 794 | | | | 782,189 | |
3.50%, 02/15/2033 | | | | | | | 1,420 | | | | 1,379,938 | |
3.625%, 03/31/2028 | | | | | | | 1,209 | | | | 1,196,325 | |
3.875%, 08/15/2033 | | | | | | | 1,128 | | | | 1,129,282 | |
4.00%, 06/30/2028 | | | | | | | 694 | | | | 697,703 | |
4.125%, 10/31/2027 | | | | | | | 603 | | | | 606,837 | |
4.125%, 11/15/2032 | | | | | | | 787 | | | | 801,103 | |
4.375%, 08/31/2028 | | | | | | | 1,306 | | | | 1,334,670 | |
4.375%, 11/30/2028 | | | | | | | 237 | | | | 243,187 | |
4.50%, 11/15/2033 | | | | | | | 497 | | | | 523,175 | |
4.625%, 09/30/2028 | | | | | | | 578 | | | | 597,146 | |
| | | | | | | | | | | | |
Total Governments–Treasuries
(cost $94,425,001) | | | | | | | | | | | 87,020,873 | |
| | | | | | | | | | | | |
26
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
Company | | | | | Principal
Amount
(000) | | | U.S. $ Value | |
| | | | | | | | | | | | |
AGENCIES–0.3% | | | | | | | | | | | | |
AGENCY DEBENTURES–0.3% | | | | | | | | | | | | |
Federal Home Loan Banks
4.625%, 11/17/2026
(cost $798,639) | | | $ | | | | 800 | | | $ | 811,848 | |
| | | | | | | | | | | | |
| | | | | | Notional
Amount | | | | |
PURCHASED OPTIONS–PUTS–0.3% | | | | | | | | | | | | |
OPTIONS ON EQUITY INDICES–0.3% | | | | | | | | | | | | |
Euro STOXX 50 Index Expiration: Nov 2024; Contracts: 1,010; Exercise Price: EUR 3,650.00; Counterparty: UBS AG(a) | | | EUR | | | | 3,686,500 | | | | 68,492 | |
FTSE 100 Index Expiration: Dec 2024; Contracts: 220; Exercise Price: GBP 6,600.00; Counterparty: UBS AG(a) | | | GBP | | | | 1,452,000 | | | | 27,661 | |
Nikkei 225 Index Expiration: Nov 2024; Contracts: 14,000; Exercise Price: JPY 27,000.00; Counterparty: UBS AG(a) | | | JPY | | | | 378,000,000 | | | | 57,341 | |
S&P 500 Index Expiration: Dec 2024; Contracts: 8,000; Exercise Price: USD 3,950.00; Counterparty: UBS AG(a) | | | USD | | | | 31,600,000 | | | | 576,449 | |
| | | | | | | | | | | | |
Total Purchased Options–Puts (premiums paid $864,999) | | | | | | | | | | | 729,943 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Company | | | | | Shares | | | U.S. $ Value | |
| | | | | | | | | | | | |
WARRANTS–0.0% | | | | | | | | | | | | |
INFORMATION TECHNOLOGY–0.0% | | | | | | | | | | | | |
SOFTWARE–0.0% | | | | | | | | | | | | |
Constellation Software, Inc., expiring 03/31/2040(a)(b)(d)(e)
(cost $0) | | | | | | | 52 | | | $ | –0 | – |
| | | | | | | | | | | | |
SHORT-TERM INVESTMENTS–2.5% | | | | | | | | | | | | |
INVESTMENT COMPANIES–2.5% | | | | | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB, 5.27%(f)(g)(h)
(cost $6,267,808) | | | | | | | 6,267,808 | | | | 6,267,808 | |
| | | | | | | | | | | | |
TOTAL INVESTMENTS BEFORE SECURITY LENDING COLLATERAL FOR SECURITIES LOANED–99.1%
(cost $185,200,955) | | | | | | | | | | | 251,405,560 | |
| | | | | | | | | | | | |
INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED–0.6% | | | | | | | | | | | | |
INVESTMENT COMPANIES–0.6% | | | | | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB, 5.27%(f)(g)(h)
(cost $1,615,764) | | | | | | | 1,615,764 | | | | 1,615,764 | |
| | | | | | | | | | | | |
TOTAL INVESTMENTS–99.7%
(cost $186,816,719) | | | | | | | | | | | 253,021,324 | |
Other assets less liabilities–0.3% | | | | | | | | | | | 795,589 | |
| | | | | | | | | | | | |
NET ASSETS–100.0% | | | | | | | | | | $ | 253,816,913 | |
| | | | | | | | | | | | |
27
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
FUTURES (see Note D)
| | | | | | | | | | | | | | | | |
| Description | | Number of
Contracts | | | Expiration
Month | | | Current
Notional | | | Value and
Unrealized
Appreciation
(Depreciation) | |
Purchased Contracts | | | | | | | | | | | | | | | | |
Euro STOXX 50 Index Futures | | | 84 | | | | March 2024 | | | $ | 4,212,807 | | | $ | (51,840 | ) |
Euro-Bund Futures | | | 3 | | | | March 2024 | | | | 454,452 | | | | 10,505 | |
MSCI EAFE Futures | | | 1 | | | | March 2024 | | | | 112,620 | | | | 2,538 | |
Nikkei 225 (CME) Futures | | | 2 | | | | March 2024 | | | | 474,468 | | | | 9,209 | |
OMXS 30 Index Futures | | | 2 | | | | January 2024 | | | | 47,526 | | | | 157 | |
S&P 500 E-Mini Futures | | | 53 | | | | March 2024 | | | | 12,773,000 | | | | 327,406 | |
TOPIX Index Futures | | | 12 | | | | March 2024 | | | | 2,013,617 | | | | 14,366 | |
U.S. T-Note 2 Yr (CBT) Futures | | | 60 | | | | March 2024 | | | | 12,354,844 | | | | 122,955 | |
U.S. T-Note 10 Yr (CBT) Futures | | | 125 | | | | March 2024 | | | | 14,111,328 | | | | 480,767 | |
U.S. Ultra Bond (CBT) Futures | | | 40 | | | | March 2024 | | | | 5,343,750 | | | | 429,921 | |
| | | | |
Sold Contracts | | | | | | | | | | | | | | | | |
FTSE 100 Index Futures | | | 18 | | | | March 2024 | | | | 1,779,628 | | | | (39,252 | ) |
MSCI Singapore IX ETS Futures | | | 1 | | | | January 2024 | | | | 21,800 | | | | (756 | ) |
S&P TSX 60 Index Futures | | | 12 | | | | March 2024 | | | | 2,301,015 | | | | (48,849 | ) |
SPI 200 Futures | | | 18 | | | | March 2024 | | | | 2,325,959 | | | | (30,370 | ) |
U.S. T-Note 5 Yr (CBT) Futures | | | 8 | | | | March 2024 | | | | 870,188 | | | | (12,692 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | $ | 1,214,065 | |
| | | | | | | | | | | | | | | | |
FORWARD CURRENCY EXCHANGE CONTRACTS (see Note D)
| | | | | | | | | | | | | | | | | | | | | | | | |
| Counterparty | | Contracts to
Deliver
(000) | | | In Exchange
For
(000) | | | Settlement
Date | | | Unrealized
Appreciation
(Depreciation) | |
Bank of America, NA | | | EUR | | | | 3,784 | | | | USD | | | | 4,024 | | | | 01/10/2024 | | | $ | (154,387 | ) |
Bank of America, NA | | | USD | | | | 759 | | | | JPY | | | | 112,243 | | | | 01/12/2024 | | | | 37,461 | |
Bank of America, NA | | | GBP | | | | 2,080 | | | | USD | | | | 2,607 | | | | 01/25/2024 | | | | (44,985 | ) |
Bank of America, NA | | | NOK | | | | 14,840 | | | | USD | | | | 1,396 | | | | 02/16/2024 | | | | (66,099 | ) |
Bank of America, NA | | | USD | | | | 3,071 | | | | NOK | | | | 33,303 | | | | 02/16/2024 | | | | 210,084 | |
Barclays Bank PLC | | | NZD | | | | 3,371 | | | | USD | | | | 2,071 | | | | 01/11/2024 | | | | (59,995 | ) |
Barclays Bank PLC | | | USD | | | | 746 | | | | AUD | | | | 1,133 | | | | 01/25/2024 | | | | 26,352 | |
Barclays Bank PLC | | | SEK | | | | 10,007 | | | | USD | | | | 961 | | | | 02/16/2024 | | | | (33,119 | ) |
BNP Paribas SA | | | USD | | | | 3,104 | | | | CAD | | | | 4,207 | | | | 01/10/2024 | | | | 71,021 | |
BNP Paribas SA | | | USD | | | | 1,152 | | | | EUR | | | | 1,045 | | | | 01/10/2024 | | | | 2,704 | |
BNP Paribas SA | | | USD | | | | 1,732 | | | | NZD | | | | 2,972 | | | | 01/11/2024 | | | | 147,291 | |
Deutsche Bank AG | | | USD | | | | 2,456 | | | | EUR | | | | 2,252 | | | | 01/10/2024 | | | | 31,132 | |
Deutsche Bank AG | | | JPY | | | | 272,296 | | | | USD | | | | 1,839 | | | | 01/12/2024 | | | | (93,910 | ) |
Deutsche Bank AG | | | CHF | | | | 3,350 | | | | USD | | | | 3,782 | | | | 01/18/2024 | | | | (206,588 | ) |
Goldman Sachs Bank USA | | | EUR | | | | 1,229 | | | | USD | | | | 1,318 | | | | 01/10/2024 | | | | (38,986 | ) |
Goldman Sachs Bank USA | | | USD | | | | 2,320 | | | | CAD | | | | 3,181 | | | | 01/10/2024 | | | | 80,758 | |
Goldman Sachs Bank USA | | | USD | | | | 1,313 | | | | JPY | | | | 192,837 | | | | 01/12/2024 | | | | 55,882 | |
Goldman Sachs Bank USA | | | USD | | | | 5,149 | | | | GBP | | | | 4,071 | | | | 01/25/2024 | | | | 40,737 | |
HSBC Bank USA | | | USD | | | | 1,755 | | | | EUR | | | | 1,599 | | | | 01/10/2024 | | | | 10,294 | |
JPMorgan Chase Bank, NA | | | EUR | | | | 1,878 | | | | USD | | | | 2,011 | | | | 01/10/2024 | | | | (62,134 | ) |
JPMorgan Chase Bank, NA | | | USD | | | | 809 | | | | NZD | | | | 1,300 | | | | 01/11/2024 | | | | 13,195 | |
JPMorgan Chase Bank, NA | | | JPY | | | | 420,755 | | | | USD | | | | 2,970 | | | | 01/12/2024 | | | | (17,332 | ) |
JPMorgan Chase Bank, NA | | | USD | | | | 1,182 | | | | JPY | | | | 174,375 | | | | 01/12/2024 | | | | 56,390 | |
28
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Counterparty | | Contracts to
Deliver
(000) | | | In Exchange
For
(000) | | | Settlement
Date | | | Unrealized
Appreciation
(Depreciation) | |
JPMorgan Chase Bank, NA | | | NOK | | | | 16,368 | | | | USD | | | | 1,589 | | | | 02/16/2024 | | | $ | (23,855 | ) |
Morgan Stanley Capital Services, Inc. | | | CAD | | | | 7,624 | | | | USD | | | | 5,661 | | | | 01/10/2024 | | | | (93,262 | ) |
Morgan Stanley Capital Services, Inc. | | | USD | | | | 1,782 | | | | EUR | | | | 1,680 | | | | 01/10/2024 | | | | 72,644 | |
Morgan Stanley Capital Services, Inc. | | | USD | | | | 2,554 | | | | AUD | | | | 3,921 | | | | 01/25/2024 | | | | 119,279 | |
State Street Bank & Trust Co. | | | CAD | | | | 618 | | | | USD | | | | 450 | | | | 01/10/2024 | | | | (16,437 | ) |
State Street Bank & Trust Co. | | | EUR | | | | 466 | | | | USD | | | | 507 | | | | 01/10/2024 | | | | (7,369 | ) |
State Street Bank & Trust Co. | | | USD | | | | 373 | | | | CAD | | | | 512 | | | | 01/10/2024 | | | | 13,704 | |
State Street Bank & Trust Co. | | | USD | | | | 243 | | | | EUR | | | | 228 | | | | 01/10/2024 | | | | 8,639 | |
State Street Bank & Trust Co. | | | USD | | | | 734 | | | | NZD | | | | 1,233 | | | | 01/11/2024 | | | | 44,625 | |
State Street Bank & Trust Co. | | | JPY | | | | 11,294 | | | | USD | | | | 80 | | | | 01/12/2024 | | | | (200 | ) |
State Street Bank & Trust Co. | | | AUD | | | | 380 | | | | USD | | | | 248 | | | | 01/25/2024 | | | | (10,730 | ) |
State Street Bank & Trust Co. | | | GBP | | | | 131 | | | | USD | | | | 163 | | | | 01/25/2024 | | | | (4,271 | ) |
State Street Bank & Trust Co. | | | USD | | | | 222 | | | | AUD | | | | 345 | | | | 01/25/2024 | | | | 13,164 | |
State Street Bank & Trust Co. | | | USD | | | | 471 | | | | GBP | | | | 371 | | | | 01/25/2024 | | | | 1,959 | |
State Street Bank & Trust Co. | | | CHF | | | | 246 | | | | USD | | | | 285 | | | | 02/15/2024 | | | | (8,866 | ) |
State Street Bank & Trust Co. | | | SEK | | | | 1,397 | | | | USD | | | | 139 | | | | 02/16/2024 | | | | (185 | ) |
UBS AG | | | CAD | | | | 6,164 | | | | USD | | | | 4,478 | | | | 01/10/2024 | | | | (174,990 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | $ | (60,385 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
TOTAL RETURN SWAPS (see Note D)
| | | | | | | | | | | | | | | | | | | | | | | | |
Counterparty &
Referenced Obligation | | Rate
Paid/
Received | | | Payment
Frequency | | | Current
Notional
(000) | | | Maturity
Date | | | Unrealized
Appreciation
(Depreciation) | |
Receive Total Return on Reference Obligation | | | | | | | | | | | | | | | | | | | | | | | | |
Morgan Stanley Capital Services LLC Swiss Market Index Futures | | | 0.00 | % | | | Maturity | | | | CHF | | | | 111 | | | | 03/15/2024 | | | $ | (587 | ) |
| (a) | | Non-income producing security. |
| (b) | | Represents entire or partial securities out on loan. See Note E for securities lending information. |
| (c) | | Security is exempt from registration under Rule 144A or Regulation S of the Securities Act of 1933. These securities are considered restricted, but liquid and may be resold in transactions exempt from registration. At December 31, 2023, the aggregate market value of these securities amounted to $121,110 or 0.0% of net assets. |
| (d) | | Security in which significant unobservable inputs (Level 3) were used in determining fair value. |
| (e) | | Fair valued by the Adviser. |
| (f) | | Affiliated investments. |
| (g) | | The rate shown represents the 7-day yield as of period end. |
| (h) | | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
Currency Abbreviation:
AUD—Australian Dollar
CAD—Canadian Dollar
CHF—Swiss Franc
EUR—Euro
GBP—Great British Pound
JPY—Japanese Yen
NOK—Norwegian Krone
NZD—New Zealand Dollar
SEK—Swedish Krona
USD—United States Dollar
29
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
Glossary:
ADR—American Depositary Receipt
CBT—Chicago Board of Trade
CME—Chicago Mercantile Exchange
EAFE—Europe, Australia, and Far East
ETS—Emission Trading Scheme
FTSE—Financial Times Stock Exchange
MSCI—Morgan Stanley Capital International
OMXS—Stockholm Stock Exchange
REG—Registered Shares
REIT—Real Estate Investment Trust
SPI—Share Price Index
TOPIX—Tokyo Price Index
TSX—Toronto Stock Exchange
See notes to financial statements.
30
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| STATEMENT OF ASSETS & LIABILITIES | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
ASSETS | | | | |
Investments in securities, at value | | | | |
Unaffiliated issuers (cost $178,933,147) | | $ | 245,137,752 | (a) |
Affiliated issuers (cost $7,883,572—including investment of cash collateral for securities loaned of $1,615,764) | | | 7,883,572 | |
Cash | | | 545 | |
Cash collateral due from broker | | | 2,019,389 | |
Foreign currencies, at value (cost $491,375) | | | 508,154 | |
Unrealized appreciation on forward currency exchange contracts | | | 1,057,315 | |
Unaffiliated interest and dividends receivable | | | 1,002,862 | |
Receivable for investment securities sold | | | 834,951 | |
Receivable for capital stock sold | | | 160,829 | |
Affiliated dividends receivable | | | 31,753 | |
Receivable due from Adviser | | | 29,567 | |
Other assets | | | 3,337 | |
| | | | |
Total assets | | | 258,670,026 | |
| | | | |
LIABILITIES | | | | |
Payable for collateral received on securities loaned | | | 1,615,764 | |
Unrealized depreciation on forward currency exchange contracts | | | 1,117,700 | |
Payable for investment securities purchased | | | 770,783 | |
Cash collateral due to broker | | | 600,000 | |
Custody and accounting fees payable | | | 308,211 | |
Advisory fee payable | | | 148,528 | |
Payable for variation margin on futures | | | 64,403 | |
Distribution fee payable | | | 52,998 | |
Administrative fee payable | | | 23,900 | |
Payable for capital stock redeemed | | | 16,651 | |
Unrealized depreciation on total return swaps | | | 587 | |
Transfer Agent fee payable | | | 150 | |
Accrued expenses | | | 133,438 | |
| | | | |
Total liabilities | | | 4,853,113 | |
| | | | |
NET ASSETS | | $ | 253,816,913 | |
| | | | |
COMPOSITION OF NET ASSETS | | | | |
Capital stock, at par | | $ | 28,518 | |
Additional paid-in capital | | | 199,268,598 | |
Distributable earnings | | | 54,519,797 | |
| | | | |
NET ASSETS | | $ | 253,816,913 | |
| | | | |
Net Asset Value Per Share—1 billion shares of capital stock authorized, $.001 par value
| | | | | | | | | | | | |
| Class | | Net Assets | | | Shares
Outstanding | | | Net Asset
Value | |
| | | |
| A | | $ | 225,992 | | | | 25,256 | | | $ | 8.95 | |
| | | |
| B | | $ | 253,590,921 | | | | 28,492,567 | | | $ | 8.90 | |
| (a) | | Includes securities on loan with a value of $4,324,366 (see Note E). |
See notes to financial statements.
31
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| STATEMENT OF OPERATIONS | | |
| |
| Year Ended December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
INVESTMENT INCOME | | | | |
Dividends | | | | |
Unaffiliated issuers (net of foreign taxes withheld of $228,548) | | $ | 2,943,923 | |
Affiliated issuers | | | 256,338 | |
Interest | | | 2,309,142 | |
Securities lending income | | | 15,479 | |
| | | | |
| | | 5,524,882 | |
| | | | |
EXPENSES | | | | |
Advisory fee (see Note B) | | | 1,696,787 | |
Distribution fee—Class B | | | 605,464 | |
Transfer agency—Class A | | | 1 | |
Transfer agency—Class B | | | 2,503 | |
Custody and accounting | | | 180,318 | |
Audit and tax | | | 144,625 | |
Administrative | | | 96,215 | |
Legal | | | 44,534 | |
Printing | | | 33,607 | |
Directors’ fees | | | 19,826 | |
Miscellaneous | | | 46,626 | |
| | | | |
Total expenses | | | 2,870,506 | |
Less: expenses waived and reimbursed by the Adviser (see Notes B & E) | | | (207,213 | ) |
| | | | |
Net expenses | | | 2,663,293 | |
| | | | |
Net investment income | | | 2,861,589 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS | | | | |
Net realized gain (loss) on: | | | | |
Investment transactions | | | (5,168,904 | ) |
Forward currency exchange contracts | | | (128,150 | ) |
Futures | | | (2,214,207 | ) |
Swaps | | | 84,382 | |
Foreign currency transactions | | | 29,224 | |
Net change in unrealized appreciation (depreciation) of: | | | | |
Investments | | | 34,156,138 | |
Forward currency exchange contracts | | | (169,438 | ) |
Futures | | | 1,301,229 | |
Swaps | | | (7,214 | ) |
Foreign currency denominated assets and liabilities | | | 32,552 | |
| | | | |
Net gain on investment and foreign currency transactions | | | 27,915,612 | |
| | | | |
NET INCREASE IN NET ASSETS FROM OPERATIONS | | $ | 30,777,201 | |
| | | | |
See notes to financial statements.
32
| | |
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| |
| STATEMENT OF CHANGES IN NET ASSETS | | AB Variable Products Series Fund |
| | | | | | | | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | | | | | | | | |
Net investment income | | $ | 2,861,589 | | | $ | 2,229,545 | |
Net realized loss on investment and foreign currency transactions | | | (7,397,655 | ) | | | (6,155,550 | ) |
Net change in unrealized appreciation (depreciation) of investments and foreign currency denominated assets and liabilities | | | 35,313,267 | | | | (51,515,846 | ) |
| | | | | | | | |
Net increase (decrease) in net assets from operations | | | 30,777,201 | | | | (55,441,851 | ) |
Distributions to Shareholders | | | | | | | | |
Class A | | | (1,818 | ) | | | (82,065 | ) |
Class B | | | (1,462,051 | ) | | | (88,612,765 | ) |
CAPITAL STOCK TRANSACTIONS | | | | | | | | |
Net increase (decrease) | | | (11,093,686 | ) | | | 77,402,279 | |
| | | | | | | | |
Total increase (decrease) | | | 18,219,646 | | | | (66,734,402 | ) |
NET ASSETS | | | | | | | | |
Beginning of period | | | 235,597,267 | | | | 302,331,669 | |
| | | | | | | | |
End of period | | $ | 253,816,913 | | | $ | 235,597,267 | |
| | | | | | | | |
See notes to financial statements.
33
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
NOTE A: Significant Accounting Policies
The AB Dynamic Asset Allocation Portfolio (the “Portfolio”) is a series of AB Variable Products Series Fund, Inc. (the “Fund”). The Portfolio’s investment objective is to maximize total return consistent with AllianceBernstein L.P. (the “Adviser”) determination of reasonable risk. The Portfolio is diversified as defined under the Investment Company Act of 1940 (the “1940 Act”). The Fund was incorporated in the State of Maryland as an open-end series investment company. The Fund offers 10 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 U.S. generally accepted accounting principles (“U.S. GAAP”), 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 Portfolio is an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Portfolio.
1. Security Valuation
Portfolio securities are valued at market value determined on the basis of market quotations or, if market quotations are not readily available or are unreliable, at “fair value” as determined in accordance with procedures approved by and under the oversight of the Fund’s Board of Directors (the “Board”). Pursuant to these procedures, the Adviser serves as the Portfolio’s valuation designee pursuant to Rule 2a-5 of the 1940 Act. In this capacity, the Adviser is responsible, among other things, for making all fair value determinations relating to the Portfolio’s portfolio investments, subject to the Board’s oversight.
In general, the market values of securities which are readily available and deemed reliable are determined as follows: securities listed on a national securities exchange (other than securities listed on the NASDAQ Stock Market, Inc. (“NASDAQ”)) 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 last traded price from the previous day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price; listed or over the counter (“OTC”) market put or call options are valued at the mid level between the current bid and ask prices. If either a current bid or current ask price is unavailable, the Adviser will have discretion to determine the best valuation (e.g., last trade price in the case of listed options); open futures 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 valuation, the last available closing settlement price is used; U.S. Government securities and any other debt instruments having 60 days or less remaining until maturity are generally valued at market by an independent pricing vendor, if a market price is available. If a market price is not available, the securities are valued at amortized cost. This methodology is commonly used for short term securities that have an original maturity of 60 days or less, as well as short term securities that had an original term to maturity that exceeded 60 days. In instances when amortized cost is utilized, the Valuation Committee (the “Committee”) must reasonably conclude that the utilization of amortized cost is approximately the same as the fair value of the security. Factors the Committee will consider include, but are not limited to, an impairment of the creditworthiness of the issuer or material changes in interest rates. 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 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. Swaps and other derivatives are valued daily, primarily using independent pricing services, independent pricing models using market inputs, as well as third party broker-dealers or counterparties. Open-end mutual funds are valued at the closing net asset value per share, while exchange traded funds are valued at the closing market price per share.
Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value as deemed appropriate by the Adviser. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer’s financial statements or
34
| | |
| |
| | | AB Variable Products Series Fund |
other available documents. In addition, the Portfolio may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Portfolio values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Portfolio generally values many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available.
2. Fair Value Measurements
In accordance with U.S. GAAP regarding fair value measurements, fair value is defined as the price that the Portfolio would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability (including those valued based on their market values as described in Note A.1 above). Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Portfolio. Unobservable inputs reflect the Portfolio’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
| | • | | Level 1—quoted prices in active markets for identical investments |
| | • | | Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| | • | | Level 3—significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of investments) |
The fair value of debt instruments, such as bonds, and over-the-counter derivatives is generally based on market price quotations, recently executed market transactions (where observable) or industry recognized modeling techniques and are generally classified as Level 2. Pricing vendor inputs to Level 2 valuations may include quoted prices for similar investments in active markets, interest rate curves, coupon rates, currency rates, yield curves, option adjusted spreads, default rates, credit spreads and other unique security features in order to estimate the relevant cash flows which are then discounted to calculate fair values. If these inputs are unobservable and significant to the fair value, these investments will be classified as Level 3.
Where readily available market prices or relevant bid prices are not available for certain equity investments, such investments may be valued based on similar publicly traded investments, movements in relevant indices since last available prices or based upon underlying company fundamentals and comparable company data (such as multiples to earnings or other multiples to equity). Where an investment is valued using an observable input, such as another publicly traded security, the investment will be classified as Level 2. If management determines that an adjustment is appropriate based on restrictions on resale, illiquidity or uncertainty, and such adjustment is a significant component of the valuation, the investment will be classified as Level 3. An investment will also be classified as Level 3 where management uses company fundamentals and other significant inputs to determine the valuation.
Options are valued using market-based inputs to models, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency, where such inputs and models are available. Alternatively, the values may be obtained through unobservable management determined inputs and/or management’s proprietary models. Where models are used, the selection of a particular model to value an option depends upon the contractual terms of, and specific risks inherent in, the option as well as the availability of pricing information in the market. Valuation models require a variety of inputs, including contractual terms, market prices, measures of volatility and correlations of such inputs. Exchange traded options generally will be classified as Level 2. For options that do not trade on an exchange but trade in liquid markets, inputs can generally be verified and model selection does not involve significant management judgment. Options are classified within Level 2 on the fair value hierarchy when all of the significant inputs can be corroborated to market evidence. Otherwise such instruments are classified as Level 3.
Other fixed income investments, including non-U.S. government and corporate debt, are generally valued using quoted market prices, if available, which are typically impacted by current interest rates, maturity dates and any perceived credit risk
35
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
of the issuer. Additionally, in the absence of quoted market prices, these inputs are used by pricing vendors to derive a valuation based upon industry or proprietary models which incorporate issuer specific data with relevant yield/spread comparisons with more widely quoted bonds with similar key characteristics. Those investments for which there are observable inputs are classified as Level 2. Where the inputs are not observable, the investments are classified as Level 3.
The following table summarizes the valuation of the Portfolio’s investments by the above fair value hierarchy levels as of December 31, 2023:
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Common Stocks: | | | | | | | | | | | | | | | | |
Information Technology | | $ | 32,595,450 | | | $ | 3,567,533 | | | $ | –0 | – | | $ | 36,162,983 | |
Financials | | | 15,715,008 | | | | 7,881,021 | | | | –0 | – | | | 23,596,029 | |
Health Care | | | 13,671,981 | | | | 5,297,875 | | | | –0 | – | | | 18,969,856 | |
Industrials | | | 10,686,505 | | | | 6,669,195 | | | | –0 | – | | | 17,355,700 | |
Consumer Discretionary | | | 12,231,604 | | | | 4,833,341 | | | | –0 | – | | | 17,064,945 | |
Communication Services | | | 9,606,550 | | | | 1,619,578 | | | | –0 | – | | | 11,226,128 | |
Consumer Staples | | | 6,860,436 | | | | 3,937,017 | | | | –0 | – | | | 10,797,453 | |
Energy | | | 5,179,075 | | | | 1,816,800 | | | | –0 | – | | | 6,995,875 | |
Materials | | | 3,195,377 | | | | 3,300,364 | | | | –0 | – | | | 6,495,741 | |
Utilities | | | 2,638,159 | | | | 1,434,815 | | | | –0 | – | | | 4,072,974 | |
Real Estate | | | 2,832,964 | | | | 1,004,440 | | | | –0 | – | | | 3,837,404 | |
Governments—Treasuries | | | –0 | – | | | 87,020,873 | | | | –0 | – | | | 87,020,873 | |
Agencies | | | –0 | – | | | 811,848 | | | | –0 | – | | | 811,848 | |
Purchased Options—Puts | | | –0 | – | | | 729,943 | | | | –0 | – | | | 729,943 | |
Warrants | | | –0 | – | | | –0 | – | | | 0 | (a) | | | –0 | – |
Short-Term Investments | | | 6,267,808 | | | | –0 | – | | | –0 | – | | | 6,267,808 | |
Investments of Cash Collateral for Securities Loaned in Affiliated Money Market Fund | | | 1,615,764 | | | | –0 | – | | | –0 | – | | | 1,615,764 | |
| | | | | | | | | | | | | | | | |
Total Investments in Securities | | | 123,096,681 | | | | 129,924,643 | | | | 0 | (a) | | | 253,021,324 | |
Other Financial Instruments(b): | | | | | | | | | | | | | | | | |
Assets: | |
Futures | | | 1,397,824 | | | | –0 | – | | | –0 | – | | | 1,397,824 | (c) |
Forward Currency Exchange Contracts | | | –0 | – | | | 1,057,315 | | | | –0 | – | | | 1,057,315 | |
Liabilities: | | | | | | | | | | | | | | | | |
Futures | | | (183,759 | ) | | | –0 | – | | | –0 | – | | | (183,759 | )(c) |
Forward Currency Exchange Contracts | | | –0 | – | | | (1,117,700 | ) | | | –0 | – | | | (1,117,700 | ) |
Total Return Swaps | | | –0 | – | | | (587 | ) | | | –0 | – | | | (587 | ) |
| | | | | | | | | | | | | | | | |
Total | | $ | 124,310,746 | | | $ | 129,863,671 | | | $ | 0 | (a) | | $ | 254,174,417 | |
| | | | | | | | | | | | | | | | |
| (a) | | The Portfolio held securities with zero market value at period end. |
| (b) | | Other financial instruments include reverse repurchase agreements and derivative instruments, such as futures, forwards and swaps. Derivative instruments are valued at the unrealized appreciation (depreciation) on the instrument. Other financial instruments may also include swaps with upfront premiums, written options and written swaptions which are valued at market value. |
| (c) | | Only variation margin receivable (payable) at period end is reported within the statement of assets and liabilities. This amount reflects cumulative unrealized appreciation (depreciation) on futures and centrally cleared swaps as reported in the portfolio of investments. Where applicable, centrally cleared swaps with upfront premiums are presented here at market value. |
3. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under forward currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and ask 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.
36
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| | | AB 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, 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 foreign currency denominated assets and liabilities.
4. 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. The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned.
In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, management has analyzed the Portfolio’s tax positions taken or expected to be taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Portfolio’s financial statements.
5. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Portfolio is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the date the securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. Non-cash dividends, if any, are recorded on the ex-dividend date at the fair value of the securities received. The Portfolio amortizes premiums and accretes discounts as adjustments to interest income. The Portfolio accounts for distributions received from REIT investments or from regulated investment companies as dividend income, realized gain, or return of capital based on information provided by the REIT or the investment company.
6. Class Allocations
All income earned and expenses incurred by the Portfolio 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 for class specific expenses which are allocated to the respective class. Expenses of the Fund are charged proportionately to each portfolio or based on other appropriate methods. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets.
7. Dividends and Distributions
Dividends and distributions to shareholders, if any, 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 U.S. GAAP. 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 the investment advisory agreement, the Portfolio pays the Adviser an advisory fee at an annual rate of .70% of the Portfolio’s average daily net assets. The Adviser has agreed to waive its fees and bear certain expenses to the extent necessary to limit total operating expenses on an annual basis (the “Expense Caps”) to .85% and 1.10% of daily average net assets for Class A and Class B shares, respectively. The Expense Caps will remain in effect until May 1, 2024 and then may be extended by the Adviser for additional one-year terms. For the year ended December 31, 2023, such reimbursements/waivers amounted to $200,299.
Pursuant to the investment advisory agreement, the Portfolio may reimburse the Adviser for certain legal and accounting services provided to the Portfolio by the Adviser. For the year ended December 31, 2023, the reimbursement for such services amounted to $96,215.
The Portfolio compensates AllianceBernstein Investor Services, Inc. (“ABIS”), 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 retained by ABIS amounted to $1,800 for the year ended December 31, 2023.
37
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
The Portfolio may invest in AB Government Money Market Portfolio (the “Government Money Market Portfolio”) which has a contractual annual advisory fee rate of .20% of the portfolio’s average daily net assets and bears its own expenses. The Adviser had contractually agreed to waive .10% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .10%) until August 31, 2023. Effective September 1, 2023, the Adviser has contractually agreed to waive .05% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .15%) until August 31, 2024. In connection with the investment by the Portfolio in Government Money Market Portfolio, the Adviser has contractually agreed to waive its advisory fee from the Portfolio in an amount equal to the Portfolio’s pro rata share of the effective advisory fee of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. For the year ended December 31, 2023, such waiver amounted to $6,456.
A summary of the Portfolio’s transactions in AB mutual funds for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | |
Portfolio | | Market Value
12/31/22
(000) | | | Purchases
at Cost
(000) | | | Sales
Proceeds
(000) | | | Market Value
12/31/23
(000) | | | Dividend
Income
(000) | |
Government Money Market Portfolio | | $ | 3,658 | | | $ | 47,069 | | | $ | 44,459 | | | $ | 6,268 | | | $ | 256 | |
Government Money Market Portfolio* | | | 165 | | | | 13,207 | | | | 11,756 | | | | 1,616 | | | | 3 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | $ | 7,884 | | | $ | 259 | |
| | | | | | | | | | | | | | | | | | | | |
| * | | Investments of cash collateral for securities lending transactions (see Note E). |
NOTE C: Distribution Plan
The Portfolio has adopted a Distribution Plan (the “Plan”) for Class B shares pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Portfolio pays distribution and servicing fees to AllianceBernstein Investments, Inc. (the “Distributor”), 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 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 or 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 year ended December 31, 2023 were as follows:
| | | | | | | | |
| | | Purchases | | | Sales | |
Investment securities (excluding U.S. government securities) | | $ | 8,554,241 | | | $ | 24,939,962 | |
U.S. government securities | | | 20,240,186 | | | | 19,235,038 | |
The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation are as follows:
| | | | |
Cost | | $ | 188,613,002 | |
| | | | |
Gross unrealized appreciation | | $ | 81,375,618 | |
Gross unrealized depreciation | | | (17,024,126 | ) |
| | | | |
Net unrealized appreciation | | $ | 64,351,492 | |
| | | | |
38
| | |
| |
| | | AB Variable Products Series Fund |
1. Derivative Financial Instruments
The Portfolio may use derivatives in an effort to earn income and enhance returns, to replace more traditional direct investments, to obtain exposure to otherwise inaccessible markets (collectively, “investment purposes”), or to hedge or adjust the risk profile of its portfolio.
The principal types of derivatives utilized by the Portfolio, as well as the methods in which they may be used are:
The Portfolio may buy or sell futures for investment purposes or for the purpose of hedging its portfolio against adverse effects of potential movements in the market. The Portfolio bears the market risk that arises from changes in the value of these instruments and the imperfect correlation between movements in the price of the futures and movements in the price of the assets, reference rates or indices which they are designed to track. Among other things, the Portfolio may purchase or sell futures for foreign currencies or options thereon for non-hedging purposes as a means of making direct investment in foreign currencies, as described below under “Currency Transactions”.
At the time the Portfolio enters into futures, the Portfolio deposits and maintains as collateral an initial margin with the broker, as required by the exchange on which the transaction is effected. Such amount is shown as cash collateral due from broker on the statement of assets and liabilities. 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. The credit/counterparty risk for exchange-traded futures is generally less than privately negotiated futures, since the clearinghouse, which is the issuer or counterparty to each exchange-traded future, has robust risk mitigation standards, including the requirement to provide initial and variation margin. 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.
Use of long futures subjects the Portfolio to risk of loss in excess of the amounts shown on the statement of assets and liabilities, up to the notional value of the futures. Use of short futures subjects the Portfolio to unlimited risk of loss. Under some circumstances, futures exchanges may establish daily limits on the amount that the price of futures can vary from the previous day’s settlement price, which could effectively prevent liquidation of unfavorable positions.
During the year ended December 31, 2023, the Portfolio held futures for hedging and non-hedging purposes.
| | • | | Forward Currency Exchange Contracts |
The Portfolio may enter into forward currency exchange 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 sale commitments denominated in foreign currencies and for non-hedging purposes as a means of making direct investments in foreign currencies, as described below under “Currency Transactions”.
A forward currency exchange contract is a commitment to purchase or sell a foreign currency at 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 forward currency exchange contracts. Fluctuations in the value of open forward currency exchange contracts are recorded for financial reporting purposes as unrealized appreciation and/or depreciation by the Portfolio. 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.
During the year ended December 31, 2023, the Portfolio held forward currency exchange contracts for hedging and non-hedging purposes.
For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign securities, including government securities, and foreign currencies that are traded on U.S. and foreign securities exchanges and over-the-counter markets. Among other things, the Portfolio may use options transactions for non-hedging purposes as a means of making direct investments in foreign currencies, as described below under “Currency Transactions” and may use options strategies involving the purchase and/or writing of various combinations of call and/or put options, for hedging and investment purposes.
39
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB 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 the premium and change in market value should the counterparty not perform under the contract. If a put or call purchased option by the Portfolio were permitted to expire without being sold or exercised, its premium would represent a loss to the Portfolio. Put and call purchased options 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 written option. The Portfolio’s maximum payment for written put options equates to the number of shares multiplied by the strike price. In certain circumstances maximum payout amounts may be partially offset by recovery values of the respective referenced assets and upfront premium received upon entering into the contract. Premiums received from written options which 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. 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 the written option by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value.
During the year ended December 31, 2023, the Portfolio held purchased options for hedging and non-hedging purposes.
The Portfolio may enter into swaps to hedge its exposure to interest rates, credit risk, equity markets or currencies. The Portfolio may also enter into swaps for non-hedging purposes as a means of gaining market exposures, making direct investments in foreign currencies, as described below under “Currency Transactions” or in order to take a “long” or “short” position with respect to an underlying referenced asset described below under “Total Return Swaps”. 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. In addition, collateral may be pledged or received by the Portfolio in accordance with the terms of the respective swaps to provide value and recourse to the Portfolio or its counterparties in the event of default, bankruptcy or insolvency by one of the parties to the swap.
Risks may arise as a result of the failure of the counterparty to the swap to comply with the terms of the swap. The loss incurred by the failure of a counterparty is generally limited to the net interim payment to be received by the Portfolio, and/or the termination value at the end of the contract. Therefore, the Portfolio considers the creditworthiness of each counterparty to a swap in evaluating potential counterparty risk. This risk is mitigated by having a netting arrangement between the Portfolio and the counterparty and by the posting of collateral by the counterparty to the Portfolio to cover the Portfolio’s exposure to the counterparty. Additionally, risks may arise from unanticipated movements in interest rates or in the value of the underlying securities. The Portfolio accrues for the interim payments on swaps on a daily basis, with the net amount recorded within unrealized appreciation/depreciation of swaps on the statement of assets and liabilities, where applicable. Once the interim payments are settled in cash, the net amount is recorded as realized gain/(loss) on swaps on the statement of operations, in addition to any realized gain/(loss) recorded upon the termination of swaps. Upfront premiums paid or received for swaps are recognized as cost or proceeds on the statement of assets and liabilities and are amortized on a straight line basis over the life of the contract. Amortized upfront premiums are included in net realized gain/(loss) from swaps on the statement of operations. Fluctuations in the value of swaps are recorded as a component of net change in unrealized appreciation/depreciation of swaps on the statement of operations.
40
| | |
| |
| | | AB Variable Products Series Fund |
Certain standardized swaps, including certain interest rate swaps and credit default swaps, are (or soon will be) subject to mandatory central clearing. Cleared swaps are transacted through futures commission merchants (“FCMs”) that are members of central clearinghouses, with the clearinghouse serving as central counterparty, similar to transactions in futures contracts. Centralized clearing will be required for additional categories of swaps on a phased-in basis based on requirements published by the Securities and Exchange Commission and Commodity Futures Trading Commission.
At the time the Portfolio enters into a centrally cleared swap, the Portfolio deposits and maintains as collateral an initial margin with the broker, as required by the clearinghouse on which the transaction is effected. Such amount is shown as cash collateral due from broker on the statement of assets and liabilities. 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. The credit/counterparty risk for centrally cleared swaps is generally less than non-centrally cleared swaps, since the clearinghouse, which is the issuer or counterparty to each centrally cleared swap, has robust risk mitigation standards, including the requirement to provide initial and variation margin. 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.
Credit Default Swaps:
The Portfolio may enter into credit default swaps, including to manage its exposure to the market or certain sectors of the market, to reduce its risk exposure to defaults by corporate and sovereign issuers held by the Portfolio, or to create exposure to corporate or sovereign issuers to which it is not otherwise exposed. The Portfolio may purchase credit protection (“Buy Contract”) or provide credit protection (“Sale Contract”) on the referenced obligation of the credit default swap. During the term of the swap, the Portfolio receives/(pays) fixed payments from/(to) the respective counterparty, calculated at the agreed upon rate applied to the notional amount. If the Portfolio is a buyer/(seller) of protection and a credit event occurs, as defined under the terms of the swap, the Portfolio will either (i) receive from the seller/(pay to the buyer) of protection an amount equal to the notional amount of the swap (the “Maximum Payout Amount”) and deliver/(take delivery of) the referenced obligation or (ii) receive/(pay) a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation. In certain circumstances Maximum Payout Amounts may be partially offset by recovery values of the respective referenced obligations, upfront premium received upon entering into the agreement, or net amounts received from settlement of buy protection credit default swaps entered into by the Portfolio for the same referenced obligations with the same counterparty.
Credit default swaps may involve greater risks than if the Portfolio 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 Portfolio is a buyer of protection and no credit event occurs, it will lose the payments it made to its counterparty. If the Portfolio is a seller of protection and a credit event occurs, the value of the referenced obligation received by the Portfolio coupled with the periodic payments previously received, may be less than the Maximum Payout Amount it pays to the buyer, resulting in a net loss to the Portfolio.
Implied credit spreads over U.S. Treasuries of comparable maturity utilized in determining the market value of credit default swaps on issuers as of period end are disclosed in the portfolio of investments. The implied spreads serve as an indicator of the current status of the payment/performance risk and typically reflect the likelihood of default by the issuer of the referenced obligation. The implied credit spread of a particular reference obligation also reflects the cost of buying/selling protection and may reflect upfront payments required to be made to enter into the agreement. Widening credit spreads typically represent a deterioration of the referenced obligation’s credit soundness and greater likelihood of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as “Defaulted” indicates a credit event has occurred for the referenced obligation.
During the year ended December 31, 2023, the Portfolio held credit default swaps for hedging and non-hedging purposes.
41
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| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
Total Return Swaps:
The Portfolio may enter into total return swaps in order to take a “long” or “short” position with respect to an underlying referenced asset. The Portfolio is subject to market price volatility of the underlying referenced asset. A total return swap involves commitments to pay interest in exchange for a market linked return based on a notional amount. To the extent that the total return of the security, group of securities or index underlying the transaction exceeds or falls short of the offsetting interest obligation, the Portfolio will receive a payment from or make a payment to the counterparty.
During the year ended December 31, 2023, the Portfolio held total return swaps for hedging and non-hedging purposes.
The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements (“ISDA Master Agreement”) with its OTC derivative contract counterparties in order to, among other things, reduce its credit risk to OTC counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the OTC counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default or termination. In the event of a default by an OTC counterparty, the return of collateral with market value in excess of the Portfolio’s net liability, held by the defaulting party, may be delayed or denied.
The Portfolio’s ISDA Master Agreements may contain provisions for early termination of OTC derivative transactions in the event the net assets of the Portfolio decline below specific levels (“net asset contingent features”). If these levels are triggered, the Portfolio’s OTC counterparty has the right to terminate such transaction and require the Portfolio to pay or receive a settlement amount in connection with the terminated transaction. If OTC derivatives were held at period end, please refer to netting arrangements by the OTC counterparty table below for additional details.
During the year ended December 31, 2023, the Portfolio had entered into the following derivatives:
| | | | | | | | | | | | |
| | | Asset Derivatives | | | Liability Derivatives | |
Derivative Type | | Statement of
Assets and Liabilities
Location | | Fair Value | | | Statement of
Assets and Liabilities
Location | | Fair Value | |
Interest rate contracts | | Receivable for variation margin on futures | | $ | 1,044,148 | * | | Payable for variation margin on futures | | $ | 12,692 | * |
| | | | |
Equity contracts | | Receivable for variation margin on futures | | | 353,676 | * | | Payable for variation margin on futures | | | 171,067 | * |
| | | | |
Foreign currency contracts | | Unrealized appreciation on forward currency exchange contracts | | | 1,057,315 | | | Unrealized depreciation on forward currency exchange contracts | | | 1,117,700 | |
| | | | |
Equity contracts | | Investments in securities, at value | | | 729,943 | | | | | | | |
| | | | |
Equity contracts | | | | | | | | Unrealized depreciation on total return swaps | | | 587 | |
| | | | | | | | | | | | |
| | | | |
Total | | | | $ | 3,185,082 | | | | | $ | 1,302,046 | |
| | | | | | | | | | | | |
| * | | Only variation margin receivable/payable at period end is reported within the statement of assets and liabilities. This amount reflects cumulative unrealized appreciation (depreciation) on futures and centrally cleared swaps as reported in the portfolio of investments. |
42
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | |
Derivative Type | | Location of Gain or (Loss) on Derivatives
Within Statement of Operations | | Realized Gain or
(Loss) on
Derivatives | | | Change in Unrealized
Appreciation or
(Depreciation) | |
Interest rate contracts | | Net realized gain (loss) on futures; Net change in unrealized appreciation (depreciation) of futures | | $ | (1,978,561 | ) | | $ | 1,195,899 | |
| | | |
Equity contracts | | Net realized gain (loss) on futures; Net change in unrealized appreciation (depreciation) of futures | | | (235,646 | ) | | | 105,330 | |
| | | |
Foreign currency contracts | | Net realized gain (loss) on forward currency exchange contracts; Net change in unrealized appreciation (depreciation) of forward currency exchange contracts | | | (128,150 | ) | | | (169,438 | ) |
| | | |
Equity contracts | | Net realized gain (loss) on investment transactions; Net change in unrealized appreciation (depreciation) of investments | | | (2,052,558 | ) | | | (120,151 | ) |
| | | |
Credit contracts | | Net realized gain (loss) on swaps; Net change in unrealized appreciation (depreciation) of swaps | | | 83,804 | | | | –0 | – |
| | | |
Equity contracts | | Net realized gain (loss) on swaps; Net change in unrealized appreciation (depreciation) of swaps | | | 578 | | | | (7,214 | ) |
| | | | | | | | | | |
Total | | | | $ | (4,310,533 | ) | | $ | 1,004,426 | |
| | | | | | | | | | |
The following table represents the average monthly volume of the Portfolio’s derivative transactions during the year ended December 31, 2023:
| | | | |
Futures: | | | | |
Average notional amount of buy contracts | | $ | 36,235,389 | |
Average notional amount of sale contracts | | $ | 7,142,539 | |
Forward Currency Exchange Contracts: | | | | |
Average principal amount of buy contracts | | $ | 27,861,760 | |
Average principal amount of sale contracts | | $ | 25,975,267 | |
Purchased Options: | | | | |
Average notional amount | | $ | 36,889,735 | |
Centrally Cleared Credit Default Swaps: | | | | |
Average notional amount of sale contracts | | $ | 3,188,500 | (a) |
Total Return Swaps: | | | | |
Average notional amount | | $ | 474,859 | (b) |
| (a) | | Positions were open for six months during the year. |
| (b) | | Positions were open for eleven months during the year. |
For financial reporting purposes, the Portfolio does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the statement of assets and liabilities.
43
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
All OTC derivatives held at period end were subject to netting arrangements. The following table presents the Portfolio’s derivative assets and liabilities by OTC counterparty net of amounts available for offset under ISDA Master Agreements (“MA”) and net of the related collateral received/pledged by the Portfolio as of December 31, 2023. Exchange-traded derivatives and centrally cleared swaps are not subject to netting arrangements and as such are excluded from the table.
| | | | | | | | | | | | | | | | | | | | |
Counterparty | | Derivative Assets
Subject to a MA | | | Derivatives
Available for
Offset | | | Cash Collateral
Received* | | | Security Collateral
Received* | | | Net Amount of
Derivative Assets | |
Bank of America, NA | | $ | 247,545 | | | $ | (247,545 | ) | | $ | –0 | – | | $ | –0 | – | | $ | –0 | – |
Barclays Bank PLC | | | 26,352 | | | | (26,352 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
BNP Paribas SA | | | 221,016 | | | | –0 | – | | | –0 | – | | | –0 | – | | | 221,016 | |
Deutsche Bank AG | | | 31,132 | | | | (31,132 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
Goldman Sachs Bank USA | | | 177,377 | | | | (38,986 | ) | | | –0 | – | | | –0 | – | | | 138,391 | |
HSBC Bank USA | | | 10,294 | | | | –0 | – | | | –0 | – | | | –0 | – | | | 10,294 | |
JPMorgan Chase Bank, NA | | | 69,585 | | | | (69,585 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
Morgan Stanley Capital Services, Inc./Morgan Stanley Capital Services LLC | | | 191,923 | | | | (93,849 | ) | | | –0 | – | | | –0 | – | | | 98,074 | |
State Street Bank & Trust Co. | | | 82,091 | | | | (48,058 | ) | | | –0 | – | | | –0 | – | | | 34,033 | |
UBS AG | | | 729,943 | | | | (174,990 | ) | | | (554,953 | ) | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 1,787,258 | | | $ | (730,497 | ) | | $ | (554,953 | ) | | $ | –0 | – | | $ | 501,808 | ^ |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Counterparty | | Derivative Liabilities
Subject to a MA | | | Derivatives
Available for
Offset | | | Cash Collateral
Pledged* | | | Security Collateral
Pledged* | | | Net Amount of
Derivative Liabilities | |
Bank of America, NA | | $ | 265,471 | | | $ | (247,545 | ) | | $ | –0 | – | | $ | –0 | – | | $ | 17,926 | |
Barclays Bank PLC | | | 93,114 | | | | (26,352 | ) | | | –0 | – | | | –0 | – | | | 66,762 | |
Deutsche Bank AG | | | 300,498 | | | | (31,132 | ) | | | –0 | – | | | –0 | – | | | 269,366 | |
Goldman Sachs Bank USA | | | 38,986 | | | | (38,986 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
JPMorgan Chase Bank, NA | | | 103,321 | | | | (69,585 | ) | | | –0 | – | | | –0 | – | | | 33,736 | |
Morgan Stanley Capital Services, Inc./Morgan Stanley Capital Services LLC | | | 93,849 | | | | (93,849 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
State Street Bank & Trust Co. | | | 48,058 | | | | (48,058 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
UBS AG | | | 174,990 | | | | (174,990 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 1,118,287 | | | $ | (730,497 | ) | | $ | –0 | – | | $ | –0 | – | | $ | 387,790 | ^ |
| | | | | | | | | | | | | | | | | | | | |
| * | | The actual collateral received/pledged may be more than the amount reported due to over-collateralization. |
| ^ | | Net amount represents the net receivable/payable that would be due from/to the counterparty in the event of default or termination. The net amount from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same counterparty. |
2. Currency Transactions
The Portfolio may invest in non-U.S. Dollar-denominated securities on a currency hedged or unhedged basis. The Portfolio may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and other options. The Portfolio may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Portfolio and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Portfolio may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).
NOTE E: Securities Lending
The Portfolio may enter into securities lending transactions. Under the Portfolio’s securities lending program, all loans of securities will be collateralized continually by cash collateral and/or non-cash collateral. Non-cash collateral will include only securities issued or guaranteed by the U.S. government or its agencies or instrumentalities. If the Portfolio cannot sell or
44
| | |
| |
| | | AB Variable Products Series Fund |
repledge any non-cash collateral, such collateral will not be reflected in the portfolio of investments. If a loan is collateralized by cash, the Portfolio will be compensated for the loan from a portion of the net return from the income earned on cash collateral after a rebate is paid to the borrower (in some cases, this rebate may be a “negative rebate” or fee paid by the borrower to the Portfolio in connection with the loan), and payments are made for fees of the securities lending agent and for certain other administrative expenses. If the Portfolio receives non-cash collateral, the Portfolio will receive a fee from the borrower generally equal to a negotiated percentage of the market value of the loaned securities. The Portfolio will have the right to call a loan and obtain the securities loaned at any time on notice to the borrower within the normal and customary settlement time for the securities. While the securities are on loan, the borrower is obligated to pay the Portfolio amounts equal to any dividend income or other distributions from the securities; however, these distributions will not be afforded the same preferential tax treatment as qualified dividends. The Portfolio will not be able to exercise voting rights with respect to any securities during the existence of a loan, but will have the right to regain ownership of loaned securities in order to exercise voting or other ownership rights. Collateral received and securities loaned are marked to market daily to ensure that the securities loaned are secured by collateral. The lending agent currently invests the cash collateral received in Government Money Market Portfolio, an eligible money market vehicle, in accordance with the investment restrictions of the Portfolio, and as approved by the Board. The collateral received on securities loaned is recorded as an asset as well as a corresponding liability in the statement of assets and liabilities. The collateral will be adjusted the next business day to maintain the required collateral amount. The amounts of securities lending income from the borrowers and Government Money Market Portfolio are reflected in the statement of operations. When the Portfolio earns net securities lending income from Government Money Market Portfolio, the income is inclusive of a rebate expense paid to the borrower. In connection with the cash collateral investment by the Portfolio in Government Money Market Portfolio, the Adviser has agreed to waive a portion of the Portfolio’s share of the advisory fees of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. When the Portfolio lends securities, its investment performance will continue to reflect changes in the value of the securities loaned. A principal risk of lending portfolio securities is that the borrower may fail to return the loaned securities upon termination of the loan and that the collateral will not be sufficient to replace the loaned securities. The lending agent has agreed to indemnify the Portfolio in the case of default of any securities borrower.
A summary of the Portfolio’s transactions surrounding securities lending for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Government Money Market
Portfolio | |
Market Value of
Securities on Loan* | | | Cash Collateral* | | | Market Value of
Non-Cash
Collateral* | | | Income from
Borrowers | | | Income Earned | | | Advisory Fee
Waived | |
| $ | 4,324,366 | | | $ | 1,615,764 | | | $ | 2,965,535 | | | $ | 12,177 | | | $ | 3,302 | | | $ | 458 | |
| *As | | of December 31, 2023. |
NOTE F: Capital Stock
Each class consists of 500,000,000 authorized shares. Transactions in capital shares for each class were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | SHARES | | | | | | AMOUNT | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | | | | | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
Class A | |
Shares sold | | | 2,915 | | | | 5,959 | | | | | | | $ | 24,456 | | | $ | 70,320 | |
Shares issued in reinvestment of dividends and distributions | | | 214 | | | | 9,643 | | | | | | | | 1,818 | | | | 82,060 | |
Shares redeemed | | | (6,942 | ) | | | (14,092 | ) | | | | | | | (57,972 | ) | | | (183,919 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (3,813 | ) | | | 1,510 | | | | | | | $ | (31,698 | ) | | $ | (31,539 | ) |
| | | | | | | | | | | | | | | | | | | | |
Class B | |
Shares sold | | | 1,935,596 | | | | 1,391,617 | | | | | | | $ | 16,171,966 | | | $ | 14,302,037 | |
Shares issued on reinvestment of dividends and distributions | | | 172,819 | | | | 10,461,956 | | | | | | | | 1,462,051 | | | | 88,612,765 | |
Shares redeemed | | | (3,442,663 | ) | | | (2,353,134 | ) | | | | | | | (28,696,005 | ) | | | (25,480,984 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (1,334,248 | ) | | | 9,500,439 | | | | | | | $ | (11,061,988 | ) | | $ | 77,433,818 | |
| | | | | | | | | | | | | | | | | | | | |
45
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
At December 31, 2023, certain shareholders of the Portfolio owned 91% in aggregate of the Portfolio’s outstanding shares. Significant transactions by such shareholders, if any, may impact the Portfolio’s performance.
NOTE G: Risks Involved in Investing in the Portfolio
Market Risk—The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Interest-Rate Risk—Changes in interest rates will affect the value of investments in fixed-income securities. When interest rates rise, the value of existing investments in fixed-income securities tends to fall and this decrease in value may not be offset by higher income from new investments. Interest-rate risk is generally greater for fixed-income securities with longer maturities or durations. The Portfolio may be subject to a greater risk of rising interest rates than would normally be the case due to the recent end of a period of historically low rates and the effects of potential central bank monetary policy, and government fiscal policy, initiatives and resulting market reactions to those initiatives.
Credit Risk—An issuer or guarantor of a fixed-income security, or the counterparty to a derivatives or other contract, may be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. The issuer or guarantor may default, causing a loss of the full principal amount of a security and accrued interest. The degree of risk for a particular security may be reflected in its credit rating. There is the possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security. Investments in fixed-income securities with lower ratings tend to have a higher probability that an issuer will default or fail to meet its payment obligations.
Allocation Risk—The allocation of investments among different global asset classes may have a significant effect on the Portfolio’s net asset value, or NAV, when one of these asset classes is performing more poorly than others. As both the direct investments and derivatives positions will be periodically adjusted to reflect the Adviser’s view of market and economic conditions, there will be transaction costs that may be, over time, significant. In addition, there is a risk that certain asset allocation decisions may not achieve the desired results and, as a result, the Portfolio may incur significant losses.
Foreign (Non-U.S.) Risk—The Portfolio’s investments in securities of non-U.S. issuers may involve more risk than those of U.S. issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
Emerging-Market Risk—Investments in emerging market countries may have more risk because the markets are less developed and less liquid, and because these investments may be subject to increased economic, political, regulatory or other uncertainties.
Currency Risk—Fluctuations in currency exchange rates may negatively affect the value of the Portfolio’s investments or reduce its returns.
ETF Risk—ETFs are investment companies. When the Portfolio invests in an ETF, the Portfolio bears its share of the ETF’s expenses and runs the risk that the ETF may not achieve its investment objective.
Derivatives Risk—Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
Leverage Risk—When the Portfolio borrows money or otherwise leverages its investments, its performance may be volatile because leverage tends to exaggerate the effect of any increase or decrease in the value of the Portfolio’s investments. The Portfolio may create leverage through the use of reverse repurchase arrangements, forward currency exchange contracts, forward commitments, dollar rolls or futures or by borrowing money. The use of other types of derivative instruments by the Portfolio, such as options and swaps, may also result in a form of leverage. Leverage may result in higher returns to the Portfolio than if the Portfolio were not leveraged, but may also adversely affect returns, particularly if the market is declining.
46
| | |
| |
| | | AB Variable Products Series Fund |
Illiquid Investments Risk—Illiquid investments risk exists when certain investments are or become difficult to purchase or sell. Difficulty in selling such investments may result in sales at disadvantageous prices affecting the value of your investment in the Portfolio. Causes of illiquid investments risk may include low trading volumes, large positions and heavy redemptions of Portfolio shares.
Capitalization Risk—Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small- and mid-capitalization companies may have additional risks because these companies have limited product lines, markets or financial resources.
Real Estate Risk—The Portfolio’s investments in real estate securities have many of the same risks as direct ownership of real estate, including the risk that the value of real estate could decline due to a variety of factors that affect the real estate market generally. Investments in real estate investment trusts, or REITs, may have additional risks. REITs are dependent on the capability of their managers, may have limited diversification, and could be significantly affected by changes in taxes. Some REITs may utilize leverage, which increases investment risk and may potentially increase the Portfolio’s losses.
LIBOR Replacement Risk—The Portfolio may be exposed to debt securities, derivatives or other financial instruments that recently transitioned from the London Interbank Offered Rate, or “LIBOR,” as a “benchmark” or “reference rate” for various interest rate calculations. LIBOR’s administrator, ICE Benchmark Administration, ceased publishing most LIBOR settings (including some U.S. LIBOR settings) by the end of 2021 and the remaining (and most widely used) U.S. Dollar LIBOR settings after June 30, 2023. The United Kingdom Financial Conduct Authority, which regulates LIBOR, will permit the use of synthetic U.S. Dollar LIBOR rates for non-U.S. contracts through September 30, 2024, but any such rates would be considered non-representative of the underlying market. Since 2018 the Federal Reserve Bank of New York has published the Secured Overnight Financing Rate (referred to as SOFR), which is intended to replace U.S. Dollar LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities in the repurchase agreement (repo) market. There is no assurance that the composition or characteristics of SOFR or any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that the market for SOFR-linked financial instruments will have the same volume or liquidity as did the market for LIBOR-linked financial instruments prior to LIBOR’s discontinuance or unavailability. Neither the long-term effects of the LIBOR transition process nor its ultimate success can yet be known.
Indemnification Risk—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. Therefore, the Portfolio has not accrued any liability in connection with these indemnification provisions.
Management Risk—The Portfolio is subject to management risk because it is an actively-managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
NOTE H: Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $325 million revolving credit facility (the “Facility”) intended to provide short-term financing related to redemptions and other short term liquidity requirements, subject to certain restrictions. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Portfolio did not utilize the Facility during the year ended December 31, 2023.
47
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
NOTE I: Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended December 31, 2023 and December 31, 2022 were as follows:
| | | | | | | | |
| | | 2023 | | | 2022 | |
Distributions paid from: | | | | | | | | |
Ordinary income | | $ | 1,463,869 | | | $ | 6,479,716 | |
Net long-term capital gains | | | –0 | – | | | 82,215,114 | |
| | | | | | | | |
Total taxable distributions paid | | $ | 1,463,869 | | | $ | 88,694,830 | |
| | | | | | | | |
As of December 31, 2023, the components of accumulated earnings (deficit) on a tax basis were as follows:
| | | | |
Undistributed ordinary income | | $ | 2,748,690 | |
Accumulated capital and other losses | | | (12,620,514 | )(a) |
Unrealized appreciation (depreciation) | | | 64,391,621 | (b) |
| | | | |
Total accumulated earnings (deficit) | | $ | 54,519,797 | |
| | | | |
| (a) | | As of December 31, 2023, the Portfolio had a net capital loss carryforward of $12,590,401. As of December 31, 2023, the cumulative deferred loss on straddles was $30,113. |
| (b) | | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable primarily to the recognition for tax purposes of unrealized gains/losses on certain derivative instruments, return of capital distributions received from underlying securities, the tax treatment of passive foreign investment companies (PFICs), the tax deferral of losses on wash sales, the tax treatment of partnership investments, and corporate restructuring. |
For tax purposes, net realized capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses for an indefinite period, and such losses will retain their character as either short-term or long-term capital losses. As of December 31, 2023, the Portfolio had a net short-term capital loss carryforward of $6,364,603 and a net long-term capital loss carryforward of $6,225,798, which may be carried forward for an indefinite period.
During the current fiscal year, there were no permanent differences that resulted in adjustments to distributable earnings or additional paid-in capital.
NOTE J: Recent Accounting Pronouncements
In December 2022, the Financial Accounting Standards Board issued an Accounting Standards Update, ASU 2022-06, “Reference Rate Reform (Topic 848)—Deferral of the Sunset Date of Topic 848”. ASU 2022-06 is an amendment to ASU 2020-04, which provided optional guidance to ease the potential accounting burden due to the discontinuation of the LIBOR and other interbank-offered based reference rates and which was effective as of March 12, 2020 through December 31, 2022. ASU 2022-06 extends the effective period through December 31, 2024. Management is currently evaluating the impact, if any, of applying ASU 2022-06.
NOTE K: Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Portfolio’s financial statements through this date.
48
| | |
|
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| |
| FINANCIAL HIGHLIGHTS | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS A | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | | $7.94 | | | | $14.94 | | | | $13.89 | | | | $13.46 | | | | $11.91 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment income(a)(b) | | | .12 | | | | .12 | | | | .14 | | | | .15 | | | | .23 | |
Net realized and unrealized gain (loss) on investment and foreign currency transactions | | | .96 | | | | (2.57 | ) | | | 1.20 | | | | .51 | | | | 1.60 | |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 1.08 | | | | (2.45 | ) | | | 1.34 | | | | .66 | | | | 1.83 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Dividends and Distributions | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (.07 | ) | | | (.38 | ) | | | (.29 | ) | | | (.23 | ) | | | (.27 | ) |
Distributions from net realized gain on investment transactions | | | –0 | – | | | (4.17 | ) | | | –0 | – | | | –0 | – | | | (.01 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (.07 | ) | | | (4.55 | ) | | | (.29 | ) | | | (.23 | ) | | | (.28 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $8.95 | | | | $7.94 | | | | $14.94 | | | | $13.89 | | | | $13.46 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset value(c) | | | 13.70 | % | | | (18.45 | )% | | | 9.67 | % | | | 5.02 | % | | | 15.51 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | | $226 | | | | $231 | | | | $412 | | | | $364 | | | | $383 | |
Ratio to average net assets of: | | | | | | | | | | | | | | | | | | | | |
Expenses, net of waivers/reimbursements(d)‡ | | | .85 | % | | | .84 | % | | | .82 | % | | | .80 | % | | | .80 | % |
Expenses, before waivers/reimbursements(d)‡ | | | .93 | % | | | .91 | % | | | .83 | % | | | .80 | % | | | .80 | % |
Net investment income(b) | | | 1.42 | % | | | 1.10 | % | | | .98 | % | | | 1.18 | % | | | 1.78 | % |
Portfolio turnover rate | | | 12 | % | | | 16 | % | | | 32 | % | | | 13 | % | | | 19 | % |
| | | | | | | | | | | | | | | | | | | | |
‡ Expense ratios exclude the estimated acquired fund fees of the affiliated/unaffiliated underlying | |
Portfolios | | | .00 | % | | | .01 | % | | | .01 | % | | | .01 | % | | | .02 | % |
See footnote summary on page 50.
49
| | |
| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| FINANCIAL HIGHLIGHTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS B | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | | $7.89 | | | | $14.85 | | | | $13.80 | | | | $13.36 | | | | $11.82 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment income(a)(b) | | | .10 | | | | .09 | | | | .12 | | | | .12 | | | | .19 | |
Net realized and unrealized gain (loss) on investment and foreign currency transactions | | | .96 | | | | (2.56 | ) | | | 1.16 | | | | .51 | | | | 1.60 | |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 1.06 | | | | (2.47 | ) | | | 1.28 | | | | .63 | | | | 1.79 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Dividends and Distributions | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (.05 | ) | | | (.32 | ) | | | (.23 | ) | | | (.19 | ) | | | (.24 | ) |
Distributions from net realized gain on investment transactions | | | –0 | – | | | (4.17 | ) | | | –0 | – | | | –0 | – | | | (.01 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (.05 | ) | | | (4.49 | ) | | | (.23 | ) | | | (.19 | ) | | | (.25 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $8.90 | | | | $7.89 | | | | $14.85 | | | | $13.80 | | | | $13.36 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset value(c) | | | 13.48 | % | | | (18.68 | )% | | | 9.28 | % | | | 4.86 | % | | | 15.24 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | | $253,591 | | | | $235,366 | | | | $301,920 | | | | $548,422 | | | | $568,985 | |
Ratio to average net assets of: | | | | | | | | | | | | | | | | | | | | |
Expenses, net of waivers/reimbursements(d)‡ | | | 1.10 | % | | | 1.09 | % | | | 1.06 | % | | | 1.05 | % | | | 1.05 | % |
Expenses, before waivers/reimbursements(d)‡ | | | 1.18 | % | | | 1.17 | % | | | 1.07 | % | | | 1.06 | % | | | 1.05 | % |
Net investment income(b) | | | 1.18 | % | | | .87 | % | | | .80 | % | | | .93 | % | | | 1.51 | % |
Portfolio turnover rate | | | 12 | % | | | 16 | % | | | 32 | % | | | 13 | % | | | 19 | % |
| | | | | | | | | | | | | | | | | | | | |
‡ Expense ratios exclude the estimated acquired fund fees of the affiliated/unaffiliated underlying | |
portfolios | | | .00 | % | | | .01 | % | | | .01 | % | | | .01 | % | | | .02 | % |
| (a) | | Based on average shares outstanding. |
| (b) | | Net of expenses waived/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 (i) insurance company’s separate account related expense charges and (ii) the deductions 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) | | In connection with the Portfolio’s investments in affiliated underlying portfolios, the Portfolio incurs no direct expenses, but bears proportionate shares of the fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated underlying portfolios. The Adviser has contractually agreed to waive its fees from the Portfolio in an amount equal to the Portfolio’s pro rata share of certain acquired fund fees and expenses, and for the year ended December 31, 2022, such waiver amounted to .01%. |
See notes to financial statements.
50
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| REPORT OF INDEPENDENT REGISTERED | | |
| |
| PUBLIC ACCOUNTING FIRM | | AB Variable Products Series Fund |
To the Shareholders and Board of Directors of AB Dynamic Asset Allocation Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of AB Dynamic Asset Allocation Portfolio (the “Portfolio”) (one of the series constituting AB Variable Products Series Fund, Inc. (the “Fund”)), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Portfolio (one of the series constituting AB Variable Products Series Fund, Inc.) at December 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Portfolio’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers or others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the AB investment companies since 1968.
New York, New York
February 14, 2024
51
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| 2023 TAX INFORMATION (unaudited) | | AB Variable Products Series Fund |
For Federal income tax purposes, the following information is furnished with respect to the distributions paid by the Portfolio during the taxable year ended December 31, 2023. For corporate shareholders, 99.93% of dividends paid qualify for the dividends received deduction.
52
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| DYNAMIC ASSET ALLOCATION | | |
| |
| PORTFOLIO | | AB Variable Products Series Fund |
| | |
| BOARD OF DIRECTORS | | |
Garry L. Moody(1), Chairman Jorge A. Bermudez(1) Michael J. Downey(1) Onur Erzan, President and
Chief Executive Officer | | Nancy P. Jacklin(1) Jeanette W. Loeb(1) Carol C. McMullen(1) Marshall C. Turner, Jr.(1) Emilie D. Wrapp, Advisory Board Member |
| | |
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| OFFICERS | | |
Caglasu Altunkopru(2), Vice President Alexander Barenboym(2), Vice President Daniel J. Loewy(2), Vice President Nancy E. Hay, Secretary Michael B. Reyes, Senior Vice President | | Stephen M. Woetzel, Treasurer and
Chief Financial Officer Phyllis J. Clarke, Controller Jennifer Friedland, Chief Compliance Officer |
|
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| CUSTODIANAND ACCOUNTING AGENT | | LEGAL COUNSEL |
| State Street Bank and Trust Company | | Seward & Kissel LLP |
One Congress Street Suite 1 | | One Battery Park Plaza New York, NY 10004 |
| Boston, MA 02114 | | |
| | |
| DISTRIBUTOR | | TRANSFER AGENT |
| AllianceBernstein Investments, Inc. | | AllianceBernstein Investor Services, Inc. |
| 501 Commerce Street | | P.O. Box 786003 |
| Nashville, TN 37203 | | San Antonio, TX 78278 |
| | Toll-Free (800) 221-5672 |
| | |
| INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | | |
| Ernst & Young LLP | | |
| One Manhattan West | | |
| New York, NY 10001 | | |
| (1) | | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
| (2) | | The day-to-day management of, and investment decisions for, the Portfolio’s portfolio are made by the Adviser’s Dynamic Asset Allocation Team. Messrs. Barenboym and Loewy and Ms. Altunkopru are the investment professionals primarily responsible for the day-to-day management of the Portfolio’s portfolio. |
53
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| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| |
| MANAGEMENT OF THE FUND | | AB Variable Products Series Fund |
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund’s Directors and Advisory Board member is set forth below.
| | | | | | | | |
NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
| INTERESTED DIRECTOR |
| | | | | | | | |
Onur Erzan,#
1345 Avenue of the Americas
New York, NY 10105
48
(2021) | | Senior Vice President of the Adviser**, Head of Global Client Group and Head of Private Wealth. He oversees AB’s entire private wealth management business and third-party institutional and retail franchise, where he is responsible for all client services, sales and marketing, as well as product strategy, management and development worldwide. Director, President and Chief Executive Officer of the AB Mutual Funds as of April 1, 2021. He is also a member of the Equitable Holdings Management Committee. Prior to joining the firm in January 2021, he spent 19 years with McKinsey (management consulting firm), most recently as a senior partner and co-leader of its Wealth & Asset Management practice. In addition, he co-led McKinsey’s Banking & Securities Solutions (a portfolio of data, analytics, and digital assets and capabilities) globally. | | | 82 | | | None |
| | | | | | | | |
| INDEPENDENT DIRECTORS | | | | | | |
| | | | | | | | |
Garry L. Moody,##
Chairman of the Board
71
(2011) | | Private Investor since prior to 2019. Formerly, Partner, Deloitte & Touche LLP (1995–2008) where he held a number of senior positions, including Vice Chairman, and U.S. and Global Investment Management Practice Managing Partner; President, Fidelity Accounting and Custody Services Company (1993–1995), where he was responsible for accounting, pricing, custody and reporting for the Fidelity mutual funds; and Partner, Ernst & Young LLP (1975–1993), where he served as the National Director of Mutual Fund Tax Services and Managing Partner of its Chicago Office Tax department. He served as a member of the Investment Company Institute’s Board of Governors and the Independent Directors Council’s Governing Council from October 2019 through September 2023, where he also served as Chairman of the Governance Committee from October 2021 through September 2023. He is Chairman of the AB Funds and Chairman of the Independent Directors Committees since January 2023; he has served as a director or trustee since 2008, and served as Chairman of the Audit Committee of such funds from 2008 to February 2023. | | | 82 | | | None |
| | | | | | | | |
54
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| |
| | | AB Variable Products Series Fund |
| | | | | | |
NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
INDEPENDENT DIRECTORS (continued) |
| | | | | | |
Jorge A. Bermudez,##
72
(2020) | | Private Investor since prior to 2019. Formerly, Chief Risk Officer of Citigroup, Inc., a global financial services company, from November 2007 to March 2008; Chief Executive Officer of Citigroup’s Commercial Business Group in North America and Citibank Texas from 2005 to 2007; and a variety of other executive and leadership roles at various businesses within Citigroup prior to then; Chairman (2017–2018) of the Texas A&M Foundation Board of Trustees (Trustee 2014-2021) and Chairman of the Smart Grid Center Board at Texas A&M University since 2012; director of, among others, Citibank N.A. from 2005 to 2008, the Federal Reserve Bank of Dallas, Houston Branch from 2009 to 2011, the Federal Reserve Bank of Dallas from 2011 to 2017, and the Electric Reliability Council of Texas from 2010 to 2016; and Chair of the Audit Committee of the Board of Directors of Moody’s Corporation since December 2022. He has served as director or trustee of the AB Funds since January 2020. | | 82 | | Moody’s Corporation since April 2011 |
| | | | | | |
Michael J. Downey,##
80
(2011) | | Private Investor since prior to 2019. Formerly, Chairman of The Asia Pacific Fund, Inc. (registered investment company) from 2002 until January 2019. From 1987 until 1993, Chairman and CEO of Prudential Mutual Fund Management, director of the Prudential mutual funds, and member of the Executive Committee of Prudential Securities, Inc. He has served as a director or trustee of the AB Funds since 2005. | | 82 | | None |
| | | | | | |
Nancy P. Jacklin,##
75
(2011) | | Private Investor since prior to 2019. Professorial Lecturer at the Johns Hopkins School of Advanced International Studies (2008–2015). U.S. Executive Director of the International Monetary Fund (which is responsible for ensuring the stability of the international monetary system), (December 2002–May 2006); Partner, Clifford Chance (1992–2002); Sector Counsel, International Banking and Finance, and Associate General Counsel, Citicorp (1985–1992); Assistant General Counsel (International), Federal Reserve Board of Governors (1982–1985); and Attorney Advisor, U.S. Department of the Treasury (1973–1982). Member of the Bar of the District of Columbia and of New York; and member of the Council on Foreign Relations. She has served as a director or trustee of the AB Funds since 2006 and served as Chair of the Governance and Nominating Committees of the AB Funds from 2014 to August 2023. | | 82 | | None |
| | | | | | |
55
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| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | |
NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
INDEPENDENT DIRECTORS (continued) |
| | | | | | |
Jeanette W. Loeb,##
71
(2020) | | Private Investor since prior to 2019. Director of New York City Center since 2005. Formerly, Chief Executive Officer of PetCareRx (e-commerce pet pharmacy) from 2002 to 2011 and 2015 to April 2023. She was a director of MidCap Financial Investment Corporation (business development company) from August 2011 to July 2023 and a director of AB Multi-Manager Alternative Fund (fund of hedge funds) from 2012 to 2018. Formerly, affiliated with Goldman Sachs Group, Inc. (financial services) from 1977 to 1994, including as a partner thereof from 1986 to 1994. She has served as director or trustee of the AB Funds since April 2020 and serves as Chair of the Governance and Nominating Committees of the AB Funds since August 2023. | | 82 | | None |
| | | | | | |
Carol C. McMullen,##
68
(2016) | | Private Investor and a member of the Advisory Board of Butcher Box (since 2018) and serves as Advisory Board Chair as of June 2023. Formerly, Managing Director of Slalom Consulting (consulting) from 2014 until July 2023; member, Mass General Brigham (formerly, Partners Healthcare) Investment Committee (2010-2019); Director of Norfolk & Dedham Group (mutual property and casualty insurance) from 2011 until November 2016; Director of Partners Community Physicians Organization (healthcare) from 2014 until December 2016; and Managing Director of The Crossland Group (consulting) from 2012 until 2013. She has held a number of senior positions in the asset and wealth management industries, including at Eastern Bank (where her roles included President of Eastern Wealth Management), Thomson Financial (Global Head of Sales for Investment Management), and Putnam Investments (where her roles included Chief Investment Officer, Core and Growth and Head of Global Investment Research). She has served on a number of private company and non-profit boards, and as a director or trustee of the AB Funds since June 2016 and serves as Chair of the Audit Committees of such funds since February 2023. | | 82 | | None |
| | | | | | |
56
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| | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
INDEPENDENT DIRECTORS (continued) |
| | | | | | | | |
Marshall C. Turner, Jr.##
82
(2011) | | Private Investor since prior to 2019. He was a Director of Xilinx, Inc. (programmable logic semi-conductors and adaptable, intelligent computing) from 2007 through August 2020, and is a former director of 33 other companies and organizations. Former Chairman and CEO of Dupont Photomasks, Inc. (semi-conductor manufacturing equipment) from 2003 through 2006. He has extensive operating leadership and venture capital investing experience, including five interim or full-time CEO roles, and prior service as general partner of institutional venture capital partnerships. He also has extensive non-profit board leadership experience, and currently serves on the board of the George Lucas Educational Foundation. He has served as a director of one AB Fund since 1992, and director or trustee of all AB Funds since 2005. He has served as both Chairman of the AB Funds and Chairman of the Independent Directors Committees from 2014 through December 2022. | | | 82 | | | None |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| ADVISORY BOARD MEMBER |
| | | | | | | | |
Emilie D. Wrapp,# 68 (2024) | | Former Senior Vice President, Counsel, Assistant Secretary & Senior Mutual Fund Legal Advisor of the Adviser (January 2023–June 2023). Prior thereto, Senior Vice President, Assistant Secretary, Counsel, and Head of Mutual Fund & Retail Legal of the Adviser; Assistant General Counsel and Assistant Secretary of ABI since prior to 2019 until June 2023. | | | 82 | | | None |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| * | The address for each of the Fund’s disinterested Directors and Advisory Board member is c/o AllianceBernstein L.P., Attention: Legal & Compliance Department—Mutual Fund Legal, 1345 Avenue of the Americas, New York, NY 10105. |
| ** | There is no stated term of office for the Fund’s Directors or Advisory Board member. |
| *** | The information above includes each Director’s principal occupation during the last five years and other information relating to the experience, attributes and skills relevant to each Director’s qualifications to serve as a Director, which led to the conclusion that each Director should serve as a Director for the Fund. |
| # | Mr. Erzan is an “interested person” of the Fund, as defined in the “1940 Act”, due to his position as a Senior Vice President of the Adviser. Ms. Wrapp is an “interested person” of the Fund, as defined in the 1940 Act, due to her former role with the Adviser. |
| ## | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
57
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| DYNAMIC ASSET ALLOCATION PORTFOLIO |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
Officer Information
Certain information concerning the Portfolio’s Officers is listed below.
| | | | |
NAME, ADDRESS*
AND AGE | | PRINCIPAL POSITION(S)
HELD WITH FUND | | PRINCIPAL OCCUPATION
DURING PAST FIVE (5) YEARS |
Onur Erzan 48 | | President and Chief Executive Officer | | See biography above. |
| | | | |
Caglasu Altunkopru 51 | | Vice President | | Senior Vice President of the Adviser**, with which she has been associated in a substantially similar capacity to her current position since prior to 2019. |
| | | | |
Alexander Barenboym 53 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated since prior to 2019. |
| | | | |
Daniel J. Loewy 49 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated since prior to 2019. He is also Chief Investment Officer and Head of Multi-Asset and Hedge Fund Solutions; and Chief Investment Officer for Dynamic Asset Allocation. |
| | | | |
Nancy E. Hay 51 | | Secretary | | Senior Vice President and Counsel of the Adviser**, with which she has been associated since prior to 2019 and Assistant Secretary of ABI**. |
| | | | |
Michael B. Reyes 47 | | Senior Vice President | | Vice President of the Adviser**, with which he has been associated since prior to 2019. |
| | | | |
Stephen M. Woetzel 52 | | Treasurer and Chief
Financial Officer | | Senior Vice President of ABIS**, with which he has been associated since prior to 2019. |
| | | | |
Phyllis J. Clarke 63 | | Controller | | Vice President of ABIS**, with which she has been associated since prior to 2019. |
| | | | |
Jennifer Friedland 49 | | Chief Compliance Officer | | Vice President of the Adviser** since 2020 and Mutual Fund Chief Compliance Officer (of all Funds since January 2023 and of the ETF Funds since 2022). Before joining the Adviser in 2020, she was Chief Compliance Officer at WestEnd Advisors, LLC from 2013 until 2019. |
| * | | The address for each of the Portfolio’s Officers is 1345 Avenue of the Americas, New York, NY 10105. |
| ** | | The Adviser, ABIS and ABI are affiliates of the Fund. |
| | | The Fund’s Statement of Additional Information (“SAI”) has additional information about the Fund’s Directors and Officers and is available without charge upon request. Contact your financial representative or the Adviser at (800) 227-4618, or visit www.abfunds.com, for a free prospectus or SAI. |
58
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| DYNAMIC ASSET ALLOCATION PORTFOLIO | | AB Variable Products Series Fund |
OPERATION AND EFFECTIVENESS OF THE PORTFOLIO’S LIQUIDITY RISK MANAGEMENT PROGRAM:
In October 2016, the Securities and Exchange Commission (“SEC”) adopted the open-end fund liquidity rule (the “Liquidity Rule”). In June 2018 the SEC adopted a requirement that funds disclose information about the operation and effectiveness of their Liquidity Risk Management Program (“LRMP”) in their reports to shareholders.
One of the requirements of the Liquidity Rule is for the Portfolio to designate an Administrator of the Portfolio’s Liquidity Risk Management Program. The Administrator of the Portfolio’s LRMP is AllianceBernstein L.P., the Portfolio’s investment adviser (the “Adviser”). The Adviser has delegated the responsibility to its Liquidity Risk Management Committee (the “Committee”).
Another requirement of the Liquidity Rule is for the Portfolio’s Board of Directors/Trustees (the “Fund Board”) to receive an annual written report from the Administrator of the LRMP, which addresses the operation of the Portfolio’s LRMP and assesses its adequacy and effectiveness. The Adviser provided the Fund Board with such annual report during the first quarter of 2024, which covered the period January 1, 2023 through December 31, 2023 (the “Program Reporting Period”).
The LRMP’s principal objectives include supporting the Portfolio’s compliance with limits on investments in illiquid assets and mitigating the risk that the Portfolio will be unable to meet its redemption obligations in a timely manner.
Pursuant to the LRMP, the Portfolio classifies the liquidity of its portfolio investments into one of the four categories defined by the SEC: Highly Liquid, Moderately Liquid, Less Liquid, and Illiquid. These classifications are reported to the SEC on Form N-PORT.
During the Program Reporting Period, the Committee reviewed whether the Portfolio’s strategy is appropriate for an open-end structure, incorporating any holdings of less liquid and illiquid assets. If the Portfolio participated in derivative transactions, the exposure from such transactions were considered in the LRMP.
The Committee also performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum (“HLIM”). The Committee also incorporated the following information when determining the Portfolio’s reasonably anticipated trading size for purposes of liquidity monitoring: historical net redemption activity, a Portfolio’s concentration in an issuer, shareholder concentration, investment performance, total net assets, and distribution channels.
The Adviser informed the Fund Board that the Committee believes the Portfolio’s LRMP is adequately designed, has been implemented as intended, and has operated effectively since its inception. No material exceptions have been noted since the implementation of the LRMP. During the Program Reporting Period, liquidity in all markets was challenged due to rising rates and economic uncertainty. However, markets also remained orderly during the Program Reporting Period. There were no liquidity events that impacted the Portfolio or its ability to timely meet redemptions during the Program Reporting Period.
59
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| DYNAMIC ASSET ALLOCATION PORTFOLIO | | AB Variable Products Series Fund |
INFORMATION REGARDING THE REVIEW AND APPROVAL OF THE FUND’S ADVISORY AGREEMENT
The disinterested directors (the “directors”) of AB Variable Products Series Fund, Inc. (the “Company”) unanimously approved the continuance of the Company’s Advisory Agreement with the Adviser in respect of AB Dynamic Asset Allocation Portfolio (the “Fund”) at meetings held in-person on August 1-2, 2023 and October 31-November 2, 2023 (the “Meetings”).
Prior to approval of the continuance of the Advisory Agreement, the directors had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The directors also reviewed additional materials, including comparative analytical data prepared by the Senior Vice President of the Fund. The directors also discussed the proposed continuance in private sessions with counsel.
The directors considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as directors or trustees of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the directors and its responsiveness, frankness and attention to concerns raised by the directors in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AB Funds. The directors noted that they have four regular meetings each year, at each of which they review extensive materials and information from the Adviser, including information on the investment performance of the Fund and the underlying funds advised by the Adviser in which the Fund invests a portion of its assets.
The directors also considered all factors they believed relevant, including the specific matters discussed below. During the course of their deliberations, the directors evaluated, among other things, the reasonableness of the advisory fee. The directors did not identify any particular information that was all-important or controlling, and different directors may have attributed different weights to the various factors. The directors determined that the selection of the Adviser to manage the Fund and the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors’ determinations included the following:
Nature, Extent and Quality of Services Provided
The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. The directors noted that the Adviser from time to time reviews the Fund’s investment strategies and from time to time proposes changes intended to improve the Fund’s relative or absolute performance for the directors’ consideration. They also noted the professional experience and qualifications of the Fund’s portfolio management team and other senior personnel of the Adviser. The directors also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services to the Fund by employees of the Adviser or its affiliates. Requests for these reimbursements are made on a quarterly basis and subject to approval by the directors. Reimbursements, to the extent requested and paid, result in a higher rate of total compensation from the Fund to the Adviser than the fee rate stated in the Advisory Agreement. The directors noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant at the request of the directors. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of the Fund’s other service providers, also was considered. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement.
Costs of Services Provided and Profitability
The directors reviewed a schedule of the revenues and expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2021 and 2022 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant at the request of the directors. The directors noted the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and understood that there are a number of potentially acceptable allocation methodologies for information of this type. The directors noted that the profitability information reflected all revenues and expenses of the Adviser’s relationship with the Fund, including those relating to its subsidiaries that provide transfer agency, distribution and brokerage services to the Fund. The directors recognized that it is
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difficult to make comparisons of the profitability of the Advisory Agreement with the profitability of fund advisory contracts for unaffiliated funds because comparative information is not generally publicly available and is affected by numerous factors. The directors focused on the profitability of the Adviser’s relationship with the Fund before taxes and distribution expenses. The directors concluded that the Adviser’s level of profitability from its relationship with the Fund was not unreasonable.
Fall-Out Benefits
The directors considered the other benefits to the Adviser and its affiliates from their relationships with the Fund and the money market fund advised by the Adviser in which the Fund invests, including, but not limited to, benefits relating to soft dollar arrangements (whereby investment advisers receive brokerage and research services from brokers that execute agency transactions for their clients); 12b-1 fees and sales charges received by the Fund’s principal underwriter (which is a wholly owned subsidiary of the Adviser) in respect of the Fund’s Class B shares; brokerage commissions paid by the Fund to brokers affiliated with the Adviser; and transfer agency fees paid by the Fund to a wholly owned subsidiary of the Adviser. The directors recognized that the Adviser’s profitability would be somewhat lower without these benefits. The directors understood that the Adviser also might derive reputational and other benefits from its association with the Fund.
Investment Results
In addition to the information reviewed by the directors in connection with the Meetings, the directors receive detailed performance information for the Fund at each regular Board meeting during the year.
At the Meetings, the directors reviewed performance information prepared by an independent service provider (the “15(c) service provider”), showing the performance of the Class A shares of the Fund against a group of similar funds (“peer group”) and a larger group of similar funds (“peer universe”), each selected by the 15(c) service provider, and information prepared by the Adviser showing performance of the Class A shares against a broad-based securities market index, in each case for the 1-, 3-, 5- and 10-year periods ended May 31, 2023 and July 31, 2023 and (in the case of comparisons with the broad-based securities market index) for the period from inception. Based on their review and their discussion with the Adviser of the reasons for the Fund’s underperformance in the periods reviewed, the directors concluded that the Fund’s investment performance was acceptable. The directors determined to continue to monitor the Fund’s performance closely.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate payable by the Fund to the Adviser and information prepared by the 15(c) service provider concerning advisory fee rates payable by other funds in the same category as the Fund. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees payable by other funds. The directors compared the Fund’s contractual advisory fee rate with a peer group median and noted that it was equal to the median. They also noted that the Adviser’s total rate of compensation, taking into account the impact of the administrative expense reimbursement paid to the Adviser in the latest fiscal year, was above the median.
The directors also considered the Adviser’s fee schedule for other clients utilizing investment strategies similar to those of the Fund. For this purpose, they reviewed the relevant advisory fee information from the Adviser’s Form ADV and in a report from the Fund’s Senior Vice President and noted the differences between the Fund’s fee schedule, on the one hand, and the Adviser’s institutional fee schedule and the schedule of fees charged by the Adviser to any offshore funds and for services to any sub-advised funds utilizing investment strategies similar to the those of Fund, on the other. The directors noted that the Adviser may, in some cases, agree to fee rates with large institutional clients that are lower than those reviewed by the directors and that they had previously discussed with the Adviser its policies in respect of such arrangements.
The Adviser reviewed with the directors the significantly greater scope of the services it provides to the Fund relative to institutional, offshore fund and sub-advised fund clients. In this regard, the Adviser noted, among other things, that, compared to institutional and offshore or sub-advisory accounts, the Fund (i) demands considerably more portfolio management, research and trading resources due to significantly higher daily cash flows; (ii) has more tax and regulatory restrictions and compliance obligations; (iii) must prepare and file or distribute regulatory and other communications about fund operations; and (iv) must provide shareholder servicing to retail investors. The Adviser also reviewed the greater legal risks presented by the large and changing population of Fund shareholders who may assert claims against the Adviser in individual or class actions, and the greater entrepreneurial risk in offering new fund products, which require substantial investment to launch,
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| DYNAMIC ASSET ALLOCATION PORTFOLIO |
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| (continued) | | AB Variable Products Series Fund |
may not succeed, and generally must be priced to compete with larger, more established funds resulting in lack of profitability to the Adviser until a new fund achieves scale. In light of the substantial differences in services rendered by the Adviser to institutional, offshore fund and sub-advised fund clients as compared to the Fund, and the different risk profile, the directors considered these fee comparisons inapt and did not place significant weight on them in their deliberations.
In connection with their review of the Fund’s advisory fee, the directors also considered the total expense ratio of the Class A shares of the Fund in comparison to the medians for a peer group and a peer universe selected by the 15(c) service provider. The Class A expense ratio of the Fund was based on the Fund’s latest fiscal year and reflected the impact of the Adviser’s expense cap for the Fund. The directors noted that it was likely that the expense ratios of some of the other funds in the Fund’s category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases might be voluntary or temporary. The directors view expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Fund by others. The directors noted that the Fund’s expense ratio was above the medians. After reviewing and discussing the Adviser’s explanations of the reasons for this, the directors concluded that the Fund’s expense ratio was acceptable.
Economies of Scale
The directors noted that the advisory fee schedule for the Fund does not contain breakpoints and that they had previously discussed their strong preference for breakpoints in advisory contracts with the Adviser. The directors took into consideration prior presentations by an independent consultant on economies of scale in the mutual fund industry and for the AB Funds, and presentations from time to time by the Adviser concerning certain of its views on economies of scale. The directors also had requested and received from the Adviser certain updates on economies of scale in advance of the Meetings. The directors believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there is no established methodology for setting breakpoints that give effect to the fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. The directors informed the Adviser that they would monitor the Fund’s asset level (which was well below the level at which they would anticipate adding an initial breakpoint) and its profitability to the Adviser and anticipated revisiting the question of breakpoints in the future if circumstances warranted doing so.
62
VPS-DAA- 0151-1223
DEC 12.31.23
ANNUAL REPORT
AB VARIABLE PRODUCTS
SERIES FUND, INC.
| + | | AB DISCOVERY VALUE PORTFOLIO |
Investment Products Offered
| | • | | Are Not Bank Guaranteed |
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AB family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the Adviser of the funds.
You may obtain a description of the Fund’s proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AB’s website at www.abfunds.com or go to the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov, or call AB at (800) 227 4618.
The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Commission’s website at www.sec.gov.
The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.
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| DISCOVERY VALUE PORTFOLIO | | AB Variable Products Series Fund |
LETTER TO INVESTORS
February 14, 2024
The following is an update of AB Variable Products Series Fund—Discovery Value Portfolio (the “Portfolio”) for the annual reporting period ended December 31, 2023. Prior to May 1, 2023, the Portfolio was named Small/Mid Cap Value Portfolio.
INVESTMENT OBJECTIVE AND POLICIES
The Portfolio’s investment objective is long-term growth of capital. The Portfolio invests primarily in a diversified portfolio of equity securities of small- to mid-capitalization US companies. Under normal circumstances, the Portfolio invests at least 80% of its net assets in securities of small- to mid-capitalization companies. Because the Portfolio’s definition of small- to mid-capitalization companies is dynamic, the lower and upper limits on market capitalization will change with the markets.
The Portfolio invests in companies that are determined by the Adviser to be undervalued, using the Adviser’s fundamental value approach. In selecting securities for the Portfolio’s portfolio, the Adviser uses its fundamental and quantitative research to identify companies whose long-term earnings power is not reflected in the current market price of their securities.
The Portfolio may enter into derivatives transactions, such as options, futures contracts, forwards and swaps. The Portfolio may use options strategies involving the purchase and/or writing of various combinations of call and/or put options, including on individual securities and stock indices, futures contracts (including futures contracts on individual securities and stock indices) or shares of exchange-traded funds (“ETFs”). These transactions may be used, for example, in an effort to earn extra income, to adjust exposure to individual securities or markets, or to protect all or a portion of the Portfolio from a decline in value, sometimes within certain ranges.
The Portfolio may invest in securities issued by non-US companies.
The Portfolio may, at times, invest in shares of ETFs in lieu of making direct investments in equity securities. ETFs may provide more efficient and economical exposure to the type of companies and geographic locations in which the Portfolio seeks to invest than direct investments.
INVESTMENT RESULTS
The table on page 3 shows the Portfolio’s performance compared with its primary benchmark, the Russell 2500 Value Index, as well as the Russell 2500 Index, which represents small-/mid-cap stocks, for the one-, five- and 10-year periods ended December 31, 2023.
All share classes of the Portfolio outperformed the primary benchmark and underperformed the Russell 2500 Index for the annual period. Both security and sector selection were positive, relative to the primary benchmark. Security selection within the financials and consumer discretionary sectors contributed, while selection within health care and consumer staples detracted. An overweight to industrials added to gains, which helped to offset losses from an overweight to financials.
The Portfolio did not use derivatives during the annual period.
MARKET REVIEW AND INVESTMENT STRATEGY
US, international and emerging-market stocks rose during the 12-month period ended December 31, 2023. Early in the period, aggressive central bank tightening—led by the US Federal Reserve—pressured global equity markets. Bouts of volatility continued as central banks reduced and then began to pause rate hikes but reiterated hawkish higher-for-longer rhetoric that weighed on sentiment. Later in the period, stronger-than-expected third-quarter economic growth triggered a rapid rise in bond yields—especially the 10-year US Treasury note, which briefly crossed the 5% threshold for the first time in 16 years. Headwinds from higher Treasury yields, conflict in the Middle East and mixed third-quarter earnings weighed on investor sentiment globally and briefly sent all major indices into correction territory in October. Equity markets rallied sharply during November and December, as optimism rose that the US Federal Reserve would begin to cut interest rates in 2024—both earlier and more than previously anticipated. Although US mega-cap technology stocks drove returns through much of the year, the rally broadened considerably during the fourth quarter as soft-landing expectations in the US continued to be underpinned by cooling inflation and moderating economic growth. Within large-cap markets, both growth-and value-oriented stocks rose, but growth significantly outperformed value, led by the technology sector and artificial intelligence optimism. Large-cap stocks outperformed small-cap stocks, although both rose in absolute terms.
The Portfolio’s Senior Investment Management Team (the “Team”) seeks to invest opportunistically in what it believes are undervalued companies with solid fundamentals, without sacrificing the Portfolio’s deep-value discipline. The Team remains focused on attractively valued opportunities, which the Team believes are widespread across most industry sectors and regions. The Portfolio’s emphasis continues to be at the stock-specific level, as the Team looks for companies that offer compelling valuation, strong free cash flow and significant company-level catalysts.
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| DISCOVERY VALUE PORTFOLIO | | |
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| DISCLOSURES AND RISKS | | AB Variable Products Series Fund |
Benchmark Disclosure
The Russell 2500® Value Index and the Russell 2500™ Index are unmanaged and do not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Russell 2500 Value Index represents the performance of small- to mid-cap value companies within the US. The Russell 2500 Index represents the performance of 2,500 small- to mid-cap cap companies within the US. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Portfolio.
A Word About Risk
Market Risk: The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Capitalization Risk: Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small- and mid-capitalization companies may have additional risks because these companies have limited product lines, markets or financial resources.
Foreign (Non-US) Risk: Investments in securities of non-US issuers may involve more risk than those of US issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
Currency Risk: Fluctuations in currency exchange rates may negatively affect the value of the Portfolio’s investments or reduce its returns.
Derivatives Risk: Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
Management Risk: The Portfolio is subject to management risk because it is an actively managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
These risks are fully discussed in the Variable Products prospectus. As with all investments, you may lose money by investing in the Portfolio.
An Important Note About Historical Performance
The investment return and principal value of an investment in the Portfolio will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Performance shown in this report represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. Please contact your financial advisor or insurance agent representative at your financial institution to obtain portfolio performance information current to the most recent month-end.
Investors should consider the investment objectives, risks, charges and expenses of the Portfolio carefully before investing. For additional copies of the Portfolio’s prospectus or summary prospectus, which contains this and other information, call your financial advisor or (800) 227 4618. Please read the prospectus and/or summary prospectus carefully before investing.
All fees and expenses related to the operation of the Portfolio have been deducted, but no adjustment has been made for insurance company separate account or annuity contract charges, which would reduce total return to a contract owner. Performance assumes reinvestment of distributions and does not account for taxes.
There are additional fees and expenses associated with all Variable Products. These fees can include mortality and expense risk charges, administrative charges, and other charges that can significantly reduce investment returns. Those fees and expenses are not reflected in this annual report. You should consult your Variable Products prospectus for a description of those fees and expenses and speak to your insurance agent or financial representative if you have any questions. You should read the prospectus before investing or sending money.
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| DISCOVERY VALUE PORTFOLIO | | |
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| HISTORICAL PERFORMANCE | | AB Variable Products Series Fund |
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| THE PORTFOLIO VS. ITS BENCHMARKS | | Net Asset Value Returns | |
| PERIODS ENDED DECEMBER 31, 2023 (unaudited) | | 1 Year | | | 5 Years1 | | | 10 Years1 | |
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| Discovery Value Portfolio Class A | | | 17.18% | | | | 10.78% | | | | 7.55% | |
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| Discovery Value Portfolio Class B | | | 16.86% | | | | 10.51% | | | | 7.29% | |
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| Primary Benchmark: Russell 2500 Value Index | | | 15.98% | | | | 10.79% | | | | 7.42% | |
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| Russell 2500 Index | | | 17.42% | | | | 11.67% | | | | 8.36% | |
1 Average annual returns. | |
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The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 0.80% and 1.05% for Class A and Class B shares, respectively. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
GROWTH OF A $10,000 INVESTMENT
12/31/2013 TO 12/31/2023 (unaudited)
This chart illustrates the total value of an assumed $10,000 investment in Discovery Value Portfolio Class A shares (from 12/31/2013 to 12/31/2023) as compared with the performance of the Portfolio’s benchmarks. The chart assumes the reinvestment of dividends and capital gains distributions.
See Disclosures, Risks and Note About Historical Performance on page 2.
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| EXPENSE EXAMPLE (unaudited) | | AB Variable Products Series Fund |
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of each class’ table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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| | | Beginning
Account Value
July 1, 2023 | | | Ending
Account Value
December 31, 2023 | | | Expenses Paid
During Period* | | | Annualized
Expense Ratio* | |
Class A | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,096.00 | | | $ | 4.28 | | | | 0.81 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,021.12 | | | $ | 4.13 | | | | 0.81 | % |
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Class B | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,094.50 | | | $ | 5.60 | | | | 1.06 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,019.86 | | | $ | 5.40 | | | | 1.06 | % |
| * | | Expenses are equal to each classes’ annualized expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
| ** | | Assumes 5% annual return before expenses. |
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| DISCOVERY VALUE PORTFOLIO | | |
| TEN LARGEST HOLDINGS1 | | |
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| December 31, 2023 (unaudited) | | AB Variable Products Series Fund |
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| COMPANY | | U.S. $ VALUE | | | PERCENT OF NET ASSETS | |
PVH Corp. | | $ | 12,895,994 | | | | 1.8 | % |
Builders FirstSource, Inc. | | | 11,765,931 | | | | 1.6 | |
Jones Lang LaSalle, Inc. | | | 11,666,122 | | | | 1.6 | |
MasTec, Inc. | | | 11,517,088 | | | | 1.6 | |
Bath & Body Works, Inc. | | | 11,468,173 | | | | 1.6 | |
Dycom Industries, Inc. | | | 11,340,163 | | | | 1.6 | |
First Citizens BancShares, Inc./NC—Class A | | | 11,100,602 | | | | 1.5 | |
Cboe Global Markets, Inc. | | | 10,827,878 | | | | 1.5 | |
Comerica, Inc. | | | 10,765,358 | | | | 1.5 | |
Herc Holdings, Inc. | | | 10,606,924 | | | | 1.5 | |
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| | | $ | 113,954,233 | | | | 15.8 | % |
SECTOR BREAKDOWN2
December 31, 2023 (unaudited)
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| SECTOR | | U.S. $ VALUE | | | PERCENT OF TOTAL INVESTMENTS | |
Industrials | | $ | 169,962,451 | | | | 23.6 | % |
Financials | | | 125,421,280 | | | | 17.4 | |
Consumer Discretionary | | | 120,559,335 | | | | 16.8 | |
Information Technology | | | 79,834,137 | | | | 11.1 | |
Real Estate | | | 56,052,916 | | | | 7.8 | |
Health Care | | | 45,014,493 | | | | 6.2 | |
Energy | | | 37,287,948 | | | | 5.2 | |
Materials | | | 24,262,172 | | | | 3.4 | |
Utilities | | | 20,687,995 | | | | 2.9 | |
Consumer Staples | | | 20,548,284 | | | | 2.9 | |
Communication Services | | | 15,998,144 | | | | 2.2 | |
Short-Term Investments | | | 3,804,925 | | | | 0.5 | |
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Total Investments | | $ | 719,434,080 | | | | 100.0 | % |
| 2 | | The Portfolio’s sector breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. |
Please note: The sector classifications presented herein are based on the Global Industry Classification Standard (GICS) which was developed by Morgan Stanley Capital International and Standard & Poor’s. The components are divided into sector, industry group, and industry sub-indices as classified by the GICS for each of the market capitalization indices in the broad market. These sector classifications are broadly defined. The “Portfolio of Investments” section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Portfolio’s prospectus.
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| DISCOVERY VALUE PORTFOLIO | | |
| PORTFOLIO OF INVESTMENTS | | |
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| December 31, 2023 | | AB Variable Products Series Fund |
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Company | | Shares | | | U.S. $ Value | |
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COMMON STOCKS–99.7% | |
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INDUSTRIALS–23.7% | | | | | | | | |
AEROSPACE & DEFENSE–1.3% | | | | | | | | |
Spirit AeroSystems Holdings, Inc.–Class A(a)(b) | | | 287,500 | | | $ | 9,136,750 | |
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BUILDING PRODUCTS–1.6% | | | | | | | | |
Builders FirstSource, Inc.(b) | | | 70,480 | | | | 11,765,931 | |
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COMMERCIAL SERVICES & SUPPLIES–2.3% | | | | | | | | |
ABM Industries, Inc. | | | 168,981 | | | | 7,575,418 | |
Stericycle, Inc.(b) | | | 185,137 | | | | 9,175,390 | |
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| | | | | | | 16,750,808 | |
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CONSTRUCTION & ENGINEERING–4.6% | | | | | | | | |
Dycom Industries, Inc.(b) | | | 98,533 | | | | 11,340,163 | |
Fluor Corp.(b) | | | 252,590 | | | | 9,893,950 | |
MasTec, Inc.(a)(b) | | | 152,101 | | | | 11,517,088 | |
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| | | | | | | 32,751,201 | |
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ELECTRICAL EQUIPMENT–2.1% | | | | | | | | |
Regal Rexnord Corp. | | | 62,140 | | | | 9,197,963 | |
Sensata Technologies Holding PLC | | | 158,800 | | | | 5,966,116 | |
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| | | | | | | 15,164,079 | |
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GROUND TRANSPORTATION–2.3% | | | | | | | | |
ArcBest Corp. | | | 69,366 | | | | 8,338,487 | |
Knight-Swift Transportation Holdings, Inc. | | | 146,959 | | | | 8,472,186 | |
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| | | | | | | 16,810,673 | |
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MACHINERY–3.2% | | | | | | | | |
Gates Industrial Corp. PLC(b) | | | 219,779 | | | | 2,949,434 | |
Middleby Corp. (The)(a)(b) | | | 71,076 | | | | 10,460,255 | |
Oshkosh Corp. | | | 88,690 | | | | 9,614,883 | |
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| | | | | | | 23,024,572 | |
| | | | | | | | |
MARINE TRANSPORTATION–1.0% | | | | | | | | |
Star Bulk Carriers Corp.(a) | | | 320,223 | | | | 6,807,941 | |
| | | | | | | | |
PASSENGER AIRLINES–1.0% | | | | | | | | |
Alaska Air Group, Inc.(a)(b) | | | 180,190 | | | | 7,040,023 | |
| | | | | | | | |
PROFESSIONAL SERVICES–2.8% | | | | | | | | |
Korn Ferry | | | 78,290 | | | | 4,646,511 | |
Robert Half, Inc.(a) | | | 95,095 | | | | 8,360,752 | |
WNS Holdings Ltd. (ADR)(b) | | | 112,283 | | | | 7,096,286 | |
| | | | | | | | |
| | | | | | | 20,103,549 | |
| | | | | | | | |
TRADING COMPANIES & DISTRIBUTORS–1.5% | | | | | | | | |
Herc Holdings, Inc. | | | 71,240 | | | | 10,606,924 | |
| | | | | | | | |
| | | | | | | 169,962,451 | |
| | | | | | | | |
FINANCIALS–17.5% | | | | | | | | |
BANKS–10.6% | | | | | | | | |
BankUnited, Inc. | | | 141,761 | | | | 4,597,309 | |
| | | | | | | | |
| | | | | | | | |
Comerica, Inc. | | | 192,893 | | | | 10,765,358 | |
First BanCorp./Puerto Rico | | | 577,204 | | | | 9,495,006 | |
First Citizens BancShares, Inc./NC–Class A | | | 7,823 | | | | 11,100,602 | |
First Hawaiian, Inc. | | | 439,368 | | | | 10,043,952 | |
Texas Capital Bancshares, Inc.(b) | | | 124,722 | | | | 8,060,783 | |
Webster Financial Corp. | | | 122,339 | | | | 6,209,928 | |
Wintrust Financial Corp. | | | 93,710 | | | | 8,691,603 | |
Zions Bancorp NA(a) | | | 159,068 | | | | 6,978,313 | |
| | | | | | | | |
| | | | | | | 75,942,854 | |
| | | | | | | | |
CAPITAL MARKETS–3.6% | | | | | | | | |
Cboe Global Markets, Inc. | | | 60,640 | | | | 10,827,878 | |
Moelis & Co.–Class A | | | 140,277 | | | | 7,873,748 | |
Stifel Financial Corp. | | | 107,837 | | | | 7,456,929 | |
| | | | | | | | |
| | | | | | | 26,158,555 | |
| | | | | | | | |
INSURANCE–3.3% | | | | | | | | |
American Financial Group, Inc./OH | | | 59,790 | | | | 7,108,433 | |
Everest Group Ltd. | | | 19,147 | | | | 6,769,996 | |
Hanover Insurance Group, Inc. (The) | | | 39,330 | | | | 4,775,449 | |
Kemper Corp. | | | 95,870 | | | | 4,665,993 | |
| | | | | | | | |
| | | | | | | 23,319,871 | |
| | | | | | | | |
| | | | | | | 125,421,280 | |
| | | | | | | | |
CONSUMER DISCRETIONARY–16.8% | | | | | | | | |
AUTOMOBILE COMPONENTS–1.9% | | | | | | | | |
Dana, Inc. | | | 379,445 | | | | 5,543,691 | |
Goodyear Tire & Rubber Co. (The)(b) | | | 545,184 | | | | 7,807,035 | |
| | | | | | | | |
| | | | | | | 13,350,726 | |
| | | | | | | | |
DIVERSIFIED CONSUMER SERVICES–1.1% | | | | | | | | |
ADT, Inc.(a) | | | 1,193,753 | | | | 8,141,395 | |
| | | | | | | | |
HOTELS, RESTAURANTS & LEISURE–1.7% | | | | | | | | |
Dine Brands Global, Inc. | | | 117,880 | | | | 5,852,742 | |
Papa John’s International, Inc.(a) | | | 83,163 | | | | 6,339,516 | |
| | | | | | | | |
| | | | | | | 12,192,258 | |
| | | | | | | | |
HOUSEHOLD DURABLES–2.4% | | | | | | | | |
PulteGroup, Inc. | | | 95,790 | | | | 9,887,444 | |
Taylor Morrison Home Corp.(b) | | | 140,859 | | | | 7,514,827 | |
| | | | | | | | |
| | | | | | | 17,402,271 | |
| | | | | | | | |
LEISURE PRODUCTS–1.5% | | | | | | | | |
Brunswick Corp./DE(a) | | | 108,530 | | | | 10,500,278 | |
| | | | | | | | |
SPECIALTY RETAIL–4.1% | | | | | | | | |
Bath & Body Works, Inc. | | | 265,713 | | | | 11,468,173 | |
Dick’s Sporting Goods, Inc.(a) | | | 71,560 | | | | 10,515,742 | |
6
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
Williams-Sonoma, Inc.(a) | | | 38,959 | | | $ | 7,861,147 | |
| | | | | | | | |
| | | | | | | 29,845,062 | |
| | | | | | | | |
TEXTILES, APPAREL & LUXURY GOODS–4.1% | | | | | | | | |
PVH Corp. | | | 105,601 | | | | 12,895,994 | |
Ralph Lauren Corp.(a) | | | 62,680 | | | | 9,038,456 | |
Tapestry, Inc. | | | 195,406 | | | | 7,192,895 | |
| | | | | | | | |
| | | | | | | 29,127,345 | |
| | | | | | | | |
| | | | | | | 120,559,335 | |
| | | | | | | | |
INFORMATION TECHNOLOGY–11.1% | | | | | | | | |
COMMUNICATIONS EQUIPMENT–2.2% | | | | | | | | |
Calix, Inc.(b) | | | 195,685 | | | | 8,549,477 | |
Lumentum Holdings, Inc.(a)(b) | | | 134,490 | | | | 7,049,966 | |
| | | | | | | | |
| | | | | | | 15,599,443 | |
| | | | | | | | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS–1.8% | | | | | | | | |
Avnet, Inc. | | | 138,750 | | | | 6,993,000 | |
Belden, Inc. | | | 81,594 | | | | 6,303,137 | |
| | | | | | | | |
| | | | | | | 13,296,137 | |
| | | | | | | | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT–3.9% | | | | | | | | |
Amkor Technology, Inc. | | | 293,748 | | | | 9,772,996 | |
FormFactor, Inc.(b) | | | 197,280 | | | | 8,228,549 | |
Synaptics, Inc.(b) | | | 88,837 | | | | 10,134,525 | |
| | | | | | | | |
| | | | | | | 28,136,070 | |
| | | | | | | | |
SOFTWARE–3.2% | | | | | | | | |
ACI Worldwide, Inc.(b) | | | 270,946 | | | | 8,290,947 | |
CommVault Systems, Inc.(b) | | | 88,746 | | | | 7,086,368 | |
Gen Digital, Inc. | | | 325,380 | | | | 7,425,172 | |
| | | | | | | | |
| | | | | | | 22,802,487 | |
| | | | | | | | |
| | | | | | | 79,834,137 | |
| | | | | | | | |
REAL ESTATE–7.8% | | | | | | | | |
DIVERSIFIED REITS–0.8% | | | | | | | | |
Broadstone Net Lease, Inc.–Class A | | | 316,681 | | | | 5,453,247 | |
| | | | | | | | |
HOTEL & RESORT REITS–1.1% | | | | | | | | |
Ryman Hospitality Properties, Inc. | | | 71,850 | | | | 7,907,811 | |
| | | | | | | | |
INDUSTRIAL REITS–2.2% | | | | | | | | |
First Industrial Realty Trust, Inc. | | | 126,307 | | | | 6,652,590 | |
STAG Industrial, Inc. | | | 239,778 | | | | 9,413,684 | |
| | | | | | | | |
| | | | | | | 16,066,274 | |
| | | | | | | | |
REAL ESTATE MANAGEMENT & DEVELOPMENT–1.6% | | | | | | | | |
Jones Lang LaSalle, Inc.(b) | | | 61,768 | | | | 11,666,122 | |
| | | | | | | | |
| | | | | | | | |
RESIDENTIAL REITS–1.2% | | | | | | | | |
Apartment Income REIT Corp. | | | 249,951 | | | | 8,680,798 | |
| | | | | | | | |
SPECIALIZED REITS–0.9% | | | | | | | | |
CubeSmart | | | 135,462 | | | | 6,278,664 | |
| | | | | | | | |
| | | | | | | 56,052,916 | |
| | | | | | | | |
HEALTH CARE–6.3% | | | | | | | | |
HEALTH CARE EQUIPMENT & SUPPLIES–3.0% | | | | | | | | |
Avantor, Inc.(b) | | | 328,560 | | | | 7,501,025 | |
Envista Holdings Corp.(b) | | | 247,530 | | | | 5,955,572 | |
Integra LifeSciences Holdings Corp.(a)(b) | | | 181,330 | | | | 7,896,921 | |
| | | | | | | | |
| | | | | | | 21,353,518 | |
| | | | | | | | |
HEALTH CARE PROVIDERS & SERVICES–2.3% | | | | | | | | |
Acadia Healthcare Co., Inc.(b) | | | 71,050 | | | | 5,524,848 | |
AMN Healthcare Services, Inc.(b) | | | 86,190 | | | | 6,453,907 | |
Pediatrix Medical Group, Inc.(b) | | | 467,240 | | | | 4,345,332 | |
| | | | | | | | |
| | | | | | | 16,324,087 | |
| | | | | | | | |
LIFE SCIENCES TOOLS & SERVICES–1.0% | | | | | | | | |
Fortrea Holdings, Inc.(b) | | | 210,226 | | | | 7,336,888 | |
| | | | | | | | |
| | | | | | | 45,014,493 | |
| | | | | | | | |
ENERGY–5.2% | | | | | | | | |
ENERGY EQUIPMENT & SERVICES–1.0% | | | | | | | | |
ChampionX Corp. | | | 252,710 | | | | 7,381,659 | |
| | | | | | | | |
OIL, GAS & CONSUMABLE FUELS–4.2% | | | | | | | | |
Cameco Corp.(a) | | | 225,700 | | | | 9,727,670 | |
HF Sinclair Corp. | | | 106,155 | | | | 5,899,033 | |
International Seaways, Inc. | | | 135,228 | | | | 6,150,170 | |
Magnolia Oil & Gas Corp.–Class A(a) | | | 381,842 | | | | 8,129,416 | |
| | | | | | | | |
| | | | | | | 29,906,289 | |
| | | | | | | | |
| | | | | | | 37,287,948 | |
| | | | | | | | |
MATERIALS–3.4% | | | | | | | | |
CHEMICALS–1.2% | | | | | | | | |
Element Solutions, Inc. | | | 361,999 | | | | 8,376,657 | |
| | | | | | | | |
CONTAINERS & PACKAGING–1.3% | | | | | | | | |
Berry Global Group, Inc. | | | 134,650 | | | | 9,074,064 | |
| | | | | | | | |
METALS & MINING–0.9% | | | | | | | | |
ATI, Inc.(b) | | | 149,801 | | | | 6,811,451 | |
| | | | | | | | |
| | | | | | | 24,262,172 | |
| | | | | | | | |
7
| | |
| DISCOVERY VALUE PORTFOLIO | | |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
UTILITIES–2.9% | | | | | | | | |
ELECTRIC UTILITIES–2.1% | | | | | | | | |
IDACORP, Inc. | | | 71,284 | | | $ | 7,008,643 | |
Portland General Electric Co. | | | 183,570 | | | | 7,955,924 | |
| | | | | | | | |
| | | | | | | 14,964,567 | |
| | | | | | | | |
MULTI-UTILITIES–0.8% | | | | | | | | |
CenterPoint Energy, Inc. | | | 200,330 | | | | 5,723,428 | |
| | | | | | | | |
| | | | | | | 20,687,995 | |
| | | | | | | | |
CONSUMER STAPLES–2.8% | | | | | | | | |
FOOD PRODUCTS–2.8% | | | | | | | | |
Hain Celestial Group, Inc. (The)(a)(b) | | | 436,704 | | | | 4,781,909 | |
Lamb Weston Holdings, Inc. | | | 72,250 | | | | 7,809,503 | |
Nomad Foods Ltd.(b) | | | 469,432 | | | | 7,956,872 | |
| | | | | | | | |
| | | | | | | 20,548,284 | |
| | | | | | | | |
COMMUNICATION SERVICES–2.2% | | | | | | | | |
MEDIA–2.2% | | | | | | | | |
Criteo SA (Sponsored ADR)(b) | | | 241,059 | | | | 6,103,614 | |
Nexstar Media Group, Inc. | | | 63,123 | | | | 9,894,530 | |
| | | | | | | | |
| | | | | | | 15,998,144 | |
| | | | | | | | |
Total Common Stocks
(cost $617,866,634) | | | | | | | 715,629,155 | |
| | | | | | | | |
SHORT-TERM INVESTMENTS–0.5% | | | | | | | | |
INVESTMENT COMPANIES–0.5% | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB, 5.27%(c)(d)(e)
(cost $3,804,925) | | | 3,804,925 | | | | 3,804,925 | |
| | | | | | | | |
TOTAL INVESTMENTS BEFORE SECURITY LENDING COLLATERAL FOR SECURITIES LOANED–100.2%
(cost $621,671,559) | | | | | | | 719,434,080 | |
| | | | | | | | |
| | | | | | | | |
INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED–0.1% | | | | | | | | |
INVESTMENT COMPANIES–0.1% | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB, 5.27%(c)(d)(e)
(cost $832,340) | | | 832,340 | | | | 832,340 | |
| | | | | | | | |
TOTAL INVESTMENTS–100.3%
(cost $622,503,899) | | | | | | | 720,266,420 | |
Other assets less liabilities–(0.3)% | | | | | | | (2,191,619 | ) |
| | | | | | | | |
Net Assets–100.0% | | | | | | $ | 718,074,801 | |
| | | | | | | | |
| (a) | | Represents entire or partial securities out on loan. See Note E for securities lending information. |
| (b) | | Non-income producing security. |
| (c) | | Affiliated investments. |
| (d) | | The rate shown represents the 7-day yield as of period end. |
| (e) | | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
Glossary:
ADR—American Depositary Receipt
REIT—Real Estate Investment Trust
See notes to financial statements.
8
| | |
| DISCOVERY VALUE PORTFOLIO | | |
| STATEMENT OF ASSETS & LIABILITIES | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
ASSETS | | | | |
Investments in securities, at value | | | | |
Unaffiliated issuers (cost $617,866,634) | | $ | 715,629,155 | (a) |
Affiliated issuers (cost $4,637,265—including investment of cash collateral for securities loaned of $832,340) | | | 4,637,265 | |
Cash | | | 52 | |
Unaffiliated dividends receivable | | | 766,169 | |
Affiliated dividends receivable | | | 18,717 | |
Receivable for capital stock sold | | | 17,141 | |
Receivable due from Adviser | | | 570 | |
| | | | |
Total assets | | | 721,069,069 | |
| | | | |
LIABILITIES | | | | |
Payable for capital stock redeemed | | | 920,068 | |
Payable for collateral received on securities loaned | | | 832,340 | |
Advisory fee payable | | | 445,409 | |
Payable for investment securities purchased | | | 428,811 | |
Custody and accounting fees payable | | | 155,501 | |
Distribution fee payable | | | 94,978 | |
Administrative fee payable | | | 24,090 | |
Transfer Agent fee payable | | | 150 | |
Accrued expenses | | | 92,921 | |
| | | | |
Total liabilities | | | 2,994,268 | |
| | | | |
NET ASSETS | | $ | 718,074,801 | |
| | | | |
COMPOSITION OF NET ASSETS | | | | |
Capital stock, at par | | $ | 40,941 | |
Additional paid-in capital | | | 582,177,604 | |
Distributable earnings | | | 135,856,256 | |
| | | | |
NET ASSETS | | $ | 718,074,801 | |
| | | | |
Net Asset Value Per Share—1 billion shares of capital stock authorized, $.001 par value
| | | | | | | | | | | | |
| Class | | Net Assets | | | Shares
Outstanding | | | Net Asset
Value | |
| | | |
| A | | $ | 259,538,131 | | | | 14,653,054 | | | $ | 17.71 | |
| | | |
| B | | $ | 458,536,670 | | | | 26,287,799 | | | $ | 17.44 | |
| (a) | | Includes securities on loan with a value of $65,117,379 (see Note E). |
See notes to financial statements.
9
| | |
| DISCOVERY VALUE PORTFOLIO | | |
| STATEMENT OF OPERATIONS | | |
| |
| Year Ended December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
INVESTMENT INCOME | | | | |
Dividends | | | | |
Unaffiliated issuers (net of foreign taxes withheld of $38,863) | | $ | 11,116,095 | |
Affiliated issuers | | | 224,116 | |
Interest | | | 321 | |
Securities lending income | | | 60,370 | |
Other income | | | 18 | |
| | | | |
| | $ | 11,400,920 | |
| | | | |
Expenses | | | | |
Advisory fee (see Note B) | | | 4,994,130 | |
Distribution fee—Class B | | | 1,080,454 | |
Transfer agency—Class A | | | 2,383 | |
Transfer agency—Class B | | | 4,402 | |
Administrative | | | 96,655 | |
Custody and accounting | | | 93,765 | |
Legal | | | 69,407 | |
Audit and tax | | | 49,182 | |
Printing | | | 34,872 | |
Directors’ fees | | | 25,123 | |
Miscellaneous | | | 32,605 | |
| | | | |
Total expenses | | | 6,482,978 | |
Less: expenses waived and reimbursed by the Adviser (see Notes B & E) | | | (5,919 | ) |
| | | | |
Net expenses | | | 6,477,059 | |
| | | | |
Net investment income | | | 4,923,861 | |
| | | | |
REALIZED AND UNREALIZED GAIN ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS | | | | |
Net realized gain on: | | | | |
Investment transactions | | | 35,757,363 | |
Foreign currency transactions | | | 1,962 | |
Net change in unrealized appreciation (depreciation) of investments | | | 66,873,944 | |
| | | | |
Net gain on investment and foreign currency transactions | | | 102,633,269 | |
| | | | |
NET INCREASE IN NET ASSETS FROM OPERATIONS | | $ | 107,557,130 | |
| | | | |
See notes to financial statements.
10
| | |
| | |
| DISCOVERY VALUE PORTFOLIO | | |
| |
| STATEMENT OF CHANGES IN NET ASSETS | | AB Variable Products Series Fund |
| | | | | | | | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | |
Net investment income | | $ | 4,923,861 | | | $ | 5,968,602 | |
Net realized gain on investment transactions | | | 35,759,325 | | | | 56,176,032 | |
Net change in unrealized appreciation (depreciation) of investments | | | 66,873,944 | | | | (192,080,807 | ) |
| | | | | | | | |
Net increase (decrease) in net assets from operations | | | 107,557,130 | | | | (129,936,173 | ) |
Distributions to Shareholders | |
Class A | | | (22,107,220 | ) | | | (39,063,484 | ) |
Class B | | | (40,508,165 | ) | | | (74,247,640 | ) |
CAPITAL STOCK TRANSACTIONS | |
Net increase | | | 13,461,192 | | | | 52,787,833 | |
| | | | | | | | |
Total increase (decrease) | | | 58,402,937 | | | | (190,459,464 | ) |
NET ASSETS | |
Beginning of period | | | 659,671,864 | | | | 850,131,328 | |
| | | | | | | | |
End of period | | $ | 718,074,801 | | | $ | 659,671,864 | |
| | | | | | | | |
See notes to financial statements.
11
| | |
| DISCOVERY VALUE PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
NOTE A: Significant Accounting Policies
The AB Discovery Value Portfolio (the “Portfolio”) (formerly known as AB Small/Mid Cap Value Portfolio) is a series of AB Variable Products Series Fund, Inc. (the “Fund”). The Portfolio’s investment objective is long-term growth of capital. The Portfolio is diversified as defined under the Investment Company Act of 1940 (the “1940 Act”). The Fund was incorporated in the State of Maryland as an open-end series investment company. The Fund offers 10 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 U.S. generally accepted accounting principles (“U.S. GAAP”), 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 Portfolio is an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Portfolio.
1. Security Valuation
Portfolio securities are valued at market value determined on the basis of market quotations or, if market quotations are not readily available or are unreliable, at “fair value” as determined in accordance with procedures approved by and under the oversight of the Fund’s Board of Directors (the “Board”). Pursuant to these procedures, AllianceBernstein L.P. (the “Adviser”) serves as the Portfolio’s valuation designee pursuant to Rule 2a-5 of the 1940 Act. In this capacity, the Adviser is responsible, among other things, for making all fair value determinations relating to the Portfolio’s portfolio investments, subject to the Board’s oversight.
In general, the market values of securities which are readily available and deemed reliable are determined as follows: securities listed on a national securities exchange (other than securities listed on the NASDAQ Stock Market, Inc. (“NASDAQ”)) 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 last traded price from the previous day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price; listed or over the counter (“OTC”) market put or call options are valued at the mid level between the current bid and ask prices. If either a current bid or current ask price is unavailable, the Adviser will have discretion to determine the best valuation (e.g., last trade price in the case of listed options); open futures 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 valuation, the last available closing settlement price is used; U.S. Government securities and any other debt instruments having 60 days or less remaining until maturity are generally valued at market by an independent pricing vendor, if a market price is available. If a market price is not available, the securities are valued at amortized cost. This methodology is commonly used for short term securities that have an original maturity of 60 days or less, as well as short term securities that had an original term to maturity that exceeded 60 days. In instances when amortized cost is utilized, the Valuation Committee (the “Committee”) must reasonably conclude that the utilization of amortized cost is approximately the same as the fair value of the security. Factors the Committee will consider include, but are not limited to, an impairment of the creditworthiness of the issuer or material changes in interest rates. 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 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. Swaps and other derivatives are valued daily, primarily using independent pricing services, independent pricing models using market inputs, as well as third party broker-dealers or counterparties. Open-end mutual funds are valued at the closing net asset value per share, while exchange traded funds are valued at the closing market price per share.
Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value as deemed appropriate by the Adviser. Factors considered in making this determination may include, but
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| | | AB Variable Products Series Fund |
are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer’s financial statements or other available documents. In addition, the Portfolio may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Portfolio values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Portfolio generally values many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available.
2. Fair Value Measurements
In accordance with U.S. GAAP regarding fair value measurements, fair value is defined as the price that the Portfolio would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability (including those valued based on their market values as described in Note A.1 above). Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Portfolio. Unobservable inputs reflect the Portfolio’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
| | • | | Level 1—quoted prices in active markets for identical investments |
| | • | | Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| | • | | Level 3—significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of investments) |
Where readily available market prices or relevant bid prices are not available for certain equity investments, such investments may be valued based on similar publicly traded investments, movements in relevant indices since last available prices or based upon underlying company fundamentals and comparable company data (such as multiples to earnings or other multiples to equity). Where an investment is valued using an observable input, such as another publicly traded security, the investment will be classified as Level 2. If management determines that an adjustment is appropriate based on restrictions on resale, illiquidity or uncertainty, and such adjustment is a significant component of the valuation, the investment will be classified as Level 3. An investment will also be classified as Level 3 where management uses company fundamentals and other significant inputs to determine the valuation.
The following table summarizes the valuation of the Portfolio’s investments by the above fair value hierarchy levels as of December 31, 2023:
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Assets: | |
Common Stocks(a) | | $ | 715,629,155 | | | $ | –0 | – | | $ | –0 | – | | $ | 715,629,155 | |
Short-Term Investments | | | 3,804,925 | | | | –0 | – | | | –0 | – | | | 3,804,925 | |
Investments of Cash Collateral for Securities Loaned in Affiliated Money Market Fund | | | 832,340 | | | | –0 | – | | | –0 | – | | | 832,340 | |
| | | | | | | | | | | | | | | | |
Total Investments in Securities | | | 720,266,420 | | | | –0 | – | | | –0 | – | | | 720,266,420 | |
Other Financial Instruments(b) | | | –0 | – | | | –0 | – | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | |
Total | | $ | 720,266,420 | | | $ | –0 | – | | $ | –0 | – | | $ | 720,266,420 | |
| | | | | | | | | | | | | | | | |
| (a) | | See Portfolio of Investments for sector classifications. |
| (b) | | Other financial instruments are derivative instruments, such as futures, forwards and swaps, which are valued at the unrealized appreciation (depreciation) on the instrument. Other financial instruments may also include swaps with upfront premiums, written options and written swaptions which are valued at market value. |
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| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
3. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under forward currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and ask 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, 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 foreign currency denominated assets and liabilities.
4. 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. The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned.
In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, management has analyzed the Portfolio’s tax positions taken or expected to be taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Portfolio’s financial statements.
5. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Portfolio is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the date the securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. Non-cash dividends, if any, are recorded on the ex-dividend date at the fair value of the securities received. The Portfolio amortizes premiums and accretes discounts as adjustments to interest income. The Portfolio accounts for distributions received from REIT investments or from regulated investment companies as dividend income, realized gain, or return of capital based on information provided by the REIT or the investment company.
6. Class Allocations
All income earned and expenses incurred by the Portfolio 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 for class specific expenses which are allocated to the respective class. Expenses of the Fund are charged proportionately to each portfolio or based on other appropriate methods. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets.
7. Dividends and Distributions
Dividends and distributions to shareholders, if any, 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 U.S. GAAP. 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 the investment advisory agreement, the Portfolio pays the Adviser an advisory fee at an 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 Portfolio’s average daily net assets. The fee is accrued daily and paid monthly. The Adviser has agreed to waive its fees and bear certain expenses to the extent necessary to limit total operating expenses on an annual basis (the “Expense Caps”) to 1.20% and 1.45% of daily average net assets for Class A and Class B shares, respectively. For the year ended December 31, 2023, there were no expenses waived by the Adviser.
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| | | AB Variable Products Series Fund |
Pursuant to the investment advisory agreement, the Portfolio may reimburse the Adviser for certain legal and accounting services provided to the Portfolio by the Adviser. For the year ended December 31, 2023, the reimbursement for such services amounted to $96,655.
The Portfolio compensates AllianceBernstein Investor Services, Inc. (“ABIS”), 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 retained by ABIS amounted to $1,800 for the year ended December 31, 2023.
The Portfolio may invest in AB Government Money Market Portfolio (the “Government Money Market Portfolio”) which has a contractual annual advisory fee rate of .20% of the portfolio’s average daily net assets and bears its own expenses. The Adviser had contractually agreed to waive .10% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .10%) until August 31, 2023. Effective September 1, 2023, the Adviser has contractually agreed to waive .05% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .15%) until August 31, 2024. In connection with the investment by the Portfolio in Government Money Market Portfolio, the Adviser has contractually agreed to waive its advisory fee from the Portfolio in an amount equal to the Portfolio’s pro rata share of the effective advisory fee of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. For the year ended December 31, 2023, such waiver amounted to $5,319.
A summary of the Portfolio’s transactions in AB mutual funds for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | |
Portfolio | | Market Value
12/31/22
(000) | | | Purchases
at Cost
(000) | | | Sales
Proceeds
(000) | | | Market Value
12/31/23
(000) | | | Dividend
Income
(000) | |
Government Money Market Portfolio | | $ | 4,206 | | | $ | 138,713 | | | $ | 139,114 | | | $ | 3,805 | | | $ | 224 | |
Government Money Market Portfolio* | | | 207 | | | | 80,583 | | | | 79,958 | | | | 832 | | | | 13 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | $ | 4,637 | | | $ | 237 | |
| | | | | | | | | | | | | | | | | | | | |
| * | | Investments of cash collateral for securities lending transactions (see Note E). |
NOTE C: Distribution Plan
The Portfolio has adopted a Distribution Plan (the “Plan”) for Class B shares pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Portfolio pays distribution and servicing fees to AllianceBernstein Investments, Inc. (the “Distributor”), 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 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 or 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 year ended December 31, 2023 were as follows:
| | | | | | | | |
| | | Purchases | | | Sales | |
Investment securities (excluding U.S. government securities) | | $ | 329,005,803 | | | $ | 370,219,671 | |
U.S. government securities | | | –0 | – | | | –0 | – |
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| DISCOVERY VALUE PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation are as follows:
| | | | |
Cost | | $ | 625,153,515 | |
| | | | |
Gross unrealized appreciation | | $ | 140,122,255 | |
Gross unrealized depreciation | | | (45,009,350 | ) |
| | | | |
Net unrealized appreciation | | $ | 95,112,905 | |
| | | | |
1. Derivative Financial Instruments
The Portfolio may use derivatives in an effort to earn income and enhance returns, to replace more traditional direct investments, to obtain exposure to otherwise inaccessible markets (collectively, “investment purposes”), or to hedge or adjust the risk profile of its portfolio.
The Portfolio did not engage in derivatives transactions for the year ended December 31, 2023.
2. Currency Transactions
The Portfolio may invest in non-U.S. Dollar-denominated securities on a currency hedged or unhedged basis. The Portfolio may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and other options. The Portfolio may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Portfolio and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Portfolio may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).
NOTE E: Securities Lending
The Portfolio may enter into securities lending transactions. Under the Portfolio’s securities lending program, all loans of securities will be collateralized continually by cash collateral and/or non-cash collateral. Non-cash collateral will include only securities issued or guaranteed by the U.S. government or its agencies or instrumentalities. If the Portfolio cannot sell or repledge any non-cash collateral, such collateral will not be reflected in the portfolio of investments. If a loan is collateralized by cash, the Portfolio will be compensated for the loan from a portion of the net return from the income earned on cash collateral after a rebate is paid to the borrower (in some cases, this rebate may be a “negative rebate” or fee paid by the borrower to the Portfolio in connection with the loan), and payments are made for fees of the securities lending agent and for certain other administrative expenses. If the Portfolio receives non-cash collateral, the Portfolio will receive a fee from the borrower generally equal to a negotiated percentage of the market value of the loaned securities. The Portfolio will have the right to call a loan and obtain the securities loaned at any time on notice to the borrower within the normal and customary settlement time for the securities. While the securities are on loan, the borrower is obligated to pay the Portfolio amounts equal to any dividend income or other distributions from the securities; however, these distributions will not be afforded the same preferential tax treatment as qualified dividends. The Portfolio will not be able to exercise voting rights with respect to any securities during the existence of a loan, but will have the right to regain ownership of loaned securities in order to exercise voting or other ownership rights. Collateral received and securities loaned are marked to market daily to ensure that the securities loaned are secured by collateral. The lending agent currently invests the cash collateral received in Government Money Market Portfolio, an eligible money market vehicle, in accordance with the investment restrictions of the Portfolio, and as approved by the Board. The collateral received on securities loaned is recorded as an asset as well as a corresponding liability in the statement of assets and liabilities. The collateral will be adjusted the next business day to maintain the required collateral amount. The amounts of securities lending income from the borrowers and Government Money Market Portfolio are reflected in the statement of operations. When the Portfolio earns net securities lending income from Government Money Market Portfolio, the income is inclusive of a rebate expense paid to the borrower. In connection with the cash collateral investment by the Portfolio in Government Money Market Portfolio, the Adviser has agreed to waive a portion of the Portfolio’s share of the advisory fees of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. When the Portfolio lends securities, its investment performance will continue to reflect changes in the value of the securities loaned. A principal risk of lending portfolio securities is that the borrower may fail to return the loaned securities upon termination of the loan and that the collateral will not be sufficient to replace the loaned securities. The lending agent has agreed to indemnify the Portfolio in the case of default of any securities borrower.
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| | | AB Variable Products Series Fund |
A summary of the Portfolio’s transactions surrounding securities lending for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Government Money Market
Portfolio | |
Market Value of
Securities on Loan* | | | Cash Collateral* | | | Market Value of
Non-Cash
Collateral* | | | Income from
Borrowers | | | Income Earned | | | Advisory Fee
Waived | |
| $ | 65,117,379 | | | $ | 832,340 | | | $ | 66,609,939 | | | $ | 47,450 | | | $ | 12,920 | | | $ | 600 | |
| * | | As of December 31, 2023. |
NOTE F: Capital Stock
Each class consists of 500,000,000 authorized shares. Transactions in capital shares for each class were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | SHARES | | | | | | AMOUNT | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | | | | | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
Class A | |
Shares sold | | | 1,485,530 | | | | 914,008 | | | | | | | $ | 24,512,123 | | | $ | 18,069,372 | |
Shares issued in reinvestment of dividends and distributions | | | 1,319,834 | | | | 2,264,550 | | | | | | | | 22,107,220 | | | | 39,063,484 | |
Shares redeemed | | | (1,902,203 | ) | | | (1,637,209 | ) | | | | | | | (31,889,060 | ) | | | (32,043,197 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase | | | 903,161 | | | | 1,541,349 | | | | | | | $ | 14,730,283 | | | $ | 25,089,659 | |
| | | | | | | | | | | | | | | | | | | | |
Class B | |
Shares sold | | | 1,449,832 | | | | 1,801,924 | | | | | | | $ | 23,808,551 | | | $ | 35,459,120 | |
Shares issued on reinvestment of dividends and distributions | | | 2,453,553 | | | | 4,359,814 | | | | | | | | 40,508,165 | | | | 74,247,640 | |
Shares redeemed | | | (3,914,785 | ) | | | (4,193,215 | ) | | | | | | | (65,585,807 | ) | | | (82,008,586 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (11,400 | ) | | | 1,968,523 | | | | | | | $ | (1,269,091 | ) | | $ | 27,698,174 | |
| | | | | | | | | | | | | | | | | | | | |
At December 31, 2023, certain shareholders of the Portfolio owned 72% in aggregate of the Portfolio’s outstanding shares. Significant transactions by such shareholders, if any, may impact the Portfolio’s performance.
NOTE G: Risks Involved in Investing in the Portfolio
Market Risk—The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Capitalization Risk—Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small- and mid-capitalization companies may have additional risks because these companies have limited product lines, markets or financial resources.
Foreign (Non-U.S.) Risk—Investments in securities of non-U.S. issuers may involve more risk than those of U.S. issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
Currency Risk—Fluctuations in currency exchange rates may negatively affect the value of the Portfolio’s investments or reduce its returns.
Derivatives Risk—Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss.
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| DISCOVERY VALUE PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
LIBOR Replacement Risk—The Portfolio may be exposed to debt securities, derivatives or other financial instruments that utilize the London Interbank Offered Rate, or “LIBOR,” as a “benchmark” or “reference rate” for various interest rate calculations. LIBOR’s administrator, ICE Benchmark Administration, ceased publishing most LIBOR settings (including some U.S. LIBOR settings) by the end of 2021 and the remaining (and most widely used) U.S. Dollar LIBOR settings after June 30, 2023. The United Kingdom Financial Conduct Authority, which regulates LIBOR, will permit the use of synthetic U.S. Dollar LIBOR rates for non-U.S. contracts through September 30, 2024, but any such rates would be considered non-representative of the underlying market. Since 2018 the Federal Reserve Bank of New York has published the Secured Overnight Financing Rate (referred to as SOFR), which is intended to replace U.S. Dollar LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities in the repurchase agreement (repo) market. There is no assurance that the composition or characteristics of SOFR or any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that the market for SOFR-linked financial instruments will have the same volume or liquidity as did the market for LIBOR-linked financial instruments prior to LIBOR’s discontinuance or unavailability. Neither the long-term effects of the LIBOR transition process nor its ultimate success can yet be known.
Indemnification Risk—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. Therefore, the Portfolio has not accrued any liability in connection with these indemnification provisions.
Management Risk—The Portfolio is subject to management risk because it is an actively-managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
NOTE H: Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $325 million revolving credit facility (the “Facility”) intended to provide short-term financing related to redemptions and other short term liquidity requirements, subject to certain restrictions. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Portfolio did not utilize the Facility during the year ended December 31, 2023.
NOTE I: Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended December 31, 2023 and December 31, 2022 were as follows:
| | | | | | | | |
| | | 2023 | | | 2022 | |
Distributions paid from: | | | | | | | | |
Ordinary income | | $ | 9,916,054 | | | $ | 53,540,355 | |
Net long-term capital gains | | | 52,699,331 | | | | 59,770,769 | |
| | | | | | | | |
Total taxable distributions paid | | $ | 62,615,385 | | | $ | 113,311,124 | |
| | | | | | | | |
As of December 31, 2023, the components of accumulated earnings (deficit) on a tax basis were as follows:
| | | | |
Undistributed ordinary income | | $ | 10,008,506 | |
Undistributed capital gains | | | 30,734,846 | |
Unrealized appreciation (depreciation) | | | 95,112,906 | (a) |
| | | | |
Total accumulated earnings (deficit) | | $ | 135,856,258 | |
| | | | |
| (a) | | The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. |
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| | | AB Variable Products Series Fund |
For tax purposes, net realized capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses for an indefinite period, and such losses will retain their character as either short-term or long-term capital losses. As of December 31, 2023, the Portfolio did not have any capital loss carryforwards.
During the current fiscal year, there were no permanent differences that resulted in adjustments to undistributed net investment income, accumulated net realized loss on investment and foreign currency transactions, or additional paid-in capital.
NOTE J: Recent Accounting Pronouncements
In December 2022, the Financial Accounting Standards Board issued an Accounting Standards Update, ASU 2022-06, “Reference Rate Reform (Topic 848) – Deferral of the Sunset Date of Topic 848”. ASU 2022-06 is an amendment to ASU 2020-04, which provided optional guidance to ease the potential accounting burden due to the discontinuation of the LIBOR and other interbank-offered based reference rates and which was effective as of March 12, 2020 through December 31, 2022. ASU 2022-06 extends the effective period through December 31, 2024. Management is currently evaluating the impact, if any, of applying ASU 2022-06.
NOTE K: Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Portfolio’s financial statements through this date.
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| DISCOVERY VALUE PORTFOLIO | | |
| |
| FINANCIAL HIGHLIGHTS | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS A | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | | $16.62 | | | | $23.46 | | | | $17.39 | | | | $17.91 | | | | $16.93 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment income(a)(b) | | | .15 | | | | .19 | | | | .21 | | | | .17 | | | | .16 | |
Net realized and unrealized gain (loss) on investment transactions | | | 2.61 | | | | (3.74 | ) | | | 6.03 | | | | .20 | | | | 3.04 | |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 2.76 | | | | (3.55 | ) | | | 6.24 | | | | .37 | | | | 3.20 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Dividends and Distributions | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (.19 | ) | | | (.22 | ) | | | (.17 | ) | | | (.16 | ) | | | (.11 | ) |
Distributions from net realized gain on investment transactions | | | (1.48 | ) | | | (3.07 | ) | | | –0 | – | | | (.73 | ) | | | (2.11 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (1.67 | ) | | | (3.29 | ) | | | (.17 | ) | | | (.89 | ) | | | (2.22 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $17.71 | | | | $16.62 | | | | $23.46 | | | | $17.39 | | | | $17.91 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset value(c) | | | 17.18 | % | | | (15.63 | )% | | | 35.95 | % | | | 3.37 | % | | | 20.10 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | | $259,538 | | | | $228,586 | | | | $286,390 | | | | $222,441 | | | | $211,046 | |
Ratio to average net assets of: | |
Expenses, net of waivers/reimbursements | | | .81 | % | | | .80 | % | | | .80 | % | | | .83 | % | | | .82 | % |
Expenses, before waivers/reimbursements | | | .81 | % | | | .80 | % | | | .80 | % | | | .83 | % | | | .83 | % |
Net investment income(b) | | | .91 | % | | | 1.00 | % | | | .98 | % | | | 1.17 | % | | | .90 | % |
Portfolio turnover rate | | | 49 | % | | | 42 | % | | | 54 | % | | | 58 | % | | | 33 | % |
See footnote summary on page 21.
20
| | |
| |
| | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS B | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | | $16.39 | | | | $23.17 | | | | $17.19 | | | | $17.72 | | | | $16.75 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment income(a)(b) | | | .11 | | | | .14 | | | | .16 | | | | .13 | | | | .12 | |
Net realized and unrealized gain (loss) on investment transactions | | | 2.56 | | | | (3.68 | ) | | | 5.95 | | | | .18 | | | | 3.02 | |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 2.67 | | | | (3.54 | ) | | | 6.11 | | | | .31 | | | | 3.14 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Dividends and Distributions | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (.14 | ) | | | (.17 | ) | | | (.13 | ) | | | (.11 | ) | | | (.06 | ) |
Distributions from net realized gain on investment transactions | | | (1.48 | ) | | | (3.07 | ) | | | –0 | – | | | (.73 | ) | | | (2.11 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (1.62 | ) | | | (3.24 | ) | | | (.13 | ) | | | (.84 | ) | | | (2.17 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $17.44 | | | | $16.39 | | | | $23.17 | | | | $17.19 | | | | $17.72 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset value(c) | | | 16.86 | % | | | (15.82 | )% | | | 35.60 | % | | | 3.05 | % | | | 19.90 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | | $458,537 | | | | $431,086 | | | | $563,741 | | | | $432,719 | | | | $423,246 | |
Ratio to average net assets of: | |
Expenses, net of waivers/reimbursements | | | 1.06 | % | | | 1.05 | % | | | 1.05 | % | | | 1.08 | % | | | 1.07 | % |
Expenses, before waivers/reimbursements | | | 1.06 | % | | | 1.05 | % | | | 1.05 | % | | | 1.08 | % | | | 1.08 | % |
Net investment income(b) | | | .65 | % | | | .74 | % | | | .73 | % | | | .91 | % | | | .65 | % |
Portfolio turnover rate. | | | 49 | % | | | 42 | % | | | 54 | % | | | 58 | % | | | 33 | % |
| (a) | | Based on average shares outstanding. |
| (b) | | Net of expenses waived/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 (i) insurance company’s separate account related expense charges and (ii) the deductions 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. |
See notes to financial statements.
21
| | |
| | |
| REPORT OF INDEPENDENT REGISTERED | | |
| |
| PUBLIC ACCOUNTING FIRM | | AB Variable Products Series Fund |
To the Shareholders and the Board of Directors of AB Discovery Value Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of AB Discovery Value Portfolio (formerly known as AB Small/Mid Cap Value Portfolio) (the “Portfolio”) (one of the series constituting AB Variable Products Series Fund, Inc. (the “Fund”)), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Portfolio (one of the series constituting AB Variable Products Series Fund, Inc.) at December 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Portfolio’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers or others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the AB investment companies since 1968.
New York, New York
February 14, 2024
22
| | |
| | |
| | |
| |
| 2023 TAX INFORMATION (unaudited) | | AB Variable Products Series Fund |
For Federal income tax purposes, the following information is furnished with respect to the distributions paid by the Portfolio during the taxable year ended December 31, 2023. For corporate shareholders, 98.07% of dividends paid qualify for the dividends received deduction. The Portfolio designates $52,699,331 of dividends paid as long-term capital gain dividends.
23
| | |
| | |
| | |
| |
| DISCOVERY VALUE PORTFOLIO | | AB Variable Products Series Fund |
| | |
| BOARD OF DIRECTORS | | |
Garry L. Moody(1), Chairman Jorge A. Bermudez(1) Michael J. Downey(1) Onur Erzan, President and
Chief Executive Officer | | Nancy P. Jacklin(1) Jeanette W. Loeb(1) Carol C. McMullen(1) Marshall C. Turner, Jr.(1) Emilie D. Wrapp, Advisory Board Member |
| | |
| | |
| OFFICERS | | |
James W. MacGregor(2), Vice President Erik A. Turenchalk(2), Vice President Nancy E. Hay, Secretary Michael B. Reyes, Senior Vice President | | Stephen M. Woetzel, Treasurer and
Chief Financial Officer Phyllis J. Clarke, Controller Jennifer Friedland, Chief Compliance Officer |
| | |
| | |
| CUSTODIANAND ACCOUNTING AGENT | | LEGAL COUNSEL |
State Street Bank and Trust Company One Congress Street Suite 1 Boston, MA 02114 | | Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 |
| | |
DISTRIBUTOR AllianceBernstein Investments, Inc. 501 Commerce Street Nashville, TN 37203 | | TRANSFER AGENT AllianceBernstein Investor Services, Inc. P.O. Box 786003 San Antonio, TX 78278 Toll-Free (800) 221-5672 |
| | |
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM Ernst & Young LLP One Manhattan West New York, NY 10001 | | |
| (1) | | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
| (2) | | The day-to-day management of, and investment decisions for, the Portfolio’s portfolio are made by the Small/Mid-Cap Value Senior Investment Management Team. Messrs. MacGregor and Turenchalk are the investment professionals with the most significant responsibility for the day-to-day management of the Portfolio’s portfolio. |
24
| | |
| | |
| DISCOVERY VALUE PORTFOLIO | | |
| |
| MANAGEMENT OF THE FUND | | AB Variable Products Series Fund |
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund’s Directors and Advisory Board member is set forth below.
| | | | | | | | |
NAME, ADDRESS*,
AGE AND
(YEAR FIRST ELECTED)** | | PRINCIPAL
OCCUPATION(S),
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR
|
| INTERESTED DIRECTOR | | | | | | |
| | | | | | | | |
Onur Erzan,# 1345 Avenue of the Americas
New York, NY 10105
48
(2021) | | Senior Vice President of the Adviser, Head of Global Client Group and Head of Private Wealth. He oversees AB’s entire private wealth management business and third-party institutional and retail franchise, where he is responsible for all client services, sales and marketing, as well as product strategy, management and development worldwide. Director, President and Chief Executive Officer of the AB Mutual Funds as of April 1, 2021. He is also a member of the Equitable Holdings Management Committee. Prior to joining the firm in January 2021, he spent 19 years with McKinsey (management consulting firm), most recently as a senior partner and co-leader of its Wealth & Asset Management practice. In addition, he co-led McKinsey’s Banking & Securities Solutions (a portfolio of data, analytics, and digital assets and capabilities) globally. | | | 82 | | | None |
| | | | | | | | |
| INDEPENDENT DIRECTORS | | | | | | |
| | | | | | | | |
Garry L. Moody##
Chairman of the Board
71
(2008) | | Private Investor since prior to 2019. Formerly, Partner, Deloitte & Touche LLP (1995–2008) where he held a number of senior positions, including Vice Chairman, and U.S. and Global Investment Management Practice Managing Partner; President, Fidelity Accounting and Custody Services Company (1993–1995), where he was responsible for accounting, pricing, custody and reporting for the Fidelity mutual funds; and Partner, Ernst & Young LLP (1975–1993), where he served as the National Director of Mutual Fund Tax Services and Managing Partner of its Chicago Office Tax department. He served as a member of the Investment Company Institute’s Board of Governors and the Independent Directors Council’s Governing Council from October 2019 through September 2023, where he also served as Chairman of the Governance Committee from October 2021 through September 2023. He is Chairman of the AB Funds and Chairman of the Independent Directors Committees since January 2023; he has served as a director or trustee since 2008, and served as Chairman of the Audit Committee of such funds from 2008 to February 2023. | | | 82 | | | None |
| | | | | | | | |
25
| | |
| DISCOVERY VALUE PORTFOLIO | | |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*,
AGE AND
(YEAR FIRST ELECTED)** | | PRINCIPAL
OCCUPATION(S),
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR
|
INDEPENDENT DIRECTORS (continued) | | | | | | |
| | | | | | | | |
Jorge A. Bermudez,##
72
(2020) | | Private Investor since prior to 2019. Formerly, Chief Risk Officer of Citigroup, Inc., a global financial services company, from November 2007 to March 2008; Chief Executive Officer of Citigroup’s Commercial Business Group in North America and Citibank Texas from 2005 to 2007; and a variety of other executive and leadership roles at various businesses within Citigroup prior to then; Chairman (2017–2018) of the Texas A&M Foundation Board of Trustees (Trustee 2014–2021) and Chairman of the Smart Grid Center Board at Texas A&M University since 2012; director of, among others, Citibank N.A. from 2005 to 2008, the Federal Reserve Bank of Dallas, Houston Branch from 2009 to 2011, the Federal Reserve Bank of Dallas from 2011 to 2017, and the Electric Reliability Council of Texas from 2010 to 2016; and Chair of the Audit Committee of the Board of Directors of Moody’s Corporation since December 2022. He has served as director or trustee of the AB Funds since January 2020. | | | 82 | | | Moody’s Corporation since April 2011 |
| | | | | | | | |
Michael J. Downey,##
80
(2005) | | Private Investor since prior to 2019. Formerly, Chairman of The Asia Pacific Fund, Inc. (registered investment company) from 2002 until January 2019. From 1987 until 1993, Chairman and CEO of Prudential Mutual Fund Management, director of the Prudential mutual funds, and member of the Executive Committee of Prudential Securities, Inc. He has served as a director or trustee of the AB Funds since 2005. | | | 82 | | | None |
| | | | | | | | |
Nancy P. Jacklin,##
75
(2006) | | Private Investor since prior to 2019. Professorial Lecturer at the Johns Hopkins School of Advanced International Studies (2008–2015). U.S. Executive Director of the International Monetary Fund (which is responsible for ensuring the stability of the international monetary system), (December 2002–May 2006); Partner, Clifford Chance (1992–2002); Sector Counsel, International Banking and Finance, and Associate General Counsel, Citicorp (1985–1992); Assistant General Counsel (International), Federal Reserve Board of Governors (1982–1985); and Attorney Advisor, U.S. Department of the Treasury (1973–1982). Member of the Bar of the District of Columbia and of New York; and member of the Council on Foreign Relations. She has served as a director or trustee of the AB Funds since 2006 and served as Chair of the Governance and Nominating Committees of the AB Funds from 2014 to August 2023. | | | 82 | | | None |
| | | | | | | | |
26
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*,
AGE AND
(YEAR FIRST ELECTED)** | | PRINCIPAL
OCCUPATION(S),
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR
|
INDEPENDENT DIRECTORS (continued) | | | | | | |
| | | | | | | | |
Jeanette W. Loeb,##
71 (2020) | | Private Investor since prior to 2019. Director of New York City Center since 2005. Formerly, Chief Executive Officer of PetCareRx (e-commerce pet pharmacy) from 2002 to 2011 and 2015 to April 2023. She was a director of MidCap Financial Investment Corporation (business development company) from August 2011 to July 2023 and a director of AB Multi-Manager Alternative Fund (fund of hedge funds) from 2012 to 2018. Formerly, affiliated with Goldman Sachs Group, Inc. (financial services) from 1977 to 1994, including as a partner thereof from 1986 to 1994. She has served as director or trustee of the AB Funds since April 2020 and serves as Chair of the Governance and Nominating Committees of the AB Funds since August 2023. | | | 82 | | | |
| | | | | | | | |
Carol C. McMullen,##
68
(2016) | | Private Investor and a member of the Advisory Board of Butcher Box (since 2018) and serves as Advisory Board Chair as of June 2023. Formerly, Managing Director of Slalom Consulting (consulting) from 2014 until July 2023; member, Mass General Brigham (formerly, Partners Healthcare) Investment Committee (2010–2019); Director of Norfolk & Dedham Group (mutual property and casualty insurance) from 2011 until November 2016; Director of Partners Community Physicians Organization (healthcare) from 2014 until December 2016; and Managing Director of The Crossland Group (consulting) from 2012 until 2013. She has held a number of senior positions in the asset and wealth management industries, including at Eastern Bank (where her roles included President of Eastern Wealth Management), Thomson Financial (Global Head of Sales for Investment Management), and Putnam Investments (where her roles included Chief Investment Officer, Core and Growth and Head of Global Investment Research). She has served on a number of private company and non-profit boards, and as a director or trustee of the AB Funds since June 2016, and serves as Chair of the Audit Committees of such funds since February 2023. | | | 82 | | | None |
| | | | | | | | |
27
| | |
| DISCOVERY VALUE PORTFOLIO | | |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*,
AGE AND
(YEAR FIRST ELECTED)** | | PRINCIPAL
OCCUPATION(S),
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR
|
INDEPENDENT DIRECTORS (continued) | | | | | | |
| | | | | | | | |
Marshall C. Turner, Jr.##
82
(2005) | | Private Investor since prior to 2019. He was a Director of Xilinx, Inc. (programmable logic semi-conductors and adaptable, intelligent computing) from 2007 through August 2020, and is a former director of 33 other companies and organizations. Former Chairman and CEO of Dupont Photomasks, Inc. (semi-conductor manufacturing equipment) from 2003 through 2006. He has extensive operating leadership and venture capital investing experience, including five interim or full-time CEO roles, and prior service as general partner of institutional venture capital partnerships. He also has extensive non-profit board leadership experience, and currently serves on the board of the George Lucas Educational Foundation. He has served as a director of one AB Fund since 1992, and director or trustee of all the AB Funds since 2005. He has served as both Chairman of the AB Funds and Chairman of the Independent Directors Committees from 2014 through December 2022. | | | 82 | | | None |
| | | | | | | | |
| ADVISORY BOARD MEMBER | | | | | | |
| | | | | | | | |
Emilie D. Wrapp,# 68 (2024) | | Former Senior Vice President, Counsel, Assistant Secretary & Senior Mutual Fund Legal Advisor of the Adviser (January 2023–June 2023). Prior thereto, Senior Vice President, Assistant Secretary, Counsel, and Head of Mutual Fund & Retail Legal of the Adviser; Assistant General Counsel and Assistant Secretary of ABI since prior to 2019 until June 2023. | | | 82 | | | None |
| * | The address for each of the Fund’s Directors and the Advisory Board member is c/o AllianceBernstein L.P., Attention: Legal and Compliance Department—Mutual Fund Legal, 1345 Avenue of the Americas, New York, NY 10105. |
| ** | There is no stated term of office for the Fund’s Directors or the Advisory Board member. |
| *** | The information above includes each Director’s principal occupation during the last five years and other information relating to the experience, attributes and skills relevant to each Director’s qualifications to serve as a Director, which led to the conclusion that each Director should serve as a Director for the Fund. |
| # | Mr. Erzan is an “interested person” of the Fund, as defined in the “1940 Act”, due to his position as a Senior Vice President of the Adviser. Ms. Wrapp is an “interested person” of the Fund, as defined in the 1940 Act, due to her former role with the Adviser. |
| ## | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
28
| | |
| |
| | | AB Variable Products Series Fund |
Officer Information
Certain information concerning the Portfolio’s Officers is listed below.
| | | | |
NAME, ADDRESS*
AND AGE | | PRINCIPAL POSITION(S)
HELD WITH FUND | | PRINCIPAL OCCUPATION
DURING PAST FIVE YEARS |
Onur Erzan
48 | | President and Chief Executive Officer | | See biography above. |
| | | | |
James W. MacGregor
56 | | Vice President | | Senior Vice President and Chief Investment Officer of US Small and Mid-Cap Value Equities of the Adviser**, with which he has been associated since prior to 2019. He is also Head - US Value Equities since 2019. |
| | | | |
Erik A. Turenchalk
51 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated since prior to 2019. |
| | | | |
Nancy E. Hay
51 | | Secretary | | Senior Vice President and Counsel of the Adviser**, with which she has been associated since prior to 2019 and Assistant Secretary of ABI**. |
| | | | |
Michael B. Reyes
47 | | Senior Vice President | | Vice President of the Adviser**, with which he has been associated since prior to 2019. |
| | | | |
Stephen M. Woetzel
52 | | Treasurer and Chief Financial Officer | | Senior Vice President of ABIS**, with which he has been associated since prior to 2019. |
| | | | |
Phyllis J. Clarke
63 | | Controller | | Vice President of ABIS**, with which she has been associated since prior to 2019. |
| | | | |
Jennifer Friedland 49 | | Chief Compliance Officer | | Vice President of the Adviser** since 2020 and Mutual Fund Chief Compliance Officer (of all Funds since January 2023 and of the ETF Funds since 2022). Before joining the Adviser in 2020, she was Chief Compliance Officer at WestEnd Advisors, LLC from 2013 to 2019. |
| * | | The address for each of the Portfolio’s Officers is 1345 Avenue of the Americas, New York, NY 10105. |
| ** | | The Adviser, ABIS and ABI are affiliates of the Fund. |
| | | The Fund’s Statement of Additional Information (“SAI”) has additional information about the Fund’s Directors and Officers and is available without charge upon request. Contact your financial representative or the Adviser at (800) 227-4618 or visit www.abfunds.com, for a free prospectus or SAI. |
29
| | |
| | |
| | |
| |
| DISCOVERY VALUE PORTFOLIO | | AB Variable Products Series Fund |
OPERATION AND EFFECTIVENESS OF THE PORTFOLIO’S LIQUIDITY RISK MANAGEMENT PROGRAM:
In October 2016, the Securities and Exchange Commission (“SEC”) adopted the open-end fund liquidity rule (the “Liquidity Rule”). In June 2018 the SEC adopted a requirement that funds disclose information about the operation and effectiveness of their Liquidity Risk Management Program (“LRMP”) in their reports to shareholders.
One of the requirements of the Liquidity Rule is for the Portfolio to designate an Administrator of the Portfolio’s Liquidity Risk Management Program. The Administrator of the Portfolio’s LRMP is AllianceBernstein L.P., the Portfolio’s investment adviser (the “Adviser”). The Adviser has delegated the responsibility to its Liquidity Risk Management Committee (the “Committee”).
Another requirement of the Liquidity Rule is for the Portfolio’s Board of Directors/Trustees (the “Fund Board”) to receive an annual written report from the Administrator of the LRMP, which addresses the operation of the Portfolio’s LRMP and assesses its adequacy and effectiveness. The Adviser provided the Fund Board with such annual report during the first quarter of 2024, which covered the period January 1, 2023 through December 31, 2023 (the “Program Reporting Period”).
The LRMP’s principal objectives include supporting the Portfolio’s compliance with limits on investments in illiquid assets and mitigating the risk that the Portfolio will be unable to meet its redemption obligations in a timely manner.
Pursuant to the LRMP, the Portfolio classifies the liquidity of its portfolio investments into one of the four categories defined by the SEC: Highly Liquid, Moderately Liquid, Less Liquid, and Illiquid. These classifications are reported to the SEC on Form N-PORT.
During the Program Reporting Period, the Committee reviewed whether the Portfolio’s strategy is appropriate for an open-end structure, incorporating any holdings of less liquid and illiquid assets. If the Portfolio participated in derivative transactions, the exposure from such transactions were considered in the LRMP.
The Committee also performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum (“HLIM”). The Committee also incorporated the following information when determining the Portfolio’s reasonably anticipated trading size for purposes of liquidity monitoring: historical net redemption activity, a Portfolio’s concentration in an issuer, shareholder concentration, investment performance, total net assets, and distribution channels.
The Adviser informed the Fund Board that the Committee believes the Portfolio’s LRMP is adequately designed, has been implemented as intended, and has operated effectively since its inception. No material exceptions have been noted since the implementation of the LRMP. During the Program Reporting Period, liquidity in all markets was challenged due to rising rates and economic uncertainty. However, markets also remained orderly during the Program Reporting Period. There were no liquidity events that impacted the Portfolio or its ability to timely meet redemptions during the Program Reporting Period.
30
| | |
| | |
| DISCOVERY VALUE PORTFOLIO | | |
| |
| CONTINUANCE DISCLOSURE | | AB Variable Products Series Fund |
INFORMATION REGARDING THE REVIEW AND APPROVAL OF THE FUND’S ADVISORY AGREEMENT
The disinterested directors (the “directors”) of AB Variable Products Series Fund, Inc. (the “Company”) unanimously approved the continuance of the Company’s Advisory Agreement with the Adviser in respect of AB Discovery Value Portfolio (formerly AB Small/Mid Cap Value Portfolio) (the “Fund”) at a meeting held in person on May 2-4, 2023 (the “Meeting”).
Prior to approval of the continuance of the Advisory Agreement, the directors had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The directors also reviewed additional materials, including comparative analytical data prepared by the Senior Vice President of the Fund. The directors also discussed the proposed continuance in private sessions with counsel.
The directors considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as directors or trustees of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the directors and its responsiveness, frankness and attention to concerns raised by the directors in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AB Funds. The directors noted that they have four regular meetings each year, at each of which they review extensive materials and information from the Adviser, including information on the investment performance of the Fund.
The directors also considered all factors they believed relevant, including the specific matters discussed below. During the course of their deliberations, the directors evaluated, among other things, the reasonableness of the advisory fee. The directors did not identify any particular information that was all-important or controlling, and different directors may have attributed different weights to the various factors. The directors determined that the selection of the Adviser to manage the Fund and the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors’ determinations included the following:
Nature, Extent and Quality of Services Provided
The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. The directors noted that the Adviser from time to time reviews the Fund’s investment strategies and from time to time proposes changes intended to improve the Fund’s relative or absolute performance for the directors’ consideration. They also noted the professional experience and qualifications of the Fund’s portfolio management team and other senior personnel of the Adviser. The directors also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services to the Fund by employees of the Adviser or its affiliates. Requests for these reimbursements are made on a quarterly basis and subject to approval by the directors. Reimbursements, to the extent requested and paid, result in a higher rate of total compensation from the Fund to the Adviser than the fee rate stated in the Advisory Agreement. The directors noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant at the request of the directors. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of the Fund’s other service providers, also was considered. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement.
Costs of Services Provided and Profitability
The directors reviewed a schedule of the revenues and expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2021 and 2022 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant at the request of the directors. The directors noted the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and understood that there are a number of potentially acceptable allocation methodologies for information of this type. The directors noted that the profitability information reflected all revenues and expenses of the Adviser’s relationship with the Fund, including those relating to its subsidiaries that provide transfer agency, distribution and brokerage services to the Fund. The directors recognized that it is difficult to make comparisons of the profitability of the Advisory Agreement with the profitability of fund advisory contracts
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| CONTINUANCE DISCLOSURE | | |
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for unaffiliated funds because comparative information is not generally publicly available and is affected by numerous factors. The directors focused on the profitability of the Adviser’s relationship with the Fund before taxes and distribution expenses. The directors concluded that the Adviser’s level of profitability from its relationship with the Fund was not unreasonable.
Fall-Out Benefits
The directors considered the other benefits to the Adviser and its affiliates from their relationships with the Fund, including, but not limited to, benefits relating to soft dollar arrangements (whereby investment advisers receive brokerage and research services from brokers that execute agency transactions for their clients); 12b-1 fees and sales charges received by the Fund’s principal underwriter (which is a wholly owned subsidiary of the Adviser) in respect of the Fund’s Class B shares; brokerage commissions paid by the Fund to brokers affiliated with the Adviser; and transfer agency fees paid by the Fund to a wholly owned subsidiary of the Adviser. The directors recognized that the Adviser’s profitability would be somewhat lower without these benefits. The directors understood that the Adviser also might derive reputational and other benefits from its association with the Fund.
Investment Results
In addition to the information reviewed by the directors in connection with the Meeting, the directors receive detailed performance information for the Fund at each regular Board meeting during the year.
At the Meeting, the directors reviewed performance information prepared by an independent service provider (the “15(c) service provider”), showing the performance of the Class A Shares of the Fund against a group of similar funds (“peer group”) and a larger group of similar funds (“peer universe”), each selected by the 15(c) service provider, and information prepared by the Adviser showing performance of the Class A Shares against a broad-based securities market index, in each case for the 1-, 3-, 5- and 10-year periods ended February 28, 2023 and (in the case of comparisons with the broad-based securities market index) for the period from inception. Based on their review, the directors concluded that the Fund’s investment performance was acceptable.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate payable by the Fund to the Adviser and information prepared by the 15(c) service provider concerning advisory fee rates payable by other funds in the same category as the Fund. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The directors compared the Fund’s contractual effective advisory fee rate with a peer group median and took into account the administrative expense reimbursement paid to the Adviser in the latest fiscal year.
The directors also considered the Adviser’s fee schedule for other clients utilizing investment strategies similar to those of the Fund. For this purpose, they reviewed the relevant advisory fee information from the Adviser’s Form ADV and in a report from the Fund’s Senior Vice President and noted the differences between the Fund’s fee schedule, on the one hand, and the Adviser’s institutional fee schedule and the schedule of fees charged by the Adviser to any offshore funds and for services to any sub-advised funds utilizing investment strategies similar to those of the Fund, on the other. The directors noted that the Adviser may, in some cases, agree to fee rates with large institutional clients that are lower than those reviewed by the directors and that they had previously discussed with the Adviser its policies in respect of such arrangements. The directors also compared the advisory fee rate for the Fund with that for another fund advised by the Adviser utilizing similar investment strategies.
The Adviser reviewed with the directors the significantly greater scope of the services it provides to the Fund relative to institutional, offshore fund and sub-advised fund clients. In this regard, the Adviser noted, among other things, that, compared to institutional and offshore or sub-advisory accounts, the Fund (i) demands considerably more portfolio management, research and trading resources due to significantly higher daily cash flows; (ii) has more tax and regulatory restrictions and compliance obligations; (iii) must prepare and file or distribute regulatory and other communications about fund operations; and (iv) must provide shareholder servicing to retail investors. The Adviser also reviewed the greater legal risks presented by the large and changing population of Fund shareholders who may assert claims against the Adviser in individual or class actions, and the greater entrepreneurial risk in offering new fund products, which require substantial investment to launch, may not succeed, and generally must be priced to compete with larger, more established funds resulting in lack of profitability to the Adviser until a new fund achieves scale. In light of the substantial differences in services rendered by the
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Adviser to institutional, offshore fund and sub-advised fund clients as compared to the Fund, and the different risk profile, the directors considered these fee comparisons inapt and did not place significant weight on them in their deliberations.
In connection with their review of the Fund’s advisory fee, the directors also considered the total expense ratio of the Class A shares of the Fund in comparison to the medians for a peer group and a peer universe selected by the 15(c) service provider. The Class A expense ratio of the Fund was based on the Fund’s latest fiscal year. The Adviser had agreed to cap the Fund’s expenses, but the directors noted that the Fund’s expense ratio was currently below the level of the Adviser’s cap. The directors noted that it was likely that the expense ratios of some of the other funds in the Fund’s category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases might be voluntary or temporary. The directors view expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Fund by others. The directors noted that the Fund’s expense ratio was equal to a median. Based on their review, the directors concluded that the Fund’s expense ratio was acceptable.
Economies of Scale
The directors noted that the advisory fee schedule for the Fund contains breakpoints that reduce the fee rates on assets above specified levels. The directors took into consideration prior presentations by an independent consultant on economies of scale in the mutual fund industry and for the AB Funds, and presentations from time to time by the Adviser concerning certain of its views on economies of scale. The directors also had requested and received from the Adviser certain updates on economies of scale in advance of the Meeting. The directors believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there is no established methodology for setting breakpoints that give effect to the fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Fund’s shareholders would benefit from a sharing of economies of scale in the event the Fund’s net assets exceed a breakpoint in the future.
33
VPS-DV-0151-1223
DEC 12.31.23
ANNUAL REPORT
AB VARIABLE PRODUCTS
SERIES FUND, INC.
| + | | AB GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
Investment Products Offered
| | • | | Are Not Bank Guaranteed |
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AB family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the Adviser of the funds.
You may obtain a description of the Fund’s proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AB’s website at www.abfunds.com or go to the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov, or call AB at (800) 227 4618.
The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Commission’s website at www.sec.gov.
The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.
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| GLOBAL RISK ALLOCATION— | | |
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| MODERATE PORTFOLIO | | AB Variable Products Series Fund |
LETTER TO INVESTORS
February 14, 2024
The following is an update of AB Variable Products Series Fund—Global Risk Allocation—Moderate Portfolio (the “Portfolio”) for the annual reporting period ended December 31, 2023.
INVESTMENT OBJECTIVE AND POLICIES
The Portfolio’s investment objective is to seek long-term growth of capital while seeking to limit volatility. In making decisions on the allocation of assets among “growth assets” and “safety assets,” the Adviser uses a risk-weighted allocation methodology based on the expected “tail risk” of each asset class. For purposes of the Portfolio, growth assets include global equities and, at times, high-yield fixed-income securities (commonly known as “junk bonds”), and safety assets include government securities of developed countries. This strategy attempts to provide investors with favorable long-term total return while minimizing exposure to material or “tail” losses. To execute this strategy, the percentage loss that will constitute a tail loss is calculated for each asset class based on historical market behavior and on a forward-looking basis through options prices. Portfolio assets are then allocated among asset classes so that growth assets contribute the majority of the expected risk of tail loss (“tail risk”) of the Portfolio, and safety assets contribute a lesser amount of tail risk. The Adviser makes frequent adjustments to the Portfolio’s asset-class exposures based on these tail-risk determinations. To help limit tail risk, the Portfolio utilizes a risk-management strategy involving the purchase of put options and sale of call options on equity indices, equity index futures or exchange-traded funds (“ETFs”). The Adviser will, on a best-efforts basis, seek to limit the volatility of the Portfolio to no more than 10% on an annualized basis. Actual results may vary.
The Adviser also assesses tail risk on a security, sector and country basis, and makes adjustments to the Portfolio’s allocations within each asset class when practicable. The Portfolio may invest in fixed-income securities with a range of maturities from short- to long-term. The Adviser expects that the Portfolio’s investments in high-yield fixed-income securities will not exceed 10% of the Portfolio’s net assets. The Portfolio’s investments in each asset class will generally be global in nature.
The Adviser expects to utilize a variety of derivatives in its management of the Portfolio, including futures contracts, options, swaps and forwards. Derivatives often provide more efficient and economical exposure to market segments than direct investments, and the Portfolio may utilize derivatives and ETFs to gain exposure to equity and fixed-income asset classes. Because derivatives transactions frequently require cash outlays that are only a small portion of the amount of exposure obtained through the derivative, a portion of the Portfolio’s assets may be held in cash or invested in cash equivalents to cover the Portfolio’s derivatives obligations, such as short-term US government and agency securities, repurchase agreements, and money-market funds. At times, a combination of direct securities investments and derivatives will be used to gain asset-class exposure so that the Portfolio’s aggregate exposure will substantially exceed its net assets (i.e., so that the Portfolio is effectively leveraged).
Currency exchange-rate fluctuations can have a dramatic impact on returns. The Adviser may seek to hedge all or a portion of the currency exposure resulting from Portfolio investments through currency-related derivatives, or decide not to hedge this exposure. The Portfolio is diversified.
INVESTMENT RESULTS
The table on page 5 shows the Portfolio’s performance compared with its primary benchmark, the Morgan Stanley Capital International (“MSCI”) World Index (net, USD hedged) and a 60%/40% blend of the MSCI World Index (net, USD hedged) and the Bloomberg Global G7 Treasury Index (USD hedged), for the one- and five-year periods ended December 31, 2023, and the period since the Portfolio’s inception on April 28, 2015.
For the 12-month period, all share classes of the Portfolio underperformed the primary benchmark and the blended benchmark. The Portfolio allocated most of its risk to global equity, with the balance allocated to government bonds and cash. Over the period, the Portfolio’s underweight to fixed income detracted from relative performance. For global equity exposure, the Portfolio entered the year with an underweight and ended the year with an overweight position. Overall equity positioning contributed, while equity index option protection detracted from performance.
During the 12-month period, the Portfolio used derivatives for hedging and investment purposes. Futures, forwards and purchased options detracted from absolute returns, while written options contributed.
MARKET REVIEW AND INVESTMENT STRATEGY
US, international and emerging-market stocks rose during the 12-month period ended December 31, 2023. Early in the period, aggressive central bank tightening—led by the US Federal Reserve—pressured global equity markets. Bouts of volatility continued as central banks reduced and then began to pause rate hikes but reiterated hawkish
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higher-for-longer rhetoric that weighed on sentiment. Later in the period, stronger-than-expected third-quarter economic growth triggered a rapid rise in bond yields—especially the 10-year US Treasury note, which briefly crossed the 5% threshold for the first time in 16 years. Headwinds from higher Treasury yields, conflict in the Middle East and mixed third-quarter earnings weighed on investor sentiment globally and briefly sent all major indices into correction territory in October. Equity markets rallied sharply during November and December, as optimism rose that the US Federal Reserve (the “Fed”) would begin to cut interest rates in 2024—both earlier and more than previously anticipated. Although US mega-cap technology stocks drove returns through much of the year, the rally broadened considerably during the fourth quarter as soft-landing expectations in the US continued to be underpinned by cooling inflation and moderating economic growth. Within large-cap markets, both growth-and value-oriented stocks rose, but growth significantly outperformed value, led by the technology sector and artificial intelligence optimism. Large-cap stocks outperformed small-cap stocks, although both rose in absolute terms.
Fixed-income government bond market yields were extremely volatile in all major developed markets, and developed-market government bond returns started to diverge based on individual country growth and inflation expectations and central bank decisions. Most central banks raised interest rates substantially to combat inflation, then paused further interest-rate hikes later in the period, and are now likely to begin to reduce short-term rates in 2024. Government bond returns in aggregate were strong as treasury yields fell significantly beginning in mid-October. Overall, developed-market investment-grade corporate bonds materially outperformed government bonds, including in the US and eurozone. High-yield corporate bonds advanced and significantly outperformed government bonds—especially in the eurozone and US. Emerging-market hard-currency sovereign bonds outperformed developed-market treasuries. Emerging-market hard-currency corporate bonds had strong relative positive returns. Among sovereigns and corporates, emerging-market high yield outperformed investment grade during the period. Local-currency sovereign bonds led emerging-market returns as the US dollar was mixed against all currencies over the year.
The Portfolio began the year with a modest equity underweight due to high market volatilities. An underweight bond, caused by concerns about inflation and restrictive monetary policies, negatively impacted fixed income investments. The Portfolio moved to an equity overweight in the second quarter of the year when the Silicon Valley Bank crisis heightened as market volatilities began to ease. The Portfolio’s Senior Investment Management Team (the “Team”) maintained dynamic risk management to equity exposure. The Team maintained a base case outlook of the US soft landing as the Fed and European Central Bank begin to cut rates in 2024.
The Portfolio ended the period with an overweight to equities as market volatilities eased.
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| DISCLOSURES AND RISKS | | AB Variable Products Series Fund |
Benchmark Disclosure
The MSCI World Index and Bloomberg Global G7 Treasury Index are unmanaged and do not reflect fees and expenses associated with the active management of a mutual fund portfolio. The MSCI World Index (net, free float-adjusted, market capitalization weighted) represents the equity market performance of developed markets, hedged to the US dollar. The Bloomberg Global G7 Treasury Index tracks fixed-rate local-currency government debt of investment-grade G7 countries. MSCI makes no express or implied warranties or representations, and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices, any securities or financial products. This report is not approved, reviewed or produced by MSCI. Net returns reflect the reinvestment of dividends after deduction of non-US withholding tax. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Portfolio.
A Word About Risk
Market Risk: The value of the Portfolio’s investments will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Allocation Risk: The allocation of investments among asset classes may have a significant effect on the Portfolio’s net asset value (“NAV”) when the asset classes in which the Portfolio has invested more heavily perform worse than the asset classes invested in less heavily.
Interest-Rate Risk: Changes in interest rates will affect the value of investments in fixed-income securities. When interest rates rise, the value of existing investments in fixed-income securities tends to fall and this decrease in value may not be offset by higher income from new investments. Interest-rate risk is generally greater for fixed-income securities with longer maturities or durations. The Portfolio may be subject to greater risk of rising interest rates than would normally be the case due to the recent end of a period of historically low rates and the effects of potential central bank monetary policy, and government fiscal policy, initiatives, and resulting market reactions to those initiatives.
Credit Risk: An issuer or guarantor of a fixed-income security, or the counterparty to a derivatives or other contract, may be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. The issuer or guarantor may default, causing a loss of the full principal amount of a security and accrued interest. The degree of risk for a particular security may be reflected in its credit rating. There is the possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security.
High-Yield Securities Risk: Investments in fixed-income securities with ratings below investment-grade (commonly known as “junk bonds”) tend to have a higher probability that an issuer will default or fail to meet its payment obligations. These securities may be subject to greater price volatility due to such factors as specific corporate developments, interest-rate sensitivity and negative perceptions of the junk bond market generally, and may be more difficult to trade than other types of securities.
Foreign (Non-US) Risk: Investments in securities of non-US issuers may involve more risk than those of US issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
Currency Risk: Fluctuations in currency exchange rates may negatively affect the value of the Portfolio’s investments or reduce its returns.
Investment in Other Investment Companies Risk: As with other investments, investments in other investment companies, including ETFs, are subject to market and selection risk. In addition, Contractholders of the Portfolio bear both their proportionate share of expenses in the Portfolio (including management fees) and, indirectly, the expenses of the investment companies in which the Portfolio invests (to the extent these expenses are not waived or reimbursed by the Adviser).
(Disclosures, Risks and Note About Historical Performance continued on next page)
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| DISCLOSURES AND RISKS | | |
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| (continued) | | AB Variable Products Series Fund |
Derivatives Risk: Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
Leverage Risk: Because the Portfolio uses leveraging techniques, its NAV may be more volatile because leverage tends to exaggerate the effect of changes in interest rates and any increase or decrease in the value of the Portfolio’s investments.
Illiquid Investments Risk: Illiquid investments risk exists when certain investments are or become difficult to purchase or sell. Difficulty in selling such investments may result in sales at disadvantageous prices affecting the value of your investment in the Portfolio. Causes of illiquid investments risk may include low trading volumes and large positions. Foreign fixed-income securities may have more illiquid investments risk because secondary trading markets for these securities may be smaller and less well-developed and the securities may trade less frequently. Illiquid investments risk may be higher in a rising interest-rate environment, when the value and liquidity of fixed-income securities generally decline.
Management Risk: The Portfolio is subject to management risk because it is an actively managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
These risks are fully discussed in the Variable Products prospectus. As with all investments, you may lose money by investing in the Portfolio.
An Important Note About Historical Performance
The investment return and principal value of an investment in the Portfolio will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Performance shown in this report represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. Please contact your financial advisor or insurance agent representative at your financial institution to obtain portfolio performance information current to the most recent month-end.
Investors should consider the investment objectives, risks, charges and expenses of the Portfolio carefully before investing. For additional copies of the Portfolio’s prospectus or summary prospectus, which contains this and other information, call your financial advisor or (800) 227 4618. Please read the prospectus and/or summary prospectus carefully before investing.
All fees and expenses related to the operation of the Portfolio have been deducted, but no adjustment has been made for insurance company separate account or annuity contract charges, which would reduce total return to a contract owner. Performance assumes reinvestment of distributions and does not account for taxes.
There are additional fees and expenses associated with all Variable Products. These fees can include mortality and expense risk charges, administrative charges, and other charges that can significantly reduce investment returns. Those fees and expenses are not reflected in this annual report. You should consult your Variable Products prospectus for a description of those fees and expenses and speak to your insurance agent or financial representative if you have any questions. You should read the prospectus before investing or sending money.
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| HISTORICAL PERFORMANCE | | AB Variable Products Series Fund |
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| THE PORTFOLIO VS. ITS BENCHMARKS | | Net Asset Value Returns | |
| PERIODS ENDED DECEMBER 31, 2023 (unaudited) | | 1 Year | | | 5 Years1 | | | Since Inception1,2 | |
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| Global Risk Allocation—Moderate Portfolio Class B | | | 14.79% | | | | 5.83% | | | | 3.76% | |
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| Primary Benchmark: MSCI World Index (net, USD hedged) | | | 24.30% | | | | 13.93% | | | | 9.59% | |
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Blended Benchmark: 60% MSCI World Index (net, USD hedged)/
40% Bloomberg Global G7 Treasury Index (USD hedged) | | | 16.76% | | | | 8.79% | | | | 6.49% | |
1 Average annual returns. | | | | | |
2 Inception date: 4/28/2015. | | | | | |
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The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 0.83% for Class B shares, respectively, gross of any fee waivers or expense reimbursements. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
GROWTH OF A $10,000 INVESTMENT
4/28/20151 TO 12/31/2023 (unaudited)
This chart illustrates the total value of an assumed $10,000 investment in Global Risk Allocation—Moderate Portfolio Class B shares (from 4/28/20151 to 12/31/2023) as compared with the performance of the Portfolio’s benchmarks. The chart assumes the reinvestment of dividends and capital gains distributions.
| 1 | | Inception date: 4/28/2015. |
See Disclosures, Risks and Note About Historical Performance on pages 3-4.
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| EXPENSE EXAMPLE (unaudited) | | AB Variable Products Series Fund |
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of each classes’ table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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| | | Beginning
Account Value
July 1, 2023 | | | Ending
Account Value
December 31, 2023 | | | Expenses Paid
During Period* | | | Annualized
Expense Ratio* | | | Total
Expenses Paid
During Period+ | | | Total
Annualized
Expense Ratio+ | |
Class B | | | | | | | | | | | | | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,052.90 | | | $ | 3.98 | | | | 0.77 | % | | $ | 4.14 | | | | 0.80 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,021.32 | | | $ | 3.92 | | | | 0.77 | % | | $ | 4.08 | | | | 0.80 | % |
| * | | Expenses are equal to each classes’ annualized expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
| ** | | Assumes 5% annual return before expenses. |
| + | | In connection with the Portfolio’s investments in affiliated/unaffiliated underlying portfolios, the Portfolio incurs no direct expenses, but bears proportionate shares of the fund fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated/unaffiliated underlying portfolios. The Adviser has contractually agreed to waive its fees and expenses from the Portfolio in an amount equal to the Portfolio’s pro rata share of certain affiliated/unaffiliated underlying portfolios acquired fund fees and expenses. The Portfolio’s total expenses are equal to the classes’ annualized expense ratio plus the Portfolio’s pro-rata share of the weighted average expense ratio of the affiliated/unaffiliated underlying portfolios in which it invests, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
6
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| SECURITY TYPE BREAKDOWN1 | | |
| |
| December 31, 2023 (unaudited) | | AB Variable Products Series Fund |
| | | | | | | | |
| SECURITY TYPE | | U.S.$ VALUE | | | PERCENT OF TOTAL INVESTMENTS | |
Common Stocks | | $ | 606,512,480 | | | | 81.2 | % |
Purchased Options—Puts | | | 369,143 | | | | 0.1 | |
Short-Term Investments | | | 139,612,098 | | | | 18.7 | |
| | | | | | | | | |
Total Investments | | $ | 746,493,721 | | | | 100.0 | % |
COUNTRY BREAKDOWN2
December 31, 2023 (unaudited)
| | | | | | | | |
| COUNTRY | | U.S.$ VALUE | | | PERCENT OF TOTAL INVESTMENTS | |
United States | | $ | 436,957,968 | | | | 58.5 | % |
Japan | | | 39,014,612 | | | | 5.2 | |
United Kingdom | | | 22,052,154 | | | | 3.0 | |
France | | | 19,614,409 | | | | 2.6 | |
Switzerland | | | 16,827,864 | | | | 2.3 | |
Germany | | | 14,989,782 | | | | 2.0 | |
Australia | | | 14,160,109 | | | | 1.9 | |
Netherlands | | | 7,875,824 | | | | 1.1 | |
Denmark | | | 5,858,956 | | | | 0.8 | |
Sweden | | | 5,576,278 | | | | 0.7 | |
Spain | | | 4,516,503 | | | | 0.6 | |
Italy | | | 3,995,782 | | | | 0.5 | |
Hong Kong | | | 3,453,371 | | | | 0.5 | |
Other | | | 11,988,011 | | | | 1.6 | |
Short-Term Investments | | | 139,612,098 | | | | 18.7 | |
| | | | | | | | | |
Total Investments | | $ | 746,493,721 | | | | 100.0 | % |
| 1 | | The Portfolio’s security type breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. The Portfolio also enters into derivatives transactions, which may be used for hedging or investment purpose (see “Portfolio of Investments” section of the report for additional details). |
| 2 | | The Portfolio’s country breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. The Portfolio also enters into derivatives transactions, which may be used for hedging or investment purpose (see “Portfolio of Investments” section of the report for additional details). “Other” country weightings represent 0.3% or less in the following: Austria, Belgium, Brazil, Chile, China, Finland, Ireland, Israel, Jordan, Luxembourg, Macau, New Zealand, Norway, Portugal, Singapore, South Africa and South Korea. |
7
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
COMMON STOCKS–78.2% | | | | | | | | |
| | | | | | | | |
INFORMATION TECHNOLOGY–18.0% | | | | | | | | |
COMMUNICATIONS EQUIPMENT–0.5% | | | | | | | | |
Arista Networks, Inc.(a) | | | 2,720 | | | $ | 640,588 | |
Cisco Systems, Inc. | | | 43,724 | | | | 2,208,886 | |
F5, Inc.(a) | | | 646 | | | | 115,442 | |
Juniper Networks, Inc. | | | 3,442 | | | | 101,470 | |
Motorola Solutions, Inc. | | | 1,792 | | | | 561,058 | |
Nokia Oyj | | | 57,110 | | | | 194,512 | |
Telefonaktiebolaget LM Ericsson–Class B | | | 31,254 | | | | 196,687 | |
| | | | | | | | |
| | | | | | | 4,018,643 | |
| | | | | | | | |
ELECTRONIC EQUIPMENT, INSTRUMENTS &
COMPONENTS–0.7% | | | | | | | | |
Amphenol Corp.–Class A | | | 6,444 | | | | 638,794 | |
Azbil Corp. | | | 1,244 | | | | 40,996 | |
CDW Corp./DE | | | 1,446 | | | | 328,704 | |
Corning, Inc. | | | 8,290 | | | | 252,400 | |
Halma PLC | | | 4,194 | | | | 121,944 | |
Hamamatsu Photonics KK | | | 1,510 | | | | 61,952 | |
Hexagon AB–Class B | | | 21,950 | | | | 263,648 | |
Hirose Electric Co., Ltd. | | | 372 | | | | 42,014 | |
Ibiden Co., Ltd. | | | 1,206 | | | | 66,474 | |
Jabil, Inc. | | | 1,382 | | | | 175,940 | |
Keyence Corp. | | | 2,098 | | | | 921,770 | |
Keysight Technologies, Inc.(a) | | | 1,918 | | | | 304,976 | |
Kyocera Corp. | | | 14,040 | | | | 204,424 | |
Murata Manufacturing Co., Ltd. | | | 18,672 | | | | 394,576 | |
Omron Corp. | | | 1,912 | | | | 88,924 | |
Shimadzu Corp. | | | 2,568 | | | | 71,576 | |
TDK Corp. | | | 4,192 | | | | 198,756 | |
TE Connectivity Ltd. | | | 3,356 | | | | 471,378 | |
Teledyne Technologies, Inc.(a) | | | 510 | | | | 227,162 | |
Trimble, Inc.(a) | | | 2,686 | | | | 142,842 | |
Yaskawa Electric Corp.(b) | | | 2,574 | | | | 107,134 | |
Yokogawa Electric Corp. | | | 2,300 | | | | 43,718 | |
Zebra Technologies Corp.–Class A(a) | | | 554 | | | | 151,424 | |
| | | | | | | | |
| | | | | | | 5,321,526 | |
| | | | | | | | |
IT SERVICES–0.9% | | | | | | | | |
Accenture PLC–Class A | | | 6,776 | | | | 2,377,416 | |
Akamai Technologies, Inc.(a) | | | 1,628 | | | | 192,674 | |
Bechtle AG | | | 934 | | | | 46,732 | |
Capgemini SE | | | 1,686 | | | | 352,150 | |
| | | | | | | | |
Cognizant Technology Solutions Corp.–Class A | | | 5,412 | | | | 408,768 | |
EPAM Systems, Inc.(a) | | | 624 | | | | 185,242 | |
Fujitsu Ltd. | | | 1,902 | | | | 286,239 | |
Gartner, Inc.(a) | | | 842 | | | | 379,384 | |
International Business Machines Corp. | | | 9,858 | | | | 1,612,112 | |
NEC Corp. | | | 2,712 | | | | 160,182 | |
Nomura Research Institute Ltd. | | | 4,140 | | | | 120,208 | |
NTT Data Group Corp. | | | 6,710 | | | | 94,836 | |
Obic Co., Ltd.(b) | | | 766 | | | | 131,622 | |
Otsuka Corp. | | | 1,284 | | | | 52,844 | |
SCSK Corp. | | | 1,574 | | | | 31,162 | |
TIS, Inc. | | | 2,330 | | | | 51,212 | |
VeriSign, Inc.(a) | | | 960 | | | | 197,516 | |
Wix.com Ltd.(a) | | | 622 | | | | 76,518 | |
| | | | | | | | |
| | | | | | | 6,756,817 | |
| | | | | | | | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT–5.4% | | | | | | | | |
Advanced Micro Devices, Inc.(a) | | | 17,440 | | | | 2,570,830 | |
Advantest Corp. | | | 8,268 | | | | 278,594 | |
Analog Devices, Inc. | | | 5,380 | | | | 1,068,054 | |
Applied Materials, Inc. | | | 9,030 | | | | 1,463,492 | |
ASM International NV | | | 512 | | | | 266,482 | |
ASML Holding NV | | | 4,348 | | | | 3,281,496 | |
BE Semiconductor Industries NV | | | 860 | | | | 129,840 | |
Broadcom, Inc. | | | 4,738 | | | | 5,288,792 | |
Disco Corp. | | | 1,002 | | | | 247,214 | |
Enphase Energy, Inc.(a) | | | 1,474 | | | | 194,774 | |
First Solar, Inc.(a) | | | 1,154 | | | | 198,638 | |
Infineon Technologies AG | | | 14,080 | | | | 588,018 | |
Intel Corp. | | | 45,510 | | | | 2,286,878 | |
KLA Corp. | | | 1,468 | | | | 852,768 | |
Lam Research Corp. | | | 1,424 | | | | 1,114,580 | |
Lasertec Corp.(b) | | | 830 | | | | 217,896 | |
Microchip Technology, Inc. | | | 5,840 | | | | 526,652 | |
Micron Technology, Inc. | | | 11,854 | | | | 1,011,536 | |
Monolithic Power Systems, Inc. | | | 518 | | | | 326,114 | |
NVIDIA Corp. | | | 26,662 | | | | 13,203,556 | |
NXP Semiconductors NV | | | 2,782 | | | | 638,970 | |
ON Semiconductor Corp.(a) | | | 4,650 | | | | 388,331 | |
Qorvo, Inc.(a) | | | 1,052 | | | | 118,354 | |
QUALCOMM, Inc. | | | 12,014 | | | | 1,737,584 | |
Renesas Electronics Corp.(a) | | | 15,836 | | | | 283,162 | |
Rohm Co., Ltd. | | | 3,538 | | | | 67,524 | |
Skyworks Solutions, Inc. | | | 1,722 | | | | 193,474 | |
8
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
STMicroelectronics NV | | | 7,364 | | | $ | 369,370 | |
SUMCO Corp.(b) | | | 3,702 | | | | 55,378 | |
Teradyne, Inc. | | | 1,650 | | | | 179,058 | |
Texas Instruments, Inc. | | | 9,804 | | | | 1,671,190 | |
Tokyo Electron Ltd. | | | 5,086 | | | | 903,808 | |
| | | | | | | | |
| | | | | | | 41,722,407 | |
| | | | | | | | |
SOFTWARE–6.4% | | | | | | | | |
Adobe, Inc.(a) | | | 4,916 | | | | 2,932,290 | |
ANSYS, Inc.(a) | | | 938 | | | | 340,018 | |
Autodesk, Inc.(a) | | | 2,308 | | | | 561,708 | |
Cadence Design Systems, Inc.(a) | | | 2,938 | | | | 799,950 | |
Check Point Software Technologies Ltd.(a) | | | 1,022 | | | | 156,152 | |
CyberArk Software Ltd.(a) | | | 466 | | | | 102,078 | |
Dassault Systemes SE | | | 7,200 | | | | 352,420 | |
Fair Isaac Corp.(a) | | | 268 | | | | 310,790 | |
Fortinet, Inc.(a) | | | 6,880 | | | | 402,686 | |
Gen Digital, Inc. | | | 6,086 | | | | 138,882 | |
Intuit, Inc. | | | 3,026 | | | | 1,890,716 | |
Microsoft Corp. | | | 80,228 | | | | 30,168,938 | |
Monday.com Ltd.(a) | | | 288 | | | | 53,902 | |
Nemetschek SE | | | 648 | | | | 55,946 | |
Nice Ltd.(a) | | | 688 | | | | 136,630 | |
Oracle Corp. | | | 17,152 | | | | 1,808,230 | |
Oracle Corp. Japan | | | 456 | | | | 35,102 | |
Palo Alto Networks, Inc.(a) | | | 3,356 | | | | 989,322 | |
PTC, Inc.(a) | | | 1,284 | | | | 224,474 | |
Roper Technologies, Inc. | | | 1,154 | | | | 628,582 | |
Sage Group PLC (The) | | | 10,942 | | | | 163,336 | |
Salesforce, Inc.(a) | | | 10,504 | | | | 2,763,760 | |
SAP SE | | | 11,260 | | | | 1,733,002 | |
ServiceNow, Inc.(a) | | | 2,214 | | | | 1,563,462 | |
Synopsys, Inc.(a) | | | 1,642 | | | | 845,482 | |
Temenos AG (REG) | | | 740 | | | | 68,960 | |
Trend Micro, Inc./Japan | | | 1,438 | | | | 76,692 | |
Tyler Technologies, Inc.(a) | | | 454 | | | | 189,826 | |
WiseTech Global Ltd.(b) | | | 1,872 | | | | 95,948 | |
Xero Ltd.(a) | | | 1,584 | | | | 120,764 | |
| | | | | | | | |
| | | | | | | 49,710,048 | |
| | | | | | | | |
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS–4.1% | | | | | | | | |
Apple, Inc. | | | 157,810 | | | | 30,383,155 | |
Brother Industries Ltd. | | | 2,378 | | | | 37,854 | |
Canon, Inc.(b) | | | 10,710 | | | | 274,726 | |
FUJIFILM Holdings Corp. | | | 4,034 | | | | 241,696 | |
Hewlett Packard Enterprise Co. | | | 13,848 | | | | 235,140 | |
HP, Inc. | | | 9,388 | | | | 282,484 | |
Logitech International SA (REG) | | | 1,812 | | | | 172,300 | |
| | | | | | | | |
NetApp, Inc. | | | 2,254 | | | | 198,712 | |
Ricoh Co., Ltd. | | | 5,800 | | | | 44,412 | |
Seagate Technology Holdings PLC | | | 2,100 | | | | 179,278 | |
Seiko Epson Corp. | | | 3,140 | | | | 46,868 | |
Western Digital Corp.(a) | | | 3,500 | | | | 183,294 | |
| | | | | | | | |
| | | | | | | 32,279,919 | |
| | | | | | | | |
| | | | | | | 139,809,360 | |
| | | | | | | | |
FINANCIALS–11.5% | | | | | | | | |
BANKS–4.0% | | | | | | | | |
ABN AMRO Bank NV–Class CVA | | | 5,132 | | | | 77,178 | |
AIB Group PLC | | | 16,940 | | | | 72,550 | |
ANZ Group Holdings Ltd. | | | 32,402 | | | | 572,462 | |
Banco Bilbao Vizcaya Argentaria SA | | | 64,316 | | | | 586,192 | |
Banco BPM SpA | | | 13,068 | | | | 69,246 | |
Banco Santander SA | | | 174,490 | | | | 729,832 | |
Bank Hapoalim BM | | | 13,560 | | | | 121,808 | |
Bank Leumi Le-Israel BM | | | 15,840 | | | | 127,478 | |
Bank of America Corp. | | | 74,320 | | | | 2,502,354 | |
Bank of Ireland Group PLC | | | 11,086 | | | | 100,644 | |
Banque Cantonale Vaudoise (REG)(b) | | | 360 | | | | 46,428 | |
Barclays PLC | | | 161,234 | | | | 315,705 | |
BNP Paribas SA | | | 11,326 | | | | 786,542 | |
BOC Hong Kong Holdings Ltd. | | | 39,084 | | | | 106,170 | |
CaixaBank SA | | | 43,626 | | | | 179,662 | |
Chiba Bank Ltd. (The) | | | 5,340 | | | | 38,472 | |
Citigroup, Inc. | | | 20,660 | | | | 1,062,700 | |
Citizens Financial Group, Inc. | | | 5,034 | | | | 166,794 | |
Comerica, Inc. | | | 1,424 | | | | 79,418 | |
Commerzbank AG | | | 11,362 | | | | 135,034 | |
Commonwealth Bank of Australia | | | 18,072 | | | | 1,377,394 | |
Concordia Financial Group Ltd.(b) | | | 10,968 | | | | 49,994 | |
Credit Agricole SA | | | 11,520 | | | | 163,762 | |
Danske Bank A/S | | | 7,404 | | | | 197,892 | |
DBS Group Holdings Ltd. | | | 19,478 | | | | 492,576 | |
DNB Bank ASA | | | 9,890 | | | | 210,274 | |
Erste Group Bank AG | | | 3,756 | | | | 152,136 | |
Fifth Third Bancorp | | | 7,352 | | | | 253,536 | |
FinecoBank Banca Fineco SpA | | | 6,518 | | | | 98,042 | |
Hang Seng Bank Ltd. | | | 8,010 | | | | 93,508 | |
HSBC Holdings PLC | | | 209,914 | | | | 1,698,188 | |
Huntington Bancshares, Inc./OH | | | 15,632 | | | | 198,826 | |
ING Groep NV | | | 39,024 | | | | 585,132 | |
Intesa Sanpaolo SpA | | | 165,870 | | | | 485,400 | |
9
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
Israel Discount Bank Ltd.–Class A | | | 12,464 | | | $ | 62,402 | |
Japan Post Bank Co., Ltd. | | | 15,602 | | | | 158,770 | |
JPMorgan Chase & Co. | | | 31,208 | | | | 5,308,310 | |
KBC Group NV | | | 2,758 | | | | 178,992 | |
KeyCorp | | | 10,106 | | | | 145,526 | |
Lloyds Banking Group PLC | | | 678,102 | | | | 411,292 | |
M&T Bank Corp. | | | 1,792 | | | | 245,510 | |
Mediobanca Banca di Credito Finanziario SpA | | | 5,772 | | | | 71,512 | |
Mitsubishi UFJ Financial Group, Inc. | | | 123,114 | | | | 1,056,572 | |
Mizrahi Tefahot Bank Ltd. | | | 1,726 | | | | 66,778 | |
Mizuho Financial Group, Inc. | | | 25,812 | | | | 440,296 | |
National Australia Bank Ltd. | | | 33,776 | | | | 705,928 | |
NatWest Group PLC | | | 60,628 | | | | 168,874 | |
Nordea Bank Abp | | | 34,220 | | | | 424,824 | |
Oversea-Chinese Banking Corp. Ltd. | | | 36,044 | | | | 354,642 | |
PNC Financial Services Group, Inc. (The) | | | 4,300 | | | | 665,856 | |
Regions Financial Corp. | | | 10,040 | | | | 194,556 | |
Resona Holdings, Inc. | | | 22,172 | | | | 112,398 | |
Shizuoka Financial Group, Inc. | | | 4,498 | | | | 38,026 | |
Skandinaviska Enskilda Banken AB–Class A | | | 16,832 | | | | 232,280 | |
Societe Generale SA | | | 7,964 | | | | 211,884 | |
Standard Chartered PLC | | | 24,600 | | | | 208,758 | |
Sumitomo Mitsui Financial Group, Inc. | | | 13,700 | | | | 666,640 | |
Sumitomo Mitsui Trust Holdings, Inc. | | | 7,118 | | | | 136,324 | |
Svenska Handelsbanken AB–Class A | | | 15,726 | | | | 170,890 | |
Swedbank AB–Class A | | | 8,976 | | | | 181,474 | |
Truist Financial Corp. | | | 14,396 | | | | 531,500 | |
UniCredit SpA | | | 17,318 | | | | 471,536 | |
United Overseas Bank Ltd. | | | 13,676 | | | | 295,150 | |
US Bancorp | | | 16,808 | | | | 727,408 | |
Wells Fargo & Co. | | | 39,202 | | | | 1,929,522 | |
Westpac Banking Corp. | | | 37,834 | | | | 590,288 | |
Zions Bancorp NA | | | 1,600 | | | | 70,148 | |
| | | | | | | | |
| | | | | | | 31,168,195 | |
| | | | | | | | |
CAPITAL MARKETS–2.3% | | | | | | | | |
3i Group PLC | | | 10,526 | | | | 323,986 | |
abrdn PLC(b) | | | 19,986 | | | | 45,440 | |
Ameriprise Financial, Inc. | | | 1,092 | | | | 414,774 | |
Amundi SA | | | 692 | | | | 47,132 | |
| | | | | | | | |
ASX Ltd. | | | 2,054 | | | | 88,246 | |
Bank of New York Mellon Corp. (The) | | | 8,302 | | | | 432,120 | |
BlackRock, Inc. | | | 1,510 | | | | 1,225,006 | |
Blackstone, Inc. | | | 7,670 | | | | 1,004,156 | |
Cboe Global Markets, Inc. | | | 1,140 | | | | 203,380 | |
Charles Schwab Corp. (The) | | | 16,066 | | | | 1,105,272 | |
CME Group, Inc. | | | 3,886 | | | | 818,392 | |
Daiwa Securities Group, Inc. | | | 14,382 | | | | 96,534 | |
Deutsche Bank AG (REG) | | | 20,492 | | | | 279,738 | |
Deutsche Boerse AG | | | 2,058 | | | | 423,814 | |
EQT AB(b) | | | 3,916 | | | | 110,848 | |
Euronext NV(c) | | | 936 | | | | 81,344 | |
FactSet Research Systems, Inc. | | | 410 | | | | 195,590 | |
Franklin Resources, Inc. | | | 3,044 | | | | 90,650 | |
Futu Holdings Ltd. (ADR)(a) | | | 656 | | | | 35,838 | |
Goldman Sachs Group, Inc. (The) | | | 3,520 | | | | 1,357,910 | |
Hargreaves Lansdown PLC | | | 3,584 | | | | 33,496 | |
Hong Kong Exchanges & Clearing Ltd. | | | 12,930 | | | | 443,502 | |
Intercontinental Exchange, Inc. | | | 6,178 | | | | 793,440 | |
Invesco Ltd. | | | 4,854 | | | | 86,578 | |
Japan Exchange Group, Inc. | | | 5,414 | | | | 114,266 | |
Julius Baer Group Ltd. | | | 2,200 | | | | 123,360 | |
London Stock Exchange Group PLC | | | 4,492 | | | | 530,888 | |
Macquarie Group Ltd. | | | 3,976 | | | | 497,722 | |
MarketAxess Holdings, Inc. | | | 410 | | | | 119,776 | |
Moody’s Corp. | | | 1,700 | | | | 663,562 | |
Morgan Stanley | | | 13,642 | | | | 1,272,116 | |
MSCI, Inc. | | | 854 | | | | 483,066 | |
Nasdaq, Inc. | | | 3,676 | | | | 213,664 | |
Nomura Holdings, Inc. | | | 32,078 | | | | 144,461 | |
Northern Trust Corp. | | | 2,236 | | | | 188,590 | |
Partners Group Holding AG | | | 246 | | | | 354,258 | |
Raymond James Financial, Inc. | | | 2,028 | | | | 226,122 | |
S&P Global, Inc. | | | 3,498 | | | | 1,540,498 | |
SBI Holdings, Inc. | | | 2,696 | | | | 60,508 | |
Schroders PLC | | | 8,348 | | | | 45,644 | |
Singapore Exchange Ltd. | | | 8,880 | | | | 66,062 | |
St. James’s Place PLC | | | 5,808 | | | | 50,522 | |
State Street Corp. | | | 3,332 | | | | 258,020 | |
T Rowe Price Group, Inc. | | | 2,412 | | | | 259,748 | |
UBS Group AG (REG) | | | 35,460 | | | | 1,101,442 | |
| | | | | | | | |
| | | | | | | 18,051,481 | |
| | | | | | | | |
10
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
CONSUMER FINANCE–0.3% | | | | | | | | |
American Express Co. | | | 6,214 | | | $ | 1,164,131 | |
Capital One Financial Corp. | | | 4,112 | | | | 539,034 | |
Discover Financial Services | | | 2,700 | | | | 303,368 | |
Synchrony Financial | | | 4,468 | | | | 170,594 | |
| | | | | | | | |
| | | | | | | 2,177,127 | |
| | | | | | | | |
FINANCIAL SERVICES–2.6% | | | | | | | | |
Adyen NV(a)(b) | | | 238 | | | | 307,244 | |
Berkshire Hathaway, Inc.–Class B(a) | | | 19,640 | | | | 7,004,802 | |
Edenred SE | | | 2,692 | | | | 161,042 | |
Eurazeo SE | | | 464 | | | | 36,894 | |
EXOR NV | | | 1,010 | | | | 100,998 | |
Fidelity National Information Services, Inc. | | | 6,396 | | | | 384,208 | |
Fiserv, Inc.(a) | | | 6,480 | | | | 860,670 | |
FleetCor Technologies, Inc.(a) | | | 780 | | | | 220,154 | |
Global Payments, Inc. | | | 2,812 | | | | 356,998 | |
Groupe Bruxelles Lambert NV | | | 950 | | | | 74,736 | |
Industrivarden AB–Class A | | | 1,482 | | | | 48,420 | |
Industrivarden AB–Class C(b) | | | 1,638 | | | | 53,416 | |
Investor AB–Class B | | | 18,560 | | | | 430,400 | |
Jack Henry & Associates, Inc. | | | 786 | | | | 128,440 | |
L E Lundbergforetagen AB–Class B | | | 872 | | | | 47,432 | |
M&G PLC | | | 24,184 | | | | 68,444 | |
Mastercard, Inc.–Class A | | | 8,940 | | | | 3,812,572 | |
Mitsubishi HC Capital, Inc. | | | 8,514 | | | | 57,042 | |
Nexi SpA(a)(b) | | | 6,114 | | | | 50,084 | |
ORIX Corp. | | | 12,654 | | | | 237,658 | |
PayPal Holdings, Inc.(a) | | | 11,638 | | | | 714,690 | |
Sofina SA | | | 178 | | | | 44,130 | |
Visa, Inc.–Class A | | | 17,206 | | | | 4,479,582 | |
Wise PLC–Class A(a) | | | 6,500 | | | | 72,290 | |
Worldline SA/France(a) | | | 2,518 | | | | 43,788 | |
| | | | | | | | |
| | | | | | | 19,796,134 | |
| | | | | | | | |
INSURANCE–2.3% | | | | | | | | |
Admiral Group PLC | | | 2,808 | | | | 95,966 | |
Aegon Ltd.(b) | | | 17,090 | | | | 99,362 | |
Aflac, Inc. | | | 5,740 | | | | 473,550 | |
Ageas SA/NV | | | 1,792 | | | | 77,900 | |
AIA Group Ltd. | | | 123,706 | | | | 1,076,590 | |
Allianz SE (REG) | | | 4,350 | | | | 1,162,232 | |
Allstate Corp. (The) | | | 2,826 | | | | 395,444 | |
American International Group, Inc. | | | 7,578 | | | | 513,410 | |
| | | | | | | | |
Aon PLC–Class A | | | 2,162 | | | | 628,894 | |
Arch Capital Group Ltd.(a) | | | 4,028 | | | | 299,160 | |
Arthur J Gallagher & Co. | | | 2,332 | | | | 524,196 | |
ASR Nederland NV | | | 1,706 | | | | 80,592 | |
Assicurazioni Generali SpA | | | 10,956 | | | | 231,472 | |
Assurant, Inc. | | | 568 | | | | 95,702 | |
Aviva PLC | | | 29,198 | | | | 161,560 | |
AXA SA | | | 19,428 | | | | 634,450 | |
Baloise Holding AG (REG) | | | 526 | | | | 82,314 | |
Brown & Brown, Inc. | | | 2,550 | | | | 181,330 | |
Chubb Ltd. | | | 4,404 | | | | 995,304 | |
Cincinnati Financial Corp. | | | 1,682 | | | | 174,020 | |
Dai-ichi Life Holdings, Inc. | | | 10,156 | | | | 215,438 | |
Everest Group Ltd. | | | 468 | | | | 165,476 | |
Gjensidige Forsikring ASA | | | 2,016 | | | | 37,184 | |
Globe Life, Inc. | | | 926 | | | | 112,590 | |
Hannover Rueck SE | | | 666 | | | | 159,004 | |
Hartford Financial Services Group, Inc. (The) | | | 3,248 | | | | 260,994 | |
Helvetia Holding AG (REG)(b) | | | 426 | | | | 58,740 | |
Insurance Australia Group Ltd. | | | 26,270 | | | | 101,544 | |
Japan Post Holdings Co., Ltd. | | | 22,390 | | | | 199,876 | |
Japan Post Insurance Co., Ltd. | | | 2,014 | | | | 35,732 | |
Legal & General Group PLC | | | 63,804 | | | | 203,898 | |
Loews Corp. | | | 1,976 | | | | 137,510 | |
Marsh & McLennan Cos., Inc. | | | 5,322 | | | | 1,008,360 | |
Medibank Pvt Ltd. | | | 27,748 | | | | 67,364 | |
MetLife, Inc. | | | 6,712 | | | | 443,864 | |
MS&AD Insurance Group Holdings, Inc. | | | 4,612 | | | | 181,338 | |
Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen (REG) | | | 1,472 | | | | 610,606 | |
NN Group NV | | | 2,920 | | | | 115,362 | |
Phoenix Group Holdings PLC | | | 7,768 | | | | 52,894 | |
Poste Italiane SpA | | | 5,264 | | | | 59,822 | |
Principal Financial Group, Inc. | | | 2,368 | | | | 186,290 | |
Progressive Corp. (The) | | | 6,316 | | | | 1,005,854 | |
Prudential Financial, Inc. | | | 3,898 | | | | 404,158 | |
Prudential PLC | | | 29,684 | | | | 334,904 | |
QBE Insurance Group Ltd. | | | 16,106 | | | | 163,196 | |
Sampo Oyj–Class A | | | 4,862 | | | | 212,972 | |
11
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
Sompo Holdings, Inc. | | | 3,266 | | | $ | 159,800 | |
Suncorp Group Ltd. | | | 13,390 | | | | 126,794 | |
Swiss Life Holding AG (REG) | | | 324 | | | | 225,164 | |
Swiss Re AG | | | 3,258 | | | | 366,624 | |
T&D Holdings, Inc. | | | 5,344 | | | | 84,822 | |
Talanx AG | | | 740 | | | | 52,884 | |
Tokio Marine Holdings, Inc. | | | 19,484 | | | | 485,170 | |
Travelers Cos, Inc. (The) | | | 2,466 | | | | 469,558 | |
Tryg A/S | | | 3,808 | | | | 82,870 | |
W R Berkley Corp. | | | 2,200 | | | | 155,514 | |
Willis Towers Watson PLC | | | 1,116 | | | | 268,938 | |
Zurich Insurance Group AG | | | 1,578 | | | | 825,020 | |
| | | | | | | | |
| | | | | | | 17,821,576 | |
| | | | | | | | |
| | | | | | | 89,014,513 | |
| | | | | | | | |
HEALTH CARE–9.9% | | | | | | | | |
BIOTECHNOLOGY–1.3% | | | | | | | | |
AbbVie, Inc. | | | 19,058 | | | | 2,953,418 | |
Amgen, Inc. | | | 5,778 | | | | 1,663,892 | |
Argenx SE(a) | | | 638 | | | | 242,294 | |
Biogen, Inc.(a) | | | 1,564 | | | | 404,716 | |
CSL Ltd. | | | 5,210 | | | | 1,015,490 | |
Genmab A/S(a) | | | 716 | | | | 228,300 | |
Gilead Sciences, Inc. | | | 13,450 | | | | 1,089,584 | |
Grifols SA(a)(b) | | | 3,006 | | | | 51,408 | |
Incyte Corp.(a) | | | 2,008 | | | | 126,082 | |
Moderna, Inc.(a) | | | 3,582 | | | | 356,130 | |
Regeneron Pharmaceuticals, Inc.(a) | | | 1,156 | | | | 1,015,304 | |
Swedish Orphan Biovitrum AB(a) | | | 2,170 | | | | 57,418 | |
Vertex Pharmaceuticals, Inc.(a) | | | 2,782 | | | | 1,131,968 | |
| | | | | | | | |
| | | | | | | 10,336,004 | |
| | | | | | | | |
HEALTH CARE EQUIPMENT & SUPPLIES–1.9% | | | | | | | | |
Abbott Laboratories | | | 18,732 | | | | 2,061,832 | |
Alcon, Inc. | | | 5,442 | | | | 425,682 | |
Align Technology, Inc.(a) | | | 770 | | | | 210,706 | |
Asahi Intecc Co., Ltd.(b) | | | 2,190 | | | | 44,390 | |
Baxter International, Inc. | | | 5,476 | | | | 211,702 | |
Becton Dickinson & Co. | | | 3,132 | | | | 763,676 | |
BioMerieux | | | 476 | | | | 52,848 | |
Boston Scientific Corp.(a) | | | 15,806 | | | | 913,744 | |
Carl Zeiss Meditec AG | | | 450 | | | | 48,984 | |
Cochlear Ltd.(b) | | | 726 | | | | 147,498 | |
Coloplast A/S–Class B | | | 1,474 | | | | 168,314 | |
Cooper Cos., Inc. (The) | | | 536 | | | | 202,466 | |
Demant A/S(a) | | | 1,082 | | | | 47,456 | |
| | | | | | | | |
DENTSPLY SIRONA, Inc. | | | 2,288 | | | | 81,394 | |
Dexcom, Inc.(a) | | | 4,172 | | | | 517,580 | |
DiaSorin SpA(b) | | | 240 | | | | 24,632 | |
Edwards Lifesciences Corp.(a) | | | 6,548 | | | | 499,208 | |
EssilorLuxottica SA | | | 3,180 | | | | 638,340 | |
Fisher & Paykel Healthcare Corp. Ltd. | | | 6,106 | | | | 91,046 | |
GE Healthcare, Inc. | | | 4,226 | | | | 326,754 | |
Getinge AB–Class B | | | 2,520 | | | | 56,114 | |
Hologic, Inc.(a) | | | 2,644 | | | | 188,914 | |
Hoya Corp. | | | 3,850 | | | | 479,476 | |
IDEXX Laboratories, Inc.(a) | | | 898 | | | | 497,880 | |
Insulet Corp.(a) | | | 754 | | | | 163,602 | |
Intuitive Surgical, Inc.(a) | | | 3,800 | | | | 1,281,968 | |
Koninklijke Philips NV | | | 8,510 | | | | 199,152 | |
Medtronic PLC | | | 14,362 | | | | 1,183,142 | |
Olympus Corp. | | | 12,968 | | | | 187,184 | |
ResMed, Inc. | | | 1,588 | | | | 273,168 | |
Siemens Healthineers AG | | | 3,096 | | | | 179,750 | |
Smith & Nephew PLC | | | 9,172 | | | | 125,996 | |
Sonova Holding AG (REG) | | | 556 | | | | 181,838 | |
STERIS PLC | | | 1,066 | | | | 234,360 | |
Straumann Holding AG (REG) | | | 1,218 | | | | 196,832 | |
Stryker Corp. | | | 3,650 | | | | 1,093,030 | |
Sysmex Corp. | | | 1,870 | | | | 103,898 | |
Teleflex, Inc. | | | 508 | | | | 126,416 | |
Terumo Corp. | | | 7,272 | | | | 237,770 | |
Zimmer Biomet Holdings, Inc. | | | 2,256 | | | | 274,556 | |
| | | | | | | | |
| | | | | | | 14,743,298 | |
| | | | | | | | |
HEALTH CARE PROVIDERS & SERVICES–1.7% | | | | | | | | |
Amplifon SpA | | | 1,382 | | | | 47,888 | |
Cardinal Health, Inc. | | | 2,660 | | | | 268,128 | |
Cencora, Inc. | | | 1,800 | | | | 369,684 | |
Centene Corp.(a) | | | 5,766 | | | | 427,894 | |
Cigna Group (The) | | | 3,160 | | | | 945,962 | |
CVS Health Corp. | | | 13,864 | | | | 1,094,702 | |
DaVita, Inc.(a) | | | 582 | | | | 60,866 | |
EBOS Group Ltd. | | | 1,688 | | | | 37,856 | |
Elevance Health, Inc. | | | 2,536 | | | | 1,195,876 | |
Fresenius Medical Care AG | | | 2,194 | | | | 91,686 | |
Fresenius SE & Co. KGaA | | | 4,564 | | | | 141,432 | |
HCA Healthcare, Inc. | | | 2,138 | | | | 578,714 | |
Henry Schein, Inc.(a) | | | 1,410 | | | | 106,750 | |
Humana, Inc. | | | 1,330 | | | | 608,430 | |
Laboratory Corp. of America Holdings | | | 916 | | | | 208,198 | |
12
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
McKesson Corp. | | | 1,436 | | | $ | 664,840 | |
Molina Healthcare, Inc.(a) | | | 630 | | | | 227,264 | |
Quest Diagnostics, Inc. | | | 1,214 | | | | 167,386 | |
Ramsay Health Care Ltd.(b) | | | 1,960 | | | | 70,310 | |
Sonic Healthcare Ltd. | | | 4,802 | | | | 104,906 | |
UnitedHealth Group, Inc. | | | 9,984 | | | | 5,256,276 | |
Universal Health Services, Inc.–Class B | | | 660 | | | | 100,458 | |
| | | | | | | | |
| | | | | | | 12,775,506 | |
| | | | | | | | |
HEALTH CARE TECHNOLOGY–0.0% | | | | | | | | |
M3, Inc. | | | 4,608 | | | | 76,026 | |
| | | | | | | | |
LIFE SCIENCES TOOLS & SERVICES–0.9% | | | | | | | | |
Agilent Technologies, Inc. | | | 3,158 | | | | 439,056 | |
Bachem Holding AG(b) | | | 394 | | | | 30,434 | |
Bio-Rad Laboratories, Inc.–Class A(a) | | | 226 | | | | 72,974 | |
Bio-Techne Corp. | | | 1,708 | | | | 131,712 | |
Charles River Laboratories International, Inc.(a) | | | 554 | | | | 130,966 | |
Danaher Corp. | | | 7,100 | | | | 1,642,282 | |
Eurofins Scientific SE | | | 1,486 | | | | 96,870 | |
Illumina, Inc.(a) | | | 1,714 | | | | 238,658 | |
IQVIA Holdings, Inc.(a) | | | 1,978 | | | | 457,438 | |
Lonza Group AG (REG) | | | 812 | | | | 341,906 | |
Mettler-Toledo International, Inc.(a) | | | 234 | | | | 283,832 | |
QIAGEN NV(a) | | | 2,428 | | | | 105,518 | |
Revvity, Inc. | | | 1,332 | | | | 145,601 | |
Sartorius AG (Preference Shares) | | | 292 | | | | 106,862 | |
Sartorius Stedim Biotech | | | 312 | | | | 82,736 | |
Thermo Fisher Scientific, Inc. | | | 4,172 | | | | 2,213,926 | |
Waters Corp.(a) | | | 638 | | | | 210,048 | |
West Pharmaceutical Services, Inc. | | | 800 | | | | 281,344 | |
| | | | | | | | |
| | | | | | | 7,012,163 | |
| | | | | | | | |
PHARMACEUTICALS–4.1% | | | | | | | | |
Astellas Pharma, Inc. | | | 19,122 | | | | 227,424 | |
AstraZeneca PLC | | | 16,712 | | | | 2,254,144 | |
Bayer AG (REG) | | | 10,666 | | | | 395,713 | |
Bristol-Myers Squibb Co. | | | 21,964 | | | | 1,126,972 | |
Catalent, Inc.(a) | | | 1,946 | | | | 87,434 | |
Chugai Pharmaceutical Co., Ltd. | | | 7,302 | | | | 275,858 | |
Daiichi Sankyo Co., Ltd. | | | 19,942 | | | | 545,946 | |
Eisai Co., Ltd. | | | 2,714 | | | | 135,134 | |
Eli Lilly & Co. | | | 8,608 | | | | 5,017,776 | |
GSK PLC | | | 44,150 | | | | 815,414 | |
Hikma Pharmaceuticals PLC | | | 1,710 | | | | 38,966 | |
| | | | | | | | |
Ipsen SA | | | 432 | | | | 51,414 | |
Johnson & Johnson | | | 25,986 | | | | 4,072,888 | |
Kyowa Kirin Co., Ltd. | | | 2,720 | | | | 45,638 | |
Merck & Co., Inc. | | | 27,354 | | | | 2,982,024 | |
Merck KGaA | | | 1,416 | | | | 225,288 | |
Novartis AG (REG) | | | 22,100 | | | | 2,232,332 | |
Novo Nordisk A/S–Class B | | | 35,184 | | | | 3,646,158 | |
Ono Pharmaceutical Co., Ltd. | | | 4,104 | | | | 72,990 | |
Orion Oyj–Class B | | | 1,168 | | | | 50,568 | |
Otsuka Holdings Co., Ltd. | | | 4,512 | | | | 168,698 | |
Pfizer, Inc. | | | 60,950 | | | | 1,754,750 | |
Recordati Industria Chimica e Farmaceutica SpA(b) | | | 1,164 | | | | 62,712 | |
Roche Holding AG (BR) | | | 356 | | | | 110,308 | |
Roche Holding AG (Genusschein) | | | 7,576 | | | | 2,202,004 | |
Sandoz Group AG(a) | | | 4,376 | | | | 140,762 | |
Sanofi SA | | | 12,274 | | | | 1,219,602 | |
Shionogi & Co., Ltd. | | | 2,878 | | | | 138,464 | |
Takeda Pharmaceutical Co., Ltd. | | | 17,070 | | | | 489,534 | |
Teva Pharmaceutical Industries Ltd. (Sponsored ADR)(a) | | | 11,958 | | | | 124,842 | |
UCB SA | | | 1,386 | | | | 120,820 | |
Viatris, Inc. | | | 12,950 | | | | 140,248 | |
Zoetis, Inc. | | | 4,956 | | | | 978,166 | |
| | | | | | | | |
| | | | | | | 31,950,991 | |
| | | | | | | | |
| | | | | | | 76,893,988 | |
| | | | | | | | |
CONSUMER DISCRETIONARY–8.7% | | | | | | | | |
AUTOMOBILE COMPONENTS–0.2% | | | | | | | | |
Aisin Corp. | | | 1,642 | | | | 57,208 | |
Aptiv PLC(a) | | | 3,054 | | | | 273,916 | |
BorgWarner, Inc. | | | 2,538 | | | | 90,952 | |
Bridgestone Corp.(b) | | | 6,140 | | | | 253,590 | |
Cie Generale des Etablissements Michelin SCA | | | 7,310 | | | | 262,586 | |
Continental AG | | | 1,198 | | | | 101,662 | |
Denso Corp. | | | 18,488 | | | | 277,548 | |
Koito Manufacturing Co., Ltd. | | | 2,104 | | | | 32,694 | |
Sumitomo Electric Industries Ltd. | | | 7,626 | | | | 96,763 | |
| | | | | | | | |
| | | | | | | 1,446,919 | |
| | | | | | | | |
AUTOMOBILES–1.9% | | | | | | | | |
Bayerische Motoren Werke AG | | | 3,438 | | | | 382,552 | |
Bayerische Motoren Werke AG (Preference Shares) | | | 654 | | | | 64,976 | |
13
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
Dr Ing hc F Porsche AG (Preference Shares)(c) | | | 1,270 | | | $ | 111,770 | |
Ferrari NV | | | 1,366 | | | | 461,170 | |
Ford Motor Co. | | | 42,446 | | | | 517,404 | |
General Motors Co. | | | 14,784 | | | | 531,006 | |
Honda Motor Co., Ltd. | | | 49,802 | | | | 513,708 | |
Isuzu Motors Ltd. | | | 6,286 | | | | 80,584 | |
Mazda Motor Corp. | | | 5,730 | | | | 61,238 | |
Mercedes-Benz Group AG | | | 8,652 | | | | 596,900 | |
Nissan Motor Co., Ltd. | | | 24,778 | | | | 96,876 | |
Porsche Automobil Holding SE (Preference Shares) | | | 1,700 | | | | 86,874 | |
Renault SA | | | 2,082 | | | | 85,112 | |
Stellantis NV (Milan) | | | 23,854 | | | | 558,890 | |
Subaru Corp. | | | 6,506 | | | | 118,666 | |
Suzuki Motor Corp. | | | 3,990 | | | | 169,998 | |
Tesla, Inc.(a) | | | 29,854 | | | | 7,418,122 | |
Toyota Motor Corp. | | | 114,336 | | | | 2,095,042 | |
Volkswagen AG | | | 326 | | | | 42,658 | |
Volkswagen AG (Preference Shares) | | | 2,222 | | | | 273,876 | |
Volvo Car AB–Class B(a)(b) | | | 6,056 | | | | 19,640 | |
Yamaha Motor Co., Ltd.(b) | | | 9,576 | | | | 85,210 | |
| | | | | | | | |
| | | | | | | 14,372,272 | |
| | | | | | | | |
BROADLINE RETAIL–2.2% | | | | | | | | |
Amazon.com, Inc.(a) | | | 98,164 | | | | 14,915,038 | |
Cie Financiere Richemont SA (REG) | | | 5,628 | | | | 777,362 | |
eBay, Inc. | | | 5,602 | | | | 244,358 | |
Etsy, Inc.(a) | | | 1,294 | | | | 104,798 | |
Global-e Online Ltd.(a) | | | 964 | | | | 38,204 | |
Next PLC | | | 1,342 | | | | 138,626 | |
Pan Pacific International Holdings Corp. | | | 4,058 | | | | 96,598 | |
Prosus NV | | | 15,772 | | | | 469,820 | |
Rakuten Group, Inc.(a)(b) | | | 15,954 | | | | 71,124 | |
Wesfarmers Ltd. | | | 12,202 | | | | 474,522 | |
| | | | | | | | |
| | | | | | | 17,330,450 | |
| | | | | | | | |
DISTRIBUTORS–0.1% | | | | | | | | |
D’ieteren Group | | | 230 | | | | 44,991 | |
Genuine Parts Co. | | | 1,514 | | | | 209,550 | |
LKQ Corp. | | | 2,890 | | | | 138,066 | |
Pool Corp. | | | 418 | | | | 166,660 | |
| | | | | | | | |
| | | | | | | 559,267 | |
| | | | | | | | |
DIVERSIFIED CONSUMER SERVICES–0.0% | | | | | | | | |
IDP Education Ltd.(b) | | | 2,648 | | | | 36,122 | |
Pearson PLC | | | 6,880 | | | | 84,494 | |
| | | | | | | | |
| | | | | | | 120,616 | |
| | | | | | | | |
| | | | | | | | |
HOTELS, RESTAURANTS & LEISURE–1.6% | | | | | | | | |
Accor SA | | | 2,158 | | | | 82,600 | |
Airbnb, Inc.–Class A(a) | | | 4,694 | | | | 638,904 | |
Amadeus IT Group SA | | | 4,858 | | | | 348,909 | |
Aristocrat Leisure Ltd. | | | 6,278 | | | | 174,424 | |
Booking Holdings, Inc.(a) | | | 378 | | | | 1,337,302 | |
Caesars Entertainment, Inc.(a) | | | 2,328 | | | | 109,136 | |
Carnival Corp.(a) | | | 10,876 | | | | 201,622 | |
Chipotle Mexican Grill, Inc.(a) | | | 296 | | | | 676,940 | |
Compass Group PLC | | | 18,436 | | | | 504,442 | |
Darden Restaurants, Inc. | | | 1,300 | | | | 213,426 | |
Delivery Hero SE(a) | | | 1,890 | | | | 52,018 | |
Domino’s Pizza, Inc. | | | 378 | | | | 155,410 | |
Entain PLC | | | 6,818 | | | | 85,970 | |
Evolution AB | | | 2,010 | | | | 239,292 | |
Expedia Group, Inc.(a) | | | 1,440 | | | | 218,426 | |
Flutter Entertainment PLC(a) | | | 1,926 | | | | 339,922 | |
Galaxy Entertainment Group Ltd. | | | 22,738 | | | | 127,352 | |
Genting Singapore Ltd. | | | 60,926 | | | | 46,148 | |
Hilton Worldwide Holdings, Inc. | | | 2,768 | | | | 504,026 | |
InterContinental Hotels Group PLC | | | 1,828 | | | | 164,752 | |
La Francaise des Jeux SAEM | | | 1,096 | | | | 39,812 | |
Las Vegas Sands Corp. | | | 3,986 | | | | 196,102 | |
Lottery Corp. Ltd. (The) | | | 22,426 | | | | 73,994 | |
Marriott International, Inc./MD–Class A | | | 2,664 | | | | 600,534 | |
McDonald’s Corp. | | | 7,830 | | | | 2,321,674 | |
McDonald’s Holdings Co. Japan Ltd.(b) | | | 930 | | | | 40,242 | |
MGM Resorts International(a) | | | 2,950 | | | | 131,806 | |
Norwegian Cruise Line Holdings Ltd.(a)(b) | | | 4,592 | | | | 92,024 | |
Oriental Land Co., Ltd./Japan | | | 11,826 | | | | 439,514 | |
Royal Caribbean Cruises Ltd.(a) | | | 2,546 | | | | 329,552 | |
Sands China Ltd.(a) | | | 24,462 | | | | 71,600 | |
Sodexo SA | | | 954 | | | | 104,914 | |
Starbucks Corp. | | | 12,334 | | | | 1,184,188 | |
Whitbread PLC | | | 2,170 | | | | 101,030 | |
Wynn Resorts Ltd. | | | 1,036 | | | | 94,390 | |
Yum! Brands, Inc. | | | 3,026 | | | | 395,378 | |
Zensho Holdings Co., Ltd. | | | 992 | | | | 51,906 | |
| | | | | | | | |
| | | | | | | 12,489,681 | |
| | | | | | | | |
14
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
HOUSEHOLD DURABLES–0.5% | | | | | | | | |
Barratt Developments PLC | | | 10,300 | | | $ | 73,784 | |
Berkeley Group Holdings PLC | | | 1,132 | | | | 67,522 | |
DR Horton, Inc. | | | 3,254 | | | | 494,392 | |
Garmin Ltd. | | | 1,652 | | | | 212,348 | |
Iida Group Holdings Co., Ltd. | | | 1,484 | | | | 22,150 | |
Lennar Corp.–Class A | | | 2,700 | | | | 402,408 | |
Mohawk Industries, Inc.(a) | | | 572 | | | | 59,098 | |
NVR, Inc.(a) | | | 34 | | | | 238,016 | |
Open House Group Co., Ltd. | | | 826 | | | | 24,402 | |
Panasonic Holdings Corp. | | | 23,576 | | | | 232,156 | |
Persimmon PLC | | | 3,216 | | | | 56,830 | |
PulteGroup, Inc. | | | 2,324 | | | | 239,780 | |
SEB SA | | | 278 | | | | 34,812 | |
Sekisui Chemical Co., Ltd. | | | 4,128 | | | | 59,358 | |
Sekisui House Ltd. | | | 6,470 | | | | 143,416 | |
Sharp Corp./Japan(a) | | | 2,158 | | | | 15,352 | |
Sony Group Corp. | | | 13,598 | | | | 1,286,724 | |
Taylor Wimpey PLC | | | 36,790 | | | | 68,866 | |
Whirlpool Corp. | | | 592 | | | | 72,088 | |
| | | | | | | | |
| | | | | | | 3,803,502 | |
| | | | | | | | |
LEISURE PRODUCTS–0.0% | | | | | | | | |
Bandai Namco Holdings, Inc. | | | 6,458 | | | | 129,148 | |
Hasbro, Inc. | | | 1,408 | | | | 71,892 | |
Shimano, Inc. | | | 854 | | | | 131,400 | |
Yamaha Corp. | | | 1,474 | | | | 33,954 | |
| | | | | | | | |
| | | | | | | 366,394 | |
| | | | | | | | |
SPECIALTY RETAIL–1.3% | | | | | | | | |
AutoZone, Inc.(a) | | | 190 | | | | 491,266 | |
Avolta AG(a) | | | 1,042 | | | | 41,024 | |
Bath & Body Works, Inc. | | | 2,454 | | | | 105,914 | |
Best Buy Co., Inc. | | | 2,092 | | | | 163,684 | |
CarMax, Inc.(a) | | | 1,714 | | | | 131,456 | |
Fast Retailing Co., Ltd. | | | 1,890 | | | | 467,356 | |
H & M Hennes & Mauritz AB–Class B | | | 6,964 | | | | 122,132 | |
Home Depot, Inc. (The) | | | 10,796 | | | | 3,741,008 | |
Industria de Diseno Textil SA | | | 11,784 | | | | 514,140 | |
JD Sports Fashion PLC | | | 25,984 | | | | 54,834 | |
Kingfisher PLC | | | 19,546 | | | | 60,558 | |
Lowe’s Cos., Inc. | | | 6,230 | | | | 1,386,486 | |
Nitori Holdings Co., Ltd. | | | 864 | | | | 115,880 | |
O’Reilly Automotive, Inc.(a) | | | 640 | | | | 607,102 | |
Ross Stores, Inc. | | | 3,656 | | | | 505,816 | |
| | | | | | | | |
TJX Cos., Inc. (The) | | | 12,350 | | | | 1,158,554 | |
Tractor Supply Co. | | | 1,168 | | | | 250,940 | |
Ulta Beauty, Inc.(a) | | | 532 | | | | 260,184 | |
USS Co., Ltd. | | | 2,202 | | | | 44,208 | |
Zalando SE(a) | | | 2,410 | | | | 57,056 | |
ZOZO, Inc.(b) | | | 1,508 | | | | 34,012 | |
| | | | | | | | |
| | | | | | | 10,313,610 | |
| | | | | | | | |
TEXTILES, APPAREL & LUXURY GOODS–0.9% | | | | | | | | |
adidas AG | | | 1,768 | | | | 359,270 | |
Burberry Group PLC | | | 3,808 | | | | 68,684 | |
Hermes International SCA | | | 342 | | | | 726,926 | |
Kering SA | | | 804 | | | | 355,647 | |
Lululemon Athletica, Inc.(a) | | | 1,244 | | | | 635,534 | |
LVMH Moet Hennessy Louis Vuitton SE | | | 2,978 | | | | 2,419,734 | |
Moncler SpA | | | 2,256 | | | | 138,900 | |
NIKE, Inc.–Class B | | | 13,214 | | | | 1,434,536 | |
Pandora A/S | | | 942 | | | | 130,098 | |
Puma SE | | | 1,150 | | | | 63,974 | |
Ralph Lauren Corp. | | | 430 | | | | 61,862 | |
Swatch Group AG (The) | | | 314 | | | | 85,164 | |
Swatch Group AG (The) (REG) | | | 610 | | | | 31,982 | |
Tapestry, Inc. | | | 2,474 | | | | 91,068 | |
VF Corp. | | | 3,568 | | | | 67,078 | |
| | | | | | | | |
| | | | | | | 6,670,457 | |
| | | | | | | | |
| | | | | | | 67,473,168 | |
| | | | | | | | |
INDUSTRIALS–8.6% | | | | | | | | |
AEROSPACE & DEFENSE–1.3% | | | | | | | | |
Airbus SE | | | 6,392 | | | | 987,490 | |
Axon Enterprise, Inc.(a) | | | 760 | | | | 196,330 | |
BAE Systems PLC | | | 32,536 | | | | 460,546 | |
Boeing Co. (The)(a) | | | 6,140 | | | | 1,600,192 | |
Dassault Aviation SA | | | 222 | | | | 43,786 | |
Elbit Systems Ltd. | | | 294 | | | | 62,142 | |
General Dynamics Corp. | | | 2,446 | | | | 634,894 | |
Howmet Aerospace, Inc. | | | 4,222 | | | | 228,494 | |
Huntington Ingalls Industries, Inc. | | | 430 | | | | 111,386 | |
Kongsberg Gruppen ASA | | | 1,024 | | | | 46,880 | |
L3Harris Technologies, Inc. | | | 2,046 | | | | 430,928 | |
Leonardo SpA | | | 4,364 | | | | 72,090 | |
Lockheed Martin Corp. | | | 2,384 | | | | 1,080,524 | |
Melrose Industries PLC | | | 14,424 | | | | 104,262 | |
MTU Aero Engines AG | | | 586 | | | | 126,036 | |
Northrop Grumman Corp. | | | 1,530 | | | | 716,254 | |
Rheinmetall AG | | | 472 | | | | 149,688 | |
Rolls-Royce Holdings PLC(a) | | | 89,836 | | | | 342,664 | |
15
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
RTX Corp. | | | 15,522 | | | $ | 1,305,938 | |
Saab AB–Class B | | | 848 | | | | 51,044 | |
Safran SA | | | 3,706 | | | | 653,406 | |
Singapore Technologies Engineering Ltd. | | | 15,730 | | | | 46,320 | |
Textron, Inc. | | | 2,116 | | | | 170,168 | |
Thales SA | | | 1,148 | | | | 169,840 | |
TransDigm Group, Inc. | | | 598 | | | | 603,926 | |
| | | | | | | | |
| | | | | | | 10,395,228 | |
| | | | | | | | |
AIR FREIGHT & LOGISTICS–0.4% | | | | | | | | |
CH Robinson Worldwide, Inc. | | | 1,260 | | | | 108,766 | |
Deutsche Post AG | | | 10,750 | | | | 532,034 | |
DSV A/S | | | 2,006 | | | | 352,292 | |
Expeditors International of Washington, Inc. | | | 1,570 | | | | 199,576 | |
FedEx Corp. | | | 2,498 | | | | 631,666 | |
Nippon Express Holdings, Inc. | | | 768 | | | | 43,520 | |
SG Holdings Co., Ltd. | | | 3,386 | | | | 48,526 | |
United Parcel Service, Inc.–Class B | | | 7,808 | | | | 1,227,494 | |
Yamato Holdings Co., Ltd. | | | 2,946 | | | | 54,364 | |
| | | | | | | | |
| | | | | | | 3,198,238 | |
| | | | | | | | |
BUILDING PRODUCTS–0.5% | | | | | | | | |
AGC, Inc.(b) | | | 2,064 | | | | 76,502 | |
Allegion PLC | | | 948 | | | | 120,102 | |
AO Smith Corp. | | | 1,326 | | | | 109,316 | |
Assa Abloy AB–Class B | | | 10,788 | | | | 310,872 | |
Builders FirstSource, Inc.(a) | | | 1,332 | | | | 222,364 | |
Carrier Global Corp. | | | 9,058 | | | | 520,324 | |
Cie de Saint-Gobain SA | | | 4,938 | | | | 364,090 | |
Daikin Industries Ltd. | | | 2,854 | | | | 462,814 | |
Geberit AG (REG) | | | 362 | | | | 231,732 | |
Johnson Controls International PLC | | | 7,344 | | | | 423,308 | |
Kingspan Group PLC | | | 1,690 | | | | 146,058 | |
Masco Corp. | | | 2,424 | | | | 162,292 | |
Nibe Industrier AB–Class B(b) | | | 15,904 | | | | 111,678 | |
Otis Worldwide Corp. | | | 4,418 | | | | 395,278 | |
ROCKWOOL A/S–Class B | | | 104 | | | | 30,136 | |
TOTO Ltd. | | | 1,426 | | | | 37,460 | |
Trane Technologies PLC | | | 2,466 | | | | 601,214 | |
Xinyi Glass Holdings Ltd. | | | 14,858 | | | | 16,688 | |
| | | | | | | | |
| | | | | | | 4,342,228 | |
| | | | | | | | |
COMMERCIAL SERVICES & SUPPLIES–0.4% | | | | | | | | |
Brambles Ltd. | | | 14,464 | | | | 134,066 | |
| | | | | | | | |
Cintas Corp. | | | 936 | | | | 563,487 | |
Copart, Inc.(a) | | | 9,432 | | | | 462,168 | |
Dai Nippon Printing Co., Ltd. | | | 2,206 | | | | 65,146 | |
Rentokil Initial PLC | | | 26,644 | | | | 150,166 | |
Republic Services, Inc. | | | 2,208 | | | | 364,122 | |
Rollins, Inc. | | | 3,030 | | | | 132,320 | |
Secom Co., Ltd. | | | 2,268 | | | | 163,088 | |
Securitas AB–Class B | | | 4,956 | | | | 48,588 | |
TOPPAN Holdings, Inc. | | | 2,642 | | | | 73,578 | |
Veralto Corp. | | | 2,366 | | | | 194,628 | |
Waste Management, Inc. | | | 3,956 | | | | 708,520 | |
| | | | | | | | |
| | | | | | | 3,059,877 | |
| | | | | | | | |
CONSTRUCTION & ENGINEERING–0.3% | | | | | | | | |
ACS Actividades de Construccion y Servicios SA | | | 2,312 | | | | 102,642 | |
Bouygues SA | | | 2,144 | | | | 80,854 | |
Eiffage SA | | | 828 | | | | 88,780 | |
Epiroc AB–Class A | | | 7,082 | | | | 142,532 | |
Epiroc AB–Class B | | | 4,236 | | | | 74,290 | |
Ferrovial SE(b) | | | 5,532 | | | | 201,924 | |
Kajima Corp. | | | 4,472 | | | | 74,550 | |
Obayashi Corp. | | | 6,542 | | | | 56,512 | |
Quanta Services, Inc. | | | 1,568 | | | | 338,374 | |
Shimizu Corp. | | | 5,562 | | | | 36,888 | |
Skanska AB–Class B(b) | | | 3,742 | | | | 67,796 | |
Taisei Corp. | | | 1,910 | | | | 65,222 | |
Vinci SA | | | 5,474 | | | | 688,877 | |
| | | | | | | | |
| | | | | | | 2,019,241 | |
| | | | | | | | |
ELECTRICAL EQUIPMENT–0.8% | | | | | | | | |
ABB Ltd. (REG) | | | 17,248 | | | | 765,734 | |
AMETEK, Inc. | | | 2,492 | | | | 410,742 | |
Eaton Corp. PLC | | | 4,310 | | | | 1,037,934 | |
Emerson Electric Co. | | | 6,154 | | | | 598,968 | |
Fuji Electric Co., Ltd. | | | 1,402 | | | | 60,092 | |
Generac Holdings, Inc.(a) | | | 664 | | | | 85,686 | |
Hubbell, Inc. | | | 580 | | | | 190,450 | |
Legrand SA | | | 2,866 | | | | 298,454 | |
Mitsubishi Electric Corp. | | | 20,626 | | | | 291,736 | |
NIDEC Corp. | | | 4,512 | | | | 181,866 | |
Prysmian SpA | | | 2,832 | | | | 129,052 | |
Rockwell Automation, Inc. | | | 1,238 | | | | 384,374 | |
Schneider Electric SE | | | 5,868 | | | | 1,181,264 | |
Siemens Energy AG(a) | | | 5,452 | | | | 72,056 | |
Vestas Wind Systems A/S(a) | | | 10,948 | | | | 346,414 | |
| | | | | | | | |
| | | | | | | 6,034,822 | |
| | | | | | | | |
GROUND TRANSPORTATION–0.8% | | | | | | | | |
Aurizon Holdings Ltd. | | | 18,546 | | | | 48,012 | |
Central Japan Railway Co. | | | 7,686 | | | | 195,048 | |
16
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
CSX Corp. | | | 21,332 | | | $ | 739,546 | |
East Japan Railway Co.(b) | | | 3,320 | | | | 191,050 | |
Grab Holdings Ltd.–Class A(a) | | | 19,722 | | | | 66,460 | |
Hankyu Hanshin Holdings, Inc. | | | 2,464 | | | | 78,274 | |
JB Hunt Transport Services, Inc. | | | 880 | | | | 175,772 | |
Keisei Electric Railway Co., Ltd. | | | 1,438 | | | | 67,812 | |
Kintetsu Group Holdings Co., Ltd.(b) | | | 2,054 | | | | 65,078 | |
MTR Corp. Ltd. | | | 15,600 | | | | 60,548 | |
Norfolk Southern Corp. | | | 2,442 | | | | 577,004 | |
Odakyu Electric Railway Co., Ltd. | | | 3,344 | | | | 50,906 | |
Old Dominion Freight Line, Inc. | | | 966 | | | | 391,548 | |
Tobu Railway Co., Ltd. | | | 2,094 | | | | 56,180 | |
Tokyu Corp. | | | 5,092 | | | | 62,088 | |
Uber Technologies, Inc.(a) | | | 22,214 | | | | 1,367,716 | |
Union Pacific Corp. | | | 6,580 | | | | 1,616,180 | |
West Japan Railway Co. | | | 2,338 | | | | 97,380 | |
| | | | | | | | |
| | | | | | | 5,906,602 | |
| | | | | | | | |
INDUSTRIAL CONGLOMERATES–0.8% | | | | | | | | |
3M Co. | | | 5,962 | | | | 651,766 | |
CK Hutchison Holdings Ltd. | | | 27,958 | | | | 150,208 | |
DCC PLC | | | 1,088 | | | | 80,056 | |
General Electric Co. | | | 11,750 | | | | 1,499,524 | |
Hikari Tsushin, Inc. | | | 248 | | | | 40,822 | |
Hitachi Ltd. | | | 10,016 | | | | 720,376 | |
Honeywell International, Inc. | | | 7,116 | | | | 1,492,296 | |
Investment AB Latour–Class B(b) | | | 1,492 | | | | 38,894 | |
Jardine Cycle & Carriage Ltd. | | | 1,024 | | | | 23,056 | |
Jardine Matheson Holdings Ltd. | | | 1,834 | | | | 75,492 | |
Keppel Corp. Ltd. | | | 14,674 | | | | 78,518 | |
Lifco AB–Class B | | | 2,578 | | | | 63,268 | |
Siemens AG (REG) | | | 8,194 | | | | 1,537,270 | |
Smiths Group PLC | | | 3,730 | | | | 83,722 | |
| | | | | | | | |
| | | | | | | 6,535,268 | |
| | | | | | | | |
MACHINERY–1.6% | | | | | | | | |
Alfa Laval AB | | | 3,094 | | | | 123,866 | |
Alstom SA | | | 3,058 | | | | 41,224 | |
Atlas Copco AB–Class A | | | 28,994 | | | | 499,582 | |
Atlas Copco AB–Class B | | | 16,828 | | | | 249,662 | |
Caterpillar, Inc. | | | 5,508 | | | | 1,628,254 | |
Cummins, Inc. | | | 1,530 | | | | 366,542 | |
Daifuku Co., Ltd. | | | 3,364 | | | | 67,832 | |
| | | | | | | | |
Daimler Truck Holding AG | | | 5,768 | | | | 216,632 | |
Deere & Co. | | | 2,892 | | | | 1,156,024 | |
Dover Corp. | | | 1,510 | | | | 232,254 | |
FANUC Corp. | | | 10,318 | | | | 302,794 | |
Fortive Corp. | | | 3,794 | | | | 279,352 | |
GEA Group AG | | | 1,786 | | | | 74,252 | |
Hitachi Construction Machinery Co., Ltd. | | | 1,084 | | | | 28,508 | |
Hoshizaki Corp.(b) | | | 1,230 | | | | 44,896 | |
Husqvarna AB– Class B(b) | | | 3,618 | | | | 29,844 | |
IDEX Corp. | | | 816 | | | | 177,162 | |
Illinois Tool Works, Inc. | | | 2,956 | | | | 774,294 | |
Indutrade AB | | | 2,988 | | | | 77,874 | |
Ingersoll Rand, Inc. | | | 4,370 | | | | 337,976 | |
Knorr-Bremse AG | | | 820 | | | | 52,896 | |
Komatsu Ltd. | | | 10,018 | | | | 260,702 | |
Kone Oyj–Class B | | | 3,664 | | | | 183,278 | |
Kubota Corp. | | | 10,704 | | | | 160,630 | |
Makita Corp. | | | 2,436 | | | | 66,976 | |
Metso Oyj(b) | | | 6,908 | | | | 70,120 | |
MINEBEA MITSUMI, Inc. | | | 3,918 | | | | 80,194 | |
MISUMI Group, Inc. | | | 3,064 | | | | 51,715 | |
Mitsubishi Heavy Industries Ltd. | | | 3,462 | | | | 201,514 | |
Nordson Corp. | | | 584 | | | | 154,006 | |
PACCAR, Inc. | | | 5,646 | | | | 551,332 | |
Parker-Hannifin Corp. | | | 1,388 | | | | 638,990 | |
Pentair PLC | | | 1,784 | | | | 129,714 | |
Rational AG | | | 60 | | | | 46,300 | |
Sandvik AB | | | 11,380 | | | | 247,234 | |
Schindler Holding AG | | | 458 | | | | 114,662 | |
Schindler Holding AG (REG) | | | 268 | | | | 63,644 | |
Seatrium Ltd.(a) | | | 430,454 | | | | 38,436 | |
SKF AB–Class B | | | 3,550 | | | | 71,144 | |
SMC Corp. | | | 620 | | | | 331,126 | |
Snap-on, Inc. | | | 570 | | | | 164,638 | |
Spirax-Sarco Engineering PLC | | | 822 | | | | 109,980 | |
Stanley Black & Decker, Inc. | | | 1,656 | | | | 162,356 | |
Techtronic Industries Co., Ltd. | | | 14,362 | | | | 171,124 | |
Toyota Industries Corp. | | | 1,574 | | | | 127,950 | |
VAT Group AG(c) | | | 292 | | | | 146,158 | |
Volvo AB–Class A | | | 2,234 | | | | 59,246 | |
Volvo AB–Class B | | | 16,350 | | | | 425,402 | |
Wartsila OYJ Abp(b) | | | 5,138 | | | | 74,672 | |
Westinghouse Air Brake Technologies Corp. | | | 1,934 | | | | 245,424 | |
Xylem, Inc./NY | | | 2,602 | | | | 297,564 | |
| | | | | | | | |
| | | | | | | 12,207,951 | |
| | | | | | | | |
17
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
MARINE TRANSPORTATION–0.1% | | | | | | | | |
AP Moller–Maersk A/S–Class A | | | 34 | | | $ | 58,618 | |
AP Moller–Maersk A/S–Class B | | | 56 | | | | 100,802 | |
Kawasaki Kisen Kaisha Ltd. | | | 1,458 | | | | 62,396 | |
Kuehne + Nagel International AG (REG) | | | 602 | | | | 207,403 | |
Mitsui OSK Lines Ltd. | | | 3,652 | | | | 116,756 | |
Nippon Yusen KK | | | 5,250 | | | | 162,108 | |
SITC International Holdings Co., Ltd. | | | 13,512 | | | | 23,320 | |
| | | | | | | | |
| | | | | | | 731,403 | |
| | | | | | | | |
PASSENGER AIRLINES–0.1% | | | | | | | | |
American Airlines Group, Inc.(a) | | | 7,056 | | | | 96,936 | |
ANA Holdings, Inc.(a) | | | 1,610 | | | | 34,882 | |
Delta Air Lines, Inc. | | | 6,946 | | | | 279,438 | |
Deutsche Lufthansa AG (REG)(a) | | | 6,022 | | | | 53,537 | |
Japan Airlines Co., Ltd. | | | 1,454 | | | | 28,544 | |
Qantas Airways Ltd.(a) | | | 8,024 | | | | 29,388 | |
Singapore Airlines Ltd. | | | 15,800 | | | | 78,448 | |
Southwest Airlines Co. | | | 6,436 | | | | 185,842 | |
United Airlines Holdings, Inc.(a) | | | 3,540 | | | | 146,060 | |
| | | | | | | | |
| | | | | | | 933,075 | |
| | | | | | | | |
PROFESSIONAL SERVICES–0.8% | | | | | | | | |
Adecco Group AG (REG) | | | 1,750 | | | | 85,900 | |
Automatic Data Processing, Inc. | | | 4,440 | | | | 1,034,386 | |
BayCurrent Consulting, Inc. | | | 1,376 | | | | 48,168 | |
Broadridge Financial Solutions, Inc. | | | 1,270 | | | | 261,302 | |
Bureau Veritas SA | | | 3,140 | | | | 79,416 | |
Ceridian HCM Holding, Inc.(a) | | | 1,684 | | | | 113,030 | |
Computershare Ltd. | | | 5,744 | | | | 95,652 | |
Equifax, Inc. | | | 1,330 | | | | 328,896 | |
Experian PLC | | | 9,880 | | | | 403,018 | |
Intertek Group PLC | | | 1,730 | | | | 93,602 | |
Jacobs Solutions, Inc. | | | 1,360 | | | | 176,398 | |
Leidos Holdings, Inc. | | | 1,484 | | | | 160,628 | |
Paychex, Inc. | | | 3,470 | | | | 413,312 | |
Paycom Software, Inc. | | | 530 | | | | 109,354 | |
Randstad NV | | | 1,252 | | | | 78,576 | |
Recruit Holdings Co., Ltd. | | | 15,590 | | | | 651,836 | |
RELX PLC (London) | | | 20,384 | | | | 808,711 | |
Robert Half, Inc. | | | 1,144 | | | | 100,492 | |
| | | | | | | | |
SGS SA (REG) | | | 1,642 | | | | 141,668 | |
Teleperformance SE | | | 666 | | | | 97,508 | |
Verisk Analytics, Inc. | | | 1,566 | | | | 373,816 | |
Wolters Kluwer NV(b) | | | 2,680 | | | | 381,282 | |
| | | | | | | | |
| | | | | | | 6,036,951 | |
| | | | | | | | |
TRADING COMPANIES & DISTRIBUTORS–0.6% | | | | | | | | |
AerCap Holdings NV(a) | | | 2,160 | | | | 160,456 | |
Ashtead Group PLC | | | 4,766 | | | | 331,202 | |
Beijer Ref AB(b) | | | 4,108 | | | | 55,124 | |
Brenntag SE | | | 1,500 | | | | 137,862 | |
Bunzl PLC | | | 3,676 | | | | 149,376 | |
Fastenal Co. | | | 6,168 | | | | 399,502 | |
ITOCHU Corp. | | | 12,876 | | | | 524,566 | |
Marubeni Corp. | | | 15,408 | | | | 242,592 | |
Mitsubishi Corp. | | | 37,198 | | | | 592,520 | |
Mitsui & Co., Ltd. | | | 14,018 | | | | 525,170 | |
MonotaRO Co., Ltd.(b) | | | 2,526 | | | | 27,476 | |
Reece Ltd. | | | 2,298 | | | | 35,036 | |
Sumitomo Corp. | | | 11,162 | | | | 242,904 | |
Toyota Tsusho Corp. | | | 2,274 | | | | 133,384 | |
United Rentals, Inc. | | | 732 | | | | 419,744 | |
WW Grainger, Inc. | | | 478 | | | | 395,284 | |
| | | | | | | | |
| | | | | | | 4,372,198 | |
| | | | | | | | |
TRANSPORTATION INFRASTRUCTURE–0.1% | | | | | | | | |
Aena SME SA | | | 820 | | | | 148,839 | |
Aeroports de Paris SA | | | 384 | | | | 49,696 | |
Auckland International Airport Ltd. | | | 14,292 | | | | 79,500 | |
Getlink SE | | | 3,780 | | | | 69,230 | |
Transurban Group | | | 32,880 | | | | 307,244 | |
| | | | | | | | |
| | | | | | | 654,509 | |
| | | | | | | | |
| | | | | | | 66,427,591 | |
| | | | | | | | |
COMMUNICATION SERVICES–5.7% | | | | | | | | |
DIVERSIFIED TELECOMMUNICATION SERVICES–1.1% | | | | | | | | |
AT&T, Inc. | | | 77,182 | | | | 1,295,096 | |
BT Group PLC | | | 68,924 | | | | 108,596 | |
Cellnex Telecom SA(a) | | | 6,140 | | | | 241,710 | |
Charter Communications, Inc.–Class A(a) | | | 1,086 | | | | 422,106 | |
Comcast Corp.–Class A | | | 43,348 | | | | 1,900,766 | |
Deutsche Telekom AG (REG) | | | 34,946 | | | | 840,194 | |
Elisa Oyj | | | 1,530 | | | | 70,720 | |
HKT Trust & HKT Ltd.–Class SS | | | 38,164 | | | | 45,564 | |
Infrastrutture Wireless Italiane SpA(b) | | | 3,386 | | | | 42,870 | |
Koninklijke KPN NV | | | 36,176 | | | | 124,628 | |
Nippon Telegraph & Telephone Corp. | | | 322,170 | | | | 393,396 | |
Orange SA | | | 19,686 | | | | 224,374 | |
18
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
Singapore Telecommunications Ltd. | | | 89,008 | | | $ | 166,624 | |
Spark New Zealand Ltd. | | | 18,834 | | | | 61,672 | |
Swisscom AG (REG) | | | 288 | | | | 172,736 | |
Telecom Italia SpA/Milano(a)(b) | | | 100,392 | | | | 32,606 | |
Telefonica SA(b) | | | 52,698 | | | | 206,042 | |
Telenor ASA | | | 6,584 | | | | 75,562 | |
Telia Co. AB | | | 24,714 | | | | 63,054 | |
Telstra Group Ltd. | | | 42,438 | | | | 114,676 | |
Verizon Communications, Inc. | | | 45,382 | | | | 1,710,864 | |
Washington H Soul Pattinson & Co., Ltd.(b) | | | 2,482 | | | | 55,424 | |
| | | | | | | | |
| | | | | | | 8,369,280 | |
| | | | | | | | |
ENTERTAINMENT–0.8% | | | | | | | | |
Bollore SE | | | 7,874 | | | | 49,274 | |
Capcom Co., Ltd. | | | 1,904 | | | | 61,444 | |
Electronic Arts, Inc. | | | 2,642 | | | | 361,452 | |
Koei Tecmo Holdings Co., Ltd. | | | 1,184 | | | | 13,488 | |
Konami Group Corp. | | | 1,138 | | | | 59,394 | |
Live Nation Entertainment, Inc.(a) | | | 1,532 | | | | 143,396 | |
Netflix, Inc.(a) | | | 4,726 | | | | 2,300,508 | |
Nexon Co., Ltd.(b) | | | 3,646 | | | | 66,300 | |
Nintendo Co., Ltd. | | | 11,214 | | | | 583,456 | |
Sea Ltd. (ADR)(a) | | | 3,914 | | | | 158,516 | |
Square Enix Holdings Co., Ltd. | | | 966 | | | | 34,631 | |
Take-Two Interactive Software, Inc.(a) | | | 1,708 | | | | 274,742 | |
Toho Co., Ltd./Tokyo | | | 1,254 | | | | 42,302 | |
Universal Music Group NV | | | 8,850 | | | | 252,642 | |
Walt Disney Co. (The) | | | 19,752 | | | | 1,783,408 | |
Warner Bros Discovery, Inc.(a) | | | 23,954 | | | | 272,596 | |
| | | | | | | | |
| | | | | | | 6,457,549 | |
| | | | | | | | |
INTERACTIVE MEDIA & SERVICES–3.3% | | | | | | | | |
Adevinta ASA(a) | | | 3,770 | | | | 41,650 | |
Alphabet, Inc.–
Class A(a) | | | 63,882 | | | | 8,923,676 | |
Alphabet, Inc.–Class C(a) | | | 53,764 | | | | 7,576,960 | |
Auto Trader Group PLC | | | 9,578 | | | | 87,990 | |
CAR Group Ltd. | | | 3,862 | | | | 81,820 | |
LY Corp. | | | 28,810 | | | | 101,880 | |
Match Group, Inc.(a) | | | 2,934 | | | | 107,092 | |
Meta Platforms, Inc.–Class A(a) | | | 23,960 | | | | 8,480,528 | |
REA Group Ltd.(b) | | | 594 | | | | 73,122 | |
Scout24 SE | | | 842 | | | | 59,539 | |
SEEK Ltd.(b) | | | 3,802 | | | | 69,170 | |
| | | | | | | | |
| | | | | | | 25,603,427 | |
| | | | | | | | |
| | | | | | | | |
MEDIA–0.2% | | | | | | | | |
Dentsu Group, Inc.(b) | | | 2,180 | | | | 55,790 | |
Fox Corp.–Class A | | | 2,670 | | | | 79,190 | |
Fox Corp.–Class B | | | 1,424 | | | | 39,374 | |
Informa PLC | | | 14,406 | | | | 143,288 | |
Interpublic Group of Cos., Inc. (The) | | | 4,134 | | | | 134,934 | |
News Corp.–Class A | | | 4,108 | | | | 100,852 | |
News Corp.–Class B | | | 1,240 | | | | 31,866 | |
Omnicom Group, Inc. | | | 2,138 | | | | 184,872 | |
Paramount Global– Class B | | | 5,208 | | | | 77,026 | |
Publicis Groupe SA | | | 2,462 | | | | 228,656 | |
Vivendi SE | | | 6,770 | | | | 72,472 | |
WPP PLC | | | 11,472 | | | | 109,579 | |
| | | | | | | | |
| | | | | | | 1,257,899 | |
| | | | | | | | |
WIRELESS TELECOMMUNICATION SERVICES–0.3% | | | | | | | | |
KDDI Corp. | | | 16,158 | | | | 512,508 | |
SoftBank Corp. | | | 30,668 | | | | 382,176 | |
SoftBank Group Corp. | | | 11,112 | | | | 490,466 | |
T-Mobile US, Inc. | | | 5,494 | | | | 880,693 | |
Tele2 AB–Class B | | | 5,236 | | | | 44,998 | |
Vodafone Group PLC | | | 248,142 | | | | 216,712 | |
| | | | | | | | |
| | | | | | | 2,527,553 | |
| | | | | | | | |
| | | | | | | 44,215,708 | |
| | | | | | | | |
CONSUMER STAPLES–5.5% | | | | | | | | |
BEVERAGES–1.2% | | | | | | | | |
Anheuser-Busch InBev SA/NV | | | 9,368 | | | | 604,686 | |
Asahi Group Holdings Ltd.(b) | | | 5,226 | | | | 194,560 | |
Brown-Forman Corp.–Class B | | | 1,976 | | | | 112,772 | |
Budweiser Brewing Co. APAC Ltd.(c) | | | 17,346 | | | | 32,518 | |
Carlsberg AS–Class B | | | 1,074 | | | | 134,644 | |
Coca-Cola Co. (The) | | | 42,002 | | | | 2,475,178 | |
Coca-Cola Europacific Partners PLC | | | 2,252 | | | | 150,298 | |
Coca-Cola HBC AG–Class DI | | | 2,354 | | | | 69,120 | |
Constellation Brands, Inc.–Class A | | | 1,746 | | | | 421,854 | |
Davide Campari-Milano NV(b) | | | 5,266 | | | | 59,468 | |
Diageo PLC | | | 24,236 | | | | 879,650 | |
Heineken Holding NV | | | 1,450 | | | | 122,692 | |
Heineken NV | | | 3,130 | | | | 317,905 | |
Keurig Dr Pepper, Inc. | | | 10,868 | | | | 362,122 | |
Kirin Holdings Co., Ltd.(b) | | | 8,214 | | | | 120,254 | |
Molson Coors Beverage Co.–Class B | | | 2,000 | | | | 122,358 | |
19
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
Monster Beverage Corp.(a) | | | 7,974 | | | $ | 459,382 | |
PepsiCo, Inc. | | | 14,842 | | | | 2,520,596 | |
Pernod Ricard SA | | | 2,214 | | | | 391,086 | |
Remy Cointreau SA | | | 258 | | | | 32,910 | |
Suntory Beverage & Food Ltd. | | | 1,532 | | | | 50,372 | |
Treasury Wine Estates Ltd.(b) | | | 8,042 | | | | 59,170 | |
| | | | | | | | |
| | | | | | | 9,693,595 | |
| | | | | | | | |
CONSUMER STAPLES DISTRIBUTION & RETAIL–1.3% | | | | | | | | |
Aeon Co., Ltd. | | | 7,072 | | | | 157,786 | |
Carrefour SA | | | 6,222 | | | | 113,936 | |
Coles Group Ltd. | | | 14,430 | | | | 158,504 | |
Costco Wholesale Corp. | | | 4,780 | | | | 3,154,522 | |
Dollar General Corp. | | | 2,370 | | | | 322,066 | |
Dollar Tree, Inc.(a) | | | 2,256 | | | | 320,464 | |
Endeavour Group Ltd./Australia | | | 14,924 | | | | 52,996 | |
HelloFresh SE(a) | | | 1,664 | | | | 26,236 | |
J Sainsbury PLC | | | 17,682 | | | | 68,172 | |
Jeronimo Martins SGPS SA | | | 3,054 | | | | 77,700 | |
Kesko Oyj–Class B | | | 3,018 | | | | 59,828 | |
Kobe Bussan Co., Ltd. | | | 1,598 | | | | 47,176 | |
Koninklijke Ahold Delhaize NV | | | 10,316 | | | | 296,806 | |
Kroger Co. (The) | | | 7,144 | | | | 326,506 | |
MatsukiyoCocokara & Co. | | | 3,546 | | | | 62,654 | |
Ocado Group PLC(a)(b) | | | 5,924 | | | | 57,216 | |
Seven & i Holdings Co., Ltd. | | | 8,196 | | | | 324,148 | |
Sysco Corp. | | | 5,444 | | | | 398,046 | |
Target Corp. | | | 4,984 | | | | 709,678 | |
Tesco PLC | | | 76,140 | | | | 282,074 | |
Walgreens Boots Alliance, Inc. | | | 7,740 | | | | 202,092 | |
Walmart, Inc. | | | 15,400 | | | | 2,427,652 | |
Woolworths Group Ltd. | | | 13,090 | | | | 332,068 | |
| | | | | | | | |
| | | | | | | 9,978,326 | |
| | | | | | | | |
FOOD PRODUCTS–1.2% | | | | | | | | |
Ajinomoto Co., Inc. | | | 4,842 | | | | 186,348 | |
Archer-Daniels-Midland Co. | | | 5,758 | | | | 415,842 | |
Associated British Foods PLC | | | 3,778 | | | | 113,866 | |
Barry Callebaut AG (REG) | | | 42 | | | | 69,216 | |
Bunge Global SA | | | 1,568 | | | | 158,290 | |
Campbell Soup Co. | | | 2,120 | | | | 91,648 | |
Chocoladefabriken Lindt & Spruengli AG (REG) | | | 2 | | | | 242,638 | |
Chocoladefabriken Lindt & Spruengli AG–Class PC | | | 12 | | | | 132,040 | |
| | | | | | | | |
Conagra Brands, Inc. | | | 5,160 | | | | 147,856 | |
Danone SA | | | 7,000 | | | | 454,084 | |
General Mills, Inc. | | | 6,276 | | | | 408,754 | |
Hershey Co. (The) | | | 1,618 | | | | 301,660 | |
Hormel Foods Corp. | | | 3,126 | | | | 100,376 | |
J M Smucker Co. (The) | | | 1,146 | | | | 144,832 | |
JDE Peet’s NV(b) | | | 1,052 | | | | 28,264 | |
Kellanova | | | 2,848 | | | | 159,176 | |
Kerry Group PLC– Class A | | | 1,762 | | | | 152,854 | |
Kikkoman Corp. | | | 1,516 | | | | 92,638 | |
Kraft Heinz Co. (The) | | | 8,606 | | | | 318,250 | |
Lamb Weston Holdings, Inc. | | | 1,564 | | | | 169,052 | |
Lotus Bakeries NV(b) | | | 6 | | | | 45,428 | |
McCormick & Co., Inc./MD (Non-Voting) | | | 2,714 | | | | 185,624 | |
MEIJI Holdings Co., Ltd. | | | 2,506 | | | | 59,526 | |
Mondelez International, Inc.–Class A | | | 14,686 | | | | 1,063,634 | |
Mowi ASA | | | 5,018 | | | | 89,862 | |
Nestle SA (REG) | | | 28,788 | | | | 3,336,985 | |
Nissin Foods Holdings Co., Ltd. | | | 2,220 | | | | 77,522 | |
Orkla ASA | | | 6,904 | | | | 53,614 | |
Salmar ASA | | | 852 | | | | 47,716 | |
Tyson Foods, Inc.– Class A | | | 3,080 | | | | 165,496 | |
WH Group Ltd. | | | 84,024 | | | | 54,262 | |
Wilmar International Ltd. | | | 19,354 | | | | 52,282 | |
Yakult Honsha Co., Ltd. | | | 2,762 | | | | 62,000 | |
| | | | | | | | |
| | | | | | | 9,181,635 | |
| | | | | | | | |
HOUSEHOLD PRODUCTS–0.8% | | | | | | | | |
Church & Dwight Co., Inc. | | | 2,660 | | | | 251,530 | |
Clorox Co. (The) | | | 1,340 | | | | 190,928 | |
Colgate-Palmolive Co. | | | 8,888 | | | | 708,462 | |
Essity AB–Class B | | | 6,522 | | | | 161,629 | |
Henkel AG & Co. KGaA | | | 1,132 | | | | 81,148 | |
Henkel AG & Co. KGaA (Preference Shares) | | | 1,856 | | | | 149,220 | |
Kimberly-Clark Corp. | | | 3,648 | | | | 443,268 | |
Procter & Gamble Co. (The) | | | 25,442 | | | | 3,728,124 | |
Reckitt Benckiser Group PLC | | | 7,754 | | | | 534,984 | |
Unicharm Corp. | | | 4,352 | | | | 157,400 | |
| | | | | | | | |
| | | | | | | 6,406,693 | |
| | | | | | | | |
PERSONAL CARE PRODUCTS–0.5% | | | | | | | | |
Beiersdorf AG | | | 1,104 | | | | 165,330 | |
Estee Lauder Cos., Inc. (The)–Class A | | | 2,508 | | | | 366,794 | |
Haleon PLC | | | 59,140 | | | | 242,131 | |
Kao Corp.(b) | | | 5,034 | | | | 206,926 | |
Kenvue, Inc. | | | 18,604 | | | | 400,544 | |
20
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
Kose Corp. | | | 386 | | | $ | 28,776 | |
L’Oreal SA | | | 2,602 | | | | 1,296,600 | |
Shiseido Co., Ltd. | | | 4,266 | | | | 128,588 | |
Unilever PLC (London) | | | 26,960 | | | | 1,305,112 | |
| | | | | | | | |
| | | | | | | 4,140,801 | |
| | | | | | | | |
TOBACCO–0.5% | | | | | | | | |
Altria Group, Inc. | | | 19,092 | | | | 770,172 | |
British American Tobacco PLC | | | 22,906 | | | | 670,211 | |
Imperial Brands PLC | | | 9,150 | | | | 210,682 | |
Japan Tobacco, Inc.(b) | | | 12,894 | | | | 332,964 | |
Philip Morris International, Inc. | | | 16,758 | | | | 1,576,498 | |
| | | | | | | | |
| | | | | | | 3,560,527 | |
| | | | | | | | |
| | | | | | | 42,961,577 | |
| | | | | | | | |
ENERGY–3.1% | | | | | | | | |
ENERGY EQUIPMENT & SERVICES–0.2% | | | | | | | | |
Baker Hughes Co. | | | 10,862 | | | | 371,263 | |
Halliburton Co. | | | 9,662 | | | | 349,282 | |
Schlumberger NV | | | 15,420 | | | | 802,456 | |
Tenaris SA | | | 5,060 | | | | 87,992 | |
| | | | | | | | |
| | | | | | | 1,610,993 | |
| | | | | | | | |
OIL, GAS & CONSUMABLE FUELS–2.9% | | | | | | | | |
Aker BP ASA | | | 3,338 | | | | 96,932 | |
Ampol Ltd. | | | 2,626 | | | | 64,694 | |
APA Corp. | | | 3,312 | | | | 118,798 | |
BP PLC | | | 184,002 | | | | 1,090,776 | |
Chevron Corp. | | | 18,952 | | | | 2,826,732 | |
ConocoPhillips | | | 12,818 | | | | 1,487,670 | |
Coterra Energy, Inc. | | | 8,120 | | | | 207,196 | |
Devon Energy Corp. | | | 6,916 | | | | 313,294 | |
Diamondback Energy, Inc. | | | 1,932 | | | | 299,614 | |
ENEOS Holdings, Inc. | | | 31,064 | | | | 123,203 | |
Eni SpA | | | 25,524 | | | | 432,906 | |
EOG Resources, Inc. | | | 6,296 | | | | 761,380 | |
EQT Corp. | | | 4,440 | | | | 171,650 | |
Equinor ASA | | | 9,770 | | | | 309,598 | |
Exxon Mobil Corp. | | | 43,240 | | | | 4,323,036 | |
Galp Energia SGPS SA | | | 4,718 | | | | 69,420 | |
Hess Corp. | | | 2,984 | | | | 430,174 | |
Idemitsu Kosan Co., Ltd. | | | 10,500 | | | | 57,020 | |
Inpex Corp.(b) | | | 10,262 | | | | 137,324 | |
Kinder Morgan, Inc. | | | 20,876 | | | | 368,234 | |
Marathon Oil Corp. | | | 6,318 | | | | 152,618 | |
Marathon Petroleum Corp. | | | 4,100 | | | | 608,128 | |
Neste Oyj | | | 4,614 | | | | 163,992 | |
Occidental Petroleum Corp. | | | 7,128 | | | | 425,554 | |
OMV AG | | | 1,582 | | | | 69,406 | |
ONEOK, Inc. | | | 6,288 | | | | 441,544 | |
Phillips 66 | | | 4,750 | | | | 632,282 | |
| | | | | | | | |
Pioneer Natural Resources Co. | | | 2,518 | | | | 566,248 | |
Repsol SA | | | 13,608 | | | | 201,846 | |
Santos Ltd. | | | 35,016 | | | | 182,060 | |
Shell PLC | | | 71,344 | | | | 2,335,380 | |
Targa Resources Corp. | | | 2,408 | | | | 209,096 | |
TotalEnergies SE | | | 24,708 | | | | 1,680,118 | |
Valero Energy Corp. | | | 3,676 | | | | 477,750 | |
Williams Cos., Inc. (The) | | | 13,132 | | | | 457,352 | |
Woodside Energy Group Ltd. | | | 20,346 | | | | 429,638 | |
| | | | | | | | |
| | | | | | | 22,722,663 | |
| | | | | | | | |
| | | | | | | 24,333,656 | |
| | | | | | | | |
MATERIALS–3.1% | | | | | | | | |
CHEMICALS–1.6% | | | | | | | | |
Air Liquide SA | | | 5,648 | | | | 1,099,446 | |
Air Products and Chemicals, Inc. | | | 2,398 | | | | 656,572 | |
Akzo Nobel NV | | | 1,864 | | | | 154,352 | |
Albemarle Corp. | | | 1,268 | | | | 183,056 | |
Arkema SA | | | 644 | | | | 73,250 | |
Asahi Kasei Corp. | | | 13,526 | | | | 99,818 | |
BASF SE | | | 9,660 | | | | 520,108 | |
Celanese Corp. | | | 1,082 | | | | 167,954 | |
CF Industries Holdings, Inc. | | | 2,062 | | | | 163,928 | |
Chr Hansen Holding A/S | | | 1,144 | | | | 95,860 | |
Clariant AG (REG) | | | 2,174 | | | | 32,106 | |
Corteva, Inc. | | | 7,608 | | | | 364,528 | |
Covestro AG(a) | | | 2,076 | | | | 120,972 | |
Croda International PLC | | | 1,530 | | | | 98,352 | |
Dow, Inc. | | | 7,572 | | | | 415,194 | |
DSM-Firmenich AG | | | 2,038 | | | | 207,252 | |
DuPont de Nemours, Inc. | | | 4,642 | | | | 357,108 | |
Eastman Chemical Co. | | | 1,280 | | | | 114,970 | |
Ecolab, Inc. | | | 2,732 | | | | 541,694 | |
EMS-Chemie Holding AG (REG) | | | 78 | | | | 62,434 | |
Evonik Industries AG | | | 2,512 | | | | 51,318 | |
FMC Corp. | | | 1,348 | | | | 84,928 | |
Givaudan SA (REG) | | | 102 | | | | 418,818 | |
ICL Group Ltd. | | | 7,440 | | | | 37,406 | |
IMCD NV | | | 644 | | | | 111,988 | |
International Flavors & Fragrances, Inc. | | | 2,756 | | | | 223,154 | |
JSR Corp. | | | 1,840 | | | | 52,328 | |
Linde PLC | | | 5,234 | | | | 2,149,656 | |
LyondellBasell Industries NV–Class A | | | 2,766 | | | | 262,992 | |
Mitsubishi Chemical Group Corp. | | | 13,804 | | | | 84,386 | |
Mitsui Chemicals, Inc. | | | 1,856 | | | | 54,856 | |
Mosaic Co. (The) | | | 3,528 | | | | 126,056 | |
Nippon Paint Holdings Co., Ltd. | | | 10,026 | | | | 80,864 | |
Nippon Sanso Holdings Corp.(b) | | | 1,792 | | | | 47,852 | |
21
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
Nissan Chemical Corp. | | | 1,430 | | | $ | 55,682 | |
Nitto Denko Corp. | | | 1,582 | | | | 118,056 | |
Novozymes A/S–Class B | | | 2,262 | | | | 124,294 | |
OCI NV | | | 1,072 | | | | 31,038 | |
Orica Ltd. | | | 4,656 | | | | 50,600 | |
PPG Industries, Inc. | | | 2,546 | | | | 380,604 | |
Sherwin-Williams Co. (The) | | | 2,542 | | | | 792,850 | |
Shin-Etsu Chemical Co., Ltd. | | | 19,642 | | | | 821,448 | |
Sika AG (REG) | | | 1,644 | | | | 536,070 | |
Sumitomo Chemical Co., Ltd. | | | 13,360 | | | | 32,474 | |
Syensqo SA(a) | | | 810 | | | | 84,184 | |
Symrise AG | | | 1,470 | | | | 161,546 | |
Toray Industries, Inc. | | | 14,952 | | | | 77,446 | |
Tosoh Corp. | | | 2,620 | | | | 33,400 | |
Umicore SA | | | 2,302 | | | | 63,294 | |
Wacker Chemie AG | | | 194 | | | | 24,334 | |
Yara International ASA | | | 1,776 | | | | 63,060 | |
| | | | | | | | |
| | | | | | | 12,765,936 | |
| | | | | | | | |
CONSTRUCTION MATERIALS–0.3% | | | | | | | | |
CRH PLC | | | 7,628 | | | | 524,954 | |
Heidelberg Materials AG | | | 1,504 | | | | 134,350 | |
Holcim AG | | | 5,634 | | | | 442,424 | |
James Hardie Industries PLC(a) | | | 4,722 | | | | 182,022 | |
Martin Marietta Materials, Inc. | | | 668 | | | | 332,773 | |
Vulcan Materials Co. | | | 1,434 | | | | 325,532 | |
| | | | | | | | |
| | | | | | | 1,942,055 | |
| | | | | | | | |
CONTAINERS & PACKAGING–0.1% | | | | | | | | |
Amcor PLC | | | 15,602 | | | | 150,404 | |
Avery Dennison Corp. | | | 870 | | | | 175,677 | |
Ball Corp. | | | 3,404 | | | | 195,740 | |
International Paper Co. | | | 3,736 | | | | 135,020 | |
Packaging Corp. of America | | | 968 | | | | 157,534 | |
SIG Group AG | | | 3,290 | | | | 75,772 | |
Smurfit Kappa Group PLC | | | 2,898 | | | | 114,878 | |
Westrock Co. | | | 2,768 | | | | 114,928 | |
| | | | | | | | |
| | | | | | | 1,119,953 | |
| | | | | | | | |
METALS & MINING–1.0% | | | | | | | | |
Anglo American PLC | | | 13,700 | | | | 342,866 | |
Antofagasta PLC | | | 4,246 | | | | 90,766 | |
ArcelorMittal SA | | | 5,462 | | | | 155,012 | |
BHP Group Ltd. | | | 54,650 | | | | 1,867,062 | |
BlueScope Steel Ltd. | | | 4,890 | | | | 77,958 | |
Boliden AB | | | 2,900 | | | | 90,738 | |
Endeavour Mining PLC | | | 1,964 | | | | 43,924 | |
Fortescue Ltd. | | | 18,074 | | | | 356,372 | |
Freeport-McMoRan, Inc. | | | 15,480 | | | | 658,942 | |
| | | | | | | | |
Glencore PLC | | | 112,856 | | | | 678,376 | |
IGO Ltd.(b) | | | 7,060 | | | | 43,506 | |
JFE Holdings, Inc. | | | 6,204 | | | | 95,984 | |
Mineral Resources Ltd.(b) | | | 1,938 | | | | 92,266 | |
Newmont Corp. (New York) | | | 12,442 | | | | 514,932 | |
Nippon Steel Corp. | | | 9,130 | | | | 208,540 | |
Norsk Hydro ASA | | | 13,550 | | | | 91,070 | |
Northern Star Resources Ltd. | | | 12,068 | | | | 111,968 | |
Nucor Corp. | | | 2,654 | | | | 461,902 | |
Pilbara Minerals Ltd.(b) | | | 30,824 | | | | 82,736 | |
Rio Tinto Ltd. | | | 4,016 | | | | 371,872 | |
Rio Tinto PLC | | | 12,140 | | | | 902,986 | |
South32 Ltd. | | | 46,988 | | | | 106,268 | |
Steel Dynamics, Inc. | | | 1,642 | | | | 193,920 | |
Sumitomo Metal Mining Co., Ltd. | | | 2,644 | | | | 78,522 | |
voestalpine AG | | | 1,344 | | | | 42,317 | |
| | | | | | | | |
| | | | | | | 7,760,805 | |
| | | | | | | | |
PAPER & FOREST PRODUCTS–0.1% | | | | | | | | |
Holmen AB–Class B | | | 822 | | | | 34,718 | |
Mondi PLC | | | 5,196 | | | | 101,658 | |
Oji Holdings Corp. | | | 8,176 | | | | 31,428 | |
Stora Enso Oyj–Class R | | | 6,150 | | | | 85,212 | |
Svenska Cellulosa AB SCA–Class B(b) | | | 6,532 | | | | 98,127 | |
UPM-Kymmene Oyj | | | 5,816 | | | | 219,384 | |
| | | | | | | | |
| | | | | | | 570,527 | |
| | | | | | | | |
| | | | | | | 24,159,276 | |
| | | | | | | | |
UTILITIES–2.1% | | | | | | | | |
ELECTRIC UTILITIES–1.3% | | | | | | | | |
Acciona SA(b) | | | 276 | | | | 40,640 | |
Alliant Energy Corp. | | | 2,756 | | | | 141,332 | |
American Electric Power Co., Inc. | | | 5,678 | | | | 461,086 | |
BKW AG | | | 248 | | | | 44,112 | |
Chubu Electric Power Co., Inc. | | | 6,878 | | | | 88,792 | |
CK Infrastructure Holdings Ltd. | | | 5,928 | | | | 32,802 | |
CLP Holdings Ltd. | | | 17,346 | | | | 143,306 | |
Constellation Energy Corp. | | | 3,448 | | | | 403,036 | |
Duke Energy Corp. | | | 8,320 | | | | 807,276 | |
Edison International | | | 4,138 | | | | 295,754 | |
EDP–Energias de Portugal SA | | | 33,494 | | | | 168,570 | |
Elia Group SA/NV(b) | | | 358 | | | | 44,812 | |
Endesa SA(b) | | | 3,434 | | | | 70,058 | |
Enel SpA | | | 87,690 | | | | 652,390 | |
Entergy Corp. | | | 2,284 | | | | 231,016 | |
Evergy, Inc. | | | 2,480 | | | | 129,456 | |
22
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
Eversource Energy | | | 3,772 | | | $ | 232,746 | |
Exelon Corp. | | | 10,746 | | | | 385,746 | |
FirstEnergy Corp. | | | 5,576 | | | | 204,380 | |
Fortum Oyj | | | 4,838 | | | | 69,866 | |
Iberdrola SA | | | 64,982 | | | | 852,354 | |
Kansai Electric Power Co., Inc. (The) | | | 7,514 | | | | 99,726 | |
Mercury NZ Ltd. | | | 6,864 | | | | 28,638 | |
NextEra Energy, Inc. | | | 22,148 | | | | 1,345,208 | |
NRG Energy, Inc. | | | 2,438 | | | | 125,992 | |
Origin Energy Ltd. | | | 17,744 | | | | 102,396 | |
Orsted AS | | | 2,072 | | | | 114,810 | |
PG&E Corp. | | | 23,030 | | | | 415,232 | |
Pinnacle West Capital Corp. | | | 1,224 | | | | 87,932 | |
Power Assets Holdings Ltd. | | | 13,978 | | | | 81,034 | |
PPL Corp. | | | 7,958 | | | | 215,634 | |
Redeia Corp. SA | | | 4,422 | | | | 72,868 | |
Southern Co. (The) | | | 11,774 | | | | 825,522 | |
SSE PLC | | | 11,776 | | | | 277,960 | |
Terna–Rete Elettrica Nazionale | | | 14,764 | | | | 123,172 | |
Tokyo Electric Power Co. Holdings, Inc.(a) | | | 15,382 | | | | 80,490 | |
Verbund AG | | | 742 | | | | 68,762 | |
Xcel Energy, Inc. | | | 5,958 | | | | 368,798 | |
| | | | | | | | |
| | | | | | | 9,933,704 | |
| | | | | | | | |
GAS UTILITIES–0.1% | | | | | | | | |
APA Group(b) | | | 13,442 | | | | 78,220 | |
Atmos Energy Corp. | | | 1,604 | | | | 185,788 | |
Enagas SA(b) | | | 2,508 | | | | 42,291 | |
Hong Kong & China Gas Co., Ltd. | | | 118,302 | | | | 90,712 | |
Naturgy Energy Group SA | | | 1,300 | | | | 38,776 | |
Osaka Gas Co., Ltd. | | | 4,044 | | | | 84,396 | |
Snam SpA(b) | | | 21,320 | | | | 109,690 | |
Tokyo Gas Co., Ltd. | | | 3,986 | | | | 91,410 | |
| | | | | | | | |
| | | | | | | 721,283 | |
| | | | | | | | |
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS–0.1% | | | | | | | | |
AES Corp. (The) | | | 7,228 | | | | 139,138 | |
Corp. ACCIONA Energias Renovables SA(b) | | | 682 | | | | 21,166 | |
EDP Renovaveis SA(b) | | | 3,280 | | | | 67,126 | |
Meridian Energy Ltd. | | | 12,972 | | | | 45,424 | |
RWE AG | | | 6,802 | | | | 309,534 | |
| | | | | | | | |
| | | | | | | 582,388 | |
| | | | | | | | |
MULTI-UTILITIES–0.5% | | | | | | | | |
Ameren Corp. | | | 2,838 | | | | 205,302 | |
CenterPoint Energy, Inc. | | | 6,814 | | | | 194,676 | |
Centrica PLC | | | 57,452 | | | | 102,992 | |
CMS Energy Corp. | | | 3,150 | | | | 182,862 | |
| | | | | | | | |
Consolidated Edison, Inc. | | | 3,726 | | | | 338,954 | |
Dominion Energy, Inc. | | | 9,034 | | | | 424,552 | |
DTE Energy Co. | | | 2,226 | | | | 245,438 | |
E.ON SE | | | 24,206 | | | | 325,196 | |
Engie SA | | | 19,692 | | | | 346,900 | |
National Grid PLC | | | 39,764 | | | | 535,660 | |
NiSource, Inc. | | | 4,462 | | | | 118,440 | |
Public Service Enterprise Group, Inc. | | | 5,380 | | | | 328,926 | |
Sembcorp Industries Ltd. | | | 9,500 | | | | 38,186 | |
Sempra | | | 6,794 | | | | 507,640 | |
Veolia Environnement SA | | | 7,340 | | | | 231,992 | |
WEC Energy Group, Inc. | | | 3,406 | | | | 286,598 | |
| | | | | | | | |
| | | | | | | 4,414,314 | |
| | | | | | | | |
WATER UTILITIES–0.1% | | | | | | | | |
American Water Works Co., Inc. | | | 2,102 | | | | 277,443 | |
Severn Trent PLC | | | 2,902 | | | | 95,430 | |
United Utilities Group PLC | | | 7,352 | | | | 99,300 | |
| | | | | | | | |
| | | | | | | 472,173 | |
| | | | | | | | |
| | | | | | | 16,123,862 | |
| | | | | | | | |
REAL ESTATE–2.0% | | | | | | | | |
DIVERSIFIED REITS–0.1% | | | | | | | | |
Daiwa House REIT Investment Corp. | | | 26 | | | | 44,580 | |
GPT Group (The) | | | 19,300 | | | | 60,910 | |
KDX Realty Investment Corp. | | | 48 | | | | 53,534 | |
Land Securities Group PLC | | | 7,098 | | | | 63,692 | |
Mirvac Group(b) | | | 39,724 | | | | 56,512 | |
Nomura Real Estate Master Fund, Inc. | | | 46 | | | | 53,798 | |
Stockland | | | 24,052 | | | | 72,938 | |
| | | | | | | | |
| | | | | | | 405,964 | |
| | | | | | | | |
HEALTH CARE REITS–0.1% | | | | | | | | |
Healthpeak Properties, Inc. | | | 5,906 | | | | 116,918 | |
Ventas, Inc. | | | 4,344 | | | | 216,456 | |
Welltower, Inc. | | | 5,974 | | | | 538,676 | |
| | | | | | | | |
| | | | | | | 872,050 | |
| | | | | | | | |
HOTEL & RESORT REITS–0.0% | | | | | | | | |
Host Hotels & Resorts, Inc. | | | 7,616 | | | | 148,264 | |
| | | | | | | | |
INDUSTRIAL REITS–0.3% | | | | | | | | |
CapitaLand Ascendas REIT | | | 39,812 | | | | 91,272 | |
GLP J-Reit | | | 52 | | | | 50,768 | |
Goodman Group | | | 18,428 | | | | 317,272 | |
23
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
Mapletree Logistics Trust | | | 35,328 | | | $ | 46,514 | |
Nippon Prologis REIT, Inc.(b) | | | 26 | | | | 48,070 | |
Prologis, Inc. | | | 9,974 | | | | 1,329,534 | |
Segro PLC | | | 12,152 | | | | 137,042 | |
Warehouses De Pauw CVA | | | 1,876 | | | | 59,052 | |
| | | | | | | | |
| | | | | | | 2,079,524 | |
| | | | | | | | |
OFFICE REITS–0.1% | | | | | | | | |
Alexandria Real Estate Equities, Inc. | | | 1,688 | | | | 213,988 | |
Boston Properties, Inc. | | | 1,560 | | | | 109,396 | |
Covivio SA/France | | | 524 | | | | 28,196 | |
Dexus(b) | | | 10,836 | | | | 56,630 | |
Gecina SA | | | 518 | | | | 63,060 | |
Japan Real Estate Investment Corp. | | | 16 | | | | 62,054 | |
Nippon Building Fund, Inc.(b) | | | 18 | | | | 77,920 | |
| | | | | | | | |
| | | | | | | 611,244 | |
| | | | | | | | |
REAL ESTATE MANAGEMENT & DEVELOPMENT–0.4% | | | | | | | | |
Azrieli Group Ltd. | | | 442 | | | | 28,588 | |
Capitaland Investment Ltd./Singapore | | | 26,948 | | | | 64,426 | |
CBRE Group, Inc.–Class A(a) | | | 3,290 | | | | 306,266 | |
City Developments Ltd. | | | 5,194 | | | | 26,146 | |
CK Asset Holdings Ltd. | | | 20,190 | | | | 101,336 | |
CoStar Group, Inc.(a) | | | 4,408 | | | | 385,215 | |
Daito Trust Construction Co., Ltd. | | | 706 | | | | 81,602 | |
Daiwa House Industry Co., Ltd. | | | 6,492 | | | | 196,226 | |
ESR Group Ltd.(c) | | | 23,358 | | | | 32,302 | |
Fastighets AB Balder–Class B(a)(b) | | | 6,354 | | | | 45,062 | |
Hang Lung Properties Ltd. | | | 17,200 | | | | 23,912 | |
Henderson Land Development Co., Ltd. | | | 14,634 | | | | 45,062 | |
Hongkong Land Holdings Ltd. | | | 11,598 | | | | 40,338 | |
Hulic Co., Ltd.(b) | | | 3,868 | | | | 40,406 | |
LEG Immobilien SE(a) | | | 808 | | | | 70,708 | |
Mitsubishi Estate Co., Ltd. | | | 12,136 | | | | 166,362 | |
Mitsui Fudosan Co., Ltd. | | | 9,510 | | | | 232,516 | |
New World Development Co., Ltd.(b) | | | 15,214 | | | | 23,588 | |
Nomura Real Estate Holdings, Inc. | | | 1,196 | | | | 31,358 | |
Sagax AB–Class B | | | 2,178 | | | | 59,920 | |
Sino Land Co., Ltd. | | | 38,832 | | | | 42,228 | |
Sumitomo Realty & Development Co., Ltd. | | | 3,118 | | | | 92,370 | |
| | | | | | | | |
Sun Hung Kai Properties Ltd. | | | 15,092 | | | | 163,306 | |
Swire Pacific Ltd.– Class A | | | 4,608 | | | | 39,028 | |
Swire Properties Ltd. | | | 11,788 | | | | 23,862 | |
Swiss Prime Site AG (REG) | | | 866 | | | | 92,420 | |
Unibail-Rodamco-Westfield(a) | | | 1,282 | | | | 94,822 | |
UOL Group Ltd.(b) | | | 4,678 | | | | 22,222 | |
Vonovia SE | | | 8,006 | | | | 251,562 | |
Wharf Holdings Ltd. (The)(b) | | | 11,500 | | | | 37,046 | |
Wharf Real Estate Investment Co., Ltd. | | | 16,824 | | | | 56,874 | |
| | | | | | | | |
| | | | | | | 2,917,079 | |
| | | | | | | | |
RESIDENTIAL REITS–0.2% | | | | | | | | |
AvalonBay Communities, Inc. | | | 1,534 | | | | 287,008 | |
Camden Property Trust | | | 1,154 | | | | 114,482 | |
Equity Residential | | | 3,730 | | | | 228,126 | |
Essex Property Trust, Inc. | | | 694 | | | | 171,822 | |
Invitation Homes, Inc. | | | 6,210 | | | | 211,789 | |
Mid-America Apartment Communities, Inc. | | | 1,260 | | | | 169,420 | |
UDR, Inc. | | | 3,268 | | | | 125,094 | |
| | | | | | | | |
| | | | | | | 1,307,741 | |
| | | | | | | | |
RETAIL REITS–0.2% | | | | | | | | |
CapitaLand Integrated Commercial Trust | | | 53,736 | | | | 83,762 | |
Federal Realty Investment Trust | | | 794 | | | | 81,718 | |
Japan Metropolitan Fund Invest | | | 78 | | | | 55,578 | |
Kimco Realty Corp. | | | 6,692 | | | | 142,586 | |
Klepierre SA | | | 2,286 | | | | 62,410 | |
Link REIT | | | 27,542 | | | | 154,650 | |
Mapletree Pan Asia Commercial Trust | | | 21,758 | | | | 25,848 | |
Realty Income Corp. | | | 7,814 | | | | 448,680 | |
Regency Centers Corp. | | | 1,774 | | | | 118,790 | |
Scentre Group | | | 55,400 | | | | 112,816 | |
Simon Property Group, Inc. | | | 3,522 | | | | 502,378 | |
Vicinity Ltd. | | | 38,986 | | | | 54,154 | |
| | | | | | | | |
| | | | | | | 1,843,370 | |
| | | | | | | | |
SPECIALIZED REITS–0.6% | | | | | | | | |
American Tower Corp. | | | 5,032 | | | | 1,086,308 | |
Crown Castle, Inc. | | | 4,686 | | | | 539,666 | |
Digital Realty Trust, Inc. | | | 3,270 | | | | 439,942 | |
Equinix, Inc. | | | 1,014 | | | | 815,860 | |
Extra Space Storage, Inc. | | | 2,282 | | | | 365,712 | |
Iron Mountain, Inc. | | | 3,152 | | | | 220,577 | |
24
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
Public Storage | | | 1,708 | | | $ | 520,940 | |
SBA Communications Corp. | | | 1,166 | | | | 295,548 | |
VICI Properties, Inc. | | | 11,168 | | | | 356,004 | |
Weyerhaeuser Co. | | | 7,880 | | | | 273,988 | |
| | | | | | | | |
| | | | | | | 4,914,545 | |
| | | | | | | | |
| | | | | | | 15,099,781 | |
| | | | | | | | |
Total Common Stocks
(cost $562,438,553) | | | | | | | 606,512,480 | |
| | | | | | | | |
| | | | | | | | | | | | |
| | | | | | Notional
Amount | | | | |
| | | | | | | | | | | | |
PURCHASED OPTIONS–PUTS–0.0% | | | | | | | | | | | | |
OPTIONS ON INDICES–0.0% | | | | | | | | | | | | |
Euro STOXX 50 Index
Expiration: Jan 2024; Contracts: 462; Exercise Price: EUR 4,450.00; Counterparty: Morgan Stanley & Co., Inc.(a) | | | EUR | | | | 20,559,000 | | | | 121,641 | |
FTSE 100 Index Expiration: Jan 2024; Contracts: 75; Exercise Price: GBP 7,400.00; Counterparty: Morgan Stanley & Co., Inc.(a) | | | GBP | | | | 5,550,000 | | | | 6,692 | |
Nikkei 225 Index Expiration: Jan 2024; Contracts: 72; Exercise Price: JPY 31,500.00; Counterparty: Morgan Stanley & Co., Inc.(a) | | | JPY | | | | 2,268,000,000 | | | | 12,000 | |
S&P 500 Index Expiration: Jan 2024; Contracts: 263; Exercise Price: USD 4,625.00; Counterparty: Morgan Stanley & Co., Inc.(a) | | | USD | | | | 121,637,500 | | | | 228,810 | |
| | | | | | | | | | | | |
Total Purchased Options–Puts (premiums paid $929,608) | | | | | | | | | | | 369,143 | |
| | | | | | | | | | | | |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
SHORT-TERM INVESTMENTS–18.0% | | | | | | | | |
INVESTMENT COMPANIES–18.0% | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB, 5.27%(d)(e)(f)
(cost $139,612,098) | | | 139,612,098 | | | $ | 139,612,098 | |
| | | | | | | | |
TOTAL INVESTMENTS BEFORE SECURITY LENDING COLLATERAL FOR SECURITIES LOANED–96.2%
(cost $702,980,259) | | | | | | | 746,493,721 | |
| | | | | | | | |
INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED–0.3% | | | | | | | | |
INVESTMENT COMPANIES–0.3% | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB, 5.27%(d)(e)(f)
(cost $1,939,050) | | | 1,939,050 | | | | 1,939,050 | |
| | | | | | | | |
TOTAL INVESTMENTS–96.5%
(cost $704,919,309) | | | | | | | 748,432,771 | |
Other assets less liabilities–3.5% | | | | | | | 27,163,446 | |
| | | | | | | | |
NET ASSETS–100.0% | | | | | | $ | 775,596,217 | |
| | | | | | | | |
25
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
FUTURES (see Note D)
| | | | | | | | | | | | | | | | |
| Description | | Number of
Contracts | | | Expiration
Month | | | Current
Notional | | | Value and
Unrealized
Appreciation
(Depreciation) | |
Purchased Contracts | | | | | | | | | | | | | | | | |
10 Yr Canadian Bond Futures | | | 92 | | | | March 2024 | | | $ | 8,621,984 | | | $ | 415,033 | |
Euro-BTP Futures | | | 128 | | | | March 2024 | | | | 16,836,565 | | | | 625,807 | |
Euro-Bund Futures | | | 38 | | | | March 2024 | | | | 5,756,394 | | | | 187,067 | |
Euro-OAT Futures | | | 155 | | | | March 2024 | | | | 22,502,975 | | | | 786,903 | |
Japan 10 Yr Bond (OSE) Futures | | | 27 | | | | March 2024 | | | | 28,093,404 | | | | 189,448 | |
Long Gilt Futures | | | 143 | | | | March 2024 | | | | 18,710,526 | | | | 1,126,272 | |
MSCI EAFE Futures | | | 6 | | | | March 2024 | | | | 675,720 | | | | 21,556 | |
MSCI Emerging Markets Futures | | | 158 | | | | March 2024 | | | | 8,166,230 | | | | 396,387 | |
S&P Mid 400 E-Mini Futures | | | 5 | | | | March 2024 | | | | 1,404,750 | | | | 79,927 | |
S&P/TSX 60 Index Futures | | | 60 | | | | March 2024 | | | | 11,505,075 | | | | 389,080 | |
TOPIX Index Futures | | | 6 | | | | March 2024 | | | | 1,006,809 | | | | 3,434 | |
U.S. T-Note 5 Yr (CBT) Futures | | | 403 | | | | March 2024 | | | | 43,835,696 | | | | 1,022,692 | |
U.S. T-Note 10 Yr (CBT) Futures | | | 757 | | | | March 2024 | | | | 85,458,203 | | | | 3,115,468 | |
U.S. Ultra Bond (CBT) Futures | | | 106 | | | | March 2024 | | | | 14,160,938 | | | | 1,372,013 | |
| | | | |
Sold Contracts | | | | | | | | | | | | | | | | |
Euro STOXX 50 Index Futures | | | 99 | | | | March 2024 | | | | 4,965,093 | | | | 36,462 | |
FTSE 100 Index Futures | | | 102 | | | | March 2024 | | | | 10,084,560 | | | | (209,466 | ) |
Hang Seng Index Futures | | | 1 | | | | January 2024 | | | | 109,701 | | | | (4,703 | ) |
MSCI Singapore IX ETS Futures | | | 22 | | | | January 2024 | | | | 479,591 | | | | (16,625 | ) |
Nikkei 225 (CME) Futures | | | 32 | | | | March 2024 | | | | 5,329,600 | | | | 9,331 | |
OMXS 30 Index Futures | | | 91 | | | | January 2024 | | | | 2,162,435 | | | | (43,479 | ) |
S&P 500 E-Mini Futures | | | 235 | | | | March 2024 | | | | 56,635,000 | | | | (1,875,152 | ) |
SPI 200 Futures | | | 23 | | | | March 2024 | | | | 2,972,059 | | | | (90,164 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | $ | 7,537,291 | |
| | | | | | | | | | | | | | | | |
FORWARD CURRENCY EXCHANGE CONTRACTS (see Note D)
| | | | | | | | | | | | | | | | | | | | | | | | |
| Counterparty | | Contracts to
Deliver
(000) | | | In Exchange
For
(000) | | | Settlement
Date | | | Unrealized
Appreciation
(Depreciation) | |
Bank of America, NA | | | EUR | | | | 45,713 | | | | USD | | | | 48,645 | | | | 01/10/2024 | | | $ | (1,833,427 | ) |
Bank of America, NA | | | JPY | | | | 4,092,950 | | | | USD | | | | 27,727 | | | | 01/12/2024 | | | | (1,333,261 | ) |
Bank of America, NA | | | NOK | | | | 3,521 | | | | USD | | | | 323 | | | | 02/16/2024 | | | | (23,947 | ) |
Bank of New York (The) | | | CNH | | | | 54,375 | | | | USD | | | | 7,608 | | | | 01/11/2024 | | | | (27,187 | ) |
Deutsche Bank AG | | | USD | | | | 3,480 | | | | CAD | | | | 4,780 | | | | 01/10/2024 | | | | 127,306 | |
Deutsche Bank AG | | | CHF | | | | 11,766 | | | | USD | | | | 13,284 | | | | 01/18/2024 | | | | (725,649 | ) |
Goldman Sachs Bank USA | | | SEK | | | | 39,686 | | | | USD | | | | 3,795 | | | | 02/16/2024 | | | | (147,002 | ) |
HSBC Bank USA | | | USD | | | | 3,931 | | | | GBP | | | | 3,148 | | | | 01/25/2024 | | | | 81,567 | |
Morgan Stanley Capital Services, Inc. | | | CAD | | | | 12,378 | | | | USD | | | | 9,002 | | | | 01/10/2024 | | | | (341,055 | ) |
Morgan Stanley Capital Services, Inc. | | | USD | | | | 7,576 | | | | EUR | | | | 6,914 | | | | 01/10/2024 | | | | 59,483 | |
Morgan Stanley Capital Services, Inc. | | | AUD | | | | 14,954 | | | | USD | | | | 9,741 | | | | 01/25/2024 | | | | (457,341 | ) |
Morgan Stanley Capital Services, Inc. | | | GBP | | | | 16,734 | | | | USD | | | | 20,787 | | | | 01/25/2024 | | | | (544,938 | ) |
State Street Bank & Trust Co. | | | NZD | | | | 636 | | | | USD | | | | 369 | | | | 01/11/2024 | | | | (32,670 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | $ | (5,198,121) | |
| | | | | | | | | | | | | | | | | | | | | | | | |
26
| | |
| |
| | | AB Variable Products Series Fund |
PUT WRITTEN OPTIONS (see Note D)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Description | | Counterparty | | | Contracts | | | Exercise
Price | | | Expiration
Month | | | Notional
(000) | | | Premiums
Received | | | U.S. $ Value | |
Euro STOXX 50 Index(g) | | | Morgan Stanley & Co., Inc. | | | | 462 | | | | EUR | | | | 4,275.00 | | | | January 2024 | | | | EUR | | | | 19,751 | | | $ | 39,646 | | | $ | (23,461 | ) |
FTSE 100 Index(g) | | | Morgan Stanley & Co., Inc. | | | | 75 | | | | GBP | | | | 7,100.00 | | | | January 2024 | | | | GBP | | | | 5,325 | | | | 6,995 | | | | (2,629 | ) |
Nikkei 225 Index(h) | | | Morgan Stanley & Co., Inc. | | | | 72 | | | | JPY | | | | 30,000.00 | | | | January 2024 | | | | JPY | | | | 2,160,000 | | | | 51,671 | | | | (3,830 | ) |
S&P 500 Index(i) | | | Morgan Stanley & Co., Inc. | | | | 263 | | | | USD | | | | 4,425.00 | | | | January 2024 | | | | USD | | | | 116,378 | | | | 182,254 | | | | (62,462 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 280,566 | | | $ | (92,382) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | | Non-income producing security. |
| (b) | | Represents entire or partial securities out on loan. See Note E for securities lending information. |
| (c) | | Security is exempt from registration under Rule 144A or Regulation S of the Securities Act of 1933. These securities are considered restricted, but liquid and may be resold in transactions exempt from registration. At December 31, 2023, the aggregate market value of these securities amounted to $404,092 or 0.1% of net assets. |
| (d) | | Affiliated investments. |
| (e) | | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
| (f) | | The rate shown represents the 7-day yield as of period end. |
| (g) | | One contract relates to 10 shares. |
| (h) | | One contract relates to 1000 shares. |
| (i) | | One contract relates to 100 shares. |
Currency Abbreviations:
AUD—Australian Dollar
CAD—Canadian Dollar
CHF—Swiss Franc
CNH—Chinese Yuan Renminbi (Offshore)
EUR—Euro
GBP—Great British Pound
JPY—Japanese Yen
NOK—Norwegian Krone
NZD—New Zealand Dollar
SEK—Swedish Krona
USD—United States Dollar
Glossary:
ADR—American Depositary Receipt
BTP—Buoni del Tesoro Poliennali
CBT—Chicago Board of Trade
CME—Chicago Mercantile Exchange
EAFE—Europe, Australia, and Far East
ETS—Emission Trading Scheme
FTSE—Financial Times Stock Exchange
MSCI—Morgan Stanley Capital International
OAT—Obligations Assimilables du Trésor
OMXS—Stockholm Stock Exchange
OSE—Osaka Securities Exchange
REG—Registered Shares
REIT—Real Estate Investment Trust
SPI—Share Price Index
TOPIX—Tokyo Price Index
TSX—Toronto Stock Exchange
See notes to financial statements.
27
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| STATEMENT OF ASSETS & LIABILITIES | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
ASSETS | | | | |
Investments in securities, at value | | | | |
Unaffiliated issuers (cost $563,368,161) | | $ | 606,881,623 | (a) |
Affiliated issuers (cost $141,551,148—including investment of cash collateral for securities loaned of $1,939,050) | | | 141,551,148 | |
Cash | | | 2,225 | |
Cash collateral due from broker | | | 15,480,760 | |
Foreign currencies, at value (cost $18,371,850) | | | 19,122,372 | |
Unaffiliated dividends receivable | | | 858,375 | |
Affiliated dividends receivable | | | 636,344 | |
Unrealized appreciation on forward currency exchange contracts | | | 268,356 | |
Receivable for capital stock sold | | | 55,747 | |
Receivable for investment securities sold | | | 31,161 | |
Receivable due from Adviser | | | 19,473 | |
| | | | |
Total assets | | | 784,907,584 | |
| | | | |
LIABILITIES | | | | |
Options written, at value (premiums received $280,566) | | | 92,382 | |
Unrealized depreciation on forward currency exchange contracts | | | 5,466,477 | |
Payable for collateral received on securities loaned | | | 1,939,050 | |
Payable for variation margin on futures | | | 430,003 | |
Payable for capital stock redeemed | | | 384,196 | |
Advisory fee payable | | | 306,409 | |
Distribution fee payable | | | 163,149 | |
Administrative fee payable | | | 24,258 | |
Transfer Agent fee payable | | | 150 | |
Accrued expenses | | | 505,293 | |
| | | | |
Total liabilities | | | 9,311,367 | |
| | | | |
NET ASSETS | | $ | 775,596,217 | |
| | | | |
COMPOSITION OF NET ASSETS | | | | |
Capital stock, at par | | $ | 67,682 | |
Additional paid-in capital | | | 787,899,530 | |
Accumulated loss | | | (12,370,995 | ) |
| | | | |
NET ASSETS | | $ | 775,596,217 | |
| | | | |
Net Asset Value Per Share—1 billion shares of capital stock authorized, $.001 par value
| | | | | | | | | | | | |
| Class | | Net Assets | | | Shares
Outstanding | | | Net Asset
Value | |
| | | |
| B | | $ | 775,596,217 | | | | 67,681,793 | | | $ | 11.46 | |
| (a) | | Includes securities on loan with a value of $6,394,233 (see Note E). |
See notes to financial statements.
28
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| STATEMENT OF OPERATIONS | | |
| |
| Year Ended December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
INVESTMENT INCOME | | | | |
Dividends | | | | |
Unaffiliated issuers (net of foreign taxes withheld of $492,248) | | $ | 11,216,128 | |
Affiliated issuers | | | 9,952,447 | |
Interest | | | 456,218 | |
Securities lending income | | | 23,379 | |
| | | | |
| | | 21,648,172 | |
| | | | |
EXPENSES | | | | |
Advisory fee (see Note B) | | | 3,703,880 | |
Distribution fee—Class B | | | 1,974,350 | |
Transfer agency—Class B | | | 1,808 | |
Custody and accounting | | | 226,982 | |
Administrative | | | 96,736 | |
Audit and tax | | | 88,708 | |
Legal | | | 73,973 | |
Printing | | | 28,810 | |
Directors’ fees | | | 26,648 | |
Miscellaneous | | | 78,434 | |
| | | | |
Total expenses | | | 6,300,329 | |
Less: expenses waived and reimbursed by the Adviser (see Notes B & E) | | | (252,052 | ) |
| | | | |
Net expenses | | | 6,048,277 | |
| | | | |
Net investment income | | | 15,599,895 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS | | | | |
Net realized gain (loss) on: | | | | |
Investment transactions | | | (14,361,547 | ) |
Forward currency exchange contracts | | | 630,797 | |
Futures | | | (18,561,885 | ) |
Options written | | | 6,880,789 | |
Foreign currency transactions | | | (833,778 | ) |
Net change in unrealized appreciation (depreciation) of: | | | | |
Investments | | | 109,143,484 | |
Forward currency exchange contracts | | | (1,660,625 | ) |
Futures | | | 10,707,185 | |
Options written | | | 113,596 | |
Foreign currency denominated assets and liabilities | | | 864,013 | |
| | | | |
Net gain on investment and foreign currency transactions | | | 92,922,029 | |
| | | | |
NET INCREASE IN NET ASSETS FROM OPERATIONS | | $ | 108,521,924 | |
| | | | |
See notes to financial statements.
29
| | |
| |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| |
| STATEMENT OF CHANGES IN NET ASSETS | | AB Variable Products Series Fund |
| | | | | | | | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | | | | | | | | |
Net investment income | | $ | 15,599,895 | | | $ | 8,260,192 | |
Net realized loss on investment transactions and foreign currency transactions | | | (26,245,624 | ) | | | (37,872,269 | ) |
Net change in unrealized appreciation (depreciation) of investments and foreign currency denominated assets and liabilities | | | 119,167,653 | | | | (115,982,567 | ) |
Contributions from Affiliates (see Note B) | | | –0 | – | | | 242,720 | |
| | | | | | | | |
Net increase (decrease) in net assets from operations | | | 108,521,924 | | | | (145,351,924 | ) |
Distributions to Shareholders | | | | | | | | |
Class A | | | (294 | ) | | | (400 | ) |
Class B | | | (16,918,128 | ) | | | (27,864,579 | ) |
CAPITAL STOCK TRANSACTIONS | | | | | | | | |
Net decrease | | | (115,408,919 | ) | | | (93,224,440 | ) |
| | | | | | | | |
Total decrease | | | (23,805,417 | ) | | | (266,441,343 | ) |
NET ASSETS | | | | | | | | |
Beginning of period | | | 799,401,634 | | | | 1,065,842,977 | |
| | | | | | | | |
End of period | | $ | 775,596,217 | | | $ | 799,401,634 | |
| | | | | | | | |
See notes to financial statements.
30
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
NOTE A: Significant Accounting Policies
The AB Global Risk Allocation—Moderate Portfolio (the “Portfolio”) is a series of AB Variable Products Series Fund, Inc. (the “Fund”). The Portfolio’s investment objective is to generate income and price appreciation without assuming what AllianceBernstein L.P. (the “Adviser”) considers undue risk. The Portfolio is diversified as defined under the Investment Company Act of 1940 (the “1940 Act”). The Fund was incorporated in the State of Maryland as an open-end series investment company. The Fund offers 10 separately managed pools of assets which have differing investment objectives and policies. The Portfolio offers Class B shares. Effective December 1, 2023, Class A shares of the Portfolio were liquidated. 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 U.S. generally accepted accounting principles (“U.S. GAAP”), 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 Portfolio is an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Portfolio.
1. Security Valuation
Portfolio securities are valued at market value determined on the basis of market quotations or, if market quotations are not readily available or are unreliable, at “fair value” as determined in accordance with procedures approved by and under the oversight of the Fund’s Board of Directors (the “Board”). Pursuant to these procedures, the Adviser serves as the Portfolio’s valuation designee pursuant to Rule 2a-5 of the 1940 Act. In this capacity, the Adviser is responsible, among other things, for making all fair value determinations relating to the Portfolio’s portfolio investments, subject to the Board’s oversight.
In general, the market values of securities which are readily available and deemed reliable are determined as follows: securities listed on a national securities exchange (other than securities listed on the NASDAQ Stock Market, Inc. (“NASDAQ”)) 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 last traded price from the previous day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price; listed or over the counter (“OTC”) market put or call options are valued at the mid level between the current bid and ask prices. If either a current bid or current ask price is unavailable, the Adviser will have discretion to determine the best valuation (e.g., last trade price in the case of listed options); open futures 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 valuation, the last available closing settlement price is used; U.S. Government securities and any other debt instruments having 60 days or less remaining until maturity are generally valued at market by an independent pricing vendor, if a market price is available. If a market price is not available, the securities are valued at amortized cost. This methodology is commonly used for short term securities that have an original maturity of 60 days or less, as well as short term securities that had an original term to maturity that exceeded 60 days. In instances when amortized cost is utilized, the Valuation Committee (the “Committee”) must reasonably conclude that the utilization of amortized cost is approximately the same as the fair value of the security. Factors the Committee will consider include, but are not limited to, an impairment of the creditworthiness of the issuer or material changes in interest rates. 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 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. Swaps and other derivatives are valued daily, primarily using independent pricing services, independent pricing models using market inputs, as well as third party broker-dealers or counterparties. Open-end mutual funds are valued at the closing net asset value per share, while exchange traded funds are valued at the closing market price per share.
31
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value as deemed appropriate by the Adviser. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer’s financial statements or other available documents. In addition, the Portfolio may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Portfolio values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Portfolio generally values many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available.
2. Fair Value Measurements
In accordance with U.S. GAAP regarding fair value measurements, fair value is defined as the price that the Portfolio would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability (including those valued based on their market values as described in Note A.1 above). Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Portfolio. Unobservable inputs reflect the Portfolio’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
| | • | | Level 1—quoted prices in active markets for identical investments |
| | • | | Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| | • | | Level 3—significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of investments) |
The fair value of debt instruments, such as bonds, and over-the-counter derivatives is generally based on market price quotations, recently executed market transactions (where observable) or industry recognized modeling techniques and are generally classified as Level 2. Pricing vendor inputs to Level 2 valuations may include quoted prices for similar investments in active markets, interest rate curves, coupon rates, currency rates, yield curves, option adjusted spreads, default rates, credit spreads and other unique security features in order to estimate the relevant cash flows which are then discounted to calculate fair values. If these inputs are unobservable and significant to the fair value, these investments will be classified as Level 3.
Where readily available market prices or relevant bid prices are not available for certain equity investments, such investments may be valued based on similar publicly traded investments, movements in relevant indices since last available prices or based upon underlying company fundamentals and comparable company data (such as multiples to earnings or other multiples to equity). Where an investment is valued using an observable input, such as another publicly traded security, the investment will be classified as Level 2. If management determines that an adjustment is appropriate based on restrictions on resale, illiquidity or uncertainty, and such adjustment is a significant component of the valuation, the investment will be classified as Level 3. An investment will also be classified as Level 3 where management uses company fundamentals and other significant inputs to determine the valuation.
Options are valued using market-based inputs to models, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency, where such inputs and models are available. Alternatively, the values may be obtained through unobservable management determined inputs and/or management’s proprietary models. Where models are used, the selection of a particular model to value an option depends upon the contractual terms of, and specific risks inherent in, the option as well as the availability of pricing information in the market. Valuation models require a variety of inputs, including contractual terms, market prices, measures of volatility and correlations of such inputs. Exchange traded options generally will be classified as Level 2. For options that do not trade on an exchange but trade in liquid markets, inputs can generally be verified and model selection does not involve significant management judgment. Options are classified within Level 2 on the fair value hierarchy when all of the significant inputs can be corroborated to market evidence. Otherwise such instruments are classified as Level 3.
32
| | |
| |
| | | AB Variable Products Series Fund |
Other fixed income investments, including non-U.S. government and corporate debt, are generally valued using quoted market prices, if available, which are typically impacted by current interest rates, maturity dates and any perceived credit risk of the issuer. Additionally, in the absence of quoted market prices, these inputs are used by pricing vendors to derive a valuation based upon industry or proprietary models which incorporate issuer specific data with relevant yield/spread comparisons with more widely quoted bonds with similar key characteristics. Those investments for which there are observable inputs are classified as Level 2. Where the inputs are not observable, the investments are classified as Level 3.
The following table summarizes the valuation of the Portfolio’s investments by the above fair value hierarchy levels as of December 31, 2023:
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Common Stocks: | | | | | | | | | | | | | | | | |
Information Technology | | $ | 125,117,630 | | | $ | 14,691,730 | | | $ | –0 | – | | $ | 139,809,360 | |
Financials | | | 56,109,591 | | | | 32,904,922 | | | | –0 | – | | | 89,014,513 | |
Health Care | | | 54,859,737 | | | | 22,034,251 | | | | –0 | – | | | 76,893,988 | |
Consumer Discretionary | | | 47,401,244 | | | | 20,071,924 | | | | –0 | – | | | 67,473,168 | |
Industrials | | | 38,841,123 | | | | 27,586,468 | | | | –0 | – | | | 66,427,591 | |
Communication Services | | | 37,481,073 | | | | 6,734,635 | | | | –0 | – | | | 44,215,708 | |
Consumer Staples | | | 26,826,088 | | | | 16,135,489 | | | | –0 | – | | | 42,961,577 | |
Energy | | | 16,801,351 | | | | 7,532,305 | | | | –0 | – | | | 24,333,656 | |
Materials | | | 10,486,732 | | | | 13,672,544 | | | | –0 | – | | | 24,159,276 | |
Utilities | | | 10,140,541 | | | | 5,983,321 | | | | –0 | – | | | 16,123,862 | |
Real Estate | | | 10,881,151 | | | | 4,218,630 | | | | –0 | – | | | 15,099,781 | |
Purchased Options—Puts | | | –0 | – | | | 369,143 | | | | –0 | – | | | 369,143 | |
Short-Term Investments | | | 139,612,098 | | | | –0 | – | | | –0 | – | | | 139,612,098 | |
Investments of Cash Collateral for Securities Loaned in Affiliated Money Market Fund | | | 1,939,050 | | | | –0 | – | | | –0 | – | | | 1,939,050 | |
| | | | | | | | | | | | | | | | |
Total Investments in Securities | | | 576,497,409 | | | | 171,935,362 | | | | –0 | – | | | 748,432,771 | |
Other Financial Instruments(a): | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Futures | | | 9,776,880 | | | | –0 | – | | | –0 | – | | | 9,776,880 | (b) |
Forward Currency Exchange Contracts | | | –0 | – | | | 268,356 | | | | –0 | – | | | 268,356 | |
Liabilities: | | | | | | | | | | | | | | | | |
Futures | | | (2,239,589 | ) | | | –0 | – | | | –0 | – | | | (2,239,589 | )(b) |
Forward Currency Exchange Contracts | | | –0 | – | | | (5,466,477 | ) | | | –0 | – | | | (5,466,477 | ) |
Put Written Options | | | –0 | – | | | (92,382 | ) | | | –0 | – | | | (92,382 | ) |
| | | | | | | | | | | | | | | | |
Total | | $ | 584,034,700 | | | $ | 166,644,859 | | | $ | –0 | – | | $ | 750,679,559 | |
| | | | | | | | | | | | | | | | |
| (a) | | Other financial instruments include reverse repurchase agreements and derivative instruments, such as futures, forwards and swaps. Derivative instruments are valued at the unrealized appreciation (depreciation) on the instrument. Other financial instruments may also include swaps with upfront premiums, written options and written swaptions which are valued at market value. |
| (b) | | Only variation margin receivable (payable) at period end is reported within the statement of assets and liabilities. This amount reflects cumulative unrealized appreciation (depreciation) on futures and centrally cleared swaps as reported in the portfolio of investments. Where applicable, centrally cleared swaps with upfront premiums are presented here at market value. |
3. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under forward currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and ask 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, holding of foreign currencies, currency gains or losses realized between the trade
33
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
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 foreign currency denominated assets and liabilities.
4. 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. The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned.
In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, management has analyzed the Portfolio’s tax positions taken or expected to be taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Portfolio’s financial statements.
5. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Portfolio is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the date the securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. Non-cash dividends, if any, are recorded on the ex-dividend date at the fair value of the securities received. The Portfolio amortizes premiums and accretes discounts as adjustments to interest income. The Portfolio accounts for distributions received from REIT investments or from regulated investment companies as dividend income, realized gain, or return of capital based on information provided by the REIT or the investment company.
6. Class Allocations
All income earned and expenses incurred by the Portfolio 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 for class specific expenses which are allocated to the respective class. Expenses of the Fund are charged proportionately to each portfolio or based on other appropriate methods. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets.
7. Dividends and Distributions
Dividends and distributions to shareholders, if any, 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 U.S. GAAP. 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 the investment advisory agreement, the Portfolio pays the Adviser an advisory fee at an annual rate of .60% of the first $100 million, .45% of the excess over $100 million up to $1 billion and .40% of the excess over $1 billion of the Portfolio’s average daily net assets. The fee is accrued daily and paid monthly. Prior to January 1, 2020, the Portfolio paid the Adviser an advisory fee at an annual rate of .60% of the Portfolio’s average daily net assets. The Adviser has agreed to waive its fees and bear certain expenses, to the extent necessary to limit total operating expenses (excluding interest expense, taxes, extraordinary expenses, expenses associated with securities sold short, and brokerage commissions and other transaction costs), inclusive of the Portfolio’s proportionate share of fees and expenses of registered investment companies or series thereof in which the Portfolio invests (“Acquired Fund Expenses”) on an annual basis (the “Expense Caps”) to 1.00% of daily average net assets for Class B. The Expense Caps may not be terminated by the Adviser before May 1, 2024. For the year ended December 31, 2023, there were no such operating expenses waived by the Adviser. For the year ended December 31, 2023, such waiver for Acquired Fund Expenses for both affiliated and unaffiliated underlying portfolios amounted to $251,109 and $0, respectively.
34
| | |
| |
| | | AB Variable Products Series Fund |
A summary of the Portfolio’s transactions in AB mutual funds for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | |
Portfolio | | Market Value
12/31/22
(000) | | | Purchases
at Cost
(000) | | | Sales
Proceeds
(000) | | | Market Value
12/31/23
(000) | | | Dividend
Income
(000) | |
AB Government Money Market Portfolio | | $ | 244,271 | | | $ | 100,135 | | | $ | 204,794 | | | $ | 139,612 | | | $ | 9,952 | |
AB Government Money Market Portfolio* | | | 64 | | | | 20,472 | | | | 18,597 | | | | 1,939 | | | | 5 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | $ | 141,551 | | | $ | 9,957 | |
| | | | | | | | | | | | | | | | | | | | |
| * | | Investments of cash collateral for securities lending transactions (see Note E). |
During the year ended December 31, 2022, the Adviser reimbursed the Portfolio $242,720 for trading losses incurred due to a trade entry error.
Pursuant to the investment advisory agreement, the Portfolio may reimburse the Adviser for certain legal and accounting services provided to the Portfolio by the Adviser. For the year ended December 31, 2023, the reimbursement for such services amounted to $96,736.
The Portfolio compensates AllianceBernstein Investor Services, Inc. (“ABIS”), 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 retained by ABIS amounted to $1,800 for the year ended December 31, 2023.
NOTE C: Distribution Plan
The Portfolio has adopted a Distribution Plan (the “Plan”) for Class B shares pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Portfolio pays distribution and servicing fees to AllianceBernstein Investments, Inc. (the “Distributor”), 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 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 or 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 year ended December 31, 2023 were as follows:
| | | | | | | | |
| | | Purchases | | | Sales | |
Investment securities (excluding U.S. government securities) | | $ | 20,293,401 | | | $ | 17,768,892 | |
U.S. government securities | | | –0 | – | | | –0 | – |
The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation are as follows:
| | | | |
Cost | | $ | 705,608,590 | |
| | | | |
Gross unrealized appreciation | | $ | 104,426,829 | |
Gross unrealized depreciation | | | (60,572,440 | ) |
| | | | |
Net unrealized appreciation | | $ | 43,854,389 | |
| | | | |
35
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
1. Derivative Financial Instruments
The Portfolio may use derivatives in an effort to earn income and enhance returns, to replace more traditional direct investments, to obtain exposure to otherwise inaccessible markets (collectively, “investment purposes”), or to hedge or adjust the risk profile of its portfolio.
The principal types of derivatives utilized by the Portfolio, as well as the methods in which they may be used are:
The Portfolio may buy or sell futures for investment purposes or for the purpose of hedging its portfolio against adverse effects of potential movements in the market. The Portfolio bears the market risk that arises from changes in the value of these instruments and the imperfect correlation between movements in the price of the futures and movements in the price of the assets, reference rates or indices which they are designed to track. Among other things, the Portfolio may purchase or sell futures for foreign currencies or options thereon for non-hedging purposes as a means of making direct investment in foreign currencies, as described below under “Currency Transactions”.
At the time the Portfolio enters into futures, the Portfolio deposits and maintains as collateral an initial margin with the broker, as required by the exchange on which the transaction is effected. Such amount is shown as cash collateral due from broker on the statement of assets and liabilities. 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. The credit/counterparty risk for exchange-traded futures is generally less than privately negotiated futures, since the clearinghouse, which is the issuer or counterparty to each exchange-traded future, has robust risk mitigation standards, including the requirement to provide initial and variation margin. 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.
Use of long futures subjects the Portfolio to risk of loss in excess of the amounts shown on the statement of assets and liabilities, up to the notional value of the futures. Use of short futures subjects the Portfolio to unlimited risk of loss. Under some circumstances, futures exchanges may establish daily limits on the amount that the price of futures can vary from the previous day’s settlement price, which could effectively prevent liquidation of unfavorable positions.
During the year ended December 31, 2023, the Portfolio held futures for hedging and non-hedging purposes.
| | • | | Forward Currency Exchange Contracts |
The Portfolio may enter into forward currency exchange 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 sale commitments denominated in foreign currencies and for non-hedging purposes as a means of making direct investments in foreign currencies, as described below under “Currency Transactions”.
A forward currency exchange contract is a commitment to purchase or sell a foreign currency at 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 forward currency exchange contracts. Fluctuations in the value of open forward currency exchange contracts are recorded for financial reporting purposes as unrealized appreciation and/or depreciation by the Portfolio. 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.
During the year ended December 31, 2023, the Portfolio held forward currency exchange contracts for hedging and non-hedging purposes.
For hedging and investment purposes, the Portfolio may purchase and write (sell) put and call options on U.S. and foreign securities, including government securities, and foreign currencies that are traded on U.S. and foreign securities exchanges and over-the-counter markets. Among other things, the Portfolio may use options transactions for non-hedging purposes as a means of making direct investments in foreign currencies, as described below under “Currency Transactions” and may use options strategies involving the purchase and/or writing of various combinations of call and/or put options, for hedging and investment purposes.
36
| | |
| |
| | | AB 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 the premium and change in market value should the counterparty not perform under the contract. If a put or call purchased option by the Portfolio were permitted to expire without being sold or exercised, its premium would represent a loss to the Portfolio. Put and call purchased options 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 written option. The Portfolio’s maximum payment for written put options equates to the number of shares multiplied by the strike price. In certain circumstances maximum payout amounts may be partially offset by recovery values of the respective referenced assets and upfront premium received upon entering into the contract. Premiums received from written options which 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. 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 the written option by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value.
During the year ended December 31, 2023, the Portfolio held purchased options for hedging and non-hedging purposes.
During the year ended December 31, 2023, the Portfolio held written options for hedging and non-hedging purposes.
The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements (“ISDA Master Agreement”) with its OTC derivative contract counterparties in order to, among other things, reduce its credit risk to OTC counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the OTC counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default or termination. In the event of a default by an OTC counterparty, the return of collateral with market value in excess of the Portfolio’s net liability, held by the defaulting party, may be delayed or denied.
The Portfolio’s ISDA Master Agreements may contain provisions for early termination of OTC derivative transactions in the event the net assets of the Portfolio decline below specific levels (“net asset contingent features”). If these levels are triggered, the Portfolio’s OTC counterparty has the right to terminate such transaction and require the Portfolio to pay or receive a settlement amount in connection with the terminated transaction. If OTC derivatives were held at period end, please refer to netting arrangements by the OTC counterparty table below for additional details.
37
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
During the year ended December 31, 2023, the Portfolio had entered into the following derivatives:
| | | | | | | | | | | | |
| | | Asset Derivatives | | | Liability Derivatives | |
Derivative Type | | Statement of
Assets and Liabilities Location | | Fair Value | | | Statement of
Assets and Liabilities Location | | Fair Value | |
Interest rate contracts | | Receivable for variation margin on futures | | $ | 8,840,703 | * | | | | | | |
Equity contracts | | Receivable for variation margin on futures | | | 936,177 | * | | Payable for variation margin on futures | | $ | 2,239,589 | * |
| | | | |
Foreign currency contracts | | Unrealized appreciation on forward currency exchange contracts | | | 268,356 | | | Unrealized depreciation on forward currency exchange contracts | | | 5,466,477 | |
| | | | |
Equity contracts | | Investments in securities, at value | | | 369,143 | | | | | | | |
Equity contracts | | | | | | | | Options written, at value | | | 92,382 | |
| | | | | | | | | | | | |
Total | | | | $ | 10,414,379 | | | | | $ | 7,798,448 | |
| | | | | | | | | | | | |
| * | | Only variation margin receivable/payable at period end is reported within the statement of assets and liabilities. This amount reflects cumulative unrealized appreciation (depreciation) on futures and centrally cleared swaps as reported in the portfolio of investments. |
| | | | | | | | | | |
Derivative Type | | Location of Gain or (Loss) on
Derivatives Within Statement of Operations | | Realized Gain or
(Loss) on
Derivatives | | | Change in Unrealized
Appreciation or
(Depreciation) | |
Interest rate contracts | | Net realized gain (loss) on futures; Net change in unrealized appreciation (depreciation) of futures | | $ | (10,425,618) | | | $ | 12,978,688 | |
| | | |
Equity contracts | | Net realized gain (loss) on futures; Net change in unrealized appreciation (depreciation) of futures | | | (8,136,267 | ) | | | (2,271,503 | ) |
| | | |
Foreign currency contracts | | Net realized gain (loss) on forward currency exchange contracts; Net change in unrealized appreciation (depreciation) of forward currency exchange contracts | | | 630,797 | | | | (1,660,625 | ) |
| | | |
Equity contracts | | Net realized gain (loss) on investment transactions; Net change in unrealized appreciation (depreciation) of investments | | | (11,033,705 | ) | | | (1,267,529 | ) |
| | | |
Equity contracts | | Net realized gain (loss) on options written; Net change in unrealized appreciation (depreciation) of options written | | | 6,880,789 | | | | 113,596 | |
| | | | | | | | | | |
Total | | | | $ | (22,084,004 | ) | | $ | 7,892,627 | |
| | | | | | | | | | |
38
| | |
| |
| | | AB Variable Products Series Fund |
The following table represents the average monthly volume of the Portfolio’s derivative transactions during the year ended December 31, 2023:
| | | | |
Futures: | | | | |
Average notional amount of buy contracts | | $ | 280,699,894 | |
Average notional amount of sale contracts | | $ | 82,860,125 | |
Forward Currency Exchange Contracts: | |
Average principal amount of buy contracts | | $ | 16,242,113 | (a) |
Average principal amount of sale contracts | | $ | 135,221,928 | |
Purchased Options: | |
Average notional amount | | $ | 160,510,557 | |
Options Written: | |
Average notional amount | | $ | 164,838,466 | |
| (a) | | Positions were open for eleven months during the year. |
For financial reporting purposes, the Portfolio does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the statement of assets and liabilities.
All OTC derivatives held at period end were subject to netting arrangements. The following table presents the Portfolio’s derivative assets and liabilities by OTC counterparty net of amounts available for offset under ISDA Master Agreements (“MA”) and net of the related collateral received/pledged by the Portfolio as of December 31, 2023. Exchange-traded derivatives and centrally cleared swaps are not subject to netting arrangements and as such are excluded from the table.
| | | | | | | | | | | | | | | | | | | | |
Counterparty | | Derivative
Assets Subject
to a MA | | | Derivatives
Available for
Offset | | | Cash Collateral
Received* | | | Security Collateral
Received* | | | Net Amount of
Derivative
Assets | |
Deutsche Bank AG | | $ | 127,306 | | | $ | (127,306 | ) | | $ | –0 | – | | $ | –0 | – | | $ | –0 | – |
HSBC Bank USA | | | 81,567 | | | | –0 | – | | | –0 | – | | | –0 | – | | | 81,567 | |
Morgan Stanley Capital Services, Inc. | | | 59,483 | | | | (59,483 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 268,356 | | | $ | (186,789 | ) | | $ | –0 | – | | $ | –0 | – | | $ | 81,567 | ^ |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Counterparty | | Derivative
Liabilities Subject
to a MA | | | Derivatives
Available for
Offset | | | Cash Collateral
Pledged* | | | Security Collateral
Pledged* | | | Net Amount of
Derivative
Liabilities | |
Bank of America, NA | | $ | 3,190,635 | | | $ | –0 | – | | $ | –0 | – | | $ | –0 | – | | $ | 3,190,635 | |
Bank of New York (The) | | | 27,187 | | | | –0 | – | | | –0 | – | | | –0 | – | | | 27,187 | |
Deutsche Bank AG | | | 725,649 | | | | (127,306 | ) | | | –0 | – | | | –0 | – | | | 598,343 | |
Goldman Sachs Bank USA | | | 147,002 | | | | –0 | – | | | –0 | – | | | –0 | – | | | 147,002 | |
Morgan Stanley Capital Services, Inc. | | | 1,343,334 | | | | (59,483 | ) | | | –0 | – | | | –0 | – | | | 1,283,851 | |
State Street Bank & Trust Co. | | | 32,670 | | | | –0 | – | | | –0 | – | | | –0 | – | | | 32,670 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 5,466,477 | | | $ | (186,789 | ) | | $ | –0 | – | | $ | –0 | – | | $ | 5,279,688 | ^ |
| | | | | | | | | | | | | | | | | | | | |
| * | | The actual collateral received/pledged may be more than the amount reported due to over-collateralization. |
| ^ | | Net amount represents the net receivable/payable that would be due from/to the counterparty in the event of default or termination. The net amount from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same counterparty. |
2. Currency Transactions
The Portfolio may invest in non-U.S. Dollar-denominated securities on a currency hedged or unhedged basis. The Portfolio may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and other options. The Portfolio may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Portfolio and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Portfolio may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).
39
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
NOTE E: Securities Lending
The Portfolio may enter into securities lending transactions. Under the Portfolio’s securities lending program, all loans of securities will be collateralized continually by cash collateral and/or non-cash collateral. Non-cash collateral will include only securities issued or guaranteed by the U.S. government or its agencies or instrumentalities. If the Portfolio cannot sell or repledge any non-cash collateral, such collateral will not be reflected in the portfolio of investments. If a loan is collateralized by cash, the Portfolio will be compensated for the loan from a portion of the net return from the income earned on cash collateral after a rebate is paid to the borrower (in some cases, this rebate may be a “negative rebate” or fee paid by the borrower to the Portfolio in connection with the loan), and payments are made for fees of the securities lending agent and for certain other administrative expenses. If the Portfolio receives non-cash collateral, the Portfolio will receive a fee from the borrower generally equal to a negotiated percentage of the market value of the loaned securities. The Portfolio will have the right to call a loan and obtain the securities loaned at any time on notice to the borrower within the normal and customary settlement time for the securities. While the securities are on loan, the borrower is obligated to pay the Portfolio amounts equal to any dividend income or other distributions from the securities; however, these distributions will not be afforded the same preferential tax treatment as qualified dividends. The Portfolio will not be able to exercise voting rights with respect to any securities during the existence of a loan, but will have the right to regain ownership of loaned securities in order to exercise voting or other ownership rights. Collateral received and securities loaned are marked to market daily to ensure that the securities loaned are secured by collateral. The lending agent currently invests the cash collateral received in AB Government Money Market Portfolio, an eligible money market vehicle, in accordance with the investment restrictions of the Portfolio, and as approved by the Board. The collateral received on securities loaned is recorded as an asset as well as a corresponding liability in the statement of assets and liabilities. The collateral will be adjusted the next business day to maintain the required collateral amount. The amounts of securities lending income from the borrowers and AB Government Money Market Portfolio are reflected in the statement of operations. When the Portfolio earns net securities lending income from AB Government Money Market Portfolio, the income is inclusive of a rebate expense paid to the borrower. In connection with the cash collateral investment by the Portfolio in AB Government Money Market Portfolio, the Adviser has agreed to waive a portion of the Portfolio’s share of the advisory fees of AB Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. When the Portfolio lends securities, its investment performance will continue to reflect changes in the value of the securities loaned. A principal risk of lending portfolio securities is that the borrower may fail to return the loaned securities upon termination of the loan and that the collateral will not be sufficient to replace the loaned securities. The lending agent has agreed to indemnify the Portfolio in the case of default of any securities borrower.
A summary of the Portfolio’s transactions surrounding securities lending for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | | | |
Market Value of
Securities on Loan* | | | Cash Collateral* | | | Market Value of
Non-Cash
Collateral* | | | Income from
Borrowers | | | AB Government Money Market
Portfolio | |
| | Income Earned | | | Advisory Fee
Waived | |
| $ | 6,394,233 | | | $ | 1,939,050 | | | $ | 4,875,901 | | | $ | 18,832 | | | $ | 4,547 | | | $ | 943 | |
| * | | As of December 31, 2023. |
40
| | |
| |
| | | AB Variable Products Series Fund |
NOTE F: Capital Stock
Each class consists of 500,000,000 authorized shares. Transactions in capital shares for each class were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | SHARES | | | | | | AMOUNT | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | | | | | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
Class A | | | | | | | | | | | | | | | | | | | | |
Shares redeemed | | | (1,100 | ) | | | –0 | – | | | | | | $ | (12,328 | ) | | $ | –0 | – |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (1,100 | ) | | | –0 | – | | | | | | $ | (12,328 | ) | | $ | –0 | – |
| | | | | | | | | | | | | | | | | | | | |
Class B | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 962,162 | | | | 1,710,854 | | | | | | | $ | 10,335,729 | | | $ | 18,775,444 | |
Shares issued on reinvestment of dividends and distributions | | | 1,554,975 | | | | 2,584,840 | | | | | | | | 16,918,128 | | | | 27,864,579 | |
Shares redeemed | | | (13,233,973 | ) | | | (12,899,724 | ) | | | | | | | (142,650,448 | ) | | | (139,864,463 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net decrease | | | (10,716,836 | ) | | | (8,604,030 | ) | | | | | | $ | (115,396,591 | ) | | $ | (93,224,440 | ) |
| | | | | | | | | | | | | | | | | | | | |
At December 31, 2023, a shareholder of the Portfolio owned 97% of the Portfolio’s outstanding shares. Significant transactions by such shareholder, if any, may impact the Portfolio’s performance.
NOTE G: Risks Involved in Investing in the Portfolio
Market Risk—The value of the Portfolio’s investments will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Allocation Risk—The allocation of investments among asset classes may have a significant effect on the Portfolio’s net asset value, or NAV, when the asset classes in which the Portfolio has invested more heavily perform worse than the asset classes invested in less heavily.
Interest-Rate Risk—Changes in interest rates will affect the value of investments in fixed-income securities. When interest rates rise, the value of existing investments in fixed-income securities tends to fall and this decrease in value may not be offset by higher income from new investments. Interest-rate risk is generally greater for fixed-income securities with longer maturities or durations. The Portfolio may be subject to a greater risk of rising interest rates than would normally be the case due to the recent end of a period of historically low rates and the effects of potential central bank monetary policy, and government fiscal policy, initiatives and resulting market reactions to those initiatives.
Credit Risk—An issuer or guarantor of a fixed-income security, or the counterparty to a derivatives or other contract, may be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. The issuer or guarantor may default, causing a loss of the full principal amount of a security and accrued interest. The degree of risk for a particular security may be reflected in its credit rating. There is the possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security.
High Yield Securities Risk—Investments in fixed-income securities with ratings below investment grade (commonly known as “junk bonds”) tend to have a higher probability that an issuer will default or fail to meet its payment obligations. These securities may be subject to greater price volatility due to such factors as specific corporate developments, interest rate sensitivity and negative perceptions of the junk bond market generally, and may be more difficult to trade than other types of securities.
Foreign (Non-U.S.) Risk—Investments in securities of non-U.S. issuers may involve more risk than those of U.S. issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
Currency Risk—Fluctuations in currency exchange rates may negatively affect the value of the Portfolio’s investments or reduce its returns.
41
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
Investment in Other Investment Companies Risk—As with other investments, investments in other investment companies, including ETFs, are subject to market and selection risk. In addition, Contractholders of the Portfolio bear both their proportionate share of expenses in the Portfolio (including management fees) and, indirectly, the expenses of the investment companies in which the Portfolio invests (to the extent these expenses are not waived or reimbursed by the Adviser).
Derivatives Risk—Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
Leverage Risk—When the Portfolio borrows money or otherwise leverages its investments, its performance may be volatile because leverage tends to exaggerate the effect of any increase or decrease in the value of the Portfolio’s investments. The Portfolio may create leverage through the use of reverse repurchase arrangements, forward currency exchange contracts, forward commitments, dollar rolls or futures or by borrowing money. The use of other types of derivative instruments by the Portfolio, such as options and swaps, may also result in a form of leverage. Leverage may result in higher returns to the Portfolio than if the Portfolio were not leveraged, but may also adversely affect returns, particularly if the market is declining.
Illiquid Investments Risk—Illiquid investments risk exists when certain investments are or become difficult to purchase or sell. Difficulty in selling such investments may result in sales at disadvantageous prices affecting the value of your investment in the Portfolio. Causes of illiquid investments risk may include low trading volumes and large positions. Foreign fixed-income securities may have more illiquid investments risk because secondary trading markets for these securities may be smaller and less well-developed and the securities may trade less frequently. Illiquid investments risk may be higher in a rising interest rate environment, when the value and liquidity of fixed-income securities generally decline.
LIBOR Replacement Risk—The Fund may be exposed to debt securities, derivatives or other financial instruments that recently transitioned from the London Interbank Offered Rate, or “LIBOR,” as a “benchmark” or “reference rate” for various interest rate calculations. LIBOR’s administrator, ICE Benchmark Administration, ceased publishing most LIBOR settings (including some U.S. LIBOR settings) by the end of 2021 and the remaining (and most widely used) U.S. Dollar LIBOR settings after June 30, 2023. The United Kingdom Financial Conduct Authority, which regulates LIBOR, will permit the use of synthetic U.S. Dollar LIBOR rates for non-U.S. contracts through September 30, 2024, but any such rates would be considered non-representative of the underlying market. Since 2018 the Federal Reserve Bank of New York has published the Secured Overnight Financing Rate (referred to as SOFR), which is intended to replace U.S. Dollar LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities in the repurchase agreement (repo) market. There is no assurance that the composition or characteristics of SOFR or any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that the market for SOFR-linked financial instruments will have the same volume or liquidity as did the market for LIBOR-linked financial instruments prior to LIBOR’s discontinuance or unavailability. Neither the long-term effects of the LIBOR transition process nor its ultimate success can yet be known.
Indemnification Risk—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. Therefore, the Portfolio has not accrued any liability in connection with these indemnification provisions.
Management Risk—The Portfolio is subject to management risk because it is an actively-managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
NOTE H: Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $325 million revolving credit facility (the “Facility”) intended to provide short-term financing related to redemptions and other short term liquidity
42
| | |
| |
| | | AB Variable Products Series Fund |
requirements, subject to certain restrictions. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Portfolio did not utilize the Facility during the year ended December 31, 2023.
NOTE I: Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended December 31, 2023 and December 31, 2022 were as follows:
| | | | | | | | |
| | | 2023 | | | 2022 | |
Distributions paid from: | | | | | | | | |
Ordinary income | | $ | 16,918,422 | | | $ | 5,569,110 | |
Net long-term capital gains | | | –0 | – | | | 22,295,869 | |
| | | | | | | | |
Total taxable distributions paid | | $ | 16,918,422 | | | $ | 27,864,979 | |
| | | | | | | | |
As of December 31, 2023, the components of accumulated earnings (deficit) on a tax basis were as follows:
| | | | |
Undistributed ordinary income | | $ | 14,177,210 | |
Accumulated capital and other losses | | | (71,205,044 | )(a) |
Unrealized appreciation (depreciation) | | | 44,656,839 | (b) |
| | | | |
Total accumulated earnings (deficit) | | $ | (12,370,995 | ) |
| | | | |
| (a) | | As of December 31, 2023, the Portfolio had a net capital loss carryforward of $71,205,044. |
| (b) | | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable primarily to the recognition for tax purposes of unrealized gains/losses on certain derivative instruments, the tax treatment of passive foreign investment companies (PFICs), the tax deferral of losses on wash sales, and the tax treatment of partnership investments. |
For tax purposes, net realized capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses for an indefinite period, and such losses will retain their character as either short-term or long-term capital losses. As of December 31, 2023, the Portfolio had a net short-term capital loss carryforward of $28,591,281 and a net long-term capital loss carryforward of $42,613,763, which may be carried forward for an indefinite period.
During the current fiscal year, there were no permanent differences that resulted in adjustments to accumulated loss or additional paid-in capital.
NOTE J: Recent Accounting Pronouncements
In December 2022, the Financial Accounting Standards Board issued an Accounting Standards Update, ASU 2022-06, “Reference Rate Reform (Topic 848)—Deferral of the Sunset Date of Topic 848”. ASU 2022-06 is an amendment to ASU 2020-04, which provided optional guidance to ease the potential accounting burden due to the discontinuation of the LIBOR and other interbank-offered based reference rates and which was effective as of March 12, 2020 through December 31, 2022. ASU 2022-06 extends the effective period through December 31, 2024. Management is currently evaluating the impact, if any, of applying ASU 2022-06.
NOTE K: Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Portfolio’s financial statements through this date.
43
| | |
|
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| |
| FINANCIAL HIGHLIGHTS | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS B | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | | $10.20 | | | | $12.25 | | | | $10.94 | | | | $11.19 | | | | $9.72 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment income(a)(b) | | | .21 | | | | .10 | | | | .01 | | | | .00 | (c) | | | .08 | |
Net realized and unrealized gain (loss) on investment transactions and foreign currency transactions | | | 1.29 | | | | (1.80 | ) | | | 1.30 | | | | .23 | | | | 1.60 | |
Contributions from Affiliates | | | –0 | – | | | .00 | (c) | | | .00 | (c) | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 1.50 | | | | (1.70 | ) | | | 1.31 | | | | .23 | | | | 1.68 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Dividends and Distributions | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (.24 | ) | | | (.07 | ) | | | –0 | – | | | (.14 | ) | | | (.21 | ) |
Distributions from net realized gain on investment transactions | | | –0 | – | | | (.28 | ) | | | –0 | – | | | (.34 | ) | | | –0 | – |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (.24 | ) | | | (.35 | ) | | | –0 | – | | | (.48 | ) | | | (.21 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $11.46 | | | | $10.20 | | | | $12.25 | | | | $10.94 | | | | $11.19 | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset value(d) | | | 14.79 | % | | | (14.07 | )% | | | 11.97 | % | | | 2.45 | % | | | 17.32 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | | $775,596 | | | | $799,391 | | | | $1,065,829 | | | | $89,696 | | | | $95,350 | |
Ratio to average net assets of: | | | | | | | | | | | | | | | | | | | | |
Expenses, net of waivers/
reimbursements(e)(f)‡ | | | .77 | % | | | .75 | % | | | .75 | % | | | .94 | % | | | .94 | % |
Expenses, before waivers/
reimbursements(e)(f)‡ | | | .80 | % | | | .79 | % | | | .78 | % | | | 1.20 | % | | | 1.20 | % |
Net investment income(b) | | | 1.98 | % | | | .92 | % | | | .09 | % | | | .01 | % | | | .78 | % |
Portfolio turnover rate | | | 3 | % | | | 2 | % | | | 18 | % | | | 31 | % | | | 29 | % |
| | | | | | | | | | | | | | | | | | | | |
‡ Expense ratios exclude the estimated acquired fund fees of the affiliated/unaffiliated underlying | |
portfolios | | | .03 | % | | | .04 | % | | | .03 | % | | | .06 | % | | | .07 | % |
See footnote summary on page 45.
44
| | |
| |
| | | AB Variable Products Series Fund |
| (a) | | Based on average shares outstanding. |
| (b) | | Net of expenses waived/reimbursed by the Adviser. |
| (c) | | Amount is less than $.005. |
| (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 (i) insurance company’s separate account related expense charges and (ii) the deductions 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) | | In connection with the Portfolio’s investments in affiliated underlying portfolios, the Portfolio incurs no direct expenses, but bears proportionate shares of the fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated underlying portfolios. The Adviser has contractually agreed to waive its fees from the Portfolio in an amount equal to the Portfolio’s pro rata share of certain acquired fund fees and expenses, and for the years ended December 31, 2023, December 31, 2022, December 31, 2021, December 31, 2020 and December 31, 2019, such waiver amounted to .03%, .04%, .03%, .06% and .07%, respectively. |
| (f) | | The expense ratios presented below exclude interest/bank overdraft expense: |
| | | | | | | | | | | | | | | | | | | | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Class B | | | | | | | | | | | | | | | | | | | | |
Net of waivers/reimbursements | | | .77 | % | | | .75 | % | | | .75 | % | | | .94 | % | | | .93 | % |
Before waivers/reimbursements | | | .80 | % | | | .79 | % | | | .78 | % | | | 1.20 | % | | | 1.19 | % |
See notes to financial statements.
45
| | |
| | | |
| REPORT OF INDEPENDENT REGISTERED | | |
| |
| PUBLIC ACCOUNTING FIRM | | AB Variable Products Series Fund |
To the Shareholders and the Board of Directors of AB Global Risk Allocation—Moderate Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of AB Global Risk Allocation - Moderate Portfolio (the “Portfolio”) (one of the series constituting AB Variable Products Series Fund, Inc. (the “Fund”)), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Portfolio (one of the series constituting AB Variable Products Series Fund, Inc.) at December 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Portfolio’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers or others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the AB investment companies since 1968.
New York, New York
February 14, 2024
46
| | |
| | |
| | |
| |
| 2023 FEDERAL TAX INFORMATION (unaudited) | | AB Variable Products Series Fund |
For Federal income tax purposes, the following information is furnished with respect to the distributions paid by the Portfolio during the taxable year ended December 31, 2023. For corporate shareholders, 17.62% of dividends paid qualify for the dividends received deduction.
47
| | |
| | |
| GLOBAL RISK ALLOCATION— | | |
| |
| MODERATE PORTFOLIO | | AB Variable Products Series Fund |
| | |
| BOARD OF DIRECTORS | | |
Garry L. Moody(1), Chairman Jorge A. Bermudez(1) Michael J. Downey(1) Onur Erzan, President and
Chief Executive Officer
| | Nancy P. Jacklin(1) Jeanette W. Loeb(1) Carol C. McMullen(1) Marshall C. Turner, Jr.(1) Emilie D. Wrapp, Advisory Board Member |
|
|
|
|
| | |
| | |
| OFFICERS | | |
Daniel J. Loewy(2), Vice President Leon Zhu(2), Vice President Nancy E. Hay, Secretary Michael B. Reyes, Senior Vice President | | Stephen M. Woetzel, Treasurer and
Chief Financial Officer Phyllis J. Clarke, Controller Jennifer Friedland, Chief Compliance Officer |
| | |
| | |
CUSTODIANAND ACCOUNTING AGENT State Street Bank and Trust Company One Congress Street, Suite 1 Boston, MA 02114 | | INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP One Manhattan West New York, NY 10001 |
| | |
PRINCIPAL UNDERWRITER AllianceBernstein Investments, Inc. 501 Commerce Street Nashville, TN 37203 | | LEGAL COUNSEL Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 |
| | |
TRANSFER AGENT AllianceBernstein Investor Services, Inc. P.O. Box 786003 San Antonio, TX 78278 Toll-Free (800) 221-5672 | | |
| (1) | | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
| (2) | | The day-to-day management of, and investment decisions for, the Fund are made by the Adviser’s Quantitative Investment Team. Messrs. Loewy and Zhu are the investment professionals with the most significant responsibility for the day-to-day management of the Fund’s portfolio. |
48
| | |
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| |
| MANAGEMENT OF THE FUND | | AB Variable Products Series Fund |
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund’s Directors and Advisory Board Member is set forth below.
| | | | | | | | |
NAME, ADDRESS*, AGE, (YEAR FIRST ELECTED**) | | PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
| INTERESTED DIRECTOR | | | | | | |
| | | | | | | | |
Onur Erzan,# 1345 Avenue of the Americas New York, NY 10105 48 (2021) | | Senior Vice President of the Adviser**, Head of Global Client Group and Head of Private Wealth. He oversees AB’s entire private wealth management business and third-party institutional and retail franchise, where he is responsible for all client services, sales and marketing, as well as product strategy, management and development worldwide. Director, President and Chief Executive Officer of the AB Mutual Funds as of April 1, 2021. He is also a member of the Equitable Holdings Management Committee. Prior to joining the firm in January 2021, he spent 19 years with McKinsey (management consulting firm), most recently as a senior partner and co-leader of its Wealth & Asset Management practice. In addition, he co-led McKinsey’s Banking & Securities Solutions (a portfolio of data, analytics, and digital assets and capabilities) globally. | | | 82 | | | None |
| | | | | | | | |
| DISINTERESTED DIRECTORS | | | | | | |
| | | | | | | | |
Garry L. Moody## Chairman of the Board 71 (2015) | | Private Investor since prior to 2019. Formerly, Partner, Deloitte & Touche LLP (1995–2008) where he held a number of senior positions, including Vice Chairman, and U.S. and Global Investment Management Practice Managing Partner; President, Fidelity Accounting and Custody Services Company (1993–1995), where he was responsible for accounting, pricing, custody and reporting for the Fidelity mutual funds; and Partner, Ernst & Young LLP (1975–1993), where he served as the National Director of Mutual Fund Tax Services and Managing Partner of its Chicago Office Tax department. He served as a member of the Investment Company Institute’s Board of Governors and the Independent Directors Council’s Governing Council from October 2019 through September 2023, where he also served as Chairman of the Governance Committee from October 2021 through September 2023. He is Chairman of the AB Funds and Chairman of the Independent Directors Committees since January 2023; he has served as a director or trustee since 2008, and served as Chairman of the Audit Committee of such funds from 2008 to February 2023. | | | 82 | | | None |
49
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*, AGE, (YEAR FIRST ELECTED**) | | PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
DISINTERESTED DIRECTORS (continued) | | | | | | |
| | | | | | | | |
Jorge A. Bermudez,## 72 (2020) | | Private Investor since prior to 2019. Formerly, Chief Risk Officer of Citigroup, Inc., a global financial services company, from November 2007 to March 2008; Chief Executive Officer of Citigroup’s Commercial Business Group in North America and Citibank Texas from 2005 to 2007; and a variety of other executive and leadership roles at various businesses within Citigroup prior to then; Chairman (2017–2018) of the Texas A&M Foundation Board of Trustees (Trustee 2014–2021) and Chairman of the Smart Grid Center Board at Texas A&M University since 2012; director of, among others, Citibank N.A. from 2005 to 2008, the Federal Reserve Bank of Dallas, Houston Branch from 2009 to 2011, the Federal Reserve Bank of Dallas from 2011 to 2017, and the Electric Reliability Council of Texas from 2010 to 2016; and Chair of the Audit Committee of the Board of Directors of Moody’s Corporation since December 2022. He has served as director or trustee of the AB Funds since January 2020. | | | 82 | | | Moody’s Corporation since April 2011 |
| | | | | | | | |
Michael J. Downey,## 80 (2015) | | Private Investor since prior to 2019. Formerly, Chairman of The Asia Pacific Fund, Inc. (registered investment company) from 2002 until January 2019. From 1987 until 1993, Chairman and CEO of Prudential Mutual Fund Management, director of the Prudential mutual funds, and member of the Executive Committee of Prudential Securities, Inc. He has served as a director or trustee of the AB Funds since 2005. | | | 82 | | | None |
| | | | | | | | |
Nancy P. Jacklin,## 75 (2015) | | Private Investor since prior to 2019. Professorial Lecturer at the Johns Hopkins School of Advanced International Studies (2008–2015). U.S. Executive Director of the International Monetary Fund (which is responsible for ensuring the stability of the international monetary system), (December 2002–May 2006); Partner, Clifford Chance (1992–2002); Sector Counsel, International Banking and Finance, and Associate General Counsel, Citicorp (1985–1992); Assistant General Counsel (International), Federal Reserve Board of Governors (1982–1985); and Attorney Advisor, U.S. Department of the Treasury (1973–1982). Member of the Bar of the District of Columbia and of New York; and member of the Council on Foreign Relations. She has served as a director or trustee of the AB Funds since 2006 and served as Chair of the Governance and Nominating Committees of the AB Funds from 2014 to August 2023. | | | 82 | | | None |
50
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*, AGE, (YEAR FIRST ELECTED**) | | PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
DISINTERESTED DIRECTORS (continued) | | | | | | |
| | | | | | | | |
Jeanette W. Loeb,## 71 (2020) | | Private Investor since prior to 2019. Director of New York City Center since 2005. Formerly, Chief Executive Officer of PetCareRx (e-commerce pet pharmacy) from 2002 to 2011 and 2015 to April 2023. She was a director of MidCap Financial Investment Corporation (business development company) from August 2011 to July 2023 and a director of AB Multi-Manager Alternative Fund (fund of hedge funds) from 2012 to 2018. Formerly, affiliated with Goldman Sachs Group, Inc. (financial services) from 1977 to 1994, including as a partner thereof from 1986 to 1994. She has served as director or trustee of the AB Funds since April 2020 and serves as Chair of the Governance and Nominating Committees of the AB Funds since August 2023. | | | 82 | | | None |
| | | | | | | | |
Carol C. McMullen,## 68 (2016) | | Private Investor and a member of the Advisory Board of Butcher Box (since 2018) and serves as Advisory Board Chair as of June 2023. Formerly, Managing Director of Slalom Consulting (consulting) from 2014 until July 2023; member, Mass General Brigham (formerly, Partners Healthcare) Investment Committee (2010-2019); Director of Norfolk & Dedham Group (mutual property and casualty insurance) from 2011 until November 2016; Director of Partners Community Physicians Organization (healthcare) from 2014 until December 2016; and Managing Director of The Crossland Group (consulting) from 2012 until 2013. She has held a number of senior positions in the asset and wealth management industries, including at Eastern Bank (where her roles included President of Eastern Wealth Management), Thomson Financial (Global Head of Sales for Investment Management), and Putnam Investments (where her roles included Chief Investment Officer, Core and Growth and Head of Global Investment Research). She has served on a number of private company and non-profit boards, and as a director or trustee of the AB Funds since June 2016 and serves as Chair of the Audit Committees of such funds since February 2023. | | | 82 | | | None |
51
| | |
| GLOBAL RISK ALLOCATION—MODERATE PORTFOLIO |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*, AGE, (YEAR FIRST ELECTED**) | | PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
DISINTERESTED DIRECTORS (continued) | | | | | | |
| | | | | | | | |
Marshall C. Turner, Jr.## 82 (2015) | | Private Investor since prior to 2019. He was a Director of Xilinx, Inc. (programmable logic semi-conductors and adaptable, intelligent computing) from 2007 through August 2020, and is a former director of 33 other companies and organizations. Former Chairman and CEO of Dupont Photomasks, Inc. (semi-conductor manufacturing equipment) from 2003 through 2006. He has extensive operating leadership and venture capital investing experience, including five interim or full-time CEO roles, and prior service as general partner of institutional venture capital partnerships. He also has extensive non-profit board leadership experience, and currently serves on the board of the George Lucas Educational Foundation. He has served as a director of one AB Fund since 1992, and director or trustee of all AB Funds since 2005. He has served as both Chairman of the AB Funds and Chairman of the Independent Directors Committees from 2014 through December 2022. | | | 82 | | | None |
| | | | | | | | |
| ADVISORY BOARD MEMBER | | | | | | |
| | | | | | | | |
Emilie D. Wrapp,# 68 (2024) | | Former Senior Vice President, Counsel, Assistant Secretary & Senior Mutual Fund Legal Advisor of the Adviser (January 2023–June 2023). Prior thereto, Senior Vice President, Assistant Secretary, Counsel, and Head of Mutual Fund & Retail Legal of the Adviser; Assistant General Counsel and Assistant Secretary of ABI since prior to 2019 until June 2023. | | | 82 | | | None |
| * | The address for each of the Fund’s disinterested Directors and Advisory Board member is c/o AllianceBernstein L.P., Attention: Legal & Compliance Department—Mutual Fund Legal, 1345 Avenue of the Americas, New York, NY 10105 |
| ** | There is no stated term of office for the Fund’s Directors or Advisory Board member. |
| *** | The information above includes each Director’s principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Director’s qualifications to serve as a Director, which led to the conclusion that each Director should serve as a Director for the Fund. |
| # | Mr. Erzan is an “interested person” of the Fund, as defined in the “1940 Act”, due to his position as a Senior Vice President of the Adviser. Ms. Wrapp is an “interested person” of the Fund, as defined in the 1940 Act, due to her former role with the Adviser. |
| ## | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
52
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| | | AB Variable Products Series Fund |
Officer Information
Certain information concerning the Fund’s Officers is listed below.
| | | | |
NAME, ADDRESS*
AND AGE | | POSITION(S) HELD
WITH FUND | | PRINCIPAL OCCUPATION
DURING PAST FIVE YEARS |
Onur Erzan 48 | | President and Chief Executive Officer | | See biography above. |
| | | | |
Daniel J. Loewy 49 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated since prior to 2019. He is Chief Investment Officer and Head of Multi-Asset and Hedge Fund Solutions; and Chief Investment Officer for Dynamic Asset Allocation. |
| | | | |
Leon Zhu
56 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated since prior to 2019. |
| | | | |
Nancy E. Hay
51 | | Secretary | | Senior Vice President and Counsel of the Adviser**, with which she has been associated since prior to 2019 and Assistant Secretary of ABI**. |
| | | | |
Michael B. Reyes
47 | | Senior Vice President | | Vice President of the Adviser**, with which he has been associated since prior to 2019. |
| | | | |
Stephen M. Woetzel 52 | | Treasurer and Chief Financial Officer | | Senior Vice President of ABIS**, with which he has been associated since prior to 2019. |
| | | | |
Phyllis J. Clarke
63 | | Controller | | Vice President of ABIS**, with which she has been associated since prior to 2019. |
| | | | |
Jennifer Friedland
49 | | Chief Compliance Officer | | Vice President of the Adviser** since 2020 and Mutual Fund Chief Compliance Officer (of all Funds since January 2023 and of the ETF Funds since 2022). Before joining the Adviser in 2020, she was Chief Compliance Officer at WestEnd Advisors, LLC from 2013 until 2019. |
| * | | The address for each of the Fund’s Officers is 1345 Avenue of the Americas, New York, NY 10105. |
| ** | | The Adviser, ABI and ABIS are affiliates of the Fund. |
| | | The Fund’s Statement of Additional Information (“SAI”) has additional information about the Fund’s Directors and Officers and is available without charge upon request. Contact your financial representative or AB at (800) 227-4618, or visit www.abfunds.com, for a free prospectus or SAI. |
53
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| GLOBAL RISK ALLOCATION— | | |
| |
| MODERATE PORTFOLIO | | AB Variable Products Series Fund |
OPERATION AND EFFECTIVENESS OF THE PORTFOLIO’S LIQUIDITY RISK MANAGEMENT PROGRAM:
In October 2016, the Securities and Exchange Commission (“SEC”) adopted the open-end fund liquidity rule (the “Liquidity Rule”). In June 2018 the SEC adopted a requirement that funds disclose information about the operation and effectiveness of their Liquidity Risk Management Program (“LRMP”) in their reports to shareholders.
One of the requirements of the Liquidity Rule is for the Portfolio to designate an Administrator of the Portfolio’s Liquidity Risk Management Program. The Administrator of the Portfolio’s LRMP is AllianceBernstein L.P., the Portfolio’s investment adviser (the “Adviser”). The Adviser has delegated the responsibility to its Liquidity Risk Management Committee (the “Committee”).
Another requirement of the Liquidity Rule is for the Portfolio’s Board of Directors/Trustees (the “Fund Board”) to receive an annual written report from the Administrator of the LRMP, which addresses the operation of the Portfolio’s LRMP and assesses its adequacy and effectiveness. The Adviser provided the Fund Board with such annual report during the first quarter of 2024, which covered the period January 1, 2023 through December 31, 2023 (the “Program Reporting Period”).
The LRMP’s principal objectives include supporting the Portfolio’s compliance with limits on investments in illiquid assets and mitigating the risk that the Portfolio will be unable to meet its redemption obligations in a timely manner.
Pursuant to the LRMP, the Portfolio classifies the liquidity of its portfolio investments into one of the four categories defined by the SEC: Highly Liquid, Moderately Liquid, Less Liquid, and Illiquid. These classifications are reported to the SEC on Form N-PORT.
During the Program Reporting Period, the Committee reviewed whether the Portfolio’s strategy is appropriate for an open-end structure, incorporating any holdings of less liquid and illiquid assets. If the Portfolio participated in derivative transactions, the exposure from such transactions were considered in the LRMP.
The Committee also performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum (“HLIM”). The Committee also incorporated the following information when determining the Portfolio’s reasonably anticipated trading size for purposes of liquidity monitoring: historical net redemption activity, a Portfolio’s concentration in an issuer, shareholder concentration, investment performance, total net assets, and distribution channels.
The Adviser informed the Fund Board that the Committee believes the Portfolio’s LRMP is adequately designed, has been implemented as intended, and has operated effectively since its inception. No material exceptions have been noted since the implementation of the LRMP. During the Program Reporting Period, liquidity in all markets was challenged due to rising rates and economic uncertainty. However, markets also remained orderly during the Program Reporting Period. There were no liquidity events that impacted the Portfolio or its ability to timely meet redemptions during the Program Reporting Period.
54
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| GLOBAL RISK ALLOCATION— | | |
| |
| MODERATE PORTFOLIO | | AB Variable Products Series Fund |
INFORMATION REGARDING THE REVIEW AND APPROVAL OF THE FUND’S ADVISORY AGREEMENT
The disinterested directors (the “directors”) of AB Variable Products Series Fund, Inc. (the “Company”) unanimously approved the continuance of the Company’s Advisory Agreement with the Adviser in respect of AB Global Risk Allocation—Moderate Portfolio (the “Fund”) at meetings held in-person on August 1-2, 2023 and October 31-November 2, 2023 (the “Meetings”).
Prior to approval of the continuance of the Advisory Agreement, the directors had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The directors also reviewed additional materials, including comparative analytical data prepared by the Senior Vice President of the Fund. The directors also discussed the proposed continuance in private sessions with counsel.
The directors considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as directors or trustees of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the directors and its responsiveness, frankness and attention to concerns raised by the directors in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AB Funds. The directors noted that they have four regular meetings each year, at each of which they review extensive materials and information from the Adviser, including information on the investment performance of the Fund and the money market fund advised by the Adviser in which the Fund invests a portion of its assets.
The directors also considered all factors they believed relevant, including the specific matters discussed below. During the course of their deliberations, the directors evaluated, among other things, the reasonableness of the advisory fee. The directors did not identify any particular information that was all-important or controlling, and different directors may have attributed different weights to the various factors. The directors determined that the selection of the Adviser to manage the Fund and the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors’ determinations included the following:
Nature, Extent and Quality of Services Provided
The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. The directors noted that the Adviser from time to time reviews the Fund’s investment strategies and from time to time proposes changes intended to improve the Fund’s relative or absolute performance for the directors’ consideration. They also noted the professional experience and qualifications of the Fund’s portfolio management team and other senior personnel of the Adviser. The directors also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services to the Fund by employees of the Adviser or its affiliates. Requests for these reimbursements are made on a quarterly basis and subject to approval by the directors. Reimbursements, to the extent requested and paid, result in a higher rate of total compensation from the Fund to the Adviser than the fee rate stated in the Advisory Agreement. The directors noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant at the request of the directors. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of the Fund’s other service providers, also was considered. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement.
Costs of Services Provided and Profitability
The directors reviewed a schedule of the revenues and expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2021 and 2022 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant at the request of the directors. The directors noted the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and understood that there are a number of potentially acceptable allocation methodologies for information of this type. The directors noted that the profitability information reflected all revenues and expenses of the Adviser’s relationship with the Fund, including those relating to its subsidiaries that provide transfer agency, distribution and brokerage services to the Fund. The directors recognized that it is
55
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| GLOBAL RISK ALLOCATION— |
| MODERATE PORTFOLIO | | |
| |
| (continued) | | AB Variable Products Series Fund |
difficult to make comparisons of the profitability of the Advisory Agreement with the profitability of fund advisory contracts for unaffiliated funds because comparative information is not generally publicly available and is affected by numerous factors. The directors focused on the profitability of the Adviser’s relationship with the Fund before taxes and distribution expenses. The directors concluded that the Adviser’s level of profitability from its relationship with the Fund was not unreasonable.
Fall-Out Benefits
The directors considered the other benefits to the Adviser and its affiliates from their relationships with the Fund and the money market fund advised by the Adviser in which the Fund invests, including, but not limited to, benefits relating to soft dollar arrangements (whereby investment advisers receive brokerage and research services from brokers that execute agency transactions for their clients); 12b-1 fees and sales charges received by the Fund’s principal underwriter (which is a wholly owned subsidiary of the Adviser) in respect of the Fund’s Class B shares; brokerage commissions paid by the Fund to brokers affiliated with the Adviser; and transfer agency fees paid by the Fund to a wholly owned subsidiary of the Adviser. The directors recognized that the Adviser’s profitability would be somewhat lower without these benefits. The directors understood that the Adviser also might derive reputational and other benefits from its association with the Fund.
Investment Results
In addition to the information reviewed by the directors in connection with the Meetings, the directors receive detailed performance information for the Fund at each regular Board meeting during the year.
At the Meetings, the directors reviewed performance information prepared by an independent service provider (the “15(c) service provider”), showing the performance of the Class A shares of the Fund against a group of similar funds (“peer group”) and a larger group of similar funds (“peer universe”), each selected by the 15(c) service provider, and information prepared by the Adviser showing performance of the Class A shares against a broad-based securities market index, in each case for the 1-, 3- and 5-year periods ended May 31, 2023 and July 31, 2023 and (in the case of comparisons with the broad-based securities market index) for the period from inception. Based on their review, the directors concluded that the Fund’s investment performance was acceptable.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate payable by the Fund to the Adviser and information prepared by the 15(c) service provider concerning advisory fee rates payable by other funds in the same category as the Fund. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees payable by other funds. The directors compared the Fund’s contractual effective advisory fee rate with a peer group median and noted that it was lower than the median. They also noted that the Adviser’s total rate of compensation, taking into account the impact of the administrative expense reimbursement paid to the Adviser in the latest fiscal year, was lower than the median.
The directors also considered the Adviser’s fee schedule for other clients utilizing investment strategies similar to those of the Fund. For this purpose, they reviewed the relevant advisory fee information from the Adviser’s Form ADV and in a report from the Fund’s Senior Vice President and noted the differences between the Fund’s fee schedule, on the one hand, and the Adviser’s institutional fee schedule and the schedule of fees charged by the Adviser to any offshore funds and for services to any sub-advised funds utilizing investment strategies similar to those of the Fund, on the other. The directors noted that the Adviser may, in some cases, agree to fee rates with large institutional clients that are lower than those reviewed by the directors and that they had previously discussed with the Adviser its policies in respect of such arrangements.
The Adviser reviewed with the directors the significantly greater scope of the services it provides to the Fund relative to institutional, offshore fund and sub-advised fund clients. In this regard, the Adviser noted, among other things, that, compared to institutional and offshore or sub-advisory accounts, the Fund (i) demands considerably more portfolio management, research and trading resources due to significantly higher daily cash flows; (ii) has more tax and regulatory restrictions and compliance obligations; (iii) must prepare and file or distribute regulatory and other communications about fund operations; and (iv) must provide shareholder servicing to retail investors. The Adviser also reviewed the greater legal risks presented by the large and changing population of Fund shareholders who may assert claims against the Adviser in individual or class actions, and the greater entrepreneurial risk in offering new fund products, which require substantial investment to launch, may not succeed, and generally must be priced to compete with larger, more established funds resulting in lack of profit-
56
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| |
| | | AB Variable Products Series Fund |
ability to the Adviser until a new fund achieves scale. In light of the substantial differences in services rendered by the Adviser to institutional, offshore fund and sub-advised fund clients as compared to the Fund, and the different risk profile, the directors considered these fee comparisons inapt and did not place significant weight on them in their deliberations.
In connection with their review of the Fund’s advisory fee, the directors also considered the total expense ratio of the Class A shares of the Fund in comparison to the medians for a peer group and a peer universe selected by the 15(c) service provider. The Class A expense ratio of the Fund was based on the Fund’s latest fiscal year. The Adviser had agreed to cap the Fund’s expenses, but the directors noted that the Fund’s expense ratio was currently below the level of the Adviser’s cap. The directors noted that it was likely that the expense ratios of some of the other funds in the Fund’s category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases might be voluntary or temporary. The directors view expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Fund by others. Based on their review, the directors concluded that the Fund’s expense ratio was acceptable.
Economies of Scale
The directors noted that the advisory fee schedule for the Fund contains breakpoints and that the Fund’s net assets were higher than a breakpoint level. Accordingly, the Fund’s current effective advisory fee rate reflected a reduction due to the breakpoint and would be further reduced to the extent the net assets of the Fund increase. The directors took into consideration prior presentations by an independent consultant on economies of scale in the mutual fund industry and for the AB Funds, and presentations from time to time by the Adviser concerning certain of its views on economies of scale. The directors also had requested and received from the Adviser certain updates on economies of scale in advance of the Meetings. The directors believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there is no established methodology for setting breakpoints that give effect to the fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Fund’s breakpoint arrangements were acceptable and provide a means for sharing any economies of scale.
57
VPS-GRA-0151-1223
DEC 12.31.23
ANNUAL REPORT
AB VARIABLE PRODUCTS
SERIES FUND, INC.
| + | | AB INTERNATIONAL VALUE PORTFOLIO |
Investment Products Offered
| | • | | Are Not Bank Guaranteed |
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AB family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the Adviser of the funds.
You may obtain a description of the Fund’s proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AB’s website at www.abfunds.com or go to the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov, or call AB at (800) 227 4618.
The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Commission’s website at www.sec.gov.
The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.
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| INTERNATIONAL VALUE PORTFOLIO | | AB Variable Products Series Fund |
LETTER TO INVESTORS
February 14, 2024
The following is an update of AB Variable Products Series Fund—International Value Portfolio (the “Portfolio”) for the annual reporting period ended December 31, 2023.
INVESTMENT OBJECTIVE AND POLICIES
The Portfolio’s investment objective is long-term growth of capital. The Portfolio invests primarily in a diversified portfolio of equity securities of established companies selected from more than 40 industries and more than 40 developed- and emerging-market countries. These countries currently include the developed nations in Europe and the Far East, Canada, Australia and emerging-market countries worldwide. Under normal market conditions, the Portfolio invests significantly, at least 40%—unless market conditions are not deemed favorable by the Adviser—in securities of non-US companies. In addition, the Portfolio invests, under normal circumstances, in the equity securities of companies located in at least three countries.
The Portfolio invests in companies that are determined by the Adviser to be undervalued, using a fundamental value approach. In selecting securities for the Portfolio, the Adviser uses its fundamental and quantitative research to identify companies whose stocks are priced low in relation to their perceived long-term earnings power.
Currency exposures can have a dramatic impact on equity return, significantly adding to returns in some years and greatly diminishing them in others. The Adviser may seek to hedge the currency exposure resulting from a securities position when it finds the currency exposure unattractive. To hedge all or a portion of its currency risk, the Portfolio may from time to time invest in currency-related derivatives, including forward currency exchange contracts, futures contracts, options on futures contracts, swaps and options. Decisions regarding portfolio investments and whether to hedge currency exposure are evaluated separately by the Adviser. The Adviser may also seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives.
The Portfolio may enter into other derivatives transactions, such as options, futures contracts, forwards and swaps. The Portfolio may use options strategies involving the purchase and/or writing of various combinations of call and/or put options, including on individual securities and stock indices, futures contracts (including futures contracts on individual securities and stock indices) or shares of exchange-traded funds (“ETFs”). These transactions may be used, for example, in an effort to earn extra income, to adjust exposure to individual securities or markets, or to protect all or a portion of the Portfolio’s portfolio from a decline in value, sometimes within certain ranges.
The Portfolio may, at times, invest in shares of ETFs in lieu of making direct investments in equity securities. ETFs may provide more efficient and economical exposure to the type of companies and geographic locations in which the Portfolio seeks to invest than direct investments. The Portfolio may invest in depositary receipts, instruments of supranational entities denominated in the currency of any country, securities of multinational companies and “semi-governmental securities,” and enter into forward commitments.
INVESTMENT RESULTS
The table on page 5 shows the Portfolio’s performance compared with its benchmark, the Morgan Stanley Capital International Europe, Australasia and the Far East (“MSCI EAFE”) Index (net), for the one-, five- and 10-year periods ended December 31, 2023.
During the 12-month period, all share classes of the Portfolio underperformed the benchmark. Both sector and security selection were negative, relative to the benchmark. Security selection within the consumer staples and consumer discretionary sectors detracted most, while selection within technology and industrials contributed. Losses from an underweight to technology and an overweight to consumer staples were partially offset by an underweight to health care and an overweight to consumer discretionary, which contributed. In terms of country positioning (a result of bottom-up security analysis driven by fundamental research), an overweight to the United Kingdom detracted, while an underweight to Hong Kong contributed.
The Portfolio used derivatives in the form of forwards for hedging purposes, which added to absolute returns during the annual period.
MARKET REVIEW AND INVESTMENT STRATEGY
US, international and emerging-market stocks rose during the 12-month period ended December 31, 2023. Early in the period, aggressive central bank tightening—led by the US Federal Reserve—pressured global equity markets. Bouts of volatility continued as central banks reduced and then began to pause rate hikes but reiterated hawkish higher-for-longer rhetoric that weighed on sentiment. Later in the period, stronger-than-expected third-quarter economic growth triggered a rapid rise in bond yields—especially the 10-year US Treasury note, which briefly crossed the 5% threshold for the first time in 16 years. Headwinds from higher Treasury yields, conflict in the Middle East and mixed third-quarter earnings weighed on investor sentiment globally and briefly sent all major indices into correction territory in October.
1
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| | | AB Variable Products Series Fund |
Equity markets rallied sharply during November and December, as optimism rose that the US Federal Reserve would begin to cut interest rates in 2024—both earlier and more than previously anticipated. Although US mega-cap technology stocks drove returns through much of the year, the rally broadened considerably during the fourth quarter as soft-landing expectations in the US continued to be underpinned by cooling inflation and moderating economic growth. Within large-cap markets, both growth-and value-oriented stocks rose, but growth significantly outperformed value, led by the technology sector and artificial intelligence optimism. Large-cap stocks outperformed small-cap stocks, although both rose in absolute terms.
The Portfolio’s Senior Investment Management Team (the “Team”) has continued to identify opportunities against a changing market backdrop. The Team has flexibility to adjust the Portfolio’s positions in real time when warranted, and to maintain conviction through short-term volatility. As markets face new uncertainties, the Team believes that this disciplined approach is the best way to capture the long-term potential for equities.
2
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| INTERNATIONAL VALUE PORTFOLIO | | |
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| DISCLOSURES AND RISKS | | AB Variable Products Series Fund |
Benchmark Disclosure
The MSCI EAFE Index is unmanaged and does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The MSCI EAFE Index (net, free float-adjusted, market capitalization weighted) represents the equity market performance of developed markets, excluding the US and Canada. MSCI makes no express or implied warranties or representations, and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices, any securities or financial products. This report is not approved, reviewed or produced by MSCI. Net returns reflect the reinvestment of dividends after the deduction of non-US withholding tax. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Portfolio.
A Word About Risk
Market Risk: The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Foreign (Non-US) Risk: Investments in securities of non-US issuers may involve more risk than those of US issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
Emerging-Market Risk: Investments in emerging-market countries may have more risk because the markets are less developed and less liquid, and because these investments may be subject to increased economic, political, regulatory or other uncertainties.
Currency Risk: Fluctuations in currency exchange rates may negatively affect the value of the Portfolio’s investments or reduce its returns.
Derivatives Risk: Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
Leverage Risk: When the Portfolio borrows money or otherwise leverages its portfolio, its net asset value (“NAV”) may be more volatile because leverage tends to exaggerate the effect of changes in interest rates and any increase or decrease in the value of the Portfolio’s investments. The Portfolio may create leverage through the use of reverse repurchase agreements, forward commitments, or by borrowing money.
Management Risk: The Portfolio is subject to management risk because it is an actively managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
These risks are fully discussed in the Variable Products prospectus. As with all investments, you may lose money by investing in the Portfolio.
An Important Note About Historical Performance
The investment return and principal value of an investment in the Portfolio will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Performance shown in this report represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. Please contact your financial advisor or insurance agent representative at your financial institution to obtain portfolio performance information current to the most recent month-end.
(Disclosures, Risks and Note About Historical Performance continued on next page)
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| DISCLOSURES AND RISKS | | |
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| (continued) | | AB Variable Products Series Fund |
Investors should consider the investment objectives, risks, charges and expenses of the Portfolio carefully before investing. For additional copies of the Portfolio’s prospectus or summary prospectus, which contains this and other information, call your financial advisor or (800) 227 4618. Please read the prospectus and/or summary prospectus carefully before investing.
All fees and expenses related to the operation of the Portfolio have been deducted, but no adjustment has been made for insurance company separate account or annuity contract charges, which would reduce total return to a contract owner. Performance assumes reinvestment of distributions and does not account for taxes.
There are additional fees and expenses associated with all Variable Products. These fees can include mortality and expense risk charges, administrative charges, and other charges that can significantly reduce investment returns. Those fees and expenses are not reflected in this annual report. You should consult your Variable Products prospectus for a description of those fees and expenses and speak to your insurance agent or financial representative if you have any questions. You should read the prospectus before investing or sending money.
4
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| INTERNATIONAL VALUE PORTFOLIO | | |
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| HISTORICAL PERFORMANCE | | AB Variable Products Series Fund |
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THE PORTFOLIO VS. ITS BENCHMARK | | Net Asset Value Returns |
| PERIODS ENDED DECEMBER 31, 2023 (unaudited) | | 1 Year | | 5 Years1 | | 10 Years1 |
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| International Value Portfolio Class A | | 15.15% | | 5.81% | | 2.09% |
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| International Value Portfolio Class B | | 14.83% | | 5.55% | | 1.83% |
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| MSCI EAFE Index (net) | | 18.24% | | 8.16% | | 4.28% |
1 Average annual returns. |
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The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 0.89% and 1.14% for Class A and Class B shares, respectively. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
GROWTH OF A $10,000 INVESTMENT
12/31/2013 TO 12/31/2023 (unaudited)
This chart illustrates the total value of an assumed $10,000 investment in International Value Portfolio Class A shares (from 12/31/2013 to 12/31/2023) as compared with the performance of the Portfolio’s benchmark. The chart assumes the reinvestment of dividends and capital gains distributions.
See Disclosures, Risks and Note About Historical Performance on pages 3-4.
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| INTERNATIONAL VALUE PORTFOLIO |
| |
| EXPENSE EXAMPLE (unaudited) | | AB Variable Products Series Fund |
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of each class’ table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | | | | | | | | | | | | | | |
| | | Beginning
Account Value
July 1, 2023 | | | Ending
Account Value
December 31, 2023 | | | Expenses Paid
During Period* | | | Annualized
Expense Ratio* | |
Class A | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,018.60 | | | $ | 4.58 | | | | 0.90 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,020.67 | | | $ | 4.58 | | | | 0.90 | % |
| | | | | | | | | | | | | | | | |
Class B | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,017.40 | | | $ | 5.85 | | | | 1.15 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,019.41 | | | $ | 5.85 | | | | 1.15 | % |
| * | | Expenses are equal to each classes’ annualized expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
| ** | | Assumes 5% annual return before expenses. |
6
| | |
| INTERNATIONAL VALUE PORTFOLIO | | |
| TEN LARGEST HOLDINGS1 | | |
| |
| December 31, 2023 (unaudited) | | AB Variable Products Series Fund |
| | | | | | | | |
| COMPANY | | U.S. $ VALUE | | | PERCENT OF NET ASSETS | |
Roche Holding AG (Genusschein) | | $ | 9,543,468 | | | | 3.3 | % |
Nestle SA (REG) | | | 9,148,395 | | | | 3.2 | |
Shell PLC | | | 9,015,168 | | | | 3.2 | |
Sanofi SA | | | 7,024,661 | | | | 2.5 | |
Deutsche Telekom AG (REG) | | | 6,425,814 | | | | 2.3 | |
Stellantis NV (France) | | | 6,402,052 | | | | 2.2 | |
Airbus SE | | | 6,332,479 | | | | 2.2 | |
Safran SA | | | 6,306,621 | | | | 2.2 | |
EDP—Energias de Portugal SA | | | 6,005,243 | | | | 2.1 | |
British American Tobacco PLC | | | 5,539,641 | | | | 1.9 | |
| | | | | | | | | |
| | | $ | 71,743,542 | | | | 25.1 | % |
SECTOR BREAKDOWN2
December 31, 2023 (unaudited)
| | | | | | | | |
| SECTOR | | U.S. $ VALUE | | | PERCENT OF TOTAL INVESTMENTS | |
Industrials | | $ | 37,052,165 | | | | 13.2 | % |
Health Care | | | 36,521,769 | | | | 13.0 | |
Consumer Discretionary | | | 35,517,233 | | | | 12.6 | |
Consumer Staples | | | 35,408,832 | | | | 12.6 | |
Financials | | | 33,658,658 | | | | 12.0 | |
Materials | | | 24,238,172 | | | | 8.6 | |
Information Technology | | | 21,807,098 | | | | 7.7 | |
Communication Services | | | 21,167,521 | | | | 7.5 | |
Energy | | | 17,579,087 | | | | 6.2 | |
Utilities | | | 11,294,127 | | | | 4.0 | |
Real Estate | | | 4,213,169 | | | | 1.5 | |
Short-Term Investments | | | 3,119,358 | | | | 1.1 | |
| | | | | | | | | |
Total Investments | | $ | 281,577,189 | | | | 100.0 | % |
| 2 | | The Portfolio’s sector breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. The Portfolio also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). |
Please note: The sector classifications presented herein are based on the Global Industry Classification Standard (GICS) which was developed by Morgan Stanley Capital International and Standard & Poor’s. The components are divided into sector, industry group, and industry sub-indices as classified by the GICS for each of the market capitalization indices in the broad market. These sector classifications are broadly defined. The “Portfolio of Investments” section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Portfolio’s prospectus.
7
| | |
| INTERNATIONAL VALUE PORTFOLIO | | |
| COUNTRY BREAKDOWN1 | | |
| |
| December 31, 2023 (unaudited) | | AB Variable Products Series Fund |
| | | | | | | | |
| COUNTRY | | U.S. $ VALUE | | | PERCENT OF TOTAL INVESTMENTS | |
Japan | | $ | 52,740,681 | | | | 18.7 | % |
United Kingdom | | | 48,309,963 | | | | 17.2 | |
France | | | 44,903,916 | | | | 15.9 | |
United States | | | 27,184,605 | | | | 9.7 | |
Switzerland | | | 18,691,863 | | | | 6.6 | |
Netherlands | | | 16,981,290 | | | | 6.0 | |
Germany | | | 16,294,799 | | | | 5.8 | |
South Korea | | | 9,200,810 | | | | 3.3 | |
Portugal | | | 6,005,243 | | | | 2.1 | |
Italy | | | 5,288,884 | | | | 1.9 | |
Austria | | | 4,692,898 | | | | 1.7 | |
Canada | | | 4,629,296 | | | | 1.6 | |
Luxembourg | | | 4,425,294 | | | | 1.6 | |
Other | | | 19,108,289 | | | | 6.8 | |
Short-Term Investments | | | 3,119,358 | | | | 1.1 | |
| | | | | | | | | |
Total Investments | | $ | 281,577,189 | | | | 100.0 | % |
| 1 | | The Portfolio’s country breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. The Portfolio also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). “Other” country weightings represent 1.5% or less in the following: Denmark, Ireland, South Africa, Spain and Taiwan. |
8
| | |
| INTERNATIONAL VALUE PORTFOLIO | | |
| PORTFOLIO OF INVESTMENTS | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
COMMON STOCKS–97.5% | | | | | | | | |
| | | | | | | | |
INDUSTRIALS–13.0% | | | | | | | | |
AEROSPACE & DEFENSE–7.8% | | | | | | | | |
Airbus SE | | | 40,990 | | | $ | 6,332,479 | |
BAE Systems PLC | | | 331,870 | | | | 4,697,616 | |
Melrose Industries PLC | | | 703,550 | | | | 5,085,526 | |
Safran SA | | | 35,770 | | | | 6,306,621 | |
| | | | | | | | |
| | | | | | | 22,422,242 | |
| | | | | | | | |
ELECTRICAL EQUIPMENT–1.3% | | | | | | | | |
Fuji Electric Co., Ltd. | | | 88,100 | | | | 3,776,137 | |
| | | | | | | | |
INDUSTRIAL CONGLOMERATES–1.2% | | | | | | | | |
Hitachi Ltd. | | | 45,900 | | | | 3,301,572 | |
| | | | | | | | |
MACHINERY–1.9% | | | | | | | | |
Amada Co., Ltd. | | | 278,600 | | | | 2,896,069 | |
Kawasaki Heavy Industries Ltd. | | | 111,500 | | | | 2,457,303 | |
| | | | | | | | |
| | | | | | | 5,353,372 | |
| | | | | | | | |
PROFESSIONAL SERVICES–0.8% | | | | | | | | |
dip Corp. | | | 68,700 | | | | 1,561,830 | |
UT Group Co., Ltd.(a) | | | 36,900 | | | | 637,012 | |
| | | | | | | | |
| | | | | | | 2,198,842 | |
| | | | | | | | |
| | | | | | | 37,052,165 | |
| | | | | | | | |
HEALTH CARE–12.8% | | | | | | | | |
HEALTH CARE EQUIPMENT & SUPPLIES–2.6% | | | | | | | | |
ConvaTec Group PLC(b) | | | 933,509 | | | | 2,904,976 | |
ResMed, Inc.–Class CDI | | | 257,400 | | | | 4,466,535 | |
| | | | | | | | |
| | | | | | | 7,371,511 | |
| | | | | | | | |
HEALTH CARE PROVIDERS & SERVICES–1.6% | | | | | | | | |
Fresenius SE & Co. KGaA | | | 152,280 | | | | 4,720,000 | |
| | | | | | | | |
PHARMACEUTICALS–8.6% | | | | | | | | |
GSK PLC | | | 218,020 | | | | 4,026,653 | |
Merck KGaA | | | 24,090 | | | | 3,835,476 | |
Roche Holding AG (Genusschein) | | | 32,830 | | | | 9,543,468 | |
Sanofi SA | | | 70,690 | | | | 7,024,661 | |
| | | | | | | | |
| | | | | | | 24,430,258 | |
| | | | | | | | |
| | | | | | | 36,521,769 | |
| | | | | | | | |
CONSUMER DISCRETIONARY–12.4% | | | | | | | | |
AUTOMOBILE COMPONENTS–0.9% | | | | | | | | |
Forvia SE (Paris)(a) | | | 117,994 | | | | 2,672,887 | |
| | | | | | | | |
AUTOMOBILES–3.7% | | | | | | | | |
Honda Motor Co., Ltd. | | | 406,300 | | | | 4,191,071 | |
Stellantis NV (France) | | | 273,368 | | | | 6,402,052 | |
| | | | | | | | |
| | | | | | | 10,593,123 | |
| | | | | | | | |
| | | | | | | | |
HOTELS, RESTAURANTS & LEISURE–1.0% | | | | | | | | |
Entain PLC | | | 232,830 | | | | 2,936,236 | |
| | | | | | | | |
HOUSEHOLD DURABLES–2.9% | | | | | | | | |
Persimmon PLC | | | 188,940 | | | | 3,339,736 | |
Sony Group Corp. | | | 53,100 | | | | 5,025,004 | |
| | | | | | | | |
| | | | | | | 8,364,740 | |
| | | | | | | | |
SPECIALTY RETAIL–1.7% | | | | | | | | |
JD Sports Fashion PLC | | | 2,266,950 | | | | 4,784,027 | |
| | | | | | | | |
TEXTILES, APPAREL & LUXURY GOODS–2.2% | | | | | | | | |
Burberry Group PLC | | | 154,020 | | | | 2,778,048 | |
Kering SA | | | 7,650 | | | | 3,388,172 | |
| | | | | | | | |
| | | | | | | 6,166,220 | |
| | | | | | | | |
| | | | | | | 35,517,233 | |
| | | | | | | | |
CONSUMER STAPLES–12.4% | | | | | | | | |
BEVERAGES–1.8% | | | | | | | | |
Heineken NV | | | 50,080 | | | | 5,088,102 | |
| | | | | | | | |
CONSUMER STAPLES DISTRIBUTION & RETAIL–4.1% | | | | | | | | |
Carrefour SA | | | 287,240 | | | | 5,260,697 | |
HelloFresh SE(a) | | | 83,310 | | | | 1,313,510 | |
Koninklijke Ahold Delhaize NV | | | 174,040 | | | | 5,007,382 | |
| | | | | | | | |
| | | | | | | 11,581,589 | |
| | | | | | | | |
FOOD PRODUCTS–3.2% | | | | | | | | |
Nestle SA (REG) | | | 78,920 | | | | 9,148,395 | |
| | | | | | | | |
PERSONAL CARE PRODUCTS–1.4% | | | | | | | | |
Haleon PLC | | | 989,457 | | | | 4,051,105 | |
| | | | | | | | |
TOBACCO–1.9% | | | | | | | | |
British American Tobacco PLC | | | 189,330 | | | | 5,539,641 | |
| | | | | | | | |
| | | | | | | 35,408,832 | |
| | | | | | | | |
FINANCIALS–11.8% | | | | | | | | |
BANKS–8.4% | | | | | | | | |
ABN AMRO Bank NV | | | 224,200 | | | | 3,371,627 | |
Bank of Ireland Group PLC | | | 340,021 | | | | 3,086,863 | |
Danske Bank A/S | | | 160,600 | | | | 4,293,046 | |
Erste Group Bank AG | | | 115,860 | | | | 4,692,898 | |
NatWest Group PLC | | | 1,669,360 | | | | 4,649,842 | |
Resona Holdings, Inc. | | | 773,700 | | | | 3,922,144 | |
| | | | | | | | |
| | | | | | | 24,016,420 | |
| | | | | | | | |
FINANCIAL SERVICES–1.0% | | | | | | | | |
ORIX Corp. | | | 149,400 | | | | 2,805,908 | |
| | | | | | | | |
INSURANCE–2.4% | | | | | | | | |
ASR Nederland NV | | | 74,390 | | | | 3,514,178 | |
SCOR SE | | | 113,380 | | | | 3,322,152 | |
| | | | | | | | |
| | | | | | | 6,836,330 | |
| | | | | | | | |
| | | | | | | 33,658,658 | |
| | | | | | | | |
9
| | |
| INTERNATIONAL VALUE PORTFOLIO | | |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
MATERIALS–8.5% | | | | | | | | |
CHEMICALS–3.1% | | | | | | | | |
Arkema SA | | | 40,050 | | | $ | 4,562,412 | |
Tosoh Corp. | | | 326,500 | | | | 4,162,231 | |
| | | | | | | | |
| | | | | | | 8,724,643 | |
| | | | | | | | |
CONSTRUCTION MATERIALS–1.7% | | | | | | | | |
CRH PLC | | | 72,160 | | | | 4,990,586 | |
| | | | | | | | |
METALS & MINING–3.7% | | | | | | | | |
Anglo American PLC | | | 140,590 | | | | 3,518,503 | |
ArcelorMittal SA | | | 155,930 | | | | 4,425,294 | |
Endeavour Mining PLC | | | 115,263 | | | | 2,579,146 | |
| | | | | | | | |
| | | | | | | 10,522,943 | |
| | | | | | | | |
| | | | | | | 24,238,172 | |
| | | | | | | | |
INFORMATION TECHNOLOGY–7.6% | | | | | | | | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT–5.9% | | | | | | | | |
NXP Semiconductors NV | | | 14,140 | | | | 3,247,675 | |
SK Hynix, Inc. | | | 39,440 | | | | 4,304,400 | |
Taiwan Semiconductor Manufacturing Co., Ltd. | | | 223,000 | | | | 4,275,253 | |
Tokyo Electron Ltd. | | | 28,600 | | | | 5,083,360 | |
| | | | | | | | |
| | | | | | | 16,910,688 | |
| | | | | | | | |
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS–1.7% | | | | | | | | |
Samsung Electronics Co., Ltd. | | | 80,670 | | | | 4,896,410 | |
| | | | | | | | |
| | | | | | | 21,807,098 | |
| | | | | | | | |
COMMUNICATION SERVICES–7.4% | | | | | | | | |
DIVERSIFIED TELECOMMUNICATION SERVICES–3.2% | | | | | | | | |
Deutsche Telekom AG (REG) | | | 267,260 | | | | 6,425,814 | |
Nippon Telegraph & Telephone Corp. | | | 2,298,100 | | | | 2,806,173 | |
| | | | | | | | |
| | | | | | | 9,231,987 | |
| | | | | | | | |
ENTERTAINMENT–3.4% | | | | | | | | |
GungHo Online Entertainment, Inc.(a)(c) | | | 88,100 | | | | 1,466,677 | |
Konami Group Corp. | | | 84,900 | | | | 4,435,022 | |
Ubisoft Entertainment SA(a) | | | 145,010 | | | | 3,706,851 | |
| | | | | | | | |
| | | | | | | 9,608,550 | |
| | | | | | | | |
MEDIA–0.8% | | | | | | | | |
Criteo SA (Sponsored ADR)(a) | | | 91,903 | | | | 2,326,984 | |
| | | | | | | | |
| | | | | | | 21,167,521 | |
| | | | | | | | |
ENERGY–6.2% | | | | | | | | |
ENERGY EQUIPMENT & SERVICES–3.2% | | | | | | | | |
Shell PLC | | | 273,990 | | | | 9,015,168 | |
| | | | | | | | |
| | | | | | | | |
OIL, GAS & CONSUMABLE FUELS–3.0% | | | | | | | | |
Cameco Corp. | | | 107,370 | | | | 4,629,296 | |
Repsol SA | | | 265,245 | | | | 3,934,623 | |
| | | | | | | | |
| | | | | | | 8,563,919 | |
| | | | | | | | |
| | | | | | | 17,579,087 | |
| | | | | | | | |
UTILITIES–3.9% | | | | | | | | |
ELECTRIC UTILITIES–3.9% | | | | | | | | |
EDP–Energias de Portugal SA | | | 1,193,174 | | | | 6,005,243 | |
Enel SpA(c) | | | 710,890 | | | | 5,288,884 | |
| | | | | | | | |
| | | | | | | 11,294,127 | |
| | | | | | | | |
REAL ESTATE–1.5% | | | | | | | | |
REAL ESTATE MANAGEMENT & DEVELOPMENT–1.5% | | | | | | | | |
Daito Trust Construction Co., Ltd. | | | 36,400 | | | | 4,213,169 | |
| | | | | | | | |
Total Common Stocks
(cost $249,175,420) | | | | | | | 278,457,831 | |
| | | | | | | | |
SHORT-TERM INVESTMENTS–1.1% | | | | | | | | |
INVESTMENT COMPANIES–1.1% | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB, 5.27%(d)(e)(f)
(cost $3,119,358) | | | 3,119,358 | | | | 3,119,358 | |
| | | | | | | | |
TOTAL INVESTMENTS BEFORE SECURITY LENDING COLLATERAL FOR SECURITIES LOANED–98.6%
(cost $252,294,778) | | | | | | | 281,577,189 | |
| | | | | | | | |
INVESTMENTS OF CASH COLLATERAL FOR SECURITIES
LOANED–0.1% | | | | | | | | |
INVESTMENT COMPANIES–0.1% | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB, 5.27%(d)(e)(f)
(cost $272,524) | | | 272,524 | | | | 272,524 | |
| | | | | | | | |
TOTAL INVESTMENTS–98.7%
(cost $252,567,302) | | | | | | | 281,849,713 | |
Other assets less
liabilities–1.3% | | | | | | | 3,718,561 | |
| | | | | | | | |
NET ASSETS–100.0% | | | | | | $ | 285,568,274 | |
| | | | | | | | |
10
| | |
| |
| | | AB Variable Products Series Fund |
FORWARD CURRENCY EXCHANGE CONTRACTS (see Note D)
| | | | | | | | | | | | | | | | | | | | | | | | |
| Counterparty | | Contracts to
Deliver
(000) | | | In Exchange
For
(000) | | | Settlement
Date | | | Unrealized
Appreciation
(Depreciation) | |
Bank of America, NA | | | USD | | | | 979 | | | | EUR | | | | 906 | | | | 01/10/2024 | | | $ | 21,421 | |
Bank of America, NA | | | USD | | | | 1,219 | | | | CNH | | | | 8,856 | | | | 01/11/2024 | | | | 24,881 | |
Bank of America, NA | | | JPY | | | | 196,622 | | | | USD | | | | 1,330 | | | | 01/12/2024 | | | | (65,898 | ) |
Bank of America, NA | | | USD | | | | 6,692 | | | | JPY | | | | 989,949 | | | | 01/12/2024 | | | | 336,553 | |
Bank of America, NA | | | USD | | | | 3,600 | | | | SGD | | | | 4,849 | | | | 01/18/2024 | | | | 77,197 | |
Bank of America, NA | | | USD | | | | 2,356 | | | | NOK | | | | 25,544 | | | | 02/16/2024 | | | | 161,139 | |
Barclays Bank PLC | | | BRL | | | | 7,129 | | | | USD | | | | 1,473 | | | | 01/03/2024 | | | | 4,941 | |
Barclays Bank PLC | | | USD | | | | 1,450 | | | | BRL | | | | 7,129 | | | | 01/03/2024 | | | | 17,744 | |
Barclays Bank PLC | | | USD | | | | 989 | | | | CAD | | | | 1,347 | | | | 01/10/2024 | | | | 27,702 | |
Barclays Bank PLC | | | JPY | | | | 330,492 | | | | USD | | | | 2,212 | | | | 01/12/2024 | | | | (134,492 | ) |
Barclays Bank PLC | | | USD | | | | 3,182 | | | | JPY | | | | 460,960 | | | | 01/12/2024 | | | | 90,395 | |
Barclays Bank PLC | | | KRW | | | | 1,070,531 | | | | USD | | | | 825 | | | | 01/18/2024 | | | | (898 | ) |
Barclays Bank PLC | | | GBP | | | | 699 | | | | USD | | | | 890 | | | | 01/25/2024 | | | | (1,451 | ) |
Barclays Bank PLC | | | USD | | | | 20,020 | | | | AUD | | | | 30,737 | | | | 01/25/2024 | | | | 940,172 | |
Barclays Bank PLC | | | CHF | | | | 1,747 | | | | USD | | | | 2,000 | | | | 02/15/2024 | | | | (86,054 | ) |
Barclays Bank PLC | | | USD | | | | 9,238 | | | | SEK | | | | 96,215 | | | | 02/16/2024 | | | | 318,436 | |
BNP Paribas SA | | | USD | | | | 1,156 | | | | JPY | | | | 170,329 | | | | 01/12/2024 | | | | 52,873 | |
BNP Paribas SA | | | USD | | | | 262 | | | | KRW | | | | 352,135 | | | | 01/18/2024 | | | | 9,782 | |
BNP Paribas SA | | | USD | | | | 2,612 | | | | GBP | | | | 2,078 | | | | 01/25/2024 | | | | 37,007 | |
Citibank, NA | | | JPY | | | | 451,046 | | | | USD | | | | 3,150 | | | | 01/12/2024 | | | | (52,077 | ) |
Citibank, NA | | | KRW | | | | 9,918,994 | | | | USD | | | | 7,360 | | | | 01/18/2024 | | | | (296,952 | ) |
Citibank, NA | | | USD | | | | 8,796 | | | | CHF | | | | 7,769 | | | | 02/15/2024 | | | | 481,275 | |
Goldman Sachs Bank USA | | | EUR | | | | 2,595 | | | | USD | | | | 2,840 | | | | 01/10/2024 | | | | (25,237 | ) |
Goldman Sachs Bank USA | | | JPY | | | | 181,490 | | | | USD | | | | 1,225 | | | | 01/12/2024 | | | | (63,937 | ) |
JPMorgan Chase Bank, NA | | | USD | | | | 1,474 | | | | ILS | | | | 5,848 | | | | 01/17/2024 | | | | 141,952 | |
Morgan Stanley Capital Services, Inc. | | | BRL | | | | 7,129 | | | | USD | | | | 1,476 | | | | 01/03/2024 | | | | 8,386 | |
Morgan Stanley Capital Services, Inc. | | | USD | | | | 1,473 | | | | BRL | | | | 7,129 | | | | 01/03/2024 | | | | (4,941 | ) |
Morgan Stanley Capital Services, Inc. | | | EUR | | | | 30,298 | | | | USD | | | | 32,278 | | | | 01/10/2024 | | | | (1,179,047 | ) |
Morgan Stanley Capital Services, Inc. | | | USD | | | | 3,239 | | | | EUR | | | | 3,017 | | | | 01/10/2024 | | | | 92,102 | |
Morgan Stanley Capital Services, Inc. | | | USD | | | | 2,198 | | | | JPY | | | | 321,880 | | | | 01/12/2024 | | | | 87,414 | |
Morgan Stanley Capital Services, Inc. | | | KRW | | | | 895,564 | | | | USD | | | | 693 | | | | 01/18/2024 | | | | 1,885 | |
Morgan Stanley Capital Services, Inc. | | | USD | | | | 1,435 | | | | MXN | | | | 25,188 | | | | 01/18/2024 | | | | 45,201 | |
Morgan Stanley Capital Services, Inc. | | | GBP | | | | 11,210 | | | | USD | | | | 13,931 | | | | 01/25/2024 | | | | (359,839 | ) |
Morgan Stanley Capital Services, Inc. | | | USD | | | | 854 | | | | AUD | | | | 1,271 | | | | 01/25/2024 | | | | 12,484 | |
Morgan Stanley Capital Services, Inc. | | | USD | | | | 1,470 | | | | BRL | | | | 7,129 | | | | 02/02/2024 | | | | (4,922 | ) |
State Street Bank & Trust Co. | | | CAD | | | | 920 | | | | USD | | | | 673 | | | | 01/10/2024 | | | | (21,791 | ) |
State Street Bank & Trust Co. | | | EUR | | | | 650 | | | | USD | | | | 713 | | | | 01/10/2024 | | | | (5,024 | ) |
State Street Bank & Trust Co. | | | USD | | | | 544 | | | | CAD | | | | 746 | | | | 01/10/2024 | | | | 18,719 | |
State Street Bank & Trust Co. | | | USD | | | | 3,349 | | | | EUR | | | | 3,127 | | | | 01/10/2024 | | | | 103,311 | |
State Street Bank & Trust Co. | | | JPY | | | | 57,214 | | | | USD | | | | 388 | | | | 01/12/2024 | | | | (18,387 | ) |
State Street Bank & Trust Co. | | | USD | | | | 1,628 | | | | JPY | | | | 238,933 | | | | 01/12/2024 | | | | 68,857 | |
State Street Bank & Trust Co. | | | USD | | | | 974 | | | | GBP | | | | 766 | | | | 01/25/2024 | | | | 2,697 | |
UBS AG | | | CAD | | | | 5,962 | | | | USD | | | | 4,331 | | | | 01/10/2024 | | | | (169,245 | ) |
UBS AG | | | USD | | | | 1,859 | | | | EUR | | | | 1,696 | | | | 01/10/2024 | | | | 14,004 | |
UBS AG | | | USD | | | | 3,540 | | | | JPY | | | | 515,659 | | | | 01/12/2024 | | | | 120,874 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | $ | 829,212 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
11
| | |
| INTERNATIONAL VALUE PORTFOLIO | | |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| (a) | | Non-income producing security. |
| (b) | | Security is exempt from registration under Rule 144A or Regulation S of the Securities Act of 1933. This security is considered restricted, but liquid and may be resold in transactions exempt from registration. At December 31, 2023, the market value of this security amounted to $2,904,976 or 1.0% of net assets. |
| (c) | | Represents entire or partial securities out on loan. See Note E for securities lending information. |
| (d) | | Affiliated investments. |
| (e) | | The rate shown represents the 7-day yield as of period end. |
| (f) | | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
Currency Abbreviations:
AUD—Australian Dollar
BRL—Brazilian Real
CAD—Canadian Dollar
CHF—Swiss Franc
CNH—Chinese Yuan Renminbi (Offshore)
EUR—Euro
GBP—Great British Pound
ILS—Israeli Shekel
JPY—Japanese Yen
KRW—South Korean Won
MXN—Mexican Peso
NOK—Norwegian Krone
SEK—Swedish Krona
SGD—Singapore Dollar
USD—United States Dollar
Glossary:
ADR—American Depositary Receipt
REG—Registered Shares
See notes to financial statements.
12
| | |
| INTERNATIONAL VALUE PORTFOLIO | | |
| STATEMENT OF ASSETS & LIABILITIES | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
ASSETS | |
Investments in securities, at value | | | | |
Unaffiliated issuers (cost $249,175,420) | | $ | 278,457,831 | (a) |
Affiliated issuers (cost $3,391,882—including investment of cash collateral for securities loaned of $272,524) | | | 3,391,882 | |
Cash collateral due from broker | | | 270,000 | |
Foreign currencies, at value (cost $288,057) | | | 292,388 | |
Unrealized appreciation on forward currency exchange contracts | | | 3,319,404 | |
Receivable for investment securities sold and foreign currency transactions | | | 1,989,800 | |
Unaffiliated dividends receivable | | | 1,102,056 | |
Receivable for capital stock sold | | | 97,509 | |
Affiliated dividends receivable | | | 13,513 | |
Receivable due from Adviser | | | 464 | |
| | | | |
Total assets | | | 288,934,847 | |
| | | | |
LIABILITIES | |
Unrealized depreciation on forward currency exchange contracts | | | 2,490,192 | |
Payable for collateral received on securities loaned | | | 272,524 | |
Custody and accounting fees payable | | | 179,524 | |
Advisory fee payable | | | 178,601 | |
Payable for capital stock redeemed | | | 69,723 | |
Distribution fee payable | | | 50,284 | |
Administrative fee payable | | | 24,090 | |
Payable for investment securities purchased and foreign currency transactions | | | 1,578 | |
Transfer Agent fee payable | | | 150 | |
Accrued expenses | | | 99,907 | |
| | | | |
Total liabilities | | | 3,366,573 | |
| | | | |
NET ASSETS | | $ | 285,568,274 | |
| | | | |
COMPOSITION OF NET ASSETS | |
Capital stock, at par | | $ | 19,398 | |
Additional paid-in capital | | | 271,292,590 | |
Distributable earnings | | | 14,256,286 | |
| | | | |
NET ASSETS | | $ | 285,568,274 | |
| | | | |
Net Asset Value Per Share—1 billion shares of capital stock authorized, $.001 par value
| | | | | | | | | | | | |
| Class | | Net Assets | | | Shares
Outstanding | | | Net Asset
Value | |
| | | |
| A | | $ | 44,286,239 | | | | 2,993,975 | | | $ | 14.79 | |
| | | |
| B | | $ | 241,282,035 | | | | 16,403,663 | | | $ | 14.71 | |
| (a) | | Includes securities on loan with a value of $1,251,154 (see Note E). |
See notes to financial statements.
13
| | |
| INTERNATIONAL VALUE PORTFOLIO | | |
| STATEMENT OF OPERATIONS | | |
| |
| Year Ended December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
INVESTMENT INCOME | | | | |
Dividends | | | | |
Unaffiliated issuers (net of foreign taxes withheld of $1,202,662) | | $ | 7,827,021 | |
Affiliated issuers | | | 247,627 | |
Interest | | | 49,020 | |
Foreign withholding tax reclaims (see Note A.4) | | | 48,861 | |
Securities lending income | | | 21,627 | |
| | | | |
| | | 8,194,156 | |
| | | | |
EXPENSES | | | | |
Advisory fee (see Note B) | | | 2,087,499 | |
Distribution fee—Class B | | | 587,549 | |
Transfer agency—Class A | | | 922 | |
Transfer agency—Class B | | | 5,000 | |
Custody and accounting | | | 104,581 | |
Audit and tax | | | 102,284 | |
Administrative | | | 96,526 | |
Legal | | | 42,805 | |
Directors’ fees | | | 20,317 | |
Printing | | | 13,241 | |
Miscellaneous | | | 33,761 | |
| | | | |
Total expenses | | | 3,094,485 | |
Less: expenses waived and reimbursed by the Adviser (see Notes B & E) | | | (6,404 | ) |
| | | | |
Net expenses | | | 3,088,081 | |
| | | | |
Net investment income | | | 5,106,075 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS | | | | |
Net realized gain (loss) on: | | | | |
Investment transactions | | | (1,102,353 | ) |
Forward currency exchange contracts | | | 47,441 | |
Foreign currency transactions | | | 101,591 | |
Net change in unrealized appreciation (depreciation) of: | | | | |
Investments | | | 32,246,319 | |
Forward currency exchange contracts | | | 722,054 | |
Foreign currency denominated assets and liabilities | | | 74,504 | |
| | | | |
Net gain on investment and foreign currency transactions | | | 32,089,556 | |
| | | | |
NET INCREASE IN NET ASSETS FROM OPERATIONS | | $ | 37,195,631 | |
| | | | |
See notes to financial statements.
14
| | |
| | |
| INTERNATIONAL VALUE PORTFOLIO | | |
| |
| STATEMENT OF CHANGES IN NET ASSETS | | AB Variable Products Series Fund |
| | | | | | | | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | | | | | | | | |
Net investment income | | $ | 5,106,075 | | | $ | 8,628,450 | |
Net realized loss on investment and foreign currency transactions | | | (953,321 | ) | | | (7,826,246 | ) |
Net change in unrealized appreciation (depreciation) of investments and foreign currency denominated assets and liabilities | | | 33,042,877 | | | | (49,220,620 | ) |
| | | | | | | | |
Net increase (decrease) in net assets from operations | | | 37,195,631 | | | | (48,418,416 | ) |
Distributions to Shareholders | | | | | | | | |
Class A | | | (355,217 | ) | | | (1,768,399 | ) |
Class B | | | (1,645,638 | ) | | | (9,099,819 | ) |
Return of capital | | | | | | | | |
Class A | | | –0 | – | | | (100,200 | ) |
Class B | | | –0 | – | | | (515,610 | ) |
CAPITAL STOCK TRANSACTIONS | | | | | | | | |
Net decrease | | | (12,883,371 | ) | | | (26,752,504 | ) |
| | | | | | | | |
Total increase (decrease) | | | 22,311,405 | | | | (86,654,948 | ) |
NET ASSETS | | | | | | | | |
Beginning of period | | | 263,256,869 | | | | 349,911,817 | |
| | | | | | | | |
End of period | | $ | 285,568,274 | | | $ | 263,256,869 | |
| | | | | | | | |
See notes to financial statements.
15
| | |
| INTERNATIONAL VALUE PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
NOTE A: Significant Accounting Policies
The AB International Value Portfolio (the “Portfolio”) is a series of AB Variable Products Series Fund, Inc. (the “Fund”). The Portfolio’s investment objective is long-term growth of capital. The Portfolio is diversified as defined under the Investment Company Act of 1940 (the “1940 Act”). The Fund was incorporated in the State of Maryland as an open-end series investment company. The Fund offers 10 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 U.S. generally accepted accounting principles (“U.S. GAAP”), 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 Portfolio is an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Portfolio.
1. Security Valuation
Portfolio securities are valued at market value determined on the basis of market quotations or, if market quotations are not readily available or are unreliable, at “fair value” as determined in accordance with procedures approved by and under the oversight of the Fund’s Board of Directors (the “Board”). Pursuant to these procedures, AllianceBernstein L.P. (the “Adviser”) serves as the Portfolio’s valuation designee pursuant to Rule 2a-5 of the 1940 Act. In this capacity, the Adviser is responsible, among other things, for making all fair value determinations relating to the Portfolio’s portfolio investments, subject to the Board’s oversight.
In general, the market values of securities which are readily available and deemed reliable are determined as follows: securities listed on a national securities exchange (other than securities listed on the NASDAQ Stock Market, Inc. (“NASDAQ”)) 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 last traded price from the previous day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price; listed or over the counter (“OTC”) market put or call options are valued at the mid level between the current bid and ask prices. If either a current bid or current ask price is unavailable, the Adviser will have discretion to determine the best valuation (e.g., last trade price in the case of listed options); open futures 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 valuation, the last available closing settlement price is used; U.S. Government securities and any other debt instruments having 60 days or less remaining until maturity are generally valued at market by an independent pricing vendor, if a market price is available. If a market price is not available, the securities are valued at amortized cost. This methodology is commonly used for short term securities that have an original maturity of 60 days or less, as well as short term securities that had an original term to maturity that exceeded 60 days. In instances when amortized cost is utilized, the Valuation Committee (the “Committee”) must reasonably conclude that the utilization of amortized cost is approximately the same as the fair value of the security. Factors the Committee will consider include, but are not limited to, an impairment of the creditworthiness of the issuer or material changes in interest rates. 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 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. Swaps and other derivatives are valued daily, primarily using independent pricing services, independent pricing models using market inputs, as well as third party broker-dealers or counterparties. Open-end mutual funds are valued at the closing net asset value per share, while exchange traded funds are valued at the closing market price per share.
Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value as deemed appropriate by the Adviser. Factors considered in making this determination may include, but
16
| | |
| |
| | | AB Variable Products Series Fund |
are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer’s financial statements or other available documents. In addition, the Portfolio may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Portfolio values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Portfolio generally values many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available.
2. Fair Value Measurements
In accordance with U.S. GAAP regarding fair value measurements, fair value is defined as the price that the Portfolio would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability (including those valued based on their market values as described in Note A.1 above). Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Portfolio. Unobservable inputs reflect the Portfolio’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
| | • | | Level 1—quoted prices in active markets for identical investments |
| | • | | Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| | • | | Level 3—significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of investments) |
The fair value of debt instruments, such as bonds, and over-the-counter derivatives is generally based on market price quotations, recently executed market transactions (where observable) or industry recognized modeling techniques and are generally classified as Level 2. Pricing vendor inputs to Level 2 valuations may include quoted prices for similar investments in active markets, interest rate curves, coupon rates, currency rates, yield curves, option adjusted spreads, default rates, credit spreads and other unique security features in order to estimate the relevant cash flows which are then discounted to calculate fair values. If these inputs are unobservable and significant to the fair value, these investments will be classified as Level 3.
Where readily available market prices or relevant bid prices are not available for certain equity investments, such investments may be valued based on similar publicly traded investments, movements in relevant indices since last available prices or based upon underlying company fundamentals and comparable company data (such as multiples to earnings or other multiples to equity). Where an investment is valued using an observable input, such as another publicly traded security, the investment will be classified as Level 2. If management determines that an adjustment is appropriate based on restrictions on resale, illiquidity or uncertainty, and such adjustment is a significant component of the valuation, the investment will be classified as Level 3. An investment will also be classified as Level 3 where management uses company fundamentals and other significant inputs to determine the valuation.
The following table summarizes the valuation of the Portfolio’s investments by the above fair value hierarchy levels as of December 31, 2023:
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Common Stocks: | | | | | | | | | | | | | | | | |
Industrials | | $ | 4,697,616 | | | $ | 32,354,549 | | | $ | –0 | – | | $ | 37,052,165 | |
Health Care | | | –0 | – | | | 36,521,769 | | | | –0 | – | | | 36,521,769 | |
Consumer Discretionary | | | –0 | – | | | 35,517,233 | | | | –0 | – | | | 35,517,233 | |
Consumer Staples | | | –0 | – | | | 35,408,832 | | | | –0 | – | | | 35,408,832 | |
Financials | | | –0 | – | | | 33,658,658 | | | | –0 | – | | | 33,658,658 | |
17
| | |
| INTERNATIONAL VALUE PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Materials | | $ | 4,990,586 | | | $ | 19,247,586 | | | $ | –0 | – | | $ | 24,238,172 | |
Information Technology | | | 3,247,675 | | | | 18,559,423 | | | | –0 | – | | | 21,807,098 | |
Communication Services | | | 2,326,984 | | | | 18,840,537 | | | | –0 | – | | | 21,167,521 | |
Energy | | | 4,629,296 | | | | 12,949,791 | | | | –0 | – | | | 17,579,087 | |
Utilities | | | –0 | – | | | 11,294,127 | | | | –0 | – | | | 11,294,127 | |
Real Estate | | | –0 | – | | | 4,213,169 | | | | –0 | – | | | 4,213,169 | |
Short-Term Investments | | | 3,119,358 | | | | –0 | – | | | –0 | – | | | 3,119,358 | |
Investments of Cash Collateral for Securities Loaned in Affiliated Money Market Fund | | | 272,524 | | | | –0 | – | | | –0 | – | | | 272,524 | |
| | | | | | | | | | | | | | | | |
Total Investments in Securities | | | 23,284,039 | | | | 258,565,674 | (a) | | | –0 | – | | | 281,849,713 | |
Other Financial Instruments(b): | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Forward Currency Exchange Contracts | | | –0 | – | | | 3,319,404 | | | | –0 | – | | | 3,319,404 | |
Liabilities: | | | | | | | | | | | | | | | | |
Forward Currency Exchange Contracts | | | –0 | – | | | (2,490,192 | ) | | | –0 | – | | | (2,490,192 | ) |
| | | | | | | | | | | | | | | | |
Total | | $ | 23,284,039 | | | $ | 259,394,886 | | | $ | –0 | – | | $ | 282,678,925 | |
| | | | | | | | | | | | | | | | |
| (a) | | A significant portion of the Portfolio’s foreign equity investments are categorized as Level 2 investments since they are valued using fair value prices based on third party vendor modeling tools to the extent available, see Note A.1. |
| (b) | | Other financial instruments are derivative instruments, such as futures, forwards and swaps, which are valued at the unrealized appreciation (depreciation) on the instrument. Other financial instruments may also include swaps with upfront premiums, written options and written swaptions which are valued at market value. |
3. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under forward currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and ask 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, 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 foreign currency denominated assets and liabilities.
4. 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. The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned. The Portfolio files withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. The Portfolio may record a reclaim receivable based on, among other things, a jurisdiction’s legal obligation to pay reclaims as well as payment history and market convention.
In consideration of recent decisions rendered by the European courts, the Portfolio filed reclaims to recover taxes withheld on dividends earned from certain European Union countries during calendar year 2015. These filings are subject to various administrative and judicial proceedings within these countries. For the year ended December 31, 2023, the Portfolio successfully recovered taxes withheld by France and is reflected in the statement of operations. No other amounts for additional tax reclaims are disclosed in the financial statements due to the uncertainty as to the ultimate resolution of proceedings, the likelihood of receipt of these reclaims, and the potential timing of payment.
18
| | |
| |
| | | AB Variable Products Series Fund |
In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, management has analyzed the Portfolio’s tax positions taken or expected to be taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Portfolio’s financial statements.
5. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Portfolio is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the date the securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. Non-cash dividends, if any, are recorded on the ex-dividend date at the fair value of the securities received. The Portfolio amortizes premiums and accretes discounts as adjustments to interest income. The Portfolio accounts for distributions received from REIT investments or from regulated investment companies as dividend income, realized gain, or return of capital based on information provided by the REIT or the investment company.
6. Class Allocations
All income earned and expenses incurred by the Portfolio 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 for class specific expenses which are allocated to the respective class. Expenses of the Fund are charged proportionately to each portfolio or based on other appropriate methods. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets.
7. Dividends and Distributions
Dividends and distributions to shareholders, if any, 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 U.S. GAAP. 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 the investment advisory agreement, the Portfolio pays the Adviser an advisory fee at an 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 Portfolio’s average daily net assets. The fee is accrued daily and paid monthly. The Adviser has agreed to waive its fees and bear certain expenses to the extent necessary to limit total operating expenses on an annual basis (the “Expense Caps”) to 1.20% and 1.45% of daily average net assets for Class A and Class B shares, respectively. For the year ended December 31, 2023, there were no expenses waived by the Adviser.
Pursuant to the investment advisory agreement, the Portfolio may reimburse the Adviser for certain legal and accounting services provided to the Portfolio by the Adviser. For the year ended December 31, 2023, the reimbursement for such services amounted to $96,526.
The Portfolio compensates AllianceBernstein Investor Services, Inc. (“ABIS”), 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 retained by ABIS amounted to $1,800 for the year ended December 31, 2023.
The Portfolio may invest in AB Government Money Market Portfolio (the “Government Money Market Portfolio”) which has a contractual annual advisory fee rate of .20% of the portfolio’s average daily net assets and bears its own expenses. The Adviser had contractually agreed to waive .10% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .10%) until August 31, 2023. Effective September 1, 2023, the Adviser has contractually agreed to waive .05% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .15%) until August 31, 2024. In connection with the investment by the Portfolio in Government Money Market Portfolio, the Adviser has contractually agreed to waive its advisory fee from the Portfolio in an amount equal to the Portfolio’s pro rata share of the effective advisory fee of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. For the year ended December 31, 2023, such waiver amounted to $5,716.
19
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| INTERNATIONAL VALUE PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
A summary of the Portfolio’s transactions in AB mutual funds for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | |
Portfolio | | Market Value
12/31/22
(000) | | | Purchases
at Cost
(000) | | | Sales
Proceeds
(000) | | | Market Value
12/31/23
(000) | | | Dividend
Income
(000) | |
Government Money Market Portfolio | | $ | 4,934 | | | $ | 98,743 | | | $ | 100,558 | | | $ | 3,119 | | | $ | 248 | |
Government Money Market Portfolio* | | | –0 | – | | | 39,297 | | | | 39,024 | | | | 273 | | | | 4 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | $ | 3,392 | | | $ | 252 | |
| | | | | | | | | | | | | | | | | | | | |
| * | | Investments of cash collateral for securities lending transactions (see Note E). |
NOTE C: Distribution Plan
The Portfolio has adopted a Distribution Plan (the “Plan”) for Class B shares pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Portfolio pays distribution and servicing fees to AllianceBernstein Investments, Inc. (the “Distributor”), 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 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 or 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 year ended December 31, 2023 were as follows:
| | | | | | | | |
| | | Purchases | | | Sales | |
Investment securities (excluding U.S. government securities) | | $ | 125,997,802 | | | $ | 134,545,031 | |
U.S. government securities | | | –0 | – | | | –0 | – |
The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation are as follows:
| | | | |
Cost | | $ | 256,497,329 | |
| | | | |
Gross unrealized appreciation | | $ | 47,255,941 | |
Gross unrealized depreciation | | | (21,826,360 | ) |
| | | | |
Net unrealized appreciation | | $ | 25,429,581 | |
| | | | |
1. Derivative Financial Instruments
The Portfolio may use derivatives in an effort to earn income and enhance returns, to replace more traditional direct investments, to obtain exposure to otherwise inaccessible markets (collectively, “investment purposes”), or to hedge or adjust the risk profile of its portfolio.
The principal type of derivative utilized by the Portfolio, as well as the methods in which they may be used are:
| | • | | Forward Currency Exchange Contracts |
The Portfolio may enter into forward currency exchange 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 sale commitments denominated in foreign currencies and for non-hedging purposes as a means of making direct investments in foreign currencies, as described below under “Currency Transactions”.
20
| | |
| |
| | | AB Variable Products Series Fund |
A forward currency exchange contract is a commitment to purchase or sell a foreign currency at 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 forward currency exchange contracts. Fluctuations in the value of open forward currency exchange contracts are recorded for financial reporting purposes as unrealized appreciation and/or depreciation by the Portfolio. 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.
During the year ended December 31, 2023, the Portfolio held forward currency exchange contracts for hedging purposes.
The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements (“ISDA Master Agreement”) with its OTC derivative contract counterparties in order to, among other things, reduce its credit risk to OTC counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the OTC counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default or termination. In the event of a default by an OTC counterparty, the return of collateral with market value in excess of the Portfolio’s net liability, held by the defaulting party, may be delayed or denied.
The Portfolio’s ISDA Master Agreements may contain provisions for early termination of OTC derivative transactions in the event the net assets of the Portfolio decline below specific levels (“net asset contingent features”). If these levels are triggered, the Portfolio’s OTC counterparty has the right to terminate such transaction and require the Portfolio to pay or receive a settlement amount in connection with the terminated transaction. If OTC derivatives were held at period end, please refer to netting arrangements by the OTC counterparty table below for additional details.
During the year ended December 31, 2023, the Portfolio had entered into the following derivatives:
| | | | | | | | | | | | |
| | | Asset Derivatives | | | Liability Derivatives | |
Derivative Type | | Statement of Assets and Liabilities Location | | Fair Value | | | Statement of Assets and Liabilities Location | | Fair Value | |
Foreign currency contracts | | Unrealized appreciation on forward currency exchange contracts | | $ | 3,319,404 | | | Unrealized depreciation on forward currency exchange contracts | | $ | 2,490,192 | |
| | | | | | | | | | | | |
Total | | | | $ | 3,319,404 | | | | | $ | 2,490,192 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Derivative Type | | Location of Gain or (Loss) on Derivatives
Within Statement of Operations | | Realized Gain or
(Loss) on
Derivatives | | | Change in Unrealized
Appreciation or
(Depreciation) | |
Foreign currency contracts | | Net realized gain (loss) on forward currency exchange contracts; Net change in unrealized appreciation (depreciation) of forward currency exchange contracts | | $ | 47,441 | | | $ | 722,054 | |
| | | | | | | | | | |
Total | | | | $ | 47,441 | | | $ | 722,054 | |
| | | | | | | | | | |
The following table represents the average monthly volume of the Portfolio’s derivative transactions during the year ended December 31, 2023:
| | | | |
Forward Currency Exchange Contracts: | | | | |
Average principal amount of buy contracts | | $ | 61,993,833 | |
Average principal amount of sale contracts | | $ | 56,902,943 | |
For financial reporting purposes, the Portfolio does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the statement of assets and liabilities.
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| INTERNATIONAL VALUE PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
All OTC derivatives held at period end were subject to netting arrangements. The following table presents the Portfolio’s derivative assets and liabilities by OTC counterparty net of amounts available for offset under ISDA Master Agreements (“MA”) and net of the related collateral received/pledged by the Portfolio as of December 31, 2023. Exchange-traded derivatives and centrally cleared swaps are not subject to netting arrangements and as such are excluded from the table.
| | | | | | | | | | | | | | | | | | | | |
Counterparty | | Derivative Assets
Subject to a MA | | | Derivatives
Available for
Offset | | | Cash Collateral
Received* | | | Security Collateral
Received* | | | Net Amount of
Derivative
Assets | |
Bank of America, NA | | $ | 621,191 | | | $ | (65,898 | ) | | $ | –0 | – | | $ | –0 | – | | $ | 555,293 | |
Barclays Bank PLC | | | 1,399,390 | | | | (222,895 | ) | | | –0 | – | | | –0 | – | | | 1,176,495 | |
BNP Paribas SA | | | 99,662 | | | | –0 | – | | | –0 | – | | | –0 | – | | | 99,662 | |
Citibank, NA | | | 481,275 | | | | (349,029 | ) | | | –0 | – | | | –0 | – | | | 132,246 | |
JPMorgan Chase Bank | | | 141,952 | | | | –0 | – | | | –0 | – | | | –0 | – | | | 141,952 | |
Morgan Stanley Capital Services, Inc. | | | 247,472 | | | | (247,472 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
State Street Bank & Trust Co. | | | 193,584 | | | | (45,202 | ) | | | –0 | – | | | –0 | – | | | 148,382 | |
UBS | | | 134,878 | | | | (134,878 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 3,319,404 | | | $ | (1,065,374 | ) | | $ | –0 | – | | $ | –0 | – | | $ | 2,254,030 | ^ |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Counterparty | | Derivative Liabilities
Subject to a MA | | | Derivatives
Available for
Offset | | | Cash Collateral
Pledged* | | | Security Collateral
Pledged* | | | Net Amount of
Derivative
Liabilities | |
Bank of America, NA | | $ | 65,898 | | | $ | (65,898 | ) | | $ | –0 | – | | $ | –0 | – | | $ | –0 | – |
Barclays Bank PLC | | | 222,895 | | | | (222,895 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
Citibank, NA | | | 349,029 | | | | (349,029 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
Goldman Sachs Bank USA | | | 89,174 | | | | –0 | – | | | –0 | – | | | –0 | – | | | 89,174 | |
Morgan Stanley Capital Services, Inc. | | | 1,548,749 | | | | (247,472 | ) | | | –0 | – | | | –0 | – | | | 1,301,277 | |
State Street Bank & Trust Co. | | | 45,202 | | | | (45,202 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
UBS | | | 169,245 | | | | (134,878 | ) | | | –0 | – | | | –0 | – | | | 34,367 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 2,490,192 | | | $ | (1,065,374 | ) | | $ | –0 | – | | $ | –0 | – | | $ | 1,424,818 | ^ |
| | | | | | | | | | | | | | | | | | | | |
| * | | The actual collateral received/pledged may be more than the amount reported due to over-collateralization. |
| ^ | | Net amount represents the net receivable/payable that would be due from/to the counterparty in the event of default or termination. The net amount from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same counterparty. |
2. Currency Transactions
The Portfolio may invest in non-U.S. Dollar-denominated securities on a currency hedged or unhedged basis. The Portfolio may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and other options. The Portfolio may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Portfolio and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Portfolio may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).
NOTE E: Securities Lending
The Portfolio may enter into securities lending transactions. Under the Portfolio’s securities lending program, all loans of securities will be collateralized continually by cash collateral and/or non-cash collateral. Non-cash collateral will include only securities issued or guaranteed by the U.S. government or its agencies or instrumentalities. If the Portfolio cannot sell or repledge any non-cash collateral, such collateral will not be reflected in the portfolio of investments. If a loan is collateralized by cash, the Portfolio will be compensated for the loan from a portion of the net return from the income earned on cash collateral after a rebate is paid to the borrower (in some cases, this rebate may be a “negative rebate” or fee paid by the borrower to the Portfolio in connection with the loan), and payments are made for fees of the securities lending agent and for certain other administrative expenses. If the Portfolio receives non-cash collateral, the Portfolio will receive a fee from the borrower generally equal to a negotiated percentage of the market value of the loaned securities. The Portfolio will have the
22
| | |
| |
| | | AB Variable Products Series Fund |
right to call a loan and obtain the securities loaned at any time on notice to the borrower within the normal and customary settlement time for the securities. While the securities are on loan, the borrower is obligated to pay the Portfolio amounts equal to any dividend income or other distributions from the securities; however, these distributions will not be afforded the same preferential tax treatment as qualified dividends. The Portfolio will not be able to exercise voting rights with respect to any securities during the existence of a loan, but will have the right to regain ownership of loaned securities in order to exercise voting or other ownership rights. Collateral received and securities loaned are marked to market daily to ensure that the securities loaned are secured by collateral. The lending agent currently invests the cash collateral received in Government Money Market Portfolio, an eligible money market vehicle, in accordance with the investment restrictions of the Portfolio, and as approved by the Board. The collateral received on securities loaned is recorded as an asset as well as a corresponding liability in the statement of assets and liabilities. The collateral will be adjusted the next business day to maintain the required collateral amount. The amounts of securities lending income from the borrowers and Government Money Market Portfolio are reflected in the statement of operations. When the Portfolio earns net securities lending income from Government Money Market Portfolio, the income is inclusive of a rebate expense paid to the borrower. In connection with the cash collateral investment by the Portfolio in Government Money Market Portfolio, the Adviser has agreed to waive a portion of the Portfolio’s share of the advisory fees of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. When the Portfolio lends securities, its investment performance will continue to reflect changes in the value of the securities loaned. A principal risk of lending portfolio securities is that the borrower may fail to return the loaned securities upon termination of the loan and that the collateral will not be sufficient to replace the loaned securities. The lending agent has agreed to indemnify the Portfolio in the case of default of any securities borrower.
A summary of the Portfolio’s transactions surrounding securities lending for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Government Money Market
Portfolio | |
Market Value of
Securities on Loan* | | | Cash Collateral* | | | Market Value of
Non-Cash
Collateral* | | | Income from
Borrowers | | | Income Earned | | | Advisory Fee
Waived | |
| $ | 1,251,154 | | | $ | 272,524 | | | $ | 1,042,949 | | | $ | 17,154 | | | $ | 4,473 | | | $ | 688 | |
| * | | As of December 31, 2023. |
NOTE F: Capital Stock
Each class consists of 500,000,000 authorized shares. Transactions in capital shares for each class were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | SHARES | | | | | | AMOUNT | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | | | | | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
Class A | |
Shares sold | | | 416,897 | | | | 459,051 | | | | | | | $ | 5,999,806 | | | $ | 6,374,956 | |
Shares issued in reinvestment of dividends and distributions | | | 24,650 | | | | 143,446 | | | | | | | | 355,217 | | | | 1,868,599 | |
Shares redeemed | | | (551,140 | ) | | | (372,951 | ) | | | | | | | (7,835,184 | ) | | | (5,083,971 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (109,593 | ) | | | 229,546 | | | | | | | $ | (1,480,161 | ) | | $ | 3,159,584 | |
| | | | | | | | | | | | | | | | | | | | |
Class B | |
Shares sold | | | 2,539,673 | | | | 1,107,715 | | | | | | | $ | 37,164,439 | | | $ | 14,215,373 | |
Shares issued on reinvestment of dividends and distributions | | | 114,759 | | | | 741,725 | | | | | | | | 1,645,638 | | | | 9,615,429 | |
Shares redeemed | | | (3,547,605 | ) | | | (4,064,954 | ) | | | | | | | (50,213,287 | ) | | | (53,742,890 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net decrease | | | (893,173 | ) | | | (2,215,514 | ) | | | | | | $ | (11,403,210 | ) | | $ | (29,912,088 | ) |
| | | | | | | | | | | | | | | | | | | | |
At December 31, 2023, certain shareholders of the Portfolio owned 52% in aggregate of the Portfolio’s outstanding shares. Significant transactions by such shareholders, if any, may impact the Portfolio’s performance.
NOTE G: Risks Involved in Investing in the Portfolio
Market Risk—The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events,
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| INTERNATIONAL VALUE PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Foreign (Non-U.S.) Risk—Investments in securities of non-U.S. issuers may involve more risk than those of U.S. issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
Emerging-Market Risk—Investments in emerging market countries may have more risk because the markets are less developed and less liquid, and because these investments may be subject to increased economic, political, regulatory or other uncertainties.
Currency Risk—Fluctuations in currency exchange rates may negatively affect the value of the Portfolio’s investments or reduce its returns.
Derivatives Risk—Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
Leverage Risk—When the Portfolio borrows money or otherwise leverages its investments, its performance may be volatile because leverage tends to exaggerate the effect of any increase or decrease in the value of the Portfolio’s investments. The Portfolio may create leverage through the use of reverse repurchase arrangements, forward currency exchange contracts, forward commitments, dollar rolls or futures or by borrowing money. The use of other types of derivative instruments by the Portfolio, such as options and swaps, may also result in a form of leverage. Leverage may result in higher returns to the Portfolio than if the Portfolio were not leveraged, but may also adversely affect returns, particularly if the market is declining.
LIBOR Replacement Risk—The Portfolio may be exposed to debt securities, derivatives or other financial instruments that recently transitioned from the London Interbank Offered Rate, or “LIBOR,” as a “benchmark” or “reference rate” for various interest rate calculations. LIBOR’s administrator, ICE Benchmark Administration, ceased publishing most LIBOR settings (including some U.S. LIBOR settings) by the end of 2021 and the remaining (and most widely used) U.S. Dollar LIBOR settings after June 30, 2023. The United Kingdom Financial Conduct Authority, which regulates LIBOR, will permit the use of synthetic U.S. Dollar LIBOR rates for non-U.S. contracts through September 30, 2024, but any such rates would be considered non-representative of the underlying market. Since 2018 the Federal Reserve Bank of New York has published the Secured Overnight Financing Rate (referred to as SOFR), which is intended to replace U.S. Dollar LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities in the repurchase agreement (repo) market. There is no assurance that the composition or characteristics of SOFR or any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that the market for SOFR-linked financial instruments will have the same volume or liquidity as did the market for LIBOR-linked financial instruments prior to LIBOR’s discontinuance or unavailability. Neither the long-term effects of the LIBOR transition process nor its ultimate success can yet be known.
Indemnification Risk—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. Therefore, the Portfolio has not accrued any liability in connection with these indemnification provisions.
Management Risk—The Portfolio is subject to management risk because it is an actively-managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
24
| | |
| |
| | | AB 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 $325 million revolving credit facility (the “Facility”) intended to provide short-term financing related to redemptions and other short term liquidity requirements, subject to certain restrictions. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Portfolio did not utilize the Facility during the year ended December 31, 2023.
NOTE I: Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended December 31, 2023 and December 31, 2022 were as follows:
| | | | | | | | |
| | | 2023 | | | 2022 | |
Distributions paid from: | | | | | | | | |
Ordinary income | | $ | 2,000,855 | | | $ | 10,868,218 | |
| | | | | | | | |
Total taxable distributions paid | | $ | 2,000,855 | | | $ | 10,868,218 | |
| | | | | | | | |
Return of Capital | | | –0 | – | | | 615,810 | |
| | | | | | | | |
Total distributions paid | | $ | 2,000,855 | | | $ | 11,484,028 | |
| | | | | | | | |
As of December 31, 2023, the components of accumulated earnings (deficit) on a tax basis were as follows:
| | | | |
Undistributed ordinary income | | $ | 4,345,081 | |
Accumulated capital and other losses | | | (15,551,881 | )(a) |
Unrealized appreciation (depreciation) | | | 25,463,087 | (b) |
| | | | |
Total accumulated earnings (deficit) | | $ | 14,256,287 | |
| | | | |
| (a) | | As of December 31, 2023, the Portfolio had a net capital loss carryforward of $15,551,881. |
| (b) | | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable primarily to the recognition for tax purposes of unrealized gains/losses on certain derivative instruments, the tax treatment of passive foreign investment companies (PFICs), and the tax deferral of losses on wash sales. |
For tax purposes, net realized capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses for an indefinite period, and such losses will retain their character as either short-term or long-term capital losses. As of December 31, 2023, the Portfolio had a net short-term capital loss carryforward of $10,206,472 and a net long-term capital loss carryforward of $5,345,409, which may be carried forward for an indefinite period.
During the current fiscal year, there were no permanent differences that resulted in adjustments to distributable earnings or additional paid-in capital.
NOTE J: Recent Accounting Pronouncements
In December 2022, the Financial Accounting Standards Board issued an Accounting Standards Update, ASU 2022-06, “Reference Rate Reform (Topic 848)—Deferral of the Sunset Date of Topic 848”. ASU 2022-06 is an amendment to ASU 2020-04, which provided optional guidance to ease the potential accounting burden due to the discontinuation of the LIBOR and other interbank-offered based reference rates and which was effective as of March 12, 2020 through December 31, 2022. ASU 2022-06 extends the effective period through December 31, 2024. Management is currently evaluating the impact, if any, of applying ASU 2022-06.
NOTE K: Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Portfolio’s financial statements through this date.
25
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| INTERNATIONAL VALUE PORTFOLIO | | |
| |
| FINANCIAL HIGHLIGHTS | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS A | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | | $12.95 | | | | $15.72 | | | | $14.45 | | | | $14.37 | | | | $12.38 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment income(a)(b) | | | .29 | | | | .44 | | | | .37 | | | | .18 | | | | .28 | |
Net realized and unrealized gain (loss) on investment and foreign currency transactions | | | 1.67 | | | | (2.58 | ) | | | 1.22 | | | | .14 | | | | 1.84 | |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 1.96 | | | | (2.14 | ) | | | 1.59 | | | | .32 | | | | 2.12 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Dividends and Distributions | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (.12 | ) | | | (.60 | ) | | | (.32 | ) | | | (.24 | ) | | | (.13 | ) |
Return of capital | | | –0 | – | | | (.03 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (.12 | ) | | | (.63 | ) | | | (.32 | ) | | | (.24 | ) | | | (.13 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $14.79 | | | | $12.95 | | | | $15.72 | | | | $14.45 | | | | $14.37 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset value(c)* | | | 15.15 | % | | | (13.61 | )% | | | 11.08 | % | | | 2.46 | % | | | 17.14 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | | $44,286 | | | | $40,197 | | | | $45,175 | | | | $41,994 | | | | $54,042 | |
Ratio to average net assets of: | |
Expenses, net of waivers/reimbursements | | | .90 | % | | | .88 | % | | | .90 | % | | | .91 | % | | | .90 | % |
Expenses, before waivers/reimbursements | | | .90 | % | | | .89 | % | | | .90 | % | | | .92 | % | | | .90 | % |
Net investment income(b) | | | 2.03 | % | | | 3.24 | % | | | 2.34 | % | | | 1.47 | % | | | 2.10 | % |
Portfolio turnover rate | | | 46 | % | | | 37 | % | | | 43 | % | | | 54 | % | | | 44 | % |
See footnote summary on page 28.
26
| | |
| |
| | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS B | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | | $12.90 | | | | $15.62 | | | | $14.34 | | | | $14.24 | | | | $12.29 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment income(a)(b) | | | .26 | | | | .40 | | | | .32 | | | | .14 | | | | .24 | |
Net realized and unrealized gain (loss) on investment and foreign currency transactions | | | 1.65 | | | | (2.56 | ) | | | 1.23 | | | | .15 | | | | 1.82 | |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 1.91 | | | | (2.16 | ) | | | 1.55 | | | | .29 | | | | 2.06 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Dividends and Distributions | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (.10 | ) | | | (.53 | ) | | | (.27 | ) | | | (.19 | ) | | | (.11 | ) |
Return of capital | | | –0 | – | | | (.03 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (.10 | ) | | | (.56 | ) | | | (.27 | ) | | | (.19 | ) | | | (.11 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $14.71 | | | | $12.90 | | | | $15.62 | | | | $14.34 | | | | $14.24 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset
value(c)* | | | 14.83 | % | | | (13.80 | )% | | | 10.86 | % | | | 2.21 | % | | | 16.79 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | | $241,282 | | | | $223,060 | | | | $304,737 | | | | $299,415 | | | | $323,582 | |
Ratio to average net assets of: | | | | | | | | | | | | | | | | | | | | |
Expenses, net of waivers/reimbursements | | | 1.15 | % | | | 1.13 | % | | | 1.15 | % | | | 1.16 | % | | | 1.15 | % |
Expenses, before waivers/reimbursements | | | 1.15 | % | | | 1.14 | % | | | 1.15 | % | | | 1.17 | % | | | 1.15 | % |
Net investment income(b) | | | 1.80 | % | | | 2.98 | % | | | 2.08 | % | | | 1.18 | % | | | 1.84 | % |
Portfolio turnover rate | | | 46 | % | | | 37 | % | | | 43 | % | | | 54 | % | | | 44 | % |
See footnote summary on page 28.
27
| | |
| INTERNATIONAL VALUE PORTFOLIO | | |
| FINANCIAL HIGHLIGHTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| (a) | | Based on average shares outstanding. |
| (b) | | Net of expenses waived/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 (i) insurance company’s separate account related expense charges and (ii) the deductions 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. |
| * | | Includes the impact of proceeds received and credited to the Portfolio resulting from class action settlements, which enhanced the Portfolio’s performance for the years ended December 31, 2022, December 31, 2020, and December 31, 2019 by .01%, .04% and .18%, respectively. |
See notes to financial statements.
28
| | |
| | |
| REPORT OF INDEPENDENT REGISTERED | | |
| |
| PUBLIC ACCOUNTING FIRM | | AB Variable Products Series Fund |
To the Shareholders and the Board of Directors of AB International Value Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of AB International Value Portfolio (the “Portfolio”) (one of the series constituting AB Variable Products Series Fund, Inc. (the “Fund”)), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Portfolio (one of the series constituting AB Variable Products Series Fund, Inc.) at December 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Portfolio’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers or others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the AB investment companies since 1968.
New York, New York
February 14, 2024
29
| | |
| | |
| | |
| |
| 2023 TAX INFORMATION (unaudited) | | AB Variable Products Series Fund |
For Federal income tax purposes, the following information is furnished with respect to the earnings of the Portfolio for the taxable year ended December 31, 2023.
The Portfolio intends to make an election to pass through foreign taxes to its shareholders. For the taxable year ended December 31, 2023, $599,096 of foreign taxes may be passed through and the associated foreign source income for information reporting purposes is $8,061,155.
30
| | |
| | |
| | |
| |
| INTERNATIONAL VALUE PORTFOLIO | | AB Variable Products Series Fund |
| | |
| BOARD OF DIRECTORS | | |
Garry L. Moody(1), Chairman Jorge A. Bermudez(1) Michael J. Downey(1) Onur Erzan, President and
Chief Executive Officer | | Nancy P. Jacklin(1) Jeanette W. Loeb(1) Carol C. McMullen(1) Marshall C. Turner, Jr.(1) Emilie D. Wrapp, Advisory Board Member |
| | |
| | |
| OFFICERS | | |
Justin Moreau(2), Vice President Avi Lavi(2), Vice President Nancy E. Hay, Secretary Michael B. Reyes, Senior Vice President | | Stephen M. Woetzel, Treasurer and
Chief Financial Officer Phyllis J. Clarke, Controller Jennifer Friedland, Chief Compliance Officer |
| | |
| | |
CUSTODIANAND ACCOUNTING AGENT State Street Bank and Trust Company One Congress Street, Suite 1 Boston, MA 02114 | | LEGAL COUNSEL Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 |
| | |
DISTRIBUTOR AllianceBernstein Investments, Inc. 501 Commerce Street Nashville, TN 37203 | | TRANSFER AGENT AllianceBernstein Investor Services, Inc. P.O. Box 786003 San Antonio, TX 78278 Toll-Free (800) 221-5672 |
| | |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP One Manhattan West New York, NY 10001 | | |
| (1) | | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
| (2) | | The day-to-day management of, and investment decisions for, the Portfolio’s portfolio are made by the Adviser’s International Value Senior Investment Management Team. Messrs. Moreau and Lavi are the investment professionals with the most significant responsibility for the day-to-day management of the Portfolio’s portfolio. |
31
| | |
| | |
| INTERNATIONAL VALUE PORTFOLIO | | |
| |
| MANAGEMENT OF THE FUND | | AB Variable Products Series Fund |
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund’s Directors and the Advisory Board member is set forth below.
| | | | | | |
NAME, ADDRESS*, AGE AND (YEAR FIRST ELECTED)** | | PRINCIPAL
OCCUPATION(S),
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS IN AB FUND COMPLEX OVERSEEN BY DIRECTOR | | OTHER PUBLIC COMPANY DIRECTORSHIPS CURRENTLY HELD BY DIRECTOR |
| INTERESTED DIRECTOR | | | | | | |
| | | | | | |
Onur Erzan,#
1345 Avenue of the Americas New York, NY 10105 48 (2021) | | Senior Vice President of the Adviser, Head of Global Client Group and Head of Private Wealth. He oversees AB’s entire private wealth management business and third-party institutional and retail franchise where he is responsible for all client services, sales and marketing, as well as product strategy, management and development worldwide. Director, President and Chief Executive Officer of the AB Mutual Funds as of April 1, 2021. He is also a member of the Equitable Holdings Management Committee. Prior to joining the firm in January 2021, he spent 19 years with McKinsey (management consulting firm), most recently as a senior partner and co-leader of its Wealth & Asset Management practice. In addition, he co-led McKinsey’s Banking & Securities Solutions (a portfolio of data, analytics, and digital assets and capabilities) globally. | | 82 | | None |
| | | | | | |
| INDEPENDENT DIRECTORS | | | | |
| | | | | | |
Garry L. Moody##
Chairman of the Board
71
(2008) | | Private Investor since prior to 2019. Formerly, Partner, Deloitte & Touche LLP (1995–2008) where he held a number of senior positions, including Vice Chairman, and U.S. and Global Investment Management Practice Managing Partner; President, Fidelity Accounting and Custody Services Company (1993–1995), where he was responsible for accounting, pricing, custody and reporting for the Fidelity mutual funds; and Partner, Ernst & Young LLP (1975–1993), where he served as the National Director of Mutual Fund Tax Services and Managing Partner of its Chicago Office Tax department. He served as a member of the Investment Company Institute’s Board of Governors and the Independent Directors Council’s Governing Council from October 2019 through September 2023, where he also served as Chairman of the Governance Committee from October 2021 through September 2023. He is Chairman of the AB Funds and Chairman of the Independent Directors Committees since January 2023; he has served as a director or trustee since 2008, and served as Chairman of the Audit Committee of such funds from 2008 to February 2023. | | 82 | | None |
| | | | | | |
32
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | |
NAME, ADDRESS*, AGE AND (YEAR FIRST ELECTED)** | | PRINCIPAL
OCCUPATION(S),
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS IN AB FUND COMPLEX OVERSEEN BY DIRECTOR | | OTHER PUBLIC COMPANY DIRECTORSHIPS CURRENTLY HELD BY DIRECTOR |
INDEPENDENT DIRECTORS (continued) |
| | | | | | |
Jorge A. Bermudez,##
72 (2020) | | Private Investor since prior to 2019. Formerly, Chief Risk Officer of Citigroup, Inc., a global financial services company, from November 2007 to March 2008; Chief Executive Officer of Citigroup’s Commercial Business Group in North America and Citibank Texas from 2005 to 2007; and a variety of other executive and leadership roles at various businesses within Citigroup prior to then; Chairman (2017–2018) of the Texas A&M Foundation Board of Trustees (Trustee 2014–2021) and Chairman of the Smart Grid Center Board at Texas A&M University since 2012; director of, among others, Citibank N.A. from 2005 to 2008, the Federal Reserve Bank of Dallas, Houston Branch from 2009 to 2011, the Federal Reserve Bank of Dallas from 2011 to 2017, and the Electric Reliability Council of Texas from 2010 to 2016; and Chair of the Audit Committee of the Board of Directors of Moody’s Corporation since December 2022. He has served as director or trustee of the AB Funds since January 2020. | | 82 | | Moody’s Corporation since April 2011 |
| | | | | | |
Michael J. Downey,##
80 (2005) | | Private Investor since prior to 2019. Formerly, Chairman of The Asia Pacific Fund, Inc. (registered investment company) from 2002 to 2018 until January 2019. From 1987 until 1993, Chairman and CEO of Prudential Mutual Fund Management, director of the Prudential mutual funds, and member of the Executive Committee of Prudential Securities, Inc. He has served as a director or trustee of the AB Funds since 2005. | | 82 | | None |
| | | | | | |
Nancy P. Jacklin,##
75 (2006) | | Private Investor since prior to 2019. Professorial Lecturer at the Johns Hopkins School of Advanced International Studies (2008–2015). U.S. Executive Director of the International Monetary Fund (which is responsible for ensuring the stability of the international monetary system), (December 2002–May 2006); Partner, Clifford Chance (1992–2002); Sector Counsel, International Banking and Finance, and Associate General Counsel, Citicorp (1985–1992); Assistant General Counsel (International), Federal Reserve Board of Governors (1982–1985); and Attorney Advisor, U.S. Department of the Treasury (1973–1982). Member of the Bar of the District of Columbia and of New York; and member of the Council on Foreign Relations. She has served as a director or trustee of the AB Funds since 2006 and served as Chair of the Governance and Nominating Committees of the AB Funds from 2014 to August 2023. | | 82 | | None |
| | | | | | |
33
| | |
| INTERNATIONAL VALUE PORTFOLIO | | |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | |
NAME, ADDRESS*, AGE AND (YEAR FIRST ELECTED)** | | PRINCIPAL
OCCUPATION(S),
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS IN AB FUND COMPLEX OVERSEEN BY DIRECTOR | | OTHER PUBLIC COMPANY DIRECTORSHIPS CURRENTLY HELD BY DIRECTOR |
INDEPENDENT DIRECTORS (continued) |
| | | | | | |
Jeanette W. Loeb,##
71
(2020) | | Private Investor since prior to 2019. Director of New York City Center since 2005. Formerly, Chief Executive Officer of PetCareRx (e-commerce pet pharmacy) from 2002 to 2011 and 2015 to April 2023. She was a director of MidCap Financial Investment Corporation (business development company) from August 2011 to July 2023 and a director of AB Multi-Manager Alternative Fund (fund of hedge funds) from 2012 to 2018. Formerly, affiliated with Goldman Sachs Group, Inc. (financial services) from 1977 to 1994, including as a partner thereof from 1986 to 1994. She has served as director or trustee of the AB Funds since April 2020 and serves as Chair of the Governance and Nominating Committees of the AB Funds since August 2023. | | 82 | | None |
| | | | | | |
Carol C. McMullen,##
68 (2016) | | Private Investor and a member of the Advisory Board of Butcher Box (since 2018) and serves as Advisory Board Chair as of June 2023. Formerly, Managing Director of Slalom Consulting (consulting) from 2014 until July 2023; member, Mass General Brigham (formerly, Partners Healthcare) Investment Committee (2010-2019); Director of Norfolk & Dedham Group (mutual property and casualty insurance) from 2011 until November 2016; Director of Partners Community Physicians Organization (healthcare) from 2014 until December 2016; and Managing Director of The Crossland Group (consulting) from 2012 until 2013. She has held a number of senior positions in the asset and wealth management industries, including at Eastern Bank (where her roles included President of Eastern Wealth Management), Thomson Financial (Global Head of Sales for Investment Management), and Putnam Investments (where her roles included Chief Investment Officer, Core and Growth and Head of Global Investment Research). She has served on a number of private company and non-profit boards, and as a director or trustee of the AB Funds since June 2016 and serves as Chair of the Audit Committees of such funds since February 2023. | | 82 | | None |
| | | | | | |
Marshall C. Turner, Jr.##
82
(2005) | | Private Investor since prior to 2019. He was a Director of Xilinx, Inc. (programmable logic semi-conductors and adaptable, intelligent computing) from 2007 through August 2020, and is a former director of 33 other companies and organizations. Former Chairman and CEO of Dupont Photomasks, Inc. (semi-conductor manufacturing equipment) from 2003 through 2006. He has extensive operating leadership and venture capital investing experience, including five interim or full-time CEO roles, and prior service as general partner of institutional venture capital partnerships. He also has extensive non-profit board leadership experience, and currently serves on the board of the George Lucas Educational Foundation. He has served as a director of one AB Fund since 1992, and director or trustee of all AB Funds since 2005. He has served as both Chairman of the AB Funds and Chairman of the Independent Directors Committees from 2014 through December 2022. | | 82 | | None |
| | | | | | |
34
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | |
NAME, ADDRESS*, AGE AND (YEAR FIRST ELECTED)** | | PRINCIPAL
OCCUPATION(S),
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS IN AB FUND COMPLEX OVERSEEN BY DIRECTOR | | OTHER PUBLIC COMPANY DIRECTORSHIPS CURRENTLY HELD BY DIRECTOR |
| ADVISORY BOARD MEMBER |
| | | | | | |
Emilie D. Wrapp,# 68 (2024) | | Former Senior Vice President, Counsel, Assistant Secretary & Senior Mutual Fund Legal Advisor of the Adviser (January 2023 – June 2023). Prior thereto, Senior Vice President, Assistant Secretary, Counsel, and Head of Mutual Fund & Retail Legal of the Adviser; Assistant General Counsel and Assistant Secretary of ABI since prior to 2019 until June 2023. | | 82 | | None |
| * | The address for each of the Fund’s Directors and the Advisory Board member is c/o AllianceBernstein L.P., Attention: Legal and Compliance Department—Mutual Fund Legal, 1345 Avenue of the Americas, New York, NY 10105. |
| ** | There is no stated term of office for the Fund’s Directors or the Advisory Board member. |
| *** | The information above includes each Director’s principal occupation during the last five years and other information relating to the experience, attributes and skills relevant to each Director’s qualifications to serve as a Director, which led to the conclusion that each Director should serve as a Director for the Fund. |
| # | Mr. Erzan is an “interested person” of the Fund, as defined in the “1940 Act”, due to his position as a Senior Vice President of the Adviser. Ms. Wrapp is an “interested person” of the Fund, as defined in the 1940 Act, due to her former role with the Adviser. |
| ## | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
35
| | |
| INTERNATIONAL VALUE PORTFOLIO | | |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
Officer Information
Certain information concerning the Portfolio’s Officers is listed below.
| | | | |
NAME, ADDRESS*
AND AGE | | PRINCIPAL POSITION(S)
HELD WITH FUND | | PRINCIPAL OCCUPATION
DURING PAST FIVE YEARS |
Onur Erzan
48 | | President and Chief Executive Officer | | See biography above. |
| | | | |
Justin Moreau
38 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated in a substantially similar capacity to his current position, including as a research analyst, since prior to 2019. |
| | | | |
Avi Lavi
57 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated since prior to 2019. He is also Chief Investment Officer of Global and International Value Equities. |
| | | | |
Nancy E. Hay
51 | | Secretary | | Senior Vice President and Counsel of the Adviser**, with which she has been associated since prior to 2019 and Assistant Secretary of ABI**. |
| | | | |
Michael B. Reyes
47 | | Senior Vice President | | Vice President of the Adviser**, with which he has been associated since prior to 2019. |
| | | | |
Stephen M. Woetzel
52 | | Treasurer and Chief
Financial Officer | | Senior Vice President of ABIS**, with which he has been associated since prior to 2019. |
| | | | |
Phyllis J. Clarke
63 | | Controller | | Vice President of ABIS**, with which she has been associated since prior to 2019. |
| | | | |
Jennifer Friedland
49 | | Chief Compliance Officer | | Vice President of the Adviser** since 2020 and Mutual Fund Chief Compliance Officer (of all Funds since January 2023 and of the ETF Funds since 2022). Before joining the Adviser in 2020, she was Chief Compliance Officer at WestEnd Advisors, LLC from 2013 until 2019. |
| * | | The address for each of the Portfolio Officers is 1345 Avenue of the Americas, New York, NY 10105. |
| ** | | The Adviser, ABI and ABIS are affiliates of the Fund. |
| | | The Fund’s Statement of Additional Information (“SAI”) has additional information about the Fund’s Directors and Officers and is available without charge upon request. Contact your financial representative or the Adviser at (800) 227-4618, or visit www.abfunds.com, for a free prospectus or SAI. |
36
| | |
| | |
| | |
| |
| INTERNATIONAL VALUE PORTFOLIO | | AB Variable Products Series Fund |
OPERATION AND EFFECTIVENESS OF THE PORTFOLIO’S LIQUIDITY RISK MANAGEMENT PROGRAM:
In October 2016, the Securities and Exchange Commission (“SEC”) adopted the open-end fund liquidity rule (the “Liquidity Rule”). In June 2018 the SEC adopted a requirement that funds disclose information about the operation and effectiveness of their Liquidity Risk Management Program (“LRMP”) in their reports to shareholders.
One of the requirements of the Liquidity Rule is for the Portfolio to designate an Administrator of the Portfolio’s Liquidity Risk Management Program. The Administrator of the Portfolio’s LRMP is AllianceBernstein L.P., the Portfolio’s investment adviser (the “Adviser”). The Adviser has delegated the responsibility to its Liquidity Risk Management Committee (the “Committee”).
Another requirement of the Liquidity Rule is for the Portfolio’s Board of Directors/Trustees (the “Fund Board”) to receive an annual written report from the Administrator of the LRMP, which addresses the operation of the Portfolio’s LRMP and assesses its adequacy and effectiveness. The Adviser provided the Fund Board with such annual report during the first quarter of 2024, which covered the period January 1, 2023 through December 31, 2023 (the “Program Reporting Period”).
The LRMP’s principal objectives include supporting the Portfolio’s compliance with limits on investments in illiquid assets and mitigating the risk that the Portfolio will be unable to meet its redemption obligations in a timely manner.
Pursuant to the LRMP, the Portfolio classifies the liquidity of its portfolio investments into one of the four categories defined by the SEC: Highly Liquid, Moderately Liquid, Less Liquid, and Illiquid. These classifications are reported to the SEC on Form N-PORT.
During the Program Reporting Period, the Committee reviewed whether the Portfolio’s strategy is appropriate for an open-end structure, incorporating any holdings of less liquid and illiquid assets. If the Portfolio participated in derivative transactions, the exposure from such transactions were considered in the LRMP.
The Committee also performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum (“HLIM”). The Committee also incorporated the following information when determining the Portfolio’s reasonably anticipated trading size for purposes of liquidity monitoring: historical net redemption activity, a Portfolio’s concentration in an issuer, shareholder concentration, investment performance, total net assets, and distribution channels.
The Adviser informed the Fund Board that the Committee believes the Portfolio’s LRMP is adequately designed, has been implemented as intended, and has operated effectively since its inception. No material exceptions have been noted since the implementation of the LRMP. During the Program Reporting Period, liquidity in all markets was challenged due to rising rates and economic uncertainty. However, markets also remained orderly during the Program Reporting Period. There were no liquidity events that impacted the Portfolio or its ability to timely meet redemptions during the Program Reporting Period.
37
| | |
| | |
| INTERNATIONAL VALUE PORTFOLIO | | |
| |
| CONTINUANCE DISCLOSURE | | AB Variable Products Series Fund |
INFORMATION REGARDING THE REVIEW AND APPROVAL OF THE FUND’S ADVISORY AGREEMENT
The disinterested directors (the “directors”) of AB Variable Products Series Fund, Inc. (the “Company”) unanimously approved the continuance of the Company’s Advisory Agreement with the Adviser in respect of AB International Value Portfolio (the “Fund”) at a meeting held in-person on May 2-4, 2023 (the “Meeting”).
Prior to approval of the continuance of the Advisory Agreement, the directors had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The directors also reviewed additional materials, including comparative analytical data prepared by the Senior Vice President of the Fund. The directors also discussed the proposed continuance in private sessions with counsel.
The directors considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as directors or trustees of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the directors and its responsiveness, frankness and attention to concerns raised by the directors in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AB Funds. The directors noted that they have four regular meetings each year, at each of which they review extensive materials and information from the Adviser, including information on the investment performance of the Fund.
The directors also considered all factors they believed relevant, including the specific matters discussed below. During the course of their deliberations, the directors evaluated, among other things, the reasonableness of the advisory fee. The directors did not identify any particular information that was all-important or controlling, and different directors may have attributed different weights to the various factors. The directors determined that the selection of the Adviser to manage the Fund and the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors’ determinations included the following:
Nature, Extent and Quality of Services Provided
The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. The directors noted that the Adviser from time to time reviews the Fund’s investment strategies and from time to time proposes changes intended to improve the Fund’s relative or absolute performance for the directors’ consideration. They also noted the professional experience and qualifications of the Fund’s portfolio management team and other senior personnel of the Adviser. The directors also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services to the Fund by employees of the Adviser or its affiliates. Requests for these reimbursements are made on a quarterly basis and subject to approval by the directors. Reimbursements, to the extent requested and paid, result in a higher rate of total compensation from the Fund to the Adviser than the fee rate stated in the Advisory Agreement. The directors noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant at the request of the directors. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of the Fund’s other service providers, also was considered. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement.
Costs of Services Provided and Profitability
The directors reviewed a schedule of the revenues and expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2021 and 2022 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant at the request of the directors. The directors noted the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and understood that there are a number of potentially acceptable allocation methodologies for information of this type. The directors noted that the profitability information reflected all revenues and expenses of the Adviser’s relationship with the Fund, including those relating to its subsidiaries that provide transfer agency, distribution and brokerage services to the Fund. The directors recognized that it is difficult to make comparisons of the profitability of the Advisory Agreement with the profitability of fund advisory contracts for unaffiliated funds because comparative information is not generally publicly available and is affected by numerous
38
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factors. The directors focused on the profitability of the Adviser’s relationship with the Fund before taxes and distribution expenses. The directors concluded that the Adviser’s level of profitability from its relationship with the Fund was not unreasonable.
Fall-Out Benefits
The directors considered the other benefits to the Adviser and its affiliates from their relationships with the Fund, including, but not limited to, benefits relating to soft dollar arrangements (whereby investment advisers receive brokerage and research services from brokers that execute agency transactions for their clients); 12b-1 fees and sales charges received by the Fund’s principal underwriter (which is a wholly owned subsidiary of the Adviser) in respect of the Fund’s Class B shares; brokerage commissions paid by the Fund to brokers affiliated with the Adviser; and transfer agency fees paid by the Fund to a wholly owned subsidiary of the Adviser. The directors recognized that the Adviser’s profitability would be somewhat lower without these benefits. The directors understood that the Adviser also might derive reputational and other benefits from its association with the Fund.
Investment Results
In addition to the information reviewed by the directors in connection with the Meeting, the directors receive detailed performance information for the Fund at each regular Board meeting during the year.
At the Meeting, the directors reviewed performance information prepared by an independent service provider (the “15(c) service provider”), showing the performance of the Class A Shares of the Fund against a group of similar funds (“peer group”) and a larger group of similar funds (“peer universe”), each selected by the 15(c) service provider, and information prepared by the Adviser showing performance of the Class A Shares against a broad-based securities market index, in each case for the 1-, 3-, 5- and 10-year periods ended February 28, 2023 and (in the case of comparisons with the broad-based securities market index) for the period from inception. Based on their review, the directors concluded that the Fund’s investment performance was acceptable.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate payable by the Fund to the Adviser and information prepared by the 15(c) service provider concerning advisory fee rates payable by other funds in the same category as the Fund. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The directors compared the Fund’s contractual effective advisory fee rate with a peer group median. Taking into account the administrative expense reimbursement paid to the Adviser in the latest fiscal year, the directors noted that the Adviser’s total compensation was equal to the median.
The directors also considered the Adviser’s fee schedule for other clients utilizing investment strategies similar to those of the Fund. For this purpose, they reviewed the relevant advisory fee information from the Adviser’s Form ADV and in a report from the Fund’s Senior Vice President and noted the differences between the Fund’s fee schedule, on the one hand, and the Adviser’s institutional fee schedule and the schedule of fees charged by the Adviser to any offshore funds and for services to any sub-advised funds utilizing investment strategies similar to those of the Fund, on the other. The directors noted that the Adviser may, in some cases, agree to fee rates with large institutional clients that are lower than those reviewed by the directors and that they had previously discussed with the Adviser its policies in respect of such arrangements. The directors also compared the advisory fee rate for the Fund with that for another fund advised by the Adviser utilizing similar investment strategies.
The Adviser reviewed with the directors the significantly greater scope of the services it provides to the Fund relative to institutional, offshore fund and sub-advised fund clients. In this regard, the Adviser noted, among other things, that, compared to institutional and offshore or sub-advisory accounts, the Fund (i) demands considerably more portfolio management, research and trading resources due to significantly higher daily cash flows; (ii) has more tax and regulatory restrictions and compliance obligations; (iii) must prepare and file or distribute regulatory and other communications about fund operations; and (iv) must provide shareholder servicing to retail investors. The Adviser also reviewed the greater legal risks presented by the large and changing population of Fund shareholders who may assert claims against the Adviser in individual or class actions, and the greater entrepreneurial risk in offering new fund products, which require substantial investment to launch, may not succeed, and generally must be priced to compete with larger, more established funds resulting in lack of profitability to the Adviser until a new fund achieves scale. In light of the substantial differences in services rendered by the Adviser to institutional, offshore fund and sub-advised fund clients as compared to the Fund, and the different risk profile, the directors considered these fee comparisons inapt and did not place significant weight on them in their deliberations.
39
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| INTERNATIONAL VALUE PORTFOLIO | | |
| CONTINUANCE DISCLOSURE | | |
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| (continued) | | AB Variable Products Series Fund |
In connection with their review of the Fund’s advisory fee, the directors also considered the total expense ratio of the Class A shares of the Fund in comparison to the medians for a peer group and a peer universe selected by the 15(c) service provider. The Class A expense ratio of the Fund was based on the Fund’s latest fiscal year. The Adviser had agreed to cap the Fund’s expenses, but the directors noted that the Fund’s expense ratio was currently below the level of the Adviser’s cap. The directors noted that it was likely that the expense ratios of some of the other funds in the Fund’s category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases might be voluntary or temporary. The directors view expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Fund by others. The directors noted that the Fund’s expense ratio was above a median. After reviewing and discussing the Adviser’s explanations of the reasons for this, the directors concluded that the Fund’s expense ratio was acceptable.
Economies of Scale
The directors noted that the advisory fee schedule for the Fund contains breakpoints that reduce the fee rates on assets above specified levels. The directors took into consideration prior presentations by an independent consultant on economies of scale in the mutual fund industry and for the AB Funds, and presentations from time to time by the Adviser concerning certain of its views on economies of scale. The directors also had requested and received from the Adviser certain updates on economies of scale in advance of the Meeting. The directors believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there is no established methodology for setting breakpoints that give effect to the fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Fund’s shareholders would benefit from a sharing of economies of scale in the event the Fund’s net assets exceed a breakpoint in the future.
40
VPS-IV-0151-1223
DEC 12.31.23
ANNUAL REPORT
AB VARIABLE PRODUCTS
SERIES FUND, INC.
| + | | AB LARGE CAP GROWTH PORTFOLIO |
Investment Products Offered
| | • | | Are Not Bank Guaranteed |
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AB family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the Adviser of the funds.
You may obtain a description of the Fund’s proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AB’s website at www.abfunds.com or go to the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov, or call AB at (800) 227 4618.
The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Commission’s website at www.sec.gov.
The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.
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| LARGE CAP GROWTH PORTFOLIO | | AB Variable Products Series Fund |
LETTER TO INVESTORS
February 14, 2024
The following is an update of AB Variable Products Series Fund—Large Cap Growth Portfolio (the “Portfolio”) for the annual reporting period ended December 31, 2023.
INVESTMENT OBJECTIVE AND POLICIES
The Portfolio’s investment objective is long-term growth of capital. The Portfolio invests primarily in equity securities of a limited number of large, carefully selected, high-quality US companies. The Portfolio invests primarily in the domestic equity securities of companies selected by the Adviser for their growth potential within various market sectors. The Portfolio emphasizes investments in large, seasoned companies. Under normal circumstances, the Portfolio invests at least 80% of its net assets in common stocks of large-capitalization companies.
The Adviser expects that normally the Portfolio’s portfolio will tend to emphasize investments in securities issued by US companies, although it may invest in foreign securities. The Adviser’s research focus is on companies with high sustainable growth prospects, high or improving return on invested capital, transparent business models, and strong and lasting competitive advantages.
The Portfolio may, at times, invest in shares of exchange-traded funds (“ETFs”) in lieu of making direct investments in securities. ETFs may provide more efficient and economical exposure to the types of companies and geographic locations in which the Portfolio seeks to invest than direct investments.
The Portfolio may enter into derivatives transactions, such as options, futures contracts, forwards and swaps. The Portfolio may use options strategies involving the purchase and/or writing of various combinations of call and/or put options, including on individual securities and stock indices, futures contracts (including futures contracts on individual securities and stock indices) or shares of ETFs. These transactions may be used, for example, in an effort to earn extra income, to adjust exposure to individual securities or markets, or to protect all or a portion of the Portfolio’s portfolio from a decline in value, sometimes within certain ranges.
INVESTMENT RESULTS
The table on page 3 shows the Portfolio’s performance compared with its benchmark, the Russell 1000 Growth Index, as well as the broad market as measured by the Standard & Poor’s (“S&P”) 500 Index, for the one-, five- and 10-year periods ended December 31, 2022.
All share classes of the Portfolio underperformed the primary benchmark and outperformed the S&P 500 Index for the annual period. Both sector and security selection detracted, relative to the benchmark. An overweight to health care and an underweight to technology detracted the most, while overweights to energy and industrials contributed. Contributions from stock selection within health care and consumer staples were offset by losses from selection within technology and consumer discretionary.
The Portfolio did not use derivatives during the annual period.
MARKET REVIEW AND INVESTMENT STRATEGY
US, international and emerging-market stocks rose during the 12-month period ended December 31, 2023. Early in the period, aggressive central bank tightening—led by the US Federal Reserve—pressured global equity markets. Bouts of volatility continued as central banks reduced and then began to pause rate hikes but reiterated hawkish higher-for-longer rhetoric that weighed on sentiment. Later in the period, stronger-than-expected third-quarter economic growth triggered a rapid rise in bond yields—especially the 10-year US Treasury note, which briefly crossed the 5% threshold for the first time in 16 years. Headwinds from higher Treasury yields, conflict in the Middle East and mixed third-quarter earnings weighed on investor sentiment globally and briefly sent all major indices into correction territory in October. Equity markets rallied sharply during November and December, as optimism rose that the US Federal Reserve would begin to cut interest rates in 2024—both earlier and more than previously anticipated. Although US mega-cap technology stocks drove returns through much of the year, the rally broadened considerably during the fourth quarter as soft-landing expectations in the US continued to be underpinned by cooling inflation and moderating economic growth. Within large-cap markets, both growth-and value-oriented stocks rose, but growth significantly outperformed value, led by the technology sector and artificial intelligence optimism. Large-cap stocks outperformed small-cap stocks, although both rose in absolute terms.
The Portfolio’s Senior Investment Management Team (the “Team”) follows a bottom-up stock-picking methodology that seeks to identify companies that meet its investment criteria of healthy balance sheets, competitive advantages, strong cash-flow generation, transparent business models and sustainable growth. The Portfolio is conservatively positioned amid the current uncertainty in the global macro environment. The Team remains laser-focused in identifying companies that generate high return on assets with high reinvestment-rate opportunities.
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| LARGE CAP GROWTH PORTFOLIO | | |
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| DISCLOSURES AND RISKS | | AB Variable Products Series Fund |
Benchmark Disclosure
The Russell 1000® Growth Index and the S&P 500® Index are unmanaged and do not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Russell 1000 Growth Index represents the performance of large-cap growth companies within the US. The S&P 500 Index includes 500 US stocks and is a common representation of the performance of the overall US stock market. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Portfolio.
A Word About Risk
Market Risk: The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Focused Portfolio Risk: Investments in a limited number of companies may have more risk because changes in the value of a single security may have a more significant effect, either negative or positive, on the Portfolio’s net asset value (“NAV”), than would be the case if the Portfolio were invested in a larger number of companies.
Sector Risk: The Portfolio may have more risk than a more diversified portfolio because it may invest to a significant extent in one or more particular market sectors, such as the technology or health care sector. To the extent it does so, market or economic factors affecting the relevant sector(s) could have a major effect on the value of the Portfolio’s investments.
Foreign (Non-US) Risk: Investments in securities of non-US issuers may involve more risk than those of US issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
Derivatives Risk: Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
Management Risk: The Portfolio is subject to management risk because it is an actively managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
These risks are fully discussed in the Variable Products prospectus. As with all investments, you may lose money by investing in the Portfolio.
An Important Note About Historical Performance
The investment return and principal value of an investment in the Portfolio will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Performance shown in this report represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. Please contact your financial advisor or insurance agent representative at your financial institution to obtain portfolio performance information current to the most recent month-end.
Investors should consider the investment objectives, risks, charges and expenses of the Portfolio carefully before investing. For additional copies of the Portfolio’s prospectus or summary prospectus, which contains this and other information, call your financial advisor or (800) 227 4618. Please read the prospectus and/or summary prospectus carefully before investing.
All fees and expenses related to the operation of the Portfolio have been deducted, but no adjustment has been made for insurance company separate account or annuity contract charges, which would reduce total return to a contract owner. Performance assumes reinvestment of distributions and does not account for taxes.
There are additional fees and expenses associated with all Variable Products. These fees can include mortality and expense risk charges, administrative charges, and other charges that can significantly reduce investment returns. Those fees and expenses are not reflected in this annual report. You should consult your Variable Products prospectus for a description of those fees and expenses and speak to your insurance agent or financial representative if you have any questions. You should read the prospectus before investing or sending money.
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| LARGE CAP GROWTH PORTFOLIO | | |
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| HISTORICAL PERFORMANCE | | AB Variable Products Series Fund |
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| THE PORTFOLIO VS. ITS BENCHMARKS | | Net Asset Value Returns | |
| PERIODS ENDED DECEMBER 31, 2023 (unaudited) | | 1 Year | | | 5 Years1 | | | 10 Years1 | |
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| Large Cap Growth Portfolio Class A | | | 35.13% | | | | 17.86% | | | | 14.89% | |
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| Large Cap Growth Portfolio Class B | | | 34.78% | | | | 17.56% | | | | 14.60% | |
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| Primary Benchmark: Russell 1000 Growth Index | | | 42.68% | | | | 19.50% | | | | 14.86% | |
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| S&P 500 Index | | | 26.29% | | | | 15.69% | | | | 12.03% | |
1 Average annual returns. | | | | | | | | | | | | |
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The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 0.65% and 0.90% for Class A and Class B shares, respectively. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
GROWTH OF A $10,000 INVESTMENT
12/31/2013 to 12/31/2023 (unaudited)
This chart illustrates the total value of an assumed $10,000 investment in Large Cap Growth Portfolio Class A shares (from 12/31/2013 to 12/31/2023) as compared with the performance of the Portfolio’s benchmarks. The chart assumes the reinvestment of dividends and capital gains distributions.
See Disclosures, Risks and Note About Historical Performance on page 2.
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| LARGE CAP GROWTH PORTFOLIO | | |
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| EXPENSE EXAMPLE (unaudited) | | AB Variable Products Series Fund |
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of each class’ table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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| | | Beginning
Account Value
July 1, 2023 | | | Ending
Account Value
December 31, 2023 | | | Expenses Paid
During Period* | | | Annualized
Expense Ratio* | | | Total
Expenses Paid
During Period+ | | | Total
Annualized
Expense Ratio+ | |
Class A | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,100.40 | | | $ | 3.44 | | | | 0.65 | % | | $ | 3.49 | | | | 0.66 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,021.93 | | | $ | 3.31 | | | | 0.65 | % | | $ | 3.36 | | | | 0.66 | % |
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Class B | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,098.90 | | | $ | 4.76 | | | | 0.90 | % | | $ | 4.81 | | | | 0.91 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,020.67 | | | $ | 4.58 | | | | 0.90 | % | | $ | 4.63 | | | | 0.91 | % |
| * | | Expenses are equal to each classes’ annualized expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
| ** | | Assumes 5% annual return before expenses. |
| + | | In connection with the Portfolio’s investments in affiliated/unaffiliated underlying portfolios, the Portfolio incurs no direct expenses, but bears proportionate shares of the fund fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated/unaffiliated underlying portfolios. The Adviser has contractually agreed to waive its fees and expenses from the Portfolio in an amount equal to the Portfolio’s pro rata share of certain affiliated/unaffiliated underlying portfolios acquired fund fees and expenses. The Portfolio’s total expenses are equal to the classes’ annualized expense ratio plus the Portfolio’s pro-rata share of the weighted average expense ratio of the affiliated/unaffiliated underlying portfolios in which it invests, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
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| LARGE CAP GROWTH PORTFOLIO | | |
| TEN LARGEST HOLDINGS1 | | |
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| December 31, 2023 (unaudited) | | AB Variable Products Series Fund |
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| COMPANY | | U.S. $ VALUE | | | PERCENT OF NET ASSETS | |
Microsoft Corp. | | $ | 74,714,259 | | | | 9.7 | % |
UnitedHealth Group, Inc. | | | 40,517,131 | | | | 5.2 | |
Amazon.com, Inc. | | | 39,374,491 | | | | 5.1 | |
Alphabet, Inc.—Class C | | | 38,216,129 | | | | 4.9 | |
NVIDIA Corp. | | | 37,611,959 | | | | 4.9 | |
Visa, Inc.—Class A | | | 34,843,161 | | | | 4.5 | |
Monster Beverage Corp. | | | 25,385,328 | | | | 3.3 | |
Costco Wholesale Corp. | | | 23,222,934 | | | | 3.0 | |
Vertex Pharmaceuticals, Inc. | | | 22,350,061 | | | | 2.9 | |
Intuitive Surgical, Inc. | | | 22,032,307 | | | | 2.8 | |
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| | | $ | 358,267,760 | | | | 46.3 | % |
SECTOR BREAKDOWN2
December 31, 2023 (unaudited)
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| SECTOR | | U.S. $ VALUE | | | PERCENT OF TOTAL INVESTMENTS | |
Information Technology | | $ | 255,131,784 | | | | 32.9 | % |
Health Care | | | 175,683,604 | | | | 22.7 | |
Consumer Discretionary | | | 94,188,577 | | | | 12.1 | |
Communication Services | | | 65,488,551 | | | | 8.4 | |
Consumer Staples | | | 48,608,262 | | | | 6.3 | |
Industrials | | | 48,194,642 | | | | 6.2 | |
Financials | | | 41,711,849 | | | | 5.4 | |
Materials | | | 10,748,698 | | | | 1.4 | |
Short-Term Investments | | | 35,426,970 | | | | 4.6 | |
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Total Investments | | $ | 775,182,937 | | | | 100.0 | % |
| 2 | | The Portfolio’s sector breakdown is expressed as a percentage of total investments and may vary over time. |
Please note: The sector classifications presented herein are based on the Global Industry Classification Standard (GICS) which was developed by Morgan Stanley Capital International and Standard & Poor’s. The components are divided into sector, industry group, and industry sub-indices as classified by the GICS for each of the market capitalization indices in the broad market. These sector classifications are broadly defined. The “Portfolio of Investments” section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Portfolio’s prospectus.
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| LARGE CAP GROWTH PORTFOLIO | | |
| PORTFOLIO OF INVESTMENTS | | |
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| December 31, 2023 | | AB Variable Products Series Fund |
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| Company | | Shares | | |
U.S. $ Value | |
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COMMON STOCKS–95.6% | |
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INFORMATION TECHNOLOGY–33.0% | | | | | | | | |
COMMUNICATIONS EQUIPMENT–3.3% | | | | | | | | |
Arista Networks, Inc.(a) | | | 70,797 | | | $ | 16,673,401 | |
Motorola Solutions, Inc. | | | 28,573 | | | | 8,945,921 | |
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| | | | | | | 25,619,322 | |
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ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS–0.6% | | | | | | | | |
Amphenol Corp.–Class A | | | 31,580 | | | | 3,130,525 | |
Cognex Corp. | | | 29,340 | | | | 1,224,652 | |
| | | | | | | | |
| | | | | | | 4,355,177 | |
| | | | | | | | |
IT SERVICES–0.4% | | | | | | | | |
EPAM Systems, Inc.(a) | | | 11,344 | | | | 3,373,025 | |
| | | | | | | | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT–9.0% | | | | | | | | |
ASML Holding NV (REG) | | | 6,915 | | | | 5,234,102 | |
Broadcom, Inc. | | | 5,481 | | | | 6,118,166 | |
Entegris, Inc. | | | 26,880 | | | | 3,220,762 | |
NVIDIA Corp. | | | 75,950 | | | | 37,611,959 | |
QUALCOMM, Inc. | | | 118,684 | | | | 17,165,267 | |
| | | | | | | | |
| | | | | | | 69,350,256 | |
| | | | | | | | |
SOFTWARE–19.7% | | | | | | | | |
Adobe, Inc.(a) | | | 22,578 | | | | 13,470,035 | |
Autodesk, Inc.(a) | | | 12,260 | | | | 2,985,065 | |
Cadence Design Systems, Inc.(a) | | | 21,646 | | | | 5,895,721 | |
Crowdstrike Holdings, Inc.–Class A(a) | | | 25,873 | | | | 6,605,894 | |
Fortinet, Inc.(a) | | | 253,783 | | | | 14,853,919 | |
Manhattan Associates, Inc.(a) | | | 22,290 | | | | 4,799,483 | |
Microsoft Corp. | | | 198,687 | | | | 74,714,259 | |
Roper Technologies, Inc. | | | 25,820 | | | | 14,076,289 | |
ServiceNow, Inc.(a) | | | 9,376 | | | | 6,624,050 | |
Synopsys, Inc.(a) | | | 10,783 | | | | 5,552,275 | |
Tyler Technologies, Inc.(a) | | | 6,833 | | | | 2,857,014 | |
| | | | | | | | |
| | | | | | | 152,434,004 | |
| | | | | | | | |
| | | | | | | 255,131,784 | |
| | | | | | | | |
HEALTH CARE–22.7% | |
BIOTECHNOLOGY–3.5% | | | | | | | | |
Genmab A/S (Sponsored ADR)(a) | | | 145,598 | | | | 4,635,840 | |
Vertex Pharmaceuticals, Inc.(a) | | | 54,929 | | | | 22,350,061 | |
| | | | | | | | |
| | | | | | | 26,985,901 | |
| | | | | | | | |
HEALTH CARE EQUIPMENT & SUPPLIES–6.7% | | | | | | | | |
Align Technology, Inc.(a) | | | 11,817 | | | | 3,237,858 | |
Edwards Lifesciences Corp.(a) | | | 152,661 | | | | 11,640,401 | |
IDEXX Laboratories, Inc.(a) | | | 26,673 | | | | 14,804,849 | |
Intuitive Surgical, Inc.(a) | | | 65,308 | | | | 22,032,307 | |
| | | | | | | | |
| | | | | | | 51,715,415 | |
| | | | | | | | |
| | | | | | | | |
HEALTH CARE PROVIDERS & SERVICES–5.2% | | | | | | | | |
ABIOMED, Inc.
(CVR)(a)(b)(c) | | | 11,373 | | | $ | 11,601 | |
UnitedHealth Group, Inc. | | | 76,960 | | | | 40,517,131 | |
| | | | | | | | |
| | | | | | | 40,528,732 | |
| | | | | | | | |
HEALTH CARE TECHNOLOGY–1.6% | | | | | | | | |
Veeva Systems, Inc.–Class A(a) | | | 62,513 | | | | 12,035,003 | |
| | | | | | | | |
LIFE SCIENCES TOOLS & SERVICES–1.1% | | | | | | | | |
Mettler-Toledo International, Inc.(a) | | | 3,582 | | | | 4,344,823 | |
Waters Corp.(a) | | | 13,715 | | | | 4,515,389 | |
| | | | | | | | |
| | | | | | | 8,860,212 | |
| | | | | | | | |
PHARMACEUTICALS–4.6% | |
Eli Lilly & Co. | | | 32,004 | | | | 18,655,772 | |
Zoetis, Inc. | | | 85,639 | | | | 16,902,569 | |
| | | | | | | | |
| | | | | | | 35,558,341 | |
| | | | | | | | |
| | | | | | | 175,683,604 | |
| | | | | | | | |
CONSUMER DISCRETIONARY–12.2% | | | | | | | | |
AUTOMOBILES–0.7% | |
Ferrari NV | | | 15,531 | | | | 5,256,156 | |
| | | | | | | | |
BROADLINE RETAIL–5.1% | |
Amazon.com, Inc.(a) | | | 259,145 | | | | 39,374,491 | |
| | | | | | | | |
HOTELS, RESTAURANTS & LEISURE–1.3% | | | | | | | | |
Chipotle Mexican Grill, Inc.(a) | | | 4,510 | | | | 10,314,190 | |
| | | | | | | | |
SPECIALTY RETAIL–1.9% | |
Home Depot, Inc. (The) | | | 30,260 | | | | 10,486,603 | |
Tractor Supply Co. | | | 20,778 | | | | 4,467,894 | |
| | | | | | | | |
| | | | | | | 14,954,497 | |
| | | | | | | | |
TEXTILES, APPAREL & LUXURY GOODS–3.2% | | | | | | | | |
Lululemon Athletica, Inc.(a) | | | 28,303 | | | | 14,471,041 | |
NIKE, Inc.–Class B | | | 90,432 | | | | 9,818,202 | |
| | | | | | | | |
| | | | | | | 24,289,243 | |
| | | | | | | | |
| | | | | | | 94,188,577 | |
| | | | | | | | |
COMMUNICATION SERVICES–8.4% | | | | | | | | |
ENTERTAINMENT–1.8% | |
Netflix, Inc.(a) | | | 29,552 | | | | 14,388,278 | |
| | | | | | | | |
INTERACTIVE MEDIA & SERVICES–6.6% | | | | | | | | |
Alphabet, Inc.–Class C(a) | | | 271,171 | | | | 38,216,129 | |
Meta Platforms, Inc.–Class A(a) | | | 36,400 | | | | 12,884,144 | |
| | | | | | | | |
| | | | | | | 51,100,273 | |
| | | | | | | | |
| | | | | | | 65,488,551 | |
| | | | | | | | |
CONSUMER STAPLES–6.3% | | | | | | | | |
BEVERAGES–3.3% | |
Monster Beverage Corp.(a) | | | 440,641 | | | | 25,385,328 | |
| | | | | | | | |
6
| | |
| | |
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
| Company | | Shares | | |
U.S. $ Value | |
| | | | | | | | |
CONSUMER STAPLES DISTRIBUTION & RETAIL–3.0% | | | | | | | | |
Costco Wholesale Corp. | | | 35,182 | | | $ | 23,222,934 | |
| | | | | | | | |
| | | | | | | 48,608,262 | |
| | | | | | | | |
INDUSTRIALS–6.2% | |
BUILDING PRODUCTS–1.7% | | | | | | | | |
Otis Worldwide Corp. | | | 105,985 | | | | 9,482,478 | |
Trex Co., Inc.(a) | | | 46,358 | | | | 3,837,979 | |
| | | | | | | | |
| | | | | | | 13,320,457 | |
| | | | | | | | |
COMMERCIAL SERVICES & SUPPLIES–2.2% | | | | | | | | |
Copart, Inc.(a) | | | 347,174 | | | | 17,011,526 | |
| | | | | | | | |
ELECTRICAL EQUIPMENT–0.6% | | | | | | | | |
AMETEK, Inc. | | | 28,240 | | | | 4,656,494 | |
| | | | | | | | |
PROFESSIONAL SERVICES–1.7% | | | | | | | | |
Paycom Software, Inc. | | | 28,432 | | | | 5,877,463 | |
Verisk Analytics, Inc. | | | 30,682 | | | | 7,328,702 | |
| | | | | | | | |
| | | | | | | 13,206,165 | |
| | | | | | | | |
| | | | | | | 48,194,642 | |
| | | | | | | | |
FINANCIALS–5.4% | |
CAPITAL MARKETS–0.9% | | | | | | | | |
MSCI, Inc. | | | 12,143 | | | | 6,868,688 | |
| | | | | | | | |
FINANCIAL SERVICES–4.5% | | | | | | | | |
Visa, Inc.–Class A | | | 133,832 | | | | 34,843,161 | |
| | | | | | | | |
| | | | | | | 41,711,849 | |
| | | | | | | | |
MATERIALS–1.4% | | | | | | | | |
CHEMICALS–1.4% | | | | | | | | |
Sherwin-Williams Co. (The) | | | 34,462 | | | | 10,748,698 | |
| | | | | | | | |
Total Common Stocks
(cost $385,542,260) | | | | | | | 739,755,967 | |
| | | | | | | | |
| | | | | | | | |
SHORT-TERM INVESTMENTS–4.6% | | | | | | | | |
INVESTMENT COMPANIES–4.6% | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB, 5.27%(d)(e)(f)
(cost $35,426,970) | | | 35,426,970 | | | | 35,426,970 | |
| | | | | | | | |
TOTAL INVESTMENTS–100.2%
(cost $420,969,230) | | | | | | | 775,182,937 | |
Other assets less liabilities–(0.2)% | | | | | | | (1,689,953 | ) |
| | | | | | | | |
NET ASSETS–100.0% | | | | | | $ | 773,492,984 | |
| | | | | | | | |
| (a) | | Non-income producing security. |
| (b) | | Security in which significant unobservable inputs (Level 3) were used in determining fair value. |
| (c) | | Fair valued by the Adviser. |
| (d) | | Affiliated investments. |
| (e) | | The rate shown represents the 7-day yield as of period end. |
| (f) | | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
Glossary:
ADR—American Depositary Receipt
CVR — Contingent Value Right
REG—Registered Shares
See notes to financial statements.
7
| | |
| LARGE CAP GROWTH PORTFOLIO | | |
| STATEMENT OF ASSETS & LIABILITIES | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
ASSETS | | | | |
Investments in securities, at value | | | | |
Unaffiliated issuers (cost $385,542,260) | | $ | 739,755,967 | |
Affiliated issuers (cost $35,426,970) | | | 35,426,970 | |
Unaffiliated dividends receivable | | | 595,892 | |
Affiliated dividends receivable | | | 161,881 | |
Receivable for capital stock sold | | | 83,601 | |
Receivable due from Adviser | | | 5,116 | |
| | | | |
Total assets | | | 776,029,427 | |
| | | | |
LIABILITIES | | | | |
Payable for capital stock redeemed | | | 1,020,808 | |
Payable for investment securities purchased | | | 760,625 | |
Advisory fee payable | | | 387,426 | |
Custody and accounting fees payable | | | 143,633 | |
Distribution fee payable | | | 92,349 | |
Administrative fee payable | | | 23,937 | |
Transfer Agent fee payable | | | 150 | |
Accrued expenses and other liabilities | | | 107,515 | |
| | | | |
Total liabilities | | | 2,536,443 | |
| | | | |
NET ASSETS | | $ | 773,492,984 | |
| | | | |
COMPOSITION OF NET ASSETS | | | | |
Capital stock, at par | | $ | 11,052 | |
Additional paid-in capital | | | 385,522,863 | |
Distributable earnings | | | 387,959,069 | |
| | | | |
NET ASSETS | | $ | 773,492,984 | |
| | | | |
Net Asset Value Per Share—1 billion shares of capital stock authorized, $.001 par value
| | | | | | | | | | | | |
| Class | | Net Assets | | | Shares
Outstanding | | | Net Asset
Value | |
| | | |
| A | | $ | 330,245,258 | | | | 4,432,855 | | | $ | 74.50 | |
| | | |
| B | | $ | 443,247,726 | | | | 6,619,454 | | | $ | 66.96 | |
See notes to financial statements.
8
| | |
| LARGE CAP GROWTH PORTFOLIO | | |
| STATEMENT OF OPERATIONS | | |
| |
| Year Ended December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
INVESTMENT INCOME | | | | |
Dividends | | | | |
Unaffiliated issuers (net of foreign taxes withheld of $12,131) | | $ | 4,083,777 | |
Affiliated issuers | | | 1,557,157 | |
Interest | | | 123 | |
Securities lending income | | | 1,548 | |
Other income | | | 7 | |
| | | | |
| | | 5,642,612 | |
| | | | |
EXPENSES | | | | |
Advisory fee (see Note B) | | | 4,108,960 | |
Distribution fee—Class B | | | 964,959 | |
Transfer agency—Class A | | | 3,753 | |
Transfer agency—Class B | | | 4,847 | |
Administrative | | | 96,131 | |
Custody and accounting | | | 86,437 | |
Legal | | | 62,585 | |
Printing | | | 59,795 | |
Audit and tax | | | 42,318 | |
Directors’ fees | | | 25,217 | |
Miscellaneous | | | 25,470 | |
| | | | |
Total expenses | | | 5,480,472 | |
Less: expenses waived and reimbursed by the Adviser (see Note B) | | | (36,928 | ) |
| | | | |
Net expenses | | | 5,443,544 | |
| | | | |
Net investment income | | | 199,068 | |
| | | | |
REALIZED AND UNREALIZED GAIN ON INVESTMENT TRANSACTIONS | | | | |
Net realized gain on investment transactions | | | 36,901,940 | |
Net change in unrealized appreciation (depreciation) of investments | | | 166,659,053 | |
| | | | |
Net gain on investment transactions | | | 203,560,993 | |
| | | | |
Contributions from Affiliates (see Note B) | | | 488 | |
| | | | |
NET INCREASE IN NET ASSETS FROM OPERATIONS | | $ | 203,760,549 | |
| | | | |
See notes to financial statements.
9
| | |
| | |
| LARGE CAP GROWTH PORTFOLIO | | |
| |
| STATEMENT OF CHANGES IN NET ASSETS | | AB Variable Products Series Fund |
| | | | | | | | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | |
Net investment income (loss) | | $ | 199,068 | | | $ | (1,400,113 | ) |
Net realized gain on investment transactions | | | 36,901,940 | | | | 45,381,893 | |
Net change in unrealized appreciation (depreciation) of investments | | | 166,659,053 | | | | (289,990,519 | ) |
Contributions from Affiliates (see Note B) | | | 488 | | | | –0 | – |
| | | | | | | | |
Net increase (decrease) in net assets from operations | | | 203,760,549 | | | | (246,008,739 | ) |
Distributions to Shareholders | |
Class A | | | (20,050,816 | ) | | | (34,080,651 | ) |
Class B | | | (28,501,444 | ) | | | (47,132,006 | ) |
CAPITAL STOCK TRANSACTIONS | |
Net increase | | | 27,201,448 | | | | 39,142,914 | |
| | | | | | | | |
Total increase (decrease) | | | 182,409,737 | | | | (288,078,482 | ) |
NET ASSETS | |
Beginning of period | | | 591,083,247 | | | | 879,161,729 | |
| | | | | | | | |
End of period | | $ | 773,492,984 | | | $ | 591,083,247 | |
| | | | | | | | |
See notes to financial statements.
10
| | |
| LARGE CAP GROWTH PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
NOTE A: Significant Accounting Policies
The AB Large Cap Growth Portfolio (the “Portfolio”) is a series of AB Variable Products Series Fund, Inc. (the “Fund”). The Portfolio’s investment objective is long-term growth of capital. The Portfolio is diversified as defined under the Investment Company Act of 1940 (the “1940 Act”). The Fund was incorporated in the State of Maryland as an open-end series investment company. The Fund offers 10 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 U.S. generally accepted accounting principles (“U.S. GAAP”), 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 Portfolio is an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Portfolio.
1. Security Valuation
Portfolio securities are valued at market value determined on the basis of market quotations or, if market quotations are not readily available or are unreliable, at “fair value” as determined in accordance with procedures approved by and under the oversight of the Fund’s Board of Directors (the “Board”). Pursuant to these procedures, AllianceBernstein L.P. (the “Adviser”) serves as the Portfolio’s valuation designee pursuant to Rule 2a-5 of the 1940 Act. In this capacity, the Adviser is responsible, among other things, for making all fair value determinations relating to the Portfolio’s portfolio investments, subject to the Board’s oversight.
In general, the market values of securities which are readily available and deemed reliable are determined as follows: securities listed on a national securities exchange (other than securities listed on the NASDAQ Stock Market, Inc. (“NASDAQ”)) 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 last traded price from the previous day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price; listed or over the counter (“OTC”) market put or call options are valued at the mid level between the current bid and ask prices. If either a current bid or current ask price is unavailable, the Adviser will have discretion to determine the best valuation (e.g., last trade price in the case of listed options); open futures 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 valuation, the last available closing settlement price is used; U.S. Government securities and any other debt instruments having 60 days or less remaining until maturity are generally valued at market by an independent pricing vendor, if a market price is available. If a market price is not available, the securities are valued at amortized cost. This methodology is commonly used for short term securities that have an original maturity of 60 days or less, as well as short term securities that had an original term to maturity that exceeded 60 days. In instances when amortized cost is utilized, the Valuation Committee (the “Committee”) must reasonably conclude that the utilization of amortized cost is approximately the same as the fair value of the security. Factors the Committee will consider include, but are not limited to, an impairment of the creditworthiness of the issuer or material changes in interest rates. 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 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. Swaps and other derivatives are valued daily, primarily using independent pricing services, independent pricing models using market inputs, as well as third party broker-dealers or counterparties. Open-end mutual funds are valued at the closing net asset value per share, while exchange traded funds are valued at the closing market price per share.
Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value as deemed appropriate by the Adviser. Factors considered in making this determination may include, but
11
| | |
| LARGE CAP GROWTH PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer’s financial statements or other available documents. In addition, the Portfolio may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Portfolio values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Portfolio generally values many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available.
2. Fair Value Measurements
In accordance with U.S. GAAP regarding fair value measurements, fair value is defined as the price that the Portfolio would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability (including those valued based on their market values as described in Note A.1 above). Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Portfolio. Unobservable inputs reflect the Portfolio’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
| | • | | Level 1—quoted prices in active markets for identical investments |
| | • | | Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| | • | | Level 3—significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of investments) |
Where readily available market prices or relevant bid prices are not available for certain equity investments, such investments may be valued based on similar publicly traded investments, movements in relevant indices since last available prices or based upon underlying company fundamentals and comparable company data (such as multiples to earnings or other multiples to equity). Where an investment is valued using an observable input, such as another publicly traded security, the investment will be classified as Level 2. If management determines that an adjustment is appropriate based on restrictions on resale, illiquidity or uncertainty, and such adjustment is a significant component of the valuation, the investment will be classified as Level 3. An investment will also be classified as Level 3 where management uses company fundamentals and other significant inputs to determine the valuation.
The following table summarizes the valuation of the Portfolio’s investments by the above fair value hierarchy levels as of December 31, 2023:
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Common Stocks: | | | | | | | | | | | | | | | | |
Information Technology | | $ | 255,131,784 | | | $ | –0 | – | | $ | –0 | – | | $ | 255,131,784 | |
Health Care | | | 175,672,003 | | | | –0 | – | | | 11,601 | | | | 175,683,604 | |
Consumer Discretionary | | | 94,188,577 | | | | –0 | – | | | –0 | – | | | 94,188,577 | |
Communication Services | | | 65,488,551 | | | | –0 | – | | | –0 | – | | | 65,488,551 | |
Consumer Staples | | | 48,608,262 | | | | –0 | – | | | –0 | – | | | 48,608,262 | |
Industrials | | | 48,194,642 | | | | –0 | – | | | –0 | – | | | 48,194,642 | |
Financials | | | 41,711,849 | | | | –0 | – | | | –0 | – | | | 41,711,849 | |
Materials | | | 10,748,698 | | | | –0 | – | | | –0 | – | | | 10,748,698 | |
Short-Term Investments | | | 35,426,970 | | | | –0 | – | | | –0 | – | | | 35,426,970 | |
| | | | | | | | | | | | | | | | |
Total Investments in Securities | | | 775,171,336 | | | | –0 | – | | | 11,601 | | | | 775,182,937 | |
Other Financial Instruments(a) | | | –0 | – | | | –0 | – | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | |
Total | | $ | 775,171,336 | | | $ | –0 | – | | $ | 11,601 | | | $ | 775,182,937 | |
| | | | | | | | | | | | | | | | |
| (a) | | Other financial instruments are derivative instruments, such as futures, forwards and swaps, which are valued at the unrealized appreciation (depreciation) on the instrument. Other financial instruments may also include swaps with upfront premiums, written options and written swaptions which are valued at market value. |
12
| | |
| |
| | | AB Variable Products Series Fund |
3. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under forward currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and ask 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, 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 foreign currency denominated assets and liabilities.
4. 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. The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned.
In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, management has analyzed the Portfolio’s tax positions taken or expected to be taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Portfolio’s financial statements.
5. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Portfolio is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the date the securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. Non-cash dividends, if any, are recorded on the ex-dividend date at the fair value of the securities received. The Portfolio amortizes premiums and accretes discounts as adjustments to interest income. The Portfolio accounts for distributions received from REIT investments or from regulated investment companies as dividend income, realized gain, or return of capital based on information provided by the REIT or the investment company.
6. Class Allocations
All income earned and expenses incurred by the Portfolio 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 for class specific expenses which are allocated to the respective class. Expenses of the Fund are charged proportionately to each portfolio or based on other appropriate methods. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets.
7. Dividends and Distributions
Dividends and distributions to shareholders, if any, 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 U.S. GAAP. 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 the investment advisory agreement, the Portfolio pays the Adviser an advisory fee at an annual rate of .60% of the first $2.5 billion, .50% of the next $2.5 billion and .45% in excess of $5 billion, of the Portfolio’s average daily net assets. The fee is accrued daily and paid monthly.
Pursuant to the investment advisory agreement, the Portfolio may reimburse the Adviser for certain legal and accounting services provided to the Portfolio by the Adviser. For the year ended December 31, 2023, the reimbursement for such services amounted to $96,131.
13
| | |
| LARGE CAP GROWTH PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
The Portfolio compensates AllianceBernstein Investor Services, Inc. (“ABIS”), 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 retained by ABIS amounted to $1,800 for the year ended December 31, 2023.
The Portfolio may invest in AB Government Money Market Portfolio (the “Government Money Market Portfolio”) which has a contractual annual advisory fee rate of .20% of the portfolio’s average daily net assets and bears its own expenses. The Adviser had contractually agreed to waive .10% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .10%) until August 31, 2023. Effective September 1, 2023, the Adviser has contractually agreed to waive .05% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .15%) until August 31, 2024. In connection with the investment by the Portfolio in Government Money Market Portfolio, the Adviser has contractually agreed to waive its advisory fee from the Portfolio in an amount equal to the Portfolio’s pro rata share of the effective advisory fee of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. For the year ended December 31, 2023, such waiver amounted to $36,928.
A summary of the Portfolio’s transactions in AB mutual funds for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | |
Portfolio | | Market Value
12/31/22
(000) | | | Purchases
at Cost
(000) | | | Sales
Proceeds
(000) | | | Market Value
12/31/23
(000) | | | Dividend
Income
(000) | |
Government Money Market Portfolio | | $ | 27,717 | | | $ | 106,791 | | | $ | 99,081 | | | $ | 35,427 | | | $ | 1,557 | |
Government Money Market Portfolio* | | | –0 | – | | | 1,876 | | | | 1,876 | | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | $ | 35,427 | | | $ | 1,557 | |
| | | | | | | | | | | | | | | | | | | | |
| * | | Investments of cash collateral for securities lending transactions (see Note E). |
During the year ended December 31, 2023, the Adviser reimbursed the Portfolio $488 for trading losses incurred due to a pricing error.
NOTE C: Distribution Plan
The Portfolio has adopted a Distribution Plan (the “Plan”) for Class B shares pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Portfolio pays distribution and servicing fees to AllianceBernstein Investments, Inc. (the “Distributor”), 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 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 or 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 year ended December 31, 2023 were as follows:
| | | | | | | | |
| | | Purchases | | | Sales | |
Investment securities (excluding U.S. government securities) | | $ | 193,709,028 | | | $ | 222,554,568 | |
U.S. government securities | | | –0 | – | | | –0 | – |
14
| | |
| |
| | | AB Variable Products Series Fund |
The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation are as follows:
| | | | |
Cost | | $ | 425,414,280 | |
| | | | |
Gross unrealized appreciation | | $ | 358,358,367 | |
Gross unrealized depreciation | | | (8,589,710 | ) |
| | | | |
Net unrealized appreciation | | $ | 349,768,657 | |
| | | | |
1. Derivative Financial Instruments
The Portfolio may use derivatives in an effort to earn income and enhance returns, to replace more traditional direct investments, to obtain exposure to otherwise inaccessible markets (collectively, “investment purposes”), or to hedge or adjust the risk profile of its portfolio.
The Portfolio did not engage in derivatives transactions for the year ended December 31, 2023.
2. Currency Transactions
The Portfolio may invest in non-U.S. Dollar-denominated securities on a currency hedged or unhedged basis. The Portfolio may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and other options. The Portfolio may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Portfolio and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Portfolio may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).
NOTE E: Securities Lending
The Portfolio may enter into securities lending transactions. Under the Portfolio’s securities lending program, all loans of securities will be collateralized continually by cash collateral and/or non-cash collateral. Non-cash collateral will include only securities issued or guaranteed by the U.S. government or its agencies or instrumentalities. If the Portfolio cannot sell or repledge any non-cash collateral, such collateral will not be reflected in the portfolio of investments. If a loan is collateralized by cash, the Portfolio will be compensated for the loan from a portion of the net return from the income earned on cash collateral after a rebate is paid to the borrower (in some cases, this rebate may be a “negative rebate” or fee paid by the borrower to the Portfolio in connection with the loan), and payments are made for fees of the securities lending agent and for certain other administrative expenses. If the Portfolio receives non-cash collateral, the Portfolio will receive a fee from the borrower generally equal to a negotiated percentage of the market value of the loaned securities. The Portfolio will have the right to call a loan and obtain the securities loaned at any time on notice to the borrower within the normal and customary settlement time for the securities. While the securities are on loan, the borrower is obligated to pay the Portfolio amounts equal to any dividend income or other distributions from the securities; however, these distributions will not be afforded the same preferential tax treatment as qualified dividends. The Portfolio will not be able to exercise voting rights with respect to any securities during the existence of a loan, but will have the right to regain ownership of loaned securities in order to exercise voting or other ownership rights. Collateral received and securities loaned are marked to market daily to ensure that the securities loaned are secured by collateral. The lending agent currently invests the cash collateral received in Government Money Market Portfolio, an eligible money market vehicle, in accordance with the investment restrictions of the Portfolio, and as approved by the Board. The collateral received on securities loaned is recorded as an asset as well as a corresponding liability in the statement of assets and liabilities. The collateral will be adjusted the next business day to maintain the required collateral amount. The amounts of securities lending income from the borrowers and Government Money Market Portfolio are reflected in the statement of operations. When the Portfolio earns net securities lending income from Government Money Market Portfolio, the income is inclusive of a rebate expense paid to the borrower. In connection with the cash collateral investment by the Portfolio in Government Money Market Portfolio, the Adviser has agreed to waive a portion of the Portfolio’s share of the advisory fees of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. When the Portfolio lends securities, its investment performance will continue to reflect changes in the value of the securities loaned. A principal risk of lending portfolio securities is that the borrower may fail to return the loaned securities upon termination of the loan and that the collateral will not be sufficient to replace the loaned securities. The lending agent has agreed to indemnify the Portfolio in the case of default of any securities borrower.
15
| | |
| LARGE CAP GROWTH PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
A summary of the Portfolio’s transactions surrounding securities lending for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | | | |
Market Value of
Securities on Loan* | | | Cash Collateral* | | | Market Value of
Non-Cash
Collateral* | | | Income from
Borrowers | | | Government Money Market
Portfolio | |
| | Income Earned | | | Advisory Fee
Waived | |
| $ | –0– | | | $ | –0– | | | $ | –0– | | | $ | 1,548 | | | $ | –0– | | | $ | –0– | |
| * | | As of December 31, 2023. |
NOTE F: Capital Stock
Each class consists of 500,000,000 authorized shares. Transactions in capital shares for each class were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | SHARES | | | | | | AMOUNT | |
| | | Year Ended
December 31, 2023 | | | Year Ended
December 31, 2022 | | | | | | Year Ended
December 31, 2023 | | | Year Ended
December 31, 2022 | |
Class A | |
Shares sold | | | 303,693 | | | | 292,422 | | | | | | | $ | 20,384,732 | | | $ | 18,985,921 | |
Shares issued in reinvestment of distributions | | | 295,735 | | | | 510,954 | | | | | | | | 20,050,816 | | | | 34,080,651 | |
Shares redeemed | | | (591,209 | ) | | | (558,038 | ) | | | | | | | (40,029,950 | ) | | | (39,512,597 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase | | | 8,219 | | | | 245,338 | | | | | | | $ | 405,598 | | | $ | 13,553,975 | |
| | | | | | | | | | | | | | | | | | | | |
Class B | |
Shares sold | | | 606,789 | | | | 614,151 | | | | | | | $ | 37,120,401 | | | $ | 38,755,142 | |
Shares issued on reinvestment of distributions | | | 467,160 | | | | 777,885 | | | | | | | | 28,501,444 | | | | 47,132,006 | |
Shares redeemed | | | (637,919 | ) | | | (929,554 | ) | | | | | | | (38,825,995 | ) | | | (60,298,209 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase | | | 436,030 | | | | 462,482 | | | | | | | $ | 26,795,850 | | | $ | 25,588,939 | |
| | | | | | | | | | | | | | | | | | | | |
At December 31, 2023, certain shareholders of the Portfolio owned 65% in aggregate of the Portfolio’s outstanding shares. Significant transactions by such shareholders, if any, may impact the Portfolio’s performance.
NOTE G: Risks Involved in Investing in the Portfolio
Market Risk—The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Focused Portfolio Risk—Investments in a limited number of companies may have more risk because changes in the value of a single security may have a more significant effect, either negative or positive, on the Portfolio’s net asset value, or NAV, than would be the case if the Portfolio were invested in a larger number of companies.
Sector Risk—The Portfolio may have more risk than a more diversified portfolio because it may invest to a significant extent in one or more particular market sectors, such as the information technology or health care sector. To the extent it does so, market or economic factors affecting the relevant sector(s) could have a major effect on the value of the Portfolio’s investments.
Foreign (Non-U.S.) Risk—Investments in securities of non-U.S. issuers may involve more risk than those of U.S. issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
Derivatives Risk—Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
16
| | |
| |
| | | AB Variable Products Series Fund |
LIBOR Replacement Risk—The Portfolio may be exposed to debt securities, derivatives or other financial instruments that recently transitioned from the London Interbank Offered Rate, or “LIBOR,” as a “benchmark” or “reference rate” for various interest rate calculations. LIBOR’s administrator, ICE Benchmark Administration, ceased publishing most LIBOR settings (including some U.S. LIBOR settings) by the end of 2021 and the remaining (and most widely used) U.S. Dollar LIBOR settings after June 30, 2023. The United Kingdom Financial Conduct Authority, which regulates LIBOR, will permit the use of synthetic U.S. Dollar LIBOR rates for non-U.S. contracts through September 30, 2024, but any such rates would be considered non-representative of the underlying market. Since 2018 the Federal Reserve Bank of New York has published the Secured Overnight Financing Rate (referred to as SOFR), which is intended to replace U.S. Dollar LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities in the repurchase agreement (repo) market. There is no assurance that the composition or characteristics of SOFR or any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that the market for SOFR-linked financial instruments will have the same volume or liquidity as did the market for LIBOR-linked financial instruments prior to LIBOR’s discontinuance or unavailability. Neither the long-term effects of the LIBOR transition process nor its ultimate success can yet be known.
Indemnification Risk—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. Therefore, the Portfolio has not accrued any liability in connection with these indemnification provisions.
Management Risk—The Portfolio is subject to management risk because it is an actively-managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
NOTE H: Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $325 million revolving credit facility (the “Facility”) intended to provide short-term financing related to redemptions and other short term liquidity requirements, subject to certain restrictions. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Portfolio did not utilize the Facility during the year ended December 31, 2023.
NOTE I: Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended December 31, 2023 and December 31, 2022 were as follows:
| | | | | | | | |
| | | 2023 | | | 2022 | |
Distributions paid from: | | | | | | | | |
Net long-term capital gains | | $ | 48,552,260 | | | $ | 81,212,657 | |
| | | | | | | | |
Total taxable distributions paid | | $ | 48,552,260 | | | $ | 81,212,657 | |
| | | | | | | | |
As of December 31, 2023, the components of accumulated earnings (deficit) on a tax basis were as follows:
| | | | |
Undistributed ordinary income | | $ | 199,068 | |
Undistributed capital gains | | | 37,991,344 | |
Unrealized appreciation (depreciation) | | | 349,768,657 | (a) |
| | | | |
Total accumulated earnings (deficit) | | $ | 387,959,069 | |
| | | | |
| (a) | | The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. |
For tax purposes, net realized capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses for an indefinite period, and such losses will retain their character as either short-term or long-term capital losses. As of December 31, 2023, the Portfolio did not have any capital loss carryforwards.
17
| | |
| LARGE CAP GROWTH PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
During the current fiscal year, permanent differences primarily due to contributions from the Adviser resulted in a net increase in distributable earnings and a net decrease in additional paid-in capital. These reclassifications had no effect on net assets.
NOTE J: Recent Accounting Pronouncements
In December 2022, the Financial Accounting Standards Board issued an Accounting Standards Update, ASU 2022-06, “Reference Rate Reform (Topic 848)—Deferral of the Sunset Date of Topic 848”. ASU 2022-06 is an amendment to ASU 2020-04, which provided optional guidance to ease the potential accounting burden due to the discontinuation of the LIBOR and other interbank-offered based reference rates and which was effective as of March 12, 2020 through December 31, 2022. ASU 2022-06 extends the effective period through December 31, 2024. Management is currently evaluating the impact, if any, of applying ASU 2022-06.
NOTE K: Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Portfolio’s financial statements through this date.
18
| | |
| | |
| LARGE CAP GROWTH PORTFOLIO | | |
| |
| FINANCIAL HIGHLIGHTS | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS A | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | $ | 58.90 | | | $ | 93.09 | | | $ | 77.09 | | | $ | 61.26 | | | $ | 51.75 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss)(a)(b) | | | .11 | | | | (.05 | ) | | | (.19 | ) | | | (.06 | ) | | | .05 | |
Net realized and unrealized gain (loss) on investment transactions | | | 20.12 | | | | (25.48 | ) | | | 22.16 | | | | 21.18 | | | | 17.18 | |
Contributions from Affiliates | | | .00 | (c) | | | –0 | – | | | –0 | – | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 20.23 | | | | (25.53 | ) | | | 21.97 | | | | 21.12 | | | | 17.23 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Distributions | | | | | | | | | | | | | | | | | | | | |
Distributions from net realized gain on investment transactions | | | (4.63 | ) | | | (8.66 | ) | | | (5.97 | ) | | | (5.29 | ) | | | (7.72 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 74.50 | | | $ | 58.90 | | | $ | 93.09 | | | $ | 77.09 | | | $ | 61.26 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset value(d)* | | | 35.13 | % | | | (28.51 | )% | | | 28.98 | % | | | 35.49 | % | | | 34.70 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 330,245 | | | $ | 260,596 | | | $ | 389,051 | | | $ | 331,436 | | | $ | 264,234 | |
Ratio to average net assets of: | | | | | | | | | | | | | | | | | | | | |
Expenses, net of waivers/reimbursements(e)‡ | | | .65 | % | | | .65 | % | | | .65 | % | | | .66 | % | | | .67 | % |
Expenses, before waivers/reimbursements(e)‡ | | | .66 | % | | | .65 | % | | | .65 | % | | | .67 | % | | | .68 | % |
Net investment income (loss)(b) | | | .17 | % | | | (.07 | )% | | | (.22 | )% | | | (.08 | )% | | | .09 | % |
Portfolio turnover rate | | | 30 | % | | | 34 | % | | | 17 | % | | | 33 | % | | | 38 | % |
| | | | | | | | | | | | | | | | | | | | |
‡ Expense ratios exclude the estimated acquired fund fees of the affiliated/unaffiliated underlying | |
portfolios | | | .01 | % | | | .00 | % | | | .00 | % | | | .01 | % | | | .01 | % |
See footnote summary on page 20.
19
| | |
| LARGE CAP GROWTH PORTFOLIO | | |
| FINANCIAL HIGHLIGHTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS B | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | $ | 53.45 | | | $ | 85.67 | | | $ | 71.51 | | | $ | 57.28 | | | $ | 48.91 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment loss(a)(b) | | | (.05 | ) | | | (.20 | ) | | | (.37 | ) | | | (.21 | ) | | | (.09 | ) |
Net realized and unrealized gain (loss) on investment transactions | | | 18.19 | | | | (23.36 | ) | | | 20.50 | | | | 19.73 | | | | 16.18 | |
Contributions from Affiliates | | | .00 | (c) | | | –0 | – | | | –0 | – | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 18.14 | | | | (23.56 | ) | | | 20.13 | | | | 19.52 | | | | 16.09 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Distributions | | | | | | | | | | | | | | | | | | | | |
Distributions from net realized gain on investment transactions | | | (4.63 | ) | | | (8.66 | ) | | | (5.97 | ) | | | (5.29 | ) | | | (7.72 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 66.96 | | | $ | 53.45 | | | $ | 85.67 | | | $ | 71.51 | | | $ | 57.28 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset value(d)* | | | 34.78 | % | | | (28.69 | )% | | | 28.65 | % | | | 35.15 | % | | | 34.37 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 443,248 | | | $ | 330,487 | | | $ | 490,111 | | | $ | 413,127 | | | $ | 322,688 | |
Ratio to average net assets of: | | | | | | | | | | | | | | | | | | | | |
Expenses, net of waivers/reimbursements(e)‡ | | | .90 | % | | | .90 | % | | | .90 | % | | | .91 | % | | | .92 | % |
Expenses, before waivers/reimbursements(e)‡ | | | .91 | % | | | .90 | % | | | .90 | % | | | .92 | % | | | .93 | % |
Net investment loss(b) | | | (.08 | )% | | | (.32 | )% | | | (.47 | )% | | | (.33 | )% | | | (.16 | )% |
Portfolio turnover rate | | | 30 | % | | | 34 | % | | | 17 | % | | | 33 | % | | | 38 | % |
| | | | | | | | | | | | | | | | | | | | |
‡ Expense ratios exclude the estimated acquired fund fees of the affiliated/unaffiliated underlying | |
portfolios | | | .01 | % | | | .00 | % | | | .00 | % | | | .01 | % | | | .01 | % |
| (a) | | Based on average shares outstanding. |
| (b) | | Net of expenses waived/reimbursed by the Adviser. |
| (c) | | Amount is less than $.005. |
| (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 (i) insurance company’s separate account related expense charges and (ii) the deductions 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) | | In connection with the Portfolio’s investments in affiliated underlying portfolios, the Portfolio incurs no direct expenses, but bears proportionate shares of the fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated underlying portfolios. The Adviser has contractually agreed to waive its fees from the Portfolio in an amount equal to the Portfolio’s pro rata share of certain acquired fund fees and expenses, and for the years ended December 31, 2023, December 31, 2020 and December 31, 2019, such waiver amounted to .01%, .01% and .01%, respectively. |
| * | | Includes the impact of proceeds received and credited to the Portfolio resulting from class action settlements, which enhanced the Portfolio’s performance for the year ended December 31, 2019 by .04%. |
See notes to financial statements.
20
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| | |
| REPORT OF INDEPENDENT REGISTERED | | |
| |
| PUBLIC ACCOUNTING FIRM | | AB Variable Products Series Fund |
To the Shareholders and the Board of Directors of AB Large Cap Growth Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of AB Large Cap Growth Portfolio (the “Portfolio”) (one of the series constituting AB Variable Products Series Fund, Inc. (the “Fund”)), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Portfolio (one of the series constituting AB Variable Products Series Fund, Inc.) at December 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Portfolio’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers or others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the AB investment companies since 1968.
New York, New York
February 14, 2024
21
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| | |
| |
| 2023 TAX INFORMATION (unaudited) | | AB Variable Products Series Fund |
For Federal income tax purposes, the following information is furnished with respect to the distributions paid by the Portfolio during the taxable year ended December 31, 2023. The Portfolio designates $48,552,260 of dividends paid as long-term capital gain dividends.
22
| | |
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| | |
| |
| LARGE CAP GROWTH PORTFOLIO | | AB Variable Products Series Fund |
| | |
| BOARD OF DIRECTORS | | |
Garry L. Moody(1), Chairman Jorge A. Bermudez(1) Michael J. Downey(1) Onur Erzan, President and
Chief Executive Officer | | Nancy P. Jacklin(1) Jeanette W. Loeb(1) Carol C. McMullen(1) Marshall C. Turner, Jr.(1) Emilie D. Wrapp, Advisory
Board Member |
|
|
|
| | |
| | |
| OFFICERS | | |
Frank V. Caruso(2)*, Vice President John H. Fogarty(2), Vice President Vinay Thapar(2), Vice President Nancy E. Hay, Secretary Michael B. Reyes, Senior Vice President | | Stephen M. Woetzel, Treasurer and
Chief Financial Officer Phyllis J. Clarke, Controller Jennifer Friedland, Chief Compliance Officer |
| | |
| | |
CUSTODIANAND ACCOUNTING AGENT State Street Bank and Trust Company One Congress Street Suite 1 Boston, MA 02114 | | LEGAL COUNSEL Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 |
| | |
DISTRIBUTOR AllianceBernstein Investments, Inc. 501 Commerce Street Nashville, TN 37203 | | TRANSFER AGENT AllianceBernstein Investor Services, Inc. P.O. Box 786003 San Antonio, TX 78278 Toll-Free (800) 221-5672 |
| | |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP One Manhattan West New York, NY 10001 | | |
| (1) | | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
| (2) | | The day-to-day management of, and investment decisions for, the Portfolio’s portfolio are made by the Adviser’s U.S. Large Cap Growth Investment Team. Messrs. Caruso, Fogarty and Thapar are the investment professionals with the most significant responsibility for the day-to-day management of the Portfolio’s portfolio. |
| * | | Mr. Caruso is expected to retire from the Adviser effective March 31, 2024. |
23
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| | |
| LARGE CAP GROWTH PORTFOLIO | | |
| |
| MANAGEMENT OF THE FUND | | AB Variable Products Series Fund |
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund’s Directors and the Advisory Board member is set forth below.
| | | | | | | | |
NAME, ADDRESS*,
AGE AND
(YEAR FIRST ELECTED)** | | PRINCIPAL OCCUPATION(S), DURING PAST FIVE YEARS AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
| INTERESTED DIRECTOR | | | | | | |
| | | | | | | | |
Onur Erzan,# 1345 Avenue of the Americas New York, NY 10105 48 (2021) | | Senior Vice President of the Adviser, Head of Global Client Group and Head of Private Wealth. He oversees AB’s entire private wealth management business and third-party institutional and retail franchise, where he is responsible for all client services, sales and marketing, as well as product strategy, management and development worldwide. Director, President and Chief Executive Officer of the AB Mutual Funds as of April 1, 2021. He is also a member of the Equitable Holdings Management Committee. Prior to joining the firm in January 2021, he spent 19 years with McKinsey (management consulting firm), most recently as a senior partner and co-leader of its Wealth & Asset Management practice. In addition, he co-led McKinsey’s Banking & Securities Solutions (a portfolio of data, analytics, and digital assets and capabilities) globally. | | | 82 | | | None |
| | | | | | | | |
| INDEPENDENT DIRECTORS | | | | | | |
| | | | | | | | |
Garry L. Moody##
Chairman of the Board
71
(2008) | | Private Investor since prior to 2019. Formerly, Partner, Deloitte & Touche LLP (1995-2008) where he held a number of senior positions, including Vice Chairman, and U.S. and Global Investment Management Practice Managing Partner; President, Fidelity Accounting and Custody Services Company (1993-1995), where he was responsible for accounting, pricing, custody and reporting for the Fidelity mutual funds; and Partner, Ernst & Young LLP (1975-1993), where he served as the National Director of Mutual Fund Tax Services and Managing Partner of its Chicago Office Tax department. He served as a member of the Investment Company Institute’s Board of Governors and the Independent Directors Council’s Governing Council from October 2019 through September 2023, where he also served as Chairman of the Governance Committee from October 2021 through September 2023. He is Chairman of the AB Funds and Chairman of the Independent Directors Committees since January 2023; he has served as a director or trustee since 2008, and served as Chairman of the Audit Committee of such funds from 2008 to February 2023. | | | 82 | | | None |
| | | | | | | | |
24
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | |
NAME, ADDRESS*,
AGE AND
(YEAR FIRST ELECTED)** | | PRINCIPAL OCCUPATION(S), DURING PAST FIVE YEARS AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
INDEPENDENT DIRECTORS (continued) | | | | | | | |
| | | | | | | | | |
Jorge A. Bermudez,##
72 (2020) | | Private Investor since prior to 2019. Formerly, Chief Risk Officer of Citigroup, Inc., a global financial services company, from November 2007 to March 2008; Chief Executive Officer of Citigroup’s Commercial Business Group in North America and Citibank Texas from 2005 to 2007; and a variety of other executive and leadership roles at various businesses within Citigroup prior to then; Chairman (2017-2018) of the Texas A&M Foundation Board of Trustees (Trustee 2014-2021) and Chairman of the Smart Grid Center Board at Texas A&M University since 2012; director of, among others, Citibank N.A. from 2005 to 2008, the Federal Reserve Bank of Dallas, Houston Branch from 2009 to 2011, the Federal Reserve Bank of Dallas from 2011 to 2017, and the Electric Reliability Council of Texas from 2010 to 2016; and Chair of the Audit Committee of the Board of Directors of Moody’s Corporation since December 2022. He has served as director or trustee of the AB Funds since January 2020. | | | | 82 | | | Moody’s Corporation since April 2011 |
| | | | | | | | | |
Michael J. Downey,##
80 (2005) | | Private Investor since prior to 2019. Formerly, Chairman of The Asia Pacific Fund, Inc. (registered investment company) from 2002 until January 2019. From 1987 until 1993, Chairman and CEO of Prudential Mutual Fund Management, director of the Prudential mutual funds, and member of the Executive Committee of Prudential Securities, Inc. He has served as a director or trustee of the AB Funds since 2005. | | | | 82 | | | None |
| | | | | | | | | |
Nancy P. Jacklin,##
75 (2006) | | Private Investor since prior to 2019. Professorial Lecturer at the Johns Hopkins School of Advanced International Studies (2008-2015). U.S. Executive Director of the International Monetary Fund (which is responsible for ensuring the stability of the international monetary system), (December 2002-May 2006); Partner, Clifford Chance (1992-2002); Sector Counsel, International Banking and Finance, and Associate General Counsel, Citicorp (1985-1992); Assistant General Counsel (International), Federal Reserve Board of Governors (1982-1985); and Attorney Advisor, U.S. Department of the Treasury (1973-1982). Member of the Bar of the District of Columbia and of New York; and member of the Council on Foreign Relations. She has served as a director or trustee of the AB Funds since 2006 and served as Chair of the Governance and Nominating Committees of the AB Funds from 2014 to August 2023. | | | | 82 | | | None |
| | | | | | | | | |
25
| | |
| LARGE CAP GROWTH PORTFOLIO | | |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | | |
NAME, ADDRESS*,
AGE AND
(YEAR FIRST ELECTED)** | | PRINCIPAL OCCUPATION(S), DURING PAST FIVE YEARS AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
INDEPENDENT DIRECTORS (continued) | | | | | | | |
| | | | | | | | | |
Jeanette W. Loeb,##
71
(2020) | | Private Investor since prior to 2019. Director of New York City Center since 2005. Formerly, Chief Executive Officer of PetCareRx (e-commerce pet pharmacy) from 2002 to 2011 and 2015 to April 2023. She was a director of MidCap Financial Investment Corporation (business development company) from August 2011 to July 2023 and a director of AB Multi-Manager Alternative Fund (fund of hedge funds) from 2012 to 2018. Formerly, affiliated with Goldman Sachs Group, Inc. (financial services) from 1977 to 1994, including as a partner thereof from 1986 to 1994. She has served as director or trustee of the AB Funds since April 2020 and serves as Chair of the Governance and Nominating Committees of the AB Funds since August 2023. | | | | 82 | | | None |
| | | | | | | | | |
Carol C. McMullen,##
68 (2016) | | Private Investor and a member of the Advisory Board of Butcher Box (since 2018) and serves as Advisory Board Chair as of June 2023. Formerly, Managing Director of Slalom Consulting (consulting) from 2014 until July 2023; member, Mass General Brigham (formerly, Partners Healthcare) Investment Committee (2010-2019); Director of Norfolk & Dedham Group (mutual property and casualty insurance) from 2011 until November 2016; Director of Partners Community Physicians Organization (healthcare) from 2014 until December 2016; and Managing Director of The Crossland Group (consulting) from 2012 until 2013. She has held a number of senior positions in the asset and wealth management industries, including at Eastern Bank (where her roles included President of Eastern Wealth Management), Thomson Financial (Global Head of Sales for Investment Management), and Putnam Investments (where her roles included Chief Investment Officer, Core and Growth and Head of Global Investment Research). She has served on a number of private company and non-profit boards, and as a director or trustee of the AB Funds since June 2016, and serves as Chair of the Audit Committees of such funds since February 2023. | | | | 82 | | | None |
| | | | | | | | | |
26
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | |
NAME, ADDRESS*,
AGE AND
(YEAR FIRST ELECTED)** | | PRINCIPAL OCCUPATION(S), DURING PAST FIVE YEARS AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
INDEPENDENT DIRECTORS (continued) | | | | | | | |
| | | | | | | | | |
Marshall C. Turner, Jr.##
82 (2005) | | Private Investor since prior to 2019. He was a Director of Xilinx, Inc. (programmable logic semi-conductors and adaptable, intelligent computing) from 2007 through August 2020, and is a former director of 33 other companies and organizations. Former Chairman and CEO of Dupont Photomasks, Inc. (semi-conductor manufacturing equipment) from 2003 through 2006. He has extensive operating leadership and venture capital investing experience, including five interim or full-time CEO roles, and prior service as general partner of institutional venture capital partnerships. He also has extensive non-profit board leadership experience, and currently serves on the board of the George Lucas Educational Foundation. He has served as a director of one AB Fund since 1992, and director or trustee of all AB Funds since 2005. He has served as both Chairman of the AB Funds and Chairman of the Independent Directors Committees from 2014 through December 2022. | | | | 82 | | | None |
| | | | | | | | | |
| ADVISORY BOARD MEMBER | | | | | | | |
| | | | | | | | | |
Emilie D. Wrapp,# 68 (2024) | | Former Senior Vice President, Counsel, Assistant Secretary & Senior Mutual Fund Legal Advisor of the Adviser (January 2023–June 2023). Prior thereto, Senior Vice President, Assistant Secretary, Counsel, and Head of Mutual Fund & Retail Legal of the Adviser; Assistant General Counsel and Assistant Secretary of ABI since prior to 2019 until June 2023. | | | | 82 | | | None |
| * | The address for each of the Fund’s Directors and the Advisory Board member is c/o AllianceBernstein L.P., Attention: Legal and Compliance Department—Mutual Fund Legal, 1345 Avenue of the Americas, New York, NY 10105. |
| ** | There is no stated term of office for the Fund’s Directors or the Advisory Board member. |
| *** | The information above includes each Director’s principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Director’s qualifications to serve as a Director, which led to the conclusion that each Director should serve as a Director for the Fund. |
| # | Mr. Erzan is an “interested person” of the Fund, as defined in the “1940 Act”, due to his position as a Senior Vice President of the Adviser. Ms. Wrapp is an “interested person” of the Fund, as defined in the 1940 Act, because of her former role with the Adviser. |
| ## | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
27
| | |
| LARGE CAP GROWTH PORTFOLIO | | |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
Officer Information
Certain information concerning the Portfolio Officers is listed below.
| | | | |
NAME, ADDRESS*
AND AGE | | PRINCIPAL POSITION(S)
HELD WITH FUND | | PRINCIPAL OCCUPATION
DURING PAST FIVE YEARS |
Onur Erzan 48 | | President and Chief Executive Officer | | See biography above. |
| | | | |
Frank V. Caruso# 67 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated since prior to 2019. He is also Chief Investment Officer of US Growth Equities. |
| | | | |
John H. Fogarty 54 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated since prior to 2019. He is also Co-Chief Investment Officer—US Growth Equites. |
| | | | |
Vinay Thapar 45 | | Vice President | | Senior Vice President of the Adviser**, with which he was associated since prior to 2019. He is also Co-Chief Investment Officer—US Growth Equites. |
| | | | |
Nancy E. Hay 51 | | Secretary | | Senior Vice President and Counsel of the Adviser**, with which she has been associated since prior to 2019 and Assistant Secretary of ABI**. |
| | | | |
Michael B. Reyes 47 | | Senior Vice President | | Vice President of the Adviser**, with which he has been associated since prior to 2019. |
| | | | |
Stephen M. Woetzel 52 | | Treasurer and Chief Financial Officer | | Senior Vice President of ABIS**, with which he has been associated since prior to 2019. |
| | | | |
Phyllis J. Clarke 63 | | Controller | | Vice President of ABIS**, with which she has been associated since prior to 2019. |
| | | | |
Jennifer Friedland 49 | | Chief Compliance Officer | | Vice President of the Adviser** since 2020 and Mutual Fund Chief Compliance Officer (of all Funds since January 2023 and of the ETF Funds since 2022). Before joining the Adviser in 2020, she was Chief Compliance Officer at WestEnd Advisors, LLC from 2013 until 2019. |
| | | | |
| * | | The address for each of the Portfolio’s Officers is 1345 Avenue of the Americas, New York, NY 10105. |
| ** | | The Adviser, ABI and ABIS are affiliates of the Fund. |
| # | | Mr. Caruso is expected to retire from the Adviser effective March 31, 2024. |
| | | The Fund’s Statement of Additional Information (“SAI”) has additional information about the Fund’s Directors and Officers and is available without charge upon request. Contact your financial representative or the Adviser at (800) 227-4618, or visit www.abfunds.com, for a free prospectus or SAI. |
28
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| | |
| |
| LARGE CAP GROWTH PORTFOLIO | | AB Variable Products Series Fund |
OPERATION AND EFFECTIVENESS OF THE PORTFOLIO’S LIQUIDITY RISK MANAGEMENT PROGRAM:
In October 2016, the Securities and Exchange Commission (“SEC”) adopted the open-end fund liquidity rule (the “Liquidity Rule”). In June 2018 the SEC adopted a requirement that funds disclose information about the operation and effectiveness of their Liquidity Risk Management Program (“LRMP”) in their reports to shareholders.
One of the requirements of the Liquidity Rule is for the Portfolio to designate an Administrator of the Portfolio’s Liquidity Risk Management Program. The Administrator of the Portfolio’s LRMP is AllianceBernstein L.P., the Portfolio’s investment adviser (the “Adviser”). The Adviser has delegated the responsibility to its Liquidity Risk Management Committee (the “Committee”).
Another requirement of the Liquidity Rule is for the Portfolio’s Board of Directors/Trustees (the “Fund Board”) to receive an annual written report from the Administrator of the LRMP, which addresses the operation of the Portfolio’s LRMP and assesses its adequacy and effectiveness. The Adviser provided the Fund Board with such annual report during the first quarter of 2024, which covered the period January 1, 2023 through December 31, 2023 (the “Program Reporting Period”).
The LRMP’s principal objectives include supporting the Portfolio’s compliance with limits on investments in illiquid assets and mitigating the risk that the Portfolio will be unable to meet its redemption obligations in a timely manner.
Pursuant to the LRMP, the Portfolio classifies the liquidity of its portfolio investments into one of the four categories defined by the SEC: Highly Liquid, Moderately Liquid, Less Liquid, and Illiquid. These classifications are reported to the SEC on Form N-PORT.
During the Program Reporting Period, the Committee reviewed whether the Portfolio’s strategy is appropriate for an open-end structure, incorporating any holdings of less liquid and illiquid assets. If the Portfolio participated in derivative transactions, the exposure from such transactions were considered in the LRMP.
The Committee also performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum (“HLIM”). The Committee also incorporated the following information when determining the Portfolio’s reasonably anticipated trading size for purposes of liquidity monitoring: historical net redemption activity, a Portfolio’s concentration in an issuer, shareholder concentration, investment performance, total net assets, and distribution channels.
The Adviser informed the Fund Board that the Committee believes the Portfolio’s LRMP is adequately designed, has been implemented as intended, and has operated effectively since its inception. No material exceptions have been noted since the implementation of the LRMP. During the Program Reporting Period, liquidity in all markets was challenged due to rising rates and economic uncertainty. However, markets also remained orderly during the Program Reporting Period. There were no liquidity events that impacted the Portfolio or its ability to timely meet redemptions during the Program Reporting Period.
29
| | |
| | |
| LARGE CAP GROWTH PORTFOLIO | | |
| |
| CONTINUANCE DISCLOSURE | | AB Variable Products Series Fund |
INFORMATION REGARDING THE REVIEW AND APPROVAL OF THE FUND’S ADVISORY AGREEMENT
The disinterested directors (the “directors”) of AB Variable Products Series Fund, Inc. (the “Company”) unanimously approved the continuance of the Company’s Advisory Agreement with the Adviser in respect of AB Large Cap Growth Portfolio (the “Fund”) at a meeting held in-person on May 2-4, 2023 (the “Meeting”).
Prior to approval of the continuance of the Advisory Agreement, the directors had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The directors also reviewed additional materials, including comparative analytical data prepared by the Senior Vice President of the Fund. The directors also discussed the proposed continuance in private sessions with counsel.
The directors considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as directors or trustees of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the directors and its responsiveness, frankness and attention to concerns raised by the directors in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AB Funds. The directors noted that they have four regular meetings each year, at each of which they review extensive materials and information from the Adviser, including information on the investment performance of the Fund.
The directors also considered all factors they believed relevant, including the specific matters discussed below. During the course of their deliberations, the directors evaluated, among other things, the reasonableness of the advisory fee. The directors did not identify any particular information that was all-important or controlling, and different directors may have attributed different weights to the various factors. The directors determined that the selection of the Adviser to manage the Fund and the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors’ determinations included the following:
Nature, Extent and Quality of Services Provided
The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. The directors noted that the Adviser from time to time reviews the Fund’s investment strategies and from time to time proposes changes intended to improve the Fund’s relative or absolute performance for the directors’ consideration. They also noted the professional experience and qualifications of the Fund’s portfolio management team and other senior personnel of the Adviser. The directors also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services to the Fund by employees of the Adviser or its affiliates. Requests for these reimbursements are made on a quarterly basis and subject to approval by the directors. Reimbursements, to the extent requested and paid, result in a higher rate of total compensation from the Fund to the Adviser than the fee rate stated in the Advisory Agreement. The directors noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant at the request of the directors. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of the Fund’s other service providers, also was considered. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement.
Costs of Services Provided and Profitability
The directors reviewed a schedule of the revenues and expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2021 and 2022 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant at the request of the directors. The directors noted the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and understood that there are a number of potentially acceptable allocation methodologies for information of this type. The directors noted that the profitability information reflected all revenues and expenses of the Adviser’s relationship with the Fund, including those relating to its subsidiaries that provide transfer agency, distribution and brokerage services to the Fund. The directors recognized that it is difficult to make comparisons of the profitability of the Advisory Agreement with the profitability of fund advisory contracts for unaffiliated funds because comparative information is not generally publicly available and is affected by numerous
30
| | |
| |
| | | AB Variable Products Series Fund |
factors. The directors focused on the profitability of the Adviser’s relationship with the Fund before taxes and distribution expenses. The directors concluded that the Adviser’s level of profitability from its relationship with the Fund was not unreasonable.
Fall-Out Benefits
The directors considered the other benefits to the Adviser and its affiliates from their relationships with the Fund, including, but not limited to, benefits relating to soft dollar arrangements (whereby investment advisers receive brokerage and research services from brokers that execute agency transactions for their clients); 12b-1 fees and sales charges received by the Fund’s principal underwriter (which is a wholly owned subsidiary of the Adviser) in respect of the Fund’s Class B shares; brokerage commissions paid by the Fund to brokers affiliated with the Adviser; and transfer agency fees paid by the Fund to a wholly owned subsidiary of the Adviser. The directors recognized that the Adviser’s profitability would be somewhat lower without these benefits. The directors understood that the Adviser also might derive reputational and other benefits from its association with the Fund.
Investment Results
In addition to the information reviewed by the directors in connection with the Meeting, the directors receive detailed performance information for the Fund at each regular Board meeting during the year.
At the Meeting, the directors reviewed performance information prepared by an independent service provider (the “15(c) service provider”), showing the performance of the Class A Shares of the Fund against a group of similar funds (“peer group”) and a larger group of similar funds (“peer universe”), each selected by the 15(c) service provider, and information prepared by the Adviser showing performance of the Class A Shares against a broad-based securities market index, in each case for the 1-, 3-, 5- and 10-year periods ended February 28, 2023 and (in the case of comparisons with the broad-based securities market index) for the period from inception. Based on their review, the directors concluded that the Fund’s investment performance was acceptable.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate payable by the Fund to the Adviser and information prepared by the 15(c) service provider concerning advisory fee rates payable by other funds in the same category as the Fund. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The directors compared the Fund’s contractual effective advisory fee rate with a peer group median and took into account the impact on the advisory fee rate of the administrative expense reimbursement paid to the Adviser in the latest fiscal year.
The directors also considered the Adviser’s fee schedule for other clients utilizing investment strategies similar to those of the Fund. For this purpose, they reviewed the relevant advisory fee information from the Adviser’s Form ADV and in a report from the Fund’s Senior Vice President and noted the differences between the Fund’s fee schedule, on the one hand, and the Adviser’s institutional fee schedule and the schedule of fees charged by the Adviser to any offshore funds and for services to any sub-advised funds utilizing investment strategies similar to those of the Fund, on the other. The directors noted that the Adviser may, in some cases, agree to fee rates with large institutional clients that are lower than those reviewed by the directors and that they had previously discussed with the Adviser its policies in respect of such arrangements. The directors also compared the advisory fee rate for the Fund with that for another funds advised by the Adviser utilizing similar investment strategies.
The Adviser reviewed with the directors the significantly greater scope of the services it provides to the Fund relative to institutional, offshore fund and sub-advised fund clients. In this regard, the Adviser noted, among other things, that, compared to institutional and offshore or sub-advisory accounts, the Fund (i) demands considerably more portfolio management, research and trading resources due to significantly higher daily cash flows; (ii) has more tax and regulatory restrictions and compliance obligations; (iii) must prepare and file or distribute regulatory and other communications about fund operations; and (iv) must provide shareholder servicing to retail investors. The Adviser also reviewed the greater legal risks presented by the large and changing population of Fund shareholders who may assert claims against the Adviser in individual or class actions, and the greater entrepreneurial risk in offering new fund products, which require substantial investment to launch, may not succeed, and generally must be priced to compete with larger, more established funds resulting in lack of profitability to the Adviser until a new fund achieves scale. In light of the substantial differences in services rendered by the Adviser to institutional, offshore fund and sub-advised fund clients as compared to the Fund, and the different risk profile, the directors considered these fee comparisons inapt and did not place significant weight on them in their deliberations.
31
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| LARGE CAP GROWTH PORTFOLIO | | |
| CONTINUANCE DISCLOSURE | | |
| |
| (continued) | | AB Variable Products Series Fund |
In connection with their review of the Fund’s advisory fee, the directors also considered the total expense ratio of the Class A shares of the Fund in comparison to the medians for a peer group and a peer universe selected by the 15(c) service provider. The Class A expense ratio of the Fund was based on the Fund’s latest fiscal year. The directors noted that it was likely that the expense ratios of some of the other funds in the Fund’s category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases might be voluntary or temporary. The directors view expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Fund by others. Based on their review, the directors concluded that the Fund’s expense ratio was acceptable.
Economies of Scale
The directors noted that the advisory fee schedule for the Fund contains breakpoints that reduce the fee rates on assets above specified levels. The directors took into consideration prior presentations by an independent consultant on economies of scale in the mutual fund industry and for the AB Funds, and presentations from time to time by the Adviser concerning certain of its views on economies of scale. The directors also had requested and received from the Adviser certain updates on economies of scale in advance of the Meeting. The directors believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there is no established methodology for setting breakpoints that give effect to the fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Fund’s shareholders would benefit from a sharing of economies of scale in the event the Fund’s net assets exceed a breakpoint in the future.
32
VPS-LCG-0151-1223
DEC 12.31.23
ANNUAL REPORT
AB VARIABLE PRODUCTS SERIES FUND, INC.
| + | | AB RELATIVE VALUE PORTFOLIO |
Investment Products Offered
| | • | | Are Not Bank Guaranteed |
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AB family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the Adviser of the funds.
You may obtain a description of the Fund’s proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AB’s website at www.abfunds.com or go to the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov, or call AB at (800) 227 4618.
The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Commission’s website at www.sec.gov.
The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.
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| | |
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| |
| RELATIVE VALUE PORTFOLIO | | AB Variable Products Series Fund |
LETTER TO INVESTORS
February 14, 2024
The following is an update of AB Variable Products Series Fund—Relative Value Portfolio (the “Portfolio”) for the annual reporting period ended December 31, 2023. Prior to May 1, 2023, the Portfolio was named Growth and Income Portfolio.
INVESTMENT OBJECTIVE AND POLICIES
The Portfolio’s investment objective is long-term growth of capital. The Portfolio invests primarily in the equity securities of US companies that the Adviser believes are trading at attractive valuations that have strong or improving business models.
The Portfolio may enter into derivatives transactions, such as options, futures contracts, forwards and swaps. The Portfolio may use options strategies involving the purchase and/or writing of various combinations of call and/or put options, including on individual securities and stock indices, futures contracts (including futures contracts on individual securities and stock indices) or shares of exchange-traded funds (“ETFs”). These transactions may be used, for example, in an effort to earn extra income, to adjust exposure to individual securities or markets, or to protect all or a portion of the Portfolio’s portfolio from a decline in value, sometimes within certain ranges.
INVESTMENT RESULTS
The table on page 3 shows the Portfolio’s performance compared with its benchmark, the Russell 1000 Value Index, for the one-, five- and 10-year periods ended December 31, 2023.
All share classes of the Portfolio outperformed the benchmark for the annual period. Sector selection drove outperformance, relative to the benchmark. Contributions from overweights to utilities and technology offset losses from an underweight to communication services and an overweight to health care. Overall security selection also contributed. Security selection within health care and communication services added to gains, while selection within technology and consumer staples detracted.
The Portfolio did not use derivatives during the annual period.
MARKET REVIEW AND INVESTMENT STRATEGY
US, international and emerging-market stocks rose during the 12-month period ended December 31, 2023. Early in the period, aggressive central bank tightening—led by the US Federal Reserve—pressured global equity markets. Bouts of volatility continued as central banks reduced and then began to pause rate hikes but reiterated hawkish higher-for-longer rhetoric that weighed on sentiment. Later in the period, stronger-than-expected third-quarter economic growth triggered a rapid rise in bond yields—especially the 10-year US Treasury note, which briefly crossed the 5% threshold for the first time in 16 years. Headwinds from higher Treasury yields, conflict in the Middle East and mixed third-quarter earnings weighed on investor sentiment globally and briefly sent all major indices into correction territory in October. Equity markets rallied sharply during November and December, as optimism rose that the US Federal Reserve would begin to cut interest rates in 2024—both earlier and more than previously anticipated. Although US mega-cap technology stocks drove returns through much of the year, the rally broadened considerably during the fourth quarter as soft-landing expectations in the US continued to be underpinned by cooling inflation and moderating economic growth. Within large-cap markets, both growth- and value-oriented stocks rose, but growth significantly outperformed value, led by the technology sector and artificial intelligence optimism. Large-cap stocks outperformed small-cap stocks, although both rose in absolute terms.
The Portfolio’s Senior Investment Management Team (the “Team”) remains committed to using bottom-up research to build a Portfolio composed of well-managed companies that are attractively valued relative to their long-term earnings power. The Team’s objective is to find companies that stand out and deploy capital wisely, allowing these companies to grow dividends and enhance the long-term value of their shares.
1
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| RELATIVE VALUE PORTFOLIO | | |
| |
| DISCLOSURES AND RISKS | | AB Variable Products Series Fund |
Benchmark Disclosure
The Russell 1000® Value Index is unmanaged and does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Russell 1000 Value Index represents the performance of large-cap value companies within the US. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Portfolio.
A Word About Risk
Market Risk: The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Capitalization Risk: Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small- and mid-capitalization companies may have additional risks because these companies have limited product lines, markets or financial resources.
Derivatives Risk: Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
Management Risk: The Portfolio is subject to management risk because it is an actively managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
These risks are fully discussed in the Variable Products prospectus. As with all investments, you may lose money by investing in the Portfolio.
An Important Note About Historical Performance
The investment return and principal value of an investment in the Portfolio will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Performance shown in this report represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. Please contact your financial advisor or insurance agent representative at your financial institution to obtain portfolio performance information current to the most recent month-end.
Investors should consider the investment objectives, risks, charges and expenses of the Portfolio carefully before investing. For additional copies of the Portfolio’s prospectus or summary prospectus, which contains this and other information, call your financial advisor or (800) 227 4618. Please read the prospectus and/or summary prospectus carefully before investing.
All fees and expenses related to the operation of the Portfolio have been deducted, but no adjustment has been made for insurance company separate account or annuity contract charges, which would reduce total return to a contract owner. Performance assumes reinvestment of distributions and does not account for taxes.
There are additional fees and expenses associated with all Variable Products. These fees can include mortality and expense risk charges, administrative charges, and other charges that can significantly reduce investment returns. Those fees and expenses are not reflected in this annual report. You should consult your Variable Products prospectus for a description of those fees and expenses and speak to your insurance agent or financial representative if you have any questions. You should read the prospectus before investing or sending money.
2
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| RELATIVE VALUE PORTFOLIO | | |
| |
| HISTORICAL PERFORMANCE | | AB Variable Products Series Fund |
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| | | | | | | | | | | | |
| THE PORTFOLIO VS. ITS BENCHMARK | | Net Asset Value Returns | |
| PERIODS ENDED DECEMBER 31, 2023 (unaudited) | | 1 Year | | | 5 Years1 | | | 10 Years1 | |
| | | |
| Relative Value Portfolio Class A | | | 12.03% | | | | 11.85% | | | | 9.32% | |
| | | |
| Relative Value Portfolio Class B | | | 11.72% | | | | 11.57% | | | | 9.05% | |
| | | |
| Russell 1000 Value Index | | | 11.46% | | | | 10.91% | | | | 8.40% | |
1 Average annual returns. | | | | | |
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The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 0.59% and 0.84% for Class A and Class B shares, respectively, gross of any fee waivers or expense reimbursements. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
GROWTH OF A $10,000 INVESTMENT
12/31/2013 to 12/31/2023 (unaudited)
This chart illustrates the total value of an assumed $10,000 investment in Relative Value Portfolio Class A shares (from 12/31/2013 to 12/31/2023) as compared with the performance of the Portfolio’s benchmark. The chart assumes the reinvestment of dividends and capital gains distributions.
See Disclosures, Risks and Note About Historical Performance on page 2.
3
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| RELATIVE VALUE PORTFOLIO | | |
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| EXPENSE EXAMPLE (unaudited) | | AB Variable Products Series Fund |
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of each classes’ table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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| | | Beginning
Account Value
July 1, 2023 | | | Ending
Account Value
December 31, 2023 | | | Expenses Paid
During Period* | | | Annualized
Expense Ratio* | | | Total
Expenses Paid
During Period+ | | | Total
Annualized
Expense Ratio+ | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,080.40 | | | $ | 3.20 | | | | 0.61 | % | | $ | 3.25 | | | | 0.62 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,022.13 | | | $ | 3.11 | | | | 0.61 | % | | $ | 3.16 | | | | 0.62 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Class B | | | | | | | | | | | | | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,078.80 | | | $ | 4.51 | | | | 0.86 | % | | $ | 4.56 | | | | 0.87 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,020.87 | | | $ | 4.38 | | | | 0.86 | % | | $ | 4.43 | | | | 0.87 | % |
| * | | Expenses are equal to the classes’ annualized expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
| ** | | Assumes 5% annual return before expenses. |
| + | | In connection with the Portfolio’s investments in affiliated/unaffiliated underlying portfolios, the Portfolio incurs no direct expenses, but bears proportionate shares of the fund fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated/unaffiliated underlying portfolios. The Adviser has contractually agreed to waive its fees and expenses from the Portfolio in an amount equal to the Portfolio’s pro rata share of certain affiliated/unaffiliated underlying portfolios acquired fund fees and expenses. The Portfolio’s total expenses are equal to the classes’ annualized expense ratio plus the Portfolio’s pro-rata share of the weighted average expense ratio of the affiliated/unaffiliated underlying portfolios in which it invests, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
4
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| RELATIVE VALUE PORTFOLIO | | |
| TEN LARGEST HOLDINGS1 | | |
| |
| December 31, 2023 (unaudited) | | AB Variable Products Series Fund |
| | | | | | | | |
| COMPANY | | U.S. $ VALUE | | | PERCENT OF NET ASSETS | |
Elevance Health, Inc. | | $ | 36,174,782 | | | | 4.2 | % |
JPMorgan Chase & Co. | | | 33,589,647 | | | | 3.9 | |
Wells Fargo & Co. | | | 33,317,461 | | | | 3.9 | |
Berkshire Hathaway, Inc.—Class B | | | 32,125,793 | | | | 3.7 | |
QUALCOMM, Inc. | | | 31,004,622 | | | | 3.6 | |
Mastercard, Inc.—Class A | | | 29,168,166 | | | | 3.4 | |
Regeneron Pharmaceuticals, Inc. | | | 26,571,786 | | | | 3.1 | |
Walmart, Inc. | | | 25,345,390 | | | | 3.0 | |
Philip Morris International, Inc. | | | 24,266,431 | | | | 2.8 | |
Fiserv, Inc. | | | 22,684,289 | | | | 2.6 | |
| | | | | | | | | |
| | | $ | 294,248,367 | | | | 34.2 | % |
SECTOR BREAKDOWN2
December 31, 2023 (unaudited)
| | | | | | | | |
| SECTOR | | U.S. $ VALUE | | | PERCENT OF TOTAL INVESTMENTS | |
Financials | | $ | 193,925,580 | | | | 22.6 | % |
Health Care | | | 156,834,624 | | | | 18.2 | |
Industrials | | | 129,784,419 | | | | 15.1 | |
Information Technology | | | 82,898,416 | | | | 9.6 | |
Energy | | | 70,258,782 | | | | 8.2 | |
Consumer Staples | | | 49,611,821 | | | | 5.8 | |
Consumer Discretionary | | | 48,834,502 | | | | 5.7 | |
Communication Services | | | 46,993,122 | | | | 5.5 | |
Materials | | | 20,413,048 | | | | 2.4 | |
Real Estate | | | 19,621,234 | | | | 2.3 | |
Short-Term Investments | | | 39,969,912 | | | | 4.6 | |
| | | | | | | | | |
Total Investments | | $ | 859,145,460 | | | | 100.0 | % |
| 2 | | The Portfolio’s sector breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. |
Please note: The sector classifications presented herein are based on the Global Industry Classification Standard (GICS) which was developed by Morgan Stanley Capital International and Standard & Poor’s. The components are divided into sector, industry group, and industry sub-indices as classified by the GICS for each of the market capitalization indices in the broad market. These sector classifications are broadly defined. The “Portfolio of Investments” section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Portfolio’s prospectus.
5
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| RELATIVE VALUE PORTFOLIO | | |
| PORTFOLIO OF INVESTMENTS | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
COMMON STOCKS–95.4% | | | | | | | | |
| | | | | | | | |
FINANCIALS–22.6% | | | | | | | | |
BANKS–8.2% | | | | | | | | |
Bank OZK | | | 63,608 | | | $ | 3,169,587 | |
JPMorgan Chase & Co. | | | 197,470 | | | | 33,589,647 | |
Wells Fargo & Co. | | | 676,909 | | | | 33,317,461 | |
| | | | | | | | |
| | | | | | | 70,076,695 | |
| | | | | | | | |
CAPITAL MARKETS–0.4% | | | | | | | | |
Raymond James Financial, Inc. | | | 29,410 | | | | 3,279,215 | |
| | | | | | | | |
FINANCIAL SERVICES–10.7% | | | | | | | | |
Berkshire Hathaway, Inc.–Class B(a) | | | 90,074 | | | | 32,125,793 | |
Fiserv, Inc.(a) | | | 170,764 | | | | 22,684,289 | |
Mastercard, Inc.–Class A | | | 68,388 | | | | 29,168,166 | |
PayPal Holdings, Inc.(a) | | | 126,802 | | | | 7,786,911 | |
| | | | | | | | |
| | | | | | | 91,765,159 | |
| | | | | | | | |
INSURANCE–3.3% | | | | | | | | |
American International Group, Inc. | | | 98,756 | | | | 6,690,719 | |
Axis Capital Holdings Ltd. | | | 278,872 | | | | 15,441,143 | |
MetLife, Inc. | | | 100,902 | | | | 6,672,649 | |
| | | | | | | | |
| | | | | | | 28,804,511 | |
| | | | | | | | |
| | | | | | | 193,925,580 | |
| | | | | | | | |
HEALTH CARE–18.2% | | | | | | | | |
BIOTECHNOLOGY–7.9% | | | | | | | | |
Amgen, Inc. | | | 71,409 | | | | 20,567,220 | |
Gilead Sciences, Inc. | | | 254,928 | | | | 20,651,717 | |
Regeneron Pharmaceuticals, Inc.(a) | | | 30,254 | | | | 26,571,786 | |
| | | | | | | | |
| | | | | | | 67,790,723 | |
| | | | | | | | |
HEALTH CARE EQUIPMENT & SUPPLIES–0.6% | | | | | | | | |
GE Healthcare, Inc. | | | 67,930 | | | | 5,252,347 | |
| | | | | | | | |
HEALTH CARE PROVIDERS & SERVICES–7.9% | | | | | | | | |
Cencora, Inc. | | | 107,699 | | | | 22,119,221 | |
Cigna Group (The) | | | 16,037 | | | | 4,802,280 | |
Elevance Health, Inc. | | | 76,713 | | | | 36,174,782 | |
Quest Diagnostics, Inc. | | | 34,891 | | | | 4,810,771 | |
| | | | | | | | |
| | | | | | | 67,907,054 | |
| | | | | | | | |
PHARMACEUTICALS–1.8% | | | | | | | | |
Roche Holding AG (Sponsored ADR)(b) | | | 438,435 | | | | 15,884,500 | |
| | | | | | | | |
| | | | | | | 156,834,624 | |
| | | | | | | | |
INDUSTRIALS–15.1% | | | | | | | | |
AEROSPACE & DEFENSE–2.1% | | | | | | | | |
Curtiss-Wright Corp. | | | 14,504 | | | | 3,231,346 | |
| | | | | | | | |
RTX Corp.(b) | | | 39,459 | | | $ | 3,320,080 | |
Textron, Inc. | | | 144,757 | | | | 11,641,358 | |
| | | | | | | | |
| | | | | | | 18,192,784 | |
| | | | | | | | |
BUILDING PRODUCTS–1.6% | | | | | | | | |
Allegion PLC | | | 61,672 | | | | 7,813,226 | |
Builders FirstSource, Inc.(a) | | | 34,404 | | | | 5,743,404 | |
| | | | | | | | |
| | | | | | | 13,556,630 | |
| | | | | | | | |
CONSTRUCTION & ENGINEERING–0.8% | | | | | | | | |
EMCOR Group, Inc. | | | 33,459 | | | | 7,208,072 | |
| | | | | | | | |
ELECTRICAL EQUIPMENT–3.8% | | | | | | | | |
Emerson Electric Co. | | | 144,517 | | | | 14,065,840 | |
nVent Electric PLC | | | 210,102 | | | | 12,414,927 | |
Sensata Technologies Holding PLC | | | 151,080 | | | | 5,676,076 | |
| | | | | | | | |
| | | | | | | 32,156,843 | |
| | | | | | | | |
MACHINERY–3.6% | | | | | | | | |
Dover Corp. | | | 50,704 | | | | 7,798,782 | |
Middleby Corp. (The)(a) | | | 24,183 | | | | 3,559,012 | |
PACCAR, Inc. | | | 132,175 | | | | 12,906,889 | |
Westinghouse Air Brake Technologies Corp. | | | 53,569 | | | | 6,797,906 | |
| | | | | | | | |
| | | | | | | 31,062,589 | |
| | | | | | | | |
PROFESSIONAL SERVICES–1.6% | | | | | | | | |
Maximus, Inc. | | | 73,995 | | | | 6,205,221 | |
Robert Half, Inc. | | | 85,824 | | | | 7,545,646 | |
| | | | | | | | |
| | | | | | | 13,750,867 | |
| | | | | | | | |
TRADING COMPANIES & DISTRIBUTORS–1.6% | | | | | | | | |
Ferguson PLC | | | 71,770 | | | | 13,856,634 | |
| | | | | | | | |
| | | | | | | 129,784,419 | |
| | | | | | | | |
INFORMATION TECHNOLOGY–9.6% | | | | | | | | |
COMMUNICATIONS EQUIPMENT–1.8% | | | | | | | | |
Cisco Systems, Inc. | | | 236,707 | | | | 11,958,438 | |
Telefonaktiebolaget LM Ericsson (Sponsored ADR)(b) | | | 560,140 | | | | 3,528,882 | |
| | | | | | | | |
| | | | | | | 15,487,320 | |
| | | | | | | | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS–0.5% | | | | | | | | |
IPG Photonics Corp.(a) | | | 43,393 | | | | 4,709,876 | |
| | | | | | | | |
IT SERVICES–2.4% | | | | | | | | |
Accenture PLC–Class A | | | 46,100 | | | | 16,176,951 | |
EPAM Systems, Inc.(a) | | | 15,796 | | | | 4,696,783 | |
| | | | | | | | |
| | | | | | | 20,873,734 | |
| | | | | | | | |
6
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT–4.9% | | | | | | | | |
QUALCOMM, Inc. | | | 214,372 | | | $ | 31,004,622 | |
Taiwan Semiconductor Manufacturing Co., Ltd. (Sponsored ADR) | | | 104,066 | | | | 10,822,864 | |
| | | | | | | | |
| | | | | | | 41,827,486 | |
| | | | | | | | |
| | | | | | | 82,898,416 | |
| | | | | | | | |
ENERGY–8.2% | | | | | | | | |
ENERGY EQUIPMENT & SERVICES–1.4% | | | | | | | | |
Cactus, Inc.–Class A | | | 33,920 | | | | 1,539,968 | |
ChampionX Corp. | | | 217,981 | | | | 6,367,225 | |
Helmerich & Payne, Inc. | | | 117,074 | | | | 4,240,420 | |
| | | | | | | | |
| | | | | | | 12,147,613 | |
| | | | | | | | |
OIL, GAS & CONSUMABLE FUELS–6.8% | | | | | | | | |
Chevron Corp. | | | 77,469 | | | | 11,555,276 | |
ConocoPhillips | | | 96,245 | | | | 11,171,157 | |
EOG Resources, Inc. | | | 117,763 | | | | 14,243,435 | |
Phillips 66 | | | 158,790 | | | | 21,141,301 | |
| | | | | | | | |
| | | | | | | 58,111,169 | |
| | | | | | | | |
| | | | | | | 70,258,782 | |
| | | | | | | | |
CONSUMER STAPLES–5.8% | | | | | | | | |
CONSUMER STAPLES DISTRIBUTION & RETAIL–3.0% | | | | | | | | |
Walmart, Inc. | | | 160,770 | | | | 25,345,390 | |
| | | | | | | | |
TOBACCO–2.8% | | | | | | | | |
Philip Morris International, Inc. | | | 257,934 | | | | 24,266,431 | |
| | | | | | | | |
| | | | | | | 49,611,821 | |
| | | | | | | | |
CONSUMER DISCRETIONARY–5.7% | | | | | | | | |
AUTOMOBILE COMPONENTS–1.6% | | | | | | | | |
Aptiv PLC(a) | | | 69,380 | | | | 6,224,774 | |
BorgWarner, Inc. | | | 208,950 | | | | 7,490,857 | |
| | | | | | | | |
| | | | | | | 13,715,631 | |
| | | | | | | | |
DISTRIBUTORS–1.5% | | | | | | | | |
LKQ Corp. | | | 259,785 | | | | 12,415,125 | |
| | | | | | | | |
HOUSEHOLD DURABLES–0.5% | | | | | | | | |
DR Horton, Inc. | | | 29,779 | | | | 4,525,813 | |
| | | | | | | | |
SPECIALTY RETAIL–2.1% | | | | | | | | |
Lowe’s Cos., Inc. | | | 14,569 | | | | 3,242,331 | |
Ross Stores, Inc. | | | 107,924 | | | | 14,935,602 | |
| | | | | | | | |
| | | | | | | 18,177,933 | |
| | | | | | | | |
| | | | | | | 48,834,502 | |
| | | | | | | | |
| | | | | | | | |
COMMUNICATION SERVICES–5.5% | | | | | | | | |
DIVERSIFIED TELECOMMUNICATION SERVICES–1.9% | | | | | | | | |
Comcast Corp.–Class A | | | 372,828 | | | $ | 16,348,508 | |
| | | | | | | | |
ENTERTAINMENT–1.4% | | | | | | | | |
Electronic Arts, Inc. | | | 86,520 | | | | 11,836,801 | |
| | | | | | | | |
INTERACTIVE MEDIA & SERVICES–2.2% | | | | | | | | |
Alphabet, Inc.–Class C(a) | | | 133,455 | | | | 18,807,813 | |
| | | | | | | | |
| | | | | | | 46,993,122 | |
| | | | | | | | |
MATERIALS–2.4% | | | | | | | | |
CHEMICALS–1.6% | | | | | | | | |
LyondellBasell Industries NV–Class A | | | 51,935 | | | | 4,937,980 | |
PPG Industries, Inc. | | | 59,354 | | | | 8,876,390 | |
| | | | | | | | |
| | | | | | | 13,814,370 | |
| | | | | | | | |
METALS & MINING–0.8% | | | | | | | | |
BHP Group Ltd. (Sponsored ADR)(b) | | | 96,599 | | | | 6,598,678 | |
| | | | | | | | |
| | | | | | | 20,413,048 | |
| | | | | | | | |
REAL ESTATE–2.3% | | | | | | | | |
SPECIALIZED REITs–2.3% | | | | | | | | |
Public Storage | | | 18,310 | | | | 5,584,550 | |
Weyerhaeuser Co. | | | 403,701 | | | | 14,036,684 | |
| | | | | | | | |
| | | | | | | 19,621,234 | |
| | | | | | | | |
Total Common Stocks
(cost $655,317,620) | | | | | | | 819,175,548 | |
| | | | | | | | |
SHORT-TERM INVESTMENTS–4.7% | | | | | | | | |
INVESTMENT COMPANIES–4.7% | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB, 5.27%(c)(d)(e)
(cost $39,969,912) | | | 39,969,912 | | | | 39,969,912 | |
| | | | | | | | |
Total Investments Before Security Lending Collateral for Securities Loaned–100.1%
(cost $695,287,532) | | | | | | | 859,145,460 | |
| | | | | | | | |
INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED–1.9% | | | | | | | | |
INVESTMENT COMPANIES–1.9% | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB, 5.27%(c)(d)(e)
(cost $16,533,262) | | | 16,533,262 | | | | 16,533,262 | |
| | | | | | | | |
7
| | |
| RELATIVE VALUE PORTFOLIO | | |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | | | | U.S. $ Value | |
| | | | | | | | |
TOTAL INVESTMENTS–102.0%
(cost $711,820,794) | | | | | | $ | 875,678,722 | |
Other assets less liabilities–(2.0)% | | | | | | | (16,928,759 | ) |
| | | | | | | | |
NET ASSETS–100.0% | | | | | | $ | 858,749,963 | |
| | | | | | | | |
| (a) | | Non-income producing security. |
| (b) | | Represents entire or partial securities out on loan. See Note E for securities lending information. |
| (c) | | Affiliated investments. |
| (d) | | The rate shown represents the 7-day yield as of period end. |
| (e) | | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
Glossary:
ADR—American Depositary Receipt
REIT—Real Estate Investment Trust
See notes to financial statements.
8
| | |
| RELATIVE VALUE PORTFOLIO | | |
| STATEMENT OF ASSETS & LIABILITIES | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
ASSETS | |
Investments in securities, at value | | | | |
Unaffiliated issuers (cost $655,317,620) | | $ | 819,175,548 | (a) |
Affiliated issuers (cost $56,503,174—including investment of cash collateral for securities loaned of $16,533,262) | | | 56,503,174 | |
Cash | | | 30,023 | |
Unaffiliated dividends receivable | | | 1,733,928 | |
Affiliated dividends receivable | | | 166,232 | |
Receivable for capital stock sold | | | 154,883 | |
Receivable due from Adviser | | | 5,586 | |
| | | | |
Total assets | | | 877,769,374 | |
| | | | |
LIABILITIES | |
Payable for collateral received on securities loaned | | | 16,533,262 | |
Payable for capital stock redeemed | | | 973,838 | |
Payable for investment securities purchased | | | 576,936 | |
Advisory fee payable | | | 393,121 | |
Distribution fee payable | | | 142,523 | |
Administrative fee payable | | | 22,666 | |
Transfer Agent fee payable | | | 150 | |
Accrued expenses and other liabilities | | | 376,915 | |
| | | | |
Total liabilities | | | 19,019,411 | |
| | | | |
NET ASSETS | | $ | 858,749,963 | |
| | | | |
COMPOSITION OF NET ASSETS | |
Capital stock, at par | | $ | 29,690 | |
Additional paid-in capital | | | 655,875,947 | |
Distributable earnings | | | 202,844,326 | |
| | | | |
NET ASSETS | | $ | 858,749,963 | |
| | | | |
Net Asset Value Per Share—1 billion shares of capital stock authorized, $.001 par value
| | | | | | | | | | | | |
| Class | | Net Assets | | | Shares
Outstanding | | | Net Asset
Value | |
| | | |
| A | | $ | 174,389,442 | | | | 5,911,961 | | | $ | 29.50 | |
| | | |
| B | | $ | 684,360,521 | | | | 23,777,786 | | | $ | 28.78 | |
| (a) | | Includes securities on loan with a value of $26,901,186 (see Note E). |
See notes to financial statements.
9
| | |
| RELATIVE VALUE PORTFOLIO | | |
| STATEMENT OF OPERATIONS | | |
| |
| Year Ended December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
INVESTMENT INCOME | | | | |
Dividends | | | | |
Unaffiliated issuers (net of foreign taxes withheld of $178,220) | | $ | 16,516,595 | |
Affiliated issuers | | | 2,054,345 | |
Interest | | | 603 | |
Securities lending income | | | 20,448 | |
Other income | | | 408 | |
| | | | |
| | | 18,592,399 | |
| | | | |
EXPENSES | | | | |
Advisory fee (see Note B) | | | 4,546,236 | |
Distribution fee—Class B | | | 1,663,488 | |
Transfer agency—Class A | | | 1,953 | |
Transfer agency—Class B | | | 8,045 | |
Printing | | | 120,321 | |
Administrative | | | 94,860 | |
Custody and accounting | | | 81,707 | |
Legal | | | 78,963 | |
Audit and tax | | | 46,437 | |
Directors’ fees | | | 27,136 | |
Miscellaneous | | | 30,827 | |
| | | | |
Total expenses | | | 6,699,973 | |
Less: expenses waived and reimbursed by the Adviser (see Notes B & E) | | | (50,347 | ) |
| | | | |
Net expenses | | | 6,649,626 | |
| | | | |
Net investment income | | | 11,942,773 | |
| | | | |
REALIZED AND UNREALIZED GAIN ON INVESTMENT TRANSACTIONS | | | | |
Net realized gain on investment transactions | | | 33,533,788 | |
Net change in unrealized appreciation (depreciation) of investments | | | 47,309,060 | |
| | | | |
Net gain on investment transactions | | | 80,842,848 | |
| | | | |
NET INCREASE IN NET ASSETS FROM OPERATIONS | | $ | 92,785,621 | |
| | | | |
See notes to financial statements.
10
| | |
| | |
| RELATIVE VALUE PORTFOLIO | | |
| |
| STATEMENT OF CHANGES IN NET ASSETS | | AB Variable Products Series Fund |
| | | | | | | | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | |
Net investment income | | $ | 11,942,773 | | | $ | 10,958,513 | |
Net realized gain on investment transactions | | | 33,533,788 | | | | 64,196,924 | |
Net change in unrealized appreciation (depreciation) of investments | | | 47,309,060 | | | | (115,477,318 | ) |
| | | | | | | | |
Net increase (decrease) in net assets from operations | | | 92,785,621 | | | | (40,321,881 | ) |
Distributions to Shareholders | |
Class A | | | (15,270,443 | ) | | | (27,285,764 | ) |
Class B | | | (62,328,817 | ) | | | (119,514,169 | ) |
CAPITAL STOCK TRANSACTIONS | |
Net increase | | | 8,728,514 | | | | 99,205,085 | |
| | | | | | | | |
Total increase (decrease) | | | 23,914,875 | | | | (87,916,729 | ) |
NET ASSETS | |
Beginning of period | | | 834,835,088 | | | | 922,751,817 | |
| | | | | | | | |
End of period | | $ | 858,749,963 | | | $ | 834,835,088 | |
| | | | | | | | |
See notes to financial statements.
11
| | |
| RELATIVE VALUE PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
NOTE A: Significant Accounting Policies
The AB Relative Value Portfolio (the “Portfolio”) (formerly known as AB Growth and Income Portfolio) is a series of AB Variable Products Series Fund, Inc. (the “Fund”). The Portfolio’s investment objective is long-term growth of capital. The Portfolio is diversified as defined under the Investment Company Act of 1940 (the “1940 Act”). The Fund was incorporated in the State of Maryland as an open-end series investment company. The Fund offers 10 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 U.S. generally accepted accounting principles (“U.S. GAAP”), 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 Portfolio is an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Portfolio.
1. Security Valuation
Portfolio securities are valued at market value determined on the basis of market quotations or, if market quotations are not readily available or are unreliable, at “fair value” as determined in accordance with procedures approved by and under the oversight of the Fund’s Board of Directors (the “Board”). Pursuant to these procedures, AllianceBernstein L.P. (the “Adviser”) serves as the Portfolio’s valuation designee pursuant to Rule 2a-5 of the 1940 Act. In this capacity, the Adviser is responsible, among other things, for making all fair value determinations relating to the Portfolio’s portfolio investments, subject to the Board’s oversight.
In general, the market values of securities which are readily available and deemed reliable are determined as follows: securities listed on a national securities exchange (other than securities listed on the NASDAQ Stock Market, Inc. (“NASDAQ”)) 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 last traded price from the previous day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price; listed or over the counter (“OTC”) market put or call options are valued at the mid level between the current bid and ask prices. If either a current bid or current ask price is unavailable, the Adviser will have discretion to determine the best valuation (e.g., last trade price in the case of listed options); open futures 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 valuation, the last available closing settlement price is used; U.S. Government securities and any other debt instruments having 60 days or less remaining until maturity are generally valued at market by an independent pricing vendor, if a market price is available. If a market price is not available, the securities are valued at amortized cost. This methodology is commonly used for short term securities that have an original maturity of 60 days or less, as well as short term securities that had an original term to maturity that exceeded 60 days. In instances when amortized cost is utilized, the Valuation Committee (the “Committee”) must reasonably conclude that the utilization of amortized cost is approximately the same as the fair value of the security. Factors the Committee will consider include, but are not limited to, an impairment of the creditworthiness of the issuer or material changes in interest rates. 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 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. Swaps and other derivatives are valued daily, primarily using independent pricing services, independent pricing models using market inputs, as well as third party broker-dealers or counterparties. Open-end mutual funds are valued at the closing net asset value per share, while exchange traded funds are valued at the closing market price per share.
Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value as deemed appropriate by the Adviser. Factors considered in making this determination may include, but
12
| | |
| |
| | | AB Variable Products Series Fund |
are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer’s financial statements or other available documents. In addition, the Portfolio may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Portfolio values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Portfolio generally values many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available.
2. Fair Value Measurements
In accordance with U.S. GAAP regarding fair value measurements, fair value is defined as the price that the Portfolio would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability (including those valued based on their market values as described in Note A.1 above). Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Portfolio. Unobservable inputs reflect the Portfolio’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
| | • | | Level 1—quoted prices in active markets for identical investments |
| | • | | Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| | • | | Level 3—significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of investments) |
Where readily available market prices or relevant bid prices are not available for certain equity investments, such investments may be valued based on similar publicly traded investments, movements in relevant indices since last available prices or based upon underlying company fundamentals and comparable company data (such as multiples to earnings or other multiples to equity). Where an investment is valued using an observable input, such as another publicly traded security, the investment will be classified as Level 2. If management determines that an adjustment is appropriate based on restrictions on resale, illiquidity or uncertainty, and such adjustment is a significant component of the valuation, the investment will be classified as Level 3. An investment will also be classified as Level 3 where management uses company fundamentals and other significant inputs to determine the valuation.
The following table summarizes the valuation of the Portfolio’s investments by the above fair value hierarchy levels as of December 31, 2023:
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Assets: | |
Common Stocks(a) | | $ | 819,175,548 | | | $ | –0 | – | | $ | –0 | – | | $ | 819,175,548 | |
Short-Term Investments | | | 39,969,912 | | | | –0 | – | | | –0 | – | | | 39,969,912 | |
Investments of Cash Collateral for Securities Loaned in Affiliated Money Market Fund | | | 16,533,262 | | | | –0 | – | | | –0 | – | | | 16,533,262 | |
| | | | | | | | | | | | | | | | |
Total Investments in Securities | | | 875,678,722 | | | | –0 | – | | | –0 | – | | | 875,678,722 | |
Other Financial Instruments(b) | | | –0 | – | | | –0 | – | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | |
Total | | $ | 875,678,722 | | | $ | –0 | – | | $ | –0 | – | | $ | 875,678,722 | |
| | | | | | | | | | | | | | | | |
| (a) | | See Portfolio of Investments for sector classifications. |
| (b) | | Other financial instruments are derivative instruments, such as futures, forwards and swaps, which are valued at the unrealized appreciation (depreciation) on the instrument. Other financial instruments may also include swaps with upfront premiums, written options and written swaptions which are valued at market value. |
13
| | |
| RELATIVE VALUE PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
3. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under forward currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and ask 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, 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 foreign currency denominated assets and liabilities.
4. 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. The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned.
In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, management has analyzed the Portfolio’s tax positions taken or expected to be taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Portfolio’s financial statements.
5. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Portfolio is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the date the securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. Non-cash dividends, if any, are recorded on the ex-dividend date at the fair value of the securities received. The Portfolio amortizes premiums and accretes discounts as adjustments to interest income. The Portfolio accounts for distributions received from REIT investments or from regulated investment companies as dividend income, realized gain, or return of capital based on information provided by the REIT or the investment company.
6. Class Allocations
All income earned and expenses incurred by the Portfolio 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 for class specific expenses which are allocated to the respective class. Expenses of the Fund are charged proportionately to each portfolio or based on other appropriate methods. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets.
7. Dividends and Distributions
Dividends and distributions to shareholders, if any, 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 U.S. GAAP. 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 the investment advisory agreement, the Portfolio pays the Adviser an advisory fee at an 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 Portfolio’s average daily net assets. The fee is accrued daily and paid monthly.
Pursuant to the investment advisory agreement, the Portfolio may reimburse the Adviser for certain legal and accounting services provided to the Portfolio by the Adviser. For the year ended December 31, 2023, the reimbursement for such services amounted to $94,860.
14
| | |
| |
| | | AB Variable Products Series Fund |
The Portfolio compensates AllianceBernstein Investor Services, Inc. (“ABIS”), 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 retained by ABIS amounted to $1,800 for the year ended December 31, 2023.
The Portfolio may invest in AB Government Money Market Portfolio (the “Government Money Market Portfolio”) which has a contractual annual advisory fee rate of .20% of the portfolio’s average daily net assets and bears its own expenses. The Adviser had contractually agreed to waive .10% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .10%) until August 31, 2023. Effective September 1, 2023, the Adviser has contractually agreed to waive .05% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .15%) until August 31, 2024. In connection with the investment by the Portfolio in Government Money Market Portfolio, the Adviser has contractually agreed to waive its advisory fee from the Portfolio in an amount equal to the Portfolio’s pro rata share of the effective advisory fee of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. For the year ended December 31, 2023, such waiver amounted to $48,119.
A summary of the Portfolio’s transactions in AB mutual funds for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | |
Portfolio | | Market Value
12/31/22
(000) | | | Purchases
at Cost
(000) | | | Sales
Proceeds
(000) | | | Market Value
12/31/23
(000) | | | Dividend
Income
(000) | |
Government Money Market Portfolio | | $ | 45,583 | | | $ | 332,593 | | | $ | 338,206 | | | $ | 39,970 | | | $ | 2,054 | |
Government Money Market Portfolio* | | | –0 | – | | | 123,396 | | | | 106,863 | | | | 16,533 | | | | 8 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | $ | 56,503 | | | $ | 2,062 | |
| | | | | | | | | | | | | | | | | | | | |
| * | | Investments of cash collateral for securities lending transactions (see Note E). |
NOTE C: Distribution Plan
The Portfolio has adopted a Distribution Plan (the “Plan”) for Class B shares pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Portfolio pays distribution and servicing fees to AllianceBernstein Investments, Inc. (the “Distributor”), 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 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 or 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 year ended December 31, 2023 were as follows:
| | | | | | | | |
| | | Purchases | | | Sales | |
Investment securities (excluding U.S. government securities) | | $ | 552,401,816 | | | $ | 609,540,632 | |
U.S. government securities | | | –0 | – | | | –0 | – |
15
| | |
| RELATIVE VALUE PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation are as follows:
| | | | |
Cost | | $ | 717,093,614 | |
| | | | |
Gross unrealized appreciation | | $ | 166,992,414 | |
Gross unrealized depreciation | | | (8,407,306 | ) |
| | | | |
Net unrealized appreciation | | $ | 158,585,108 | |
| | | | |
1. Derivative Financial Instruments
The Portfolio may use derivatives in an effort to earn income and enhance returns, to replace more traditional direct investments, to obtain exposure to otherwise inaccessible markets (collectively, “investment purposes”), or to hedge or adjust the risk profile of its portfolio.
The Portfolio did not engage in derivatives transactions for the year ended December 31, 2023.
2. Currency Transactions
The Portfolio may invest in non-U.S. Dollar-denominated securities on a currency hedged or unhedged basis. The Portfolio may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and other options. The Portfolio may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Portfolio and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Portfolio may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).
NOTE E: Securities Lending
The Portfolio may enter into securities lending transactions. Under the Portfolio’s securities lending program, all loans of securities will be collateralized continually by cash collateral and/or non-cash collateral. Non-cash collateral will include only securities issued or guaranteed by the U.S. government or its agencies or instrumentalities. If the Portfolio cannot sell or repledge any non-cash collateral, such collateral will not be reflected in the portfolio of investments. If a loan is collateralized by cash, the Portfolio will be compensated for the loan from a portion of the net return from the income earned on cash collateral after a rebate is paid to the borrower (in some cases, this rebate may be a “negative rebate” or fee paid by the borrower to the Portfolio in connection with the loan), and payments are made for fees of the securities lending agent and for certain other administrative expenses. If the Portfolio receives non-cash collateral, the Portfolio will receive a fee from the borrower generally equal to a negotiated percentage of the market value of the loaned securities. The Portfolio will have the right to call a loan and obtain the securities loaned at any time on notice to the borrower within the normal and customary settlement time for the securities. While the securities are on loan, the borrower is obligated to pay the Portfolio amounts equal to any dividend income or other distributions from the securities; however, these distributions will not be afforded the same preferential tax treatment as qualified dividends. The Portfolio will not be able to exercise voting rights with respect to any securities during the existence of a loan, but will have the right to regain ownership of loaned securities in order to exercise voting or other ownership rights. Collateral received and securities loaned are marked to market daily to ensure that the securities loaned are secured by collateral. The lending agent currently invests the cash collateral received in Government Money Market Portfolio, an eligible money market vehicle, in accordance with the investment restrictions of the Portfolio, and as approved by the Board. The collateral received on securities loaned is recorded as an asset as well as a corresponding liability in the statement of assets and liabilities. The collateral will be adjusted the next business day to maintain the required collateral amount. The amounts of securities lending income from the borrowers and Government Money Market Portfolio are reflected in the statement of operations. When the Portfolio earns net securities lending income from Government Money Market Portfolio, the income is inclusive of a rebate expense paid to the borrower. In connection with the cash collateral investment by the Portfolio in Government Money Market Portfolio, the Adviser has agreed to waive a portion of the Portfolio’s share of the advisory fees of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. When the Portfolio lends securities, its investment performance will continue to reflect changes in the value of the securities loaned. A principal risk of lending portfolio securities is that the borrower may fail to return the loaned securities upon termination of the loan and that the collateral will not be sufficient to replace the loaned securities. The lending agent has agreed to indemnify the Portfolio in the case of default of any securities borrower.
16
| | |
| |
| | | AB Variable Products Series Fund |
A summary of the Portfolio’s transactions surrounding securities lending for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Government Money Market
Portfolio | |
Market Value of
Securities on Loan* | | | Cash Collateral* | | | Market Value of
Non-Cash
Collateral* | | | Income from
Borrowers | | | Income Earned | | | Advisory Fee
Waived | |
| $ | 26,901,186 | | | $ | 16,533,262 | | | $ | 10,893,868 | | | $ | 12,197 | | | $ | 8,251 | | | $ | 2,228 | |
| * | | As of December 31, 2023. |
NOTE F: Capital Stock
Each class consists of 500,000,000 authorized shares. Transactions in capital shares for each class were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | SHARES | | | | | | AMOUNT | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | | | | | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
Class A | |
Shares sold | | | 958,264 | | | | 726,184 | | | | | | | $ | 27,676,936 | | | $ | 22,884,961 | |
Shares issued in reinvestment of dividends and distributions | | | 545,958 | | | | 968,955 | | | | | | | | 15,270,443 | | | | 27,285,764 | |
Shares redeemed | | | (1,028,628 | ) | | | (879,980 | ) | | | | | | | (29,725,520 | ) | | | (28,582,107 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase | | | 475,594 | | | | 815,159 | | | | | | | $ | 13,221,859 | | | $ | 21,588,618 | |
| | | | | | | | | | | | | | | | | | | | |
Class B | |
Shares sold | | | 1,489,635 | | | | 2,020,177 | | | | | | | $ | 42,230,544 | | | $ | 62,982,072 | |
Shares issued on reinvestment of dividends and distributions | | | 2,281,435 | | | | 4,336,508 | | | | | | | | 62,328,817 | | | | 119,514,169 | |
Shares redeemed | | | (3,874,936 | ) | | | (3,311,067 | ) | | | | | | | (109,052,706 | ) | | | (104,879,774 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (103,866 | ) | | | 3,045,618 | | | | | | | $ | (4,493,345 | ) | | $ | 77,616,467 | |
| | | | | | | | | | | | | | | | | | | | |
At December 31, 2023, certain shareholders of the Portfolio owned 47% in aggregate of the Portfolio’s outstanding shares. Significant transactions by such shareholders, if any, may impact the Portfolio’s performance.
NOTE G: Risks Involved in Investing in the Portfolio
Market Risk—The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Capitalization Risk—Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small-and mid-capitalization companies may have additional risks because these companies have limited product lines, markets or financial resources.
Derivatives Risk—Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
LIBOR Replacement Risk—The Portfolio may be exposed to debt securities, derivatives or other financial instruments that recently transitioned from the London Interbank Offered Rate, or “LIBOR,” as a “benchmark” or “reference rate” for various interest rate calculations. LIBOR’s administrator, ICE Benchmark Administration, ceased publishing most LIBOR settings (including some U.S. LIBOR settings) by the end of 2021 and the remaining (and most widely used) U.S. Dollar
17
| | |
| RELATIVE VALUE PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
LIBOR settings after June 30, 2023. The United Kingdom Financial Conduct Authority, which regulates LIBOR, will permit the use of synthetic U.S. Dollar LIBOR rates for non-U.S. contracts through September 30, 2024, but any such rates would be considered non-representative of the underlying market. Since 2018 the Federal Reserve Bank of New York has published the Secured Overnight Financing Rate (referred to as SOFR), which is intended to replace U.S. Dollar LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities in the repurchase agreement (repo) market. There is no assurance that the composition or characteristics of SOFR or any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that the market for SOFR-linked financial instruments will have the same volume or liquidity as did the market for LIBOR-linked financial instruments prior to LIBOR’s discontinuance or unavailability. Neither the long-term effects of the LIBOR transition process nor its ultimate success can yet be known.
Indemnification Risk—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. Therefore, the Portfolio has not accrued any liability in connection with these indemnification provisions.
Management Risk—The Portfolio is subject to management risk because it is an actively-managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
NOTE H: Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $325 million revolving credit facility (the “Facility”) intended to provide short-term financing related to redemptions and other short term liquidity requirements, subject to certain restrictions. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Portfolio did not utilize the Facility during the year ended December 31, 2023.
NOTE I: Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended December 31, 2023 and December 31, 2022 were as follows:
| | | | | | | | |
| | | 2023 | | | 2022 | |
Distributions paid from: | | | | | | | | |
Ordinary income | | $ | 10,958,671 | | | $ | 21,194,171 | |
Net long-term capital gains | | | 66,640,589 | | | | 125,605,762 | |
| | | | | | | | |
Total taxable distributions paid | | $ | 77,599,260 | | | $ | 146,799,933 | |
| | | | | | | | |
As of December 31, 2023, the components of accumulated earnings (deficit) on a tax basis were as follows:
| | | | |
Undistributed ordinary income | | $ | 11,941,059 | |
Undistributed capital gains | | | 32,318,159 | |
Unrealized appreciation (depreciation) | | | 158,585,108 | (a) |
| | | | |
Total accumulated earnings (deficit) | | $ | 202,844,326 | |
| | | | |
| (a) | | The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. |
For tax purposes, net realized capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses for an indefinite period, and such losses will retain their character as either short-term or long-term capital losses. As of December 31, 2023, the Portfolio did not have any capital loss carryforwards.
18
| | |
| |
| | | AB Variable Products Series Fund |
During the current fiscal year, there were no permanent differences that resulted in adjustments to distributable earnings or additional paid-in capital.
NOTE J: Recent Accounting Pronouncements
In December 2022, the Financial Accounting Standards Board issued an Accounting Standards Update, ASU 2022-06, “Reference Rate Reform (Topic 848) – Deferral of the Sunset Date of Topic 848”. ASU 2022-06 is an amendment to ASU 2020-04, which provided optional guidance to ease the potential accounting burden due to the discontinuation of the LIBOR and other interbank-offered based reference rates and which was effective as of March 12, 2020 through December 31, 2022. ASU 2022-06 extends the effective period through December 31, 2024. Management is currently evaluating the impact, if any, of applying ASU 2022-06.
NOTE K: Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Portfolio’s financial statements through this date.
19
| | |
| | |
| RELATIVE VALUE PORTFOLIO | | |
| |
| FINANCIAL HIGHLIGHTS | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | Class A | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | | $29.00 | | | | $36.83 | | | | $28.97 | | | | $30.30 | | | | $27.78 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Income From Investment Operations | |
Net investment income(a)(b) | | | .47 | | | | .48 | | | | .38 | | | | .40 | | | | .43 | |
Net realized and unrealized gain (loss) on investment transactions | | | 2.86 | | | | (2.21 | ) | | | 7.76 | | | | .13 | | | | 5.84 | |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 3.33 | | | | (1.73 | ) | | | 8.14 | | | | .53 | | | | 6.27 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Less: Dividends and Distributions | |
Dividends from net investment income | | | (.45 | ) | | | (.49 | ) | | | (.28 | ) | | | (.42 | ) | | | (.39 | ) |
Distributions from net realized gain on investment transactions | | | (2.38 | ) | | | (5.61 | ) | | | –0 | – | | | (1.44 | ) | | | (3.36 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (2.83 | ) | | | (6.10 | ) | | | (.28 | ) | | | (1.86 | ) | | | (3.75 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $29.50 | | | | $29.00 | | | | $36.83 | | | | $28.97 | | | | $30.30 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Total Return | |
Total investment return based on net asset value(c)* | | | 12.03 | % | | | (4.19 | )% | | | 28.15 | % | | | 2.72 | % | | | 23.91 | % |
| | | | | | | | | | | | | | | | | | | | |
| Ratios/Supplemental Data | |
Net assets, end of period (000’s omitted) | | | $174,389 | | | | $157,648 | | | | $170,190 | | | | $143,269 | | | | $155,765 | |
Ratio to average net assets of: | |
Expenses, net of waivers/reimbursements(d)‡ | | | .60 | % | | | .59 | % | | | .59 | % | | | .61 | % | | | .61 | % |
Expenses, before waivers/reimbursements(d)‡ | | | .61 | % | | | .59 | % | | | .59 | % | | | .62 | % | | | .62 | % |
Net investment income(b) | | | 1.65 | % | | | 1.50 | % | | | 1.13 | % | | | 1.53 | % | | | 1.43 | % |
Portfolio turnover rate | | | 70 | % | | | 66 | % | | | 51 | % | | | 54 | % | | | 66 | % |
| | | | | | | | | | | | | | | | | | | | |
‡ Expense ratios exclude the estimated acquired fund fees of the affiliated/unaffiliated underlying | |
portfolios | | | .01 | % | | | .00 | % | | | .00 | % | | | .01 | % | | | .01 | % |
See footnote summary on page 21.
20
| | |
| RELATIVE VALUE PORTFOLIO | | |
| FINANCIAL HIGHLIGHTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | Class B | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | | $28.36 | | | | $36.12 | | | | $28.43 | | | | $29.76 | | | | $27.34 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Income From Investment Operations | |
Net investment income(a)(b) | | | .39 | | | | .39 | | | | .29 | | | | .33 | | | | .35 | |
Net realized and unrealized gain (loss) on investment transactions | | | 2.79 | | | | (2.16 | ) | | | 7.61 | | | | .13 | | | | 5.74 | |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 3.18 | | | | (1.77 | ) | | | 7.90 | | | | .46 | | | | 6.09 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Less: Dividends and Distributions | |
Dividends from net investment income | | | (.38 | ) | | | (.38 | ) | | | (.21 | ) | | | (.35 | ) | | | (.31 | ) |
Distributions from net realized gain on investment transactions | | | (2.38 | ) | | | (5.61 | ) | | | –0 | – | | | (1.44 | ) | | | (3.36 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (2.76 | ) | | | (5.99 | ) | | | (.21 | ) | | | (1.79 | ) | | | (3.67 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $28.78 | | | | $28.36 | | | | $36.12 | | | | $28.43 | | | | $29.76 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Total Return | |
Total investment return based on net asset value(c)* | | | 11.72 | % | | | (4.42 | )% | | | 27.84 | % | | | 2.47 | % | | | 23.61 | % |
| | | | | | | | | | | | | | | | | | | | |
| Ratios/Supplemental Data | |
Net assets, end of period (000’s omitted) | | | $684,361 | | | | $677,187 | | | | $752,562 | | | | $868,715 | | | | $922,603 | |
Ratio to average net assets of: | |
Expenses, net of waivers/reimbursements(d)‡ | | | .85 | % | | | .84 | % | | | .84 | % | | | .86 | % | | | .86 | % |
Expenses, before waivers/reimbursements(d)‡ | | | .86 | % | | | .84 | % | | | .85 | % | | | .87 | % | | | .87 | % |
Net investment income(b) | | | 1.40 | % | | | 1.25 | % | | | .87 | % | | | 1.28 | % | | | 1.18 | % |
Portfolio turnover rate | | | 70 | % | | | 66 | % | | | 51 | % | | | 54 | % | | | 66 | % |
| | | | | | | | | | | | | | | | | | | | |
‡ Expense ratios exclude the estimated acquired fund fees of the affiliated/unaffiliated underlying | |
portfolios | | | .01 | % | | | .00 | % | | | .00 | % | | | .01 | % | | | .01 | % |
| (a) | | Based on average shares outstanding. |
| (b) | | Net of expenses waived/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 (i) insurance company’s separate account related expense charges and (ii) the deductions 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) | | In connection with the Portfolio’s investments in affiliated underlying portfolios, the Portfolio incurs no direct expenses, but bears proportionate shares of the fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated underlying portfolios. The Adviser has contractually agreed to waive its fees from the Portfolio in an amount equal to the Portfolio’s pro rata share of certain acquired fund fees and expenses, and for the years ended December 31, 2023, December 31, 2020 and December 31, 2019, such waiver amounted to .01%, .01% and .01%, respectively. |
| * | | Includes the impact of proceeds received and credited to the Portfolio resulting from class action settlements, which enhanced the Portfolio’s performance for the year ended December 31, 2019 by .15%. |
See notes to financial statements.
21
| | |
| | |
| REPORT OF INDEPENDENT REGISTERED |
| |
| PUBLIC ACCOUNTING FIRM | | AB Variable Products Series Fund |
To the Shareholders and the Board of Directors of AB Relative Value Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of AB Relative Value Portfolio (formerly known as AB Growth and Income Portfolio) (the “Portfolio”) (one of the series constituting AB Variable Products Series Fund, Inc. (the “Fund”)), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Portfolio (one of the series constituting AB Variable Products Series Fund, Inc.) at December 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Portfolio’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers or others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the AB investment companies since 1968.
New York, New York
February 14, 2024
22
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| 2023 FEDERAL TAX INFORMATION (unaudited) | | AB Variable Products Series Fund |
For Federal income tax purposes, the following information is furnished with respect to the distributions paid by the Portfolio during the taxable year ended December 31, 2023. For corporate shareholders, 100% of dividends paid qualify for the dividends received deduction. The Portfolio designates $66,640,589 of dividends paid as long-term capital gain dividends.
23
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| RELATIVE VALUE PORTFOLIO | | AB Variable Products Series Fund |
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| BOARD OF DIRECTORS | | |
Garry L. Moody(1), Chairman Jorge A. Bermudez(1) Michael J. Downey(1) Onur Erzan, President and Chief Executive Officer | | Nancy P. Jacklin(1) Jeanette W. Loeb(1) Carol C. McMullen(1) Marshall C. Turner, Jr.(1) Emilie D. Wrapp, Advisory Board Member |
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| OFFICERS | | |
Frank V. Caruso(2)*, Vice President John H. Fogarty(2), Vice President Vinay Thapar(2), Vice President Christopher Kotowicz(2), Vice President Nancy E. Hay, Secretary | | Michael B. Reyes, Senior Vice President Stephen M. Woetzel, Treasurer and
Chief Financial Officer Phyllis J. Clarke, Controller Jennifer Friedland, Chief Compliance Officer |
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CUSTODIANAND ACCOUNTING AGENT State Street Bank and Trust Company One Congress Street Suite 1 Boston, MA 02114 | | LEGAL COUNSEL Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 |
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DISTRIBUTOR AllianceBernstein Investments, Inc. 501 Commerce Street Nashville, TN 37203 | | TRANSFER AGENT AllianceBernstein Investor Services, Inc. P.O. Box 786003
San Antonio, TX 78278 Toll-Free (800) 221-5672 |
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP One Manhattan West New York, NY 1000 | | |
| (1) | | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
| (2) | | The day-to-day management of, and investment decisions for, the Portfolio’s portfolio are made by the Adviser’s Relative Value Investment Team. Messrs. Caruso, Fogarty, Thapar and Kotowicz are the investment professionals with the most significant responsibility for the day-to-day management of the Portfolio’s portfolio. |
| * | | Mr. Caruso is expected to retire from the Adviser effective March 31, 2024. |
24
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| RELATIVE VALUE PORTFOLIO | | |
| |
| MANAGEMENT OF THE FUND | | AB Variable Products Series Fund |
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund’s Directors and the Advisory Board member is set forth below.
| | | | | | | | |
NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
| INTERESTED DIRECTOR | | | | | | |
| | | | | | | | |
Onur Erzan,# 1345 Avenue of the Americas New York, NY 10105 48 (2021) | | Senior Vice President of the Adviser, Head of Global Client Group and Head of Private Wealth. He oversees AB’s entire private wealth management business and third-party institutional and retail franchise, where he is responsible for all client services, sales and marketing, as well as product strategy, management and development worldwide. Director, President and Chief Executive Officer of the AB Mutual Funds as of April 1, 2021. He is also a member of the Equitable Holdings Management Committee. Prior to joining the firm in January 2021, he spent 19 years with McKinsey (management consulting firm), most recently as a senior partner and co-leader of its Wealth & Asset Management practice. In addition, he co-led McKinsey’s Banking & Securities Solutions (a portfolio of data, analytics, and digital assets and capabilities) globally. | | | 82 | | | None |
| | | | | | | | |
| INDEPENDENT DIRECTORS | | | | | | |
| | | | | | | | |
Garry L. Moody,## Chairman of the Board 71 (2008) | | Private Investor since prior to 2019. Formerly, Partner, Deloitte & Touche LLP (1995-2008) where he held a number of senior positions, including Vice Chairman, and U.S. and Global Investment Management Practice Managing Partner; President, Fidelity Accounting and Custody Services Company (1993-1995), where he was responsible for accounting, pricing, custody and reporting for the Fidelity mutual funds; and Partner, Ernst & Young LLP (1975-1993), where he served as the National Director of Mutual Fund Tax Services and Managing Partner of its Chicago Office Tax department. He served as a member of the Investment Company Institute’s Board of Governors and the Independent Directors Council’s Governing Council from October 2019 through September 2023, where he also served as Chairman of the Governance Committee from October 2021 through September 2023. He is Chairman of the AB Funds and Chairman of the Independent Directors Committees since January 2023; he has served as a director or trustee since 2008, and served as Chairman of the Audit Committee of such funds from 2008 to February 2023. | | | 82 | | | None |
25
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| RELATIVE VALUE PORTFOLIO | | |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
INDEPENDENT DIRECTORS
(continued) | | | | | | |
| | | | | | | | |
Jorge A. Bermudez,## 72 (2020) | | Private Investor since prior to 2019. Formerly, Chief Risk Officer of Citigroup, Inc., a global financial services company, from November 2007 to March 2008, Chief Executive Officer of Citigroup’s Commercial Business Group in North America and Citibank Texas from 2005 to 2007, and a variety of other executive and leadership roles at various businesses within Citigroup prior to then; Chairman (2017-2018) of the Texas A&M Foundation Board of Trustees (Trustee 2014-2021) and Chairman of the Smart Grid Center Board at Texas A&M University since 2012; director of, among others, Citibank N.A. from 2005 to 2008, the Federal Reserve Bank of Dallas, Houston Branch from 2009 to 2011, the Federal Reserve Bank of Dallas from 2011 to 2017, and the Electric Reliability Council of Texas from 2010 to 2016; and Chair of the Audit Committee of the Board of Directors of Moody’s Corporation since December 2022. He has served as director or trustee of the AB Funds since January 2020. | | | 82 | | | Moody’s Corporation since April 2011 |
| | | | | | | | |
Michael J. Downey,## 80 (2005) | | Private Investor since prior to 2019. Formerly, Chairman of The Asia Pacific Fund, Inc. (registered investment company) from 2002 until January 2019. From 1987 until 1993, Chairman and CEO of Prudential Mutual Fund Management, director of the Prudential mutual funds, and member of the Executive Committee of Prudential Securities, Inc. He has served as a director or trustee of the AB Funds since 2005. | | | 82 | | | None |
| | | | | | | | |
Nancy P. Jacklin,## 75 (2006) | | Private Investor since prior to 2019. Professorial Lecturer at the Johns Hopkins School of Advanced International Studies (2008-2015). U.S. Executive Director of the International Monetary Fund (which is responsible for ensuring the stability of the international monetary system), (December 2002-May 2006); Partner, Clifford Chance (1992-2002); Sector Counsel, International Banking and Finance, and Associate General Counsel, Citicorp (1985-1992); Assistant General Counsel (International), Federal Reserve Board of Governors (1982-1985); and Attorney Advisor, U.S. Department of the Treasury (1973-1982). Member of the Bar of the District of Columbia and of New York; and member of the Council on Foreign Relations. She has served as a director or trustee of the AB Funds since 2006 and served as Chair of the Governance and Nominating Committees of the AB Funds from 2014 to August 2023. | | | 82 | | | None |
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26
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| | | AB Variable Products Series Fund |
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NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
INDEPENDENT DIRECTORS
(continued) | | | | | | |
| | | | | | | | |
Jeanette W. Loeb,## 71 (2020) | | Private Investor since prior to 2019. Director of New York City Center since 2005. Formerly, Chief Executive Officer of PetCareRx (e-commerce pet pharmacy) from 2002 to 2011 and 2015 to April 2023. She was a director of MidCap Financial Investment Corporation (business development company) from August 2011 to July 2023 and a director of AB Multi-Manager Alternative Fund (fund of hedge funds) from 2012 to 2018. Formerly, affiliated with Goldman Sachs Group, Inc. (financial services) from 1977 to 1994, including as a partner thereof from 1986 to 1994. She has served as director or trustee of the AB Funds since April 2020 and serves as Chair of the Governance and Nominating Committees of the AB Funds since August 2023. | | | 82 | | | None |
| | | | | | | | |
Carol C. McMullen,## 68 (2016) | | Private Investor and a member of the Advisory Board of Butcher Box (since 2018) and serves as Advisory Board Chair as of June 2023. Formerly, Managing Director of Slalom Consulting (consulting) from 2014 until July 2023; member, Mass General Brigham (formerly, Partners Healthcare) Investment Committee (2010-2019); Director of Norfolk & Dedham Group (mutual property and casualty insurance) from 2011 until November 2016; Director of Partners Community Physicians Organization (healthcare) from 2014 until December 2016; and Managing Director of The Crossland Group (consulting) from 2012 until 2013. She has held a number of senior positions in the asset and wealth management industries, including at Eastern Bank (where her roles included President of Eastern Wealth Management), Thomson Financial (Global Head of Sales for Investment Management), and Putnam Investments (where her roles included Chief Investment Officer, Core and Growth and Head of Global Investment Research). She has served on a number of private company and non-profit boards, and as a director or trustee of the AB Funds since June 2016, and serves as Chair of the Audit Committees of such funds since February 2023. | | | 82 | | | None |
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27
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| RELATIVE VALUE PORTFOLIO | | |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
INDEPENDENT DIRECTORS
(continued) | | | | | | |
| | | | | | | | |
Marshall C. Turner, Jr.## 82 (2005) | | Private Investor since prior to 2019. He was a Director of Xilinx, Inc. (programmable logic semi-conductors and adaptable, intelligent computing) from 2007 through August 2020, and is a former director of 33 other companies and organizations. Former Chairman and CEO of Dupont Photomasks, Inc. (semi-conductor manufacturing equipment) from 2003 through 2006. He has extensive operating leadership and venture capital investing experience, including five interim or full-time CEO roles, and prior service as general partner of institutional venture capital partnerships. He also has extensive non-profit board leadership experience, and currently serves on the board of the George Lucas Educational Foundation. He has served as a director of one AB Fund since 1992, and director or trustee of all AB Funds since 2005. He has served as both Chairman of the AB Funds and Chairman of the Independent Directors Committees from 2014 through December 2022. | | | 82 | | | None |
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| ADVISORY BOARD MEMBER | | | | | | |
| | | | | | | | |
Emilie D. Wrapp,# 68 (2024) | | Former Senior Vice President, Counsel, Assistant Secretary & Senior Mutual Fund Legal Advisor of the Adviser (January 2023—June 2023). Prior thereto, Senior Vice President, Assistant Secretary, Counsel, and Head of Mutual Fund & Retail Legal of the Adviser; Assistant General Counsel and Assistant Secretary of ABI since prior to 2019 until June 2023. | | | 82 | | | None |
| * | The address for each of the Fund’s Directors and the Advisory Board member is c/o AllianceBernstein L.P., Attention: Legal & Compliance Department—Mutual Fund Legal, 1345 Avenue of the Americas, New York, NY 10105. |
| ** | There is no stated term of office for the Fund’s Directors or the Advisory Board member. |
| *** | The information above includes each Director’s principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Director’s qualifications to serve as a Director, which led to the conclusion that each Director should serve as a Director for the Fund. |
| # | Mr. Erzan is an “interested person” of the Fund, as defined in the “1940 Act”, due to his position as a Senior Vice President of the Adviser. Ms. Wrapp is an “interested person” of the Fund, as defined in the 1940 Act, because of her former role with the Adviser. |
| ## | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
28
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| | | AB Variable Products Series Fund |
Officer Information
Certain information concerning the Portfolio’s Officers is listed below.
| | | | |
NAME, ADDRESS,* AND AGE | | PRINCIPAL POSITION(S)
HELD WITH FUND | | PRINCIPAL OCCUPATION
DURING PAST FIVE YEARS |
Onur Erzan
48 | | President and Chief
Executive Officer | | See biography above. |
| | | | |
Frank V. Caruso#
67 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated since prior to 2019. He is also Chief Investment Officer—US Growth Equities. |
| | | | |
John H. Fogarty
54 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated since prior to 2019. He is also Co-Chief Investment Officer—US Growth Equites. |
| | | | |
Vinay Thapar
45 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated since prior to 2019. He is also Co-Chief Investment Officer—US Growth Equities. |
| | | | |
Christopher Kotowicz
52 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated in a substantially similar capacity to his current position, including as a research analyst, since prior to 2019. |
| | | | |
Nancy E. Hay
51 | | Secretary | | Senior Vice President and Counsel of the Adviser**, with which she has been associated since prior to 2019 and Assistant Secretary of ABI**. |
| | | | |
Michael B. Reyes
47 | | Senior Vice President | | Vice President of the Adviser**, with which he has been associated since prior to 2019. |
| | | | |
Stephen M. Woetzel
52 | | Treasurer and Chief Financial Officer | | Senior Vice President of ABIS**, with which he has been associated since prior to 2019. |
| | | | |
Phyllis J. Clarke
63 | | Controller | | Vice President of ABIS**, with which she has been associated since prior to 2019. |
| | | | |
Jennifer Friedland
49 | | Chief Compliance Officer | | Vice President of the Adviser** since 2020 and Mutual Fund Chief Compliance Officer (of all Funds since January 2023 and of the ETF Funds since 2022). Before joining the Adviser in 2020, she was Chief Compliance Officer at WestEnd Advisors, LLC from 2013 until 2019. |
| * | | The address for each of the Portfolio’s Officers is 1345 Avenue of the Americas, New York, NY 10105. |
| ** | | The Adviser, ABIS and ABI are affiliates of the Fund. |
| # | | Mr. Caruso is expected to retire from the Adviser effective March 31, 2024. |
| | | The Fund’s Statement of Additional Information (“SAI”) has additional information about the Fund’s Directors and Officers and is available without charge upon request. Contact your financial representative or the Adviser at (800) 227-4618, or visit www.abfunds.com, for a free prospectus or SAI. |
29
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| RELATIVE VALUE PORTFOLIO | | AB Variable Products Series Fund |
OPERATION AND EFFECTIVENESS OF THE PORTFOLIO’S LIQUIDITY RISK MANAGEMENT PROGRAM:
In October 2016, the Securities and Exchange Commission (“SEC”) adopted the open-end fund liquidity rule (the “Liquidity Rule”). In June 2018 the SEC adopted a requirement that funds disclose information about the operation and effectiveness of their Liquidity Risk Management Program (“LRMP”) in their reports to shareholders.
One of the requirements of the Liquidity Rule is for the Portfolio to designate an Administrator of the Portfolio’s Liquidity Risk Management Program. The Administrator of the Portfolio’s LRMP is AllianceBernstein L.P., the Portfolio’s investment adviser (the “Adviser”). The Adviser has delegated the responsibility to its Liquidity Risk Management Committee (the “Committee”).
Another requirement of the Liquidity Rule is for the Portfolio’s Board of Directors/Trustees (the “Fund Board”) to receive an annual written report from the Administrator of the LRMP, which addresses the operation of the Portfolio’s LRMP and assesses its adequacy and effectiveness. The Adviser provided the Fund Board with such annual report during the first quarter of 2024, which covered the period January 1, 2023 through December 31, 2023 (the “Program Reporting Period”).
The LRMP’s principal objectives include supporting the Portfolio’s compliance with limits on investments in illiquid assets and mitigating the risk that the Portfolio will be unable to meet its redemption obligations in a timely manner.
Pursuant to the LRMP, the Portfolio classifies the liquidity of its portfolio investments into one of the four categories defined by the SEC: Highly Liquid, Moderately Liquid, Less Liquid, and Illiquid. These classifications are reported to the SEC on Form N-PORT.
During the Program Reporting Period, the Committee reviewed whether the Portfolio’s strategy is appropriate for an open-end structure, incorporating any holdings of less liquid and illiquid assets. If the Portfolio participated in derivative transactions, the exposure from such transactions were considered in the LRMP.
The Committee also performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum (“HLIM”). The Committee also incorporated the following information when determining the Portfolio’s reasonably anticipated trading size for purposes of liquidity monitoring: historical net redemption activity, a Portfolio’s concentration in an issuer, shareholder concentration, investment performance, total net assets, and distribution channels.
The Adviser informed the Fund Board that the Committee believes the Portfolio’s LRMP is adequately designed, has been implemented as intended, and has operated effectively since its inception. No material exceptions have been noted since the implementation of the LRMP. During the Program Reporting Period, liquidity in all markets was challenged due to rising rates and economic uncertainty. However, markets also remained orderly during the Program Reporting Period. There were no liquidity events that impacted the Portfolio or its ability to timely meet redemptions during the Program Reporting Period.
30
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| RELATIVE VALUE PORTFOLIO | | |
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| CONTINUANCE DISCLOSURE | | AB Variable Products Series Fund |
INFORMATION REGARDING THE REVIEW AND APPROVAL OF THE FUND’S ADVISORY AGREEMENT
The disinterested directors (the “directors”) of AB Variable Products Series Fund, Inc. (the “Company”) unanimously approved the continuance of the Company’s Advisory Agreement with the Adviser in respect of AB Relative Value Portfolio (formerly AB Growth and Income Portfolio) (the “Fund”) at a meeting held in-person on May 2-4, 2023 (the “Meeting”).
Prior to approval of the continuance of the Advisory Agreement, the directors had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The directors also reviewed additional materials, including comparative analytical data prepared by the Senior Vice President of the Fund. The directors also discussed the proposed continuance in private sessions with counsel.
The directors considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as directors or trustees of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the directors and its responsiveness, frankness and attention to concerns raised by the directors in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AB Funds. The directors noted that they have four regular meetings each year, at each of which they review extensive materials and information from the Adviser, including information on the investment performance of the Fund.
The directors also considered all factors they believed relevant, including the specific matters discussed below. During the course of their deliberations, the directors evaluated, among other things, the reasonableness of the advisory fee. The directors did not identify any particular information that was all-important or controlling, and different directors may have attributed different weights to the various factors. The directors determined that the selection of the Adviser to manage the Fund and the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors’ determinations included the following:
Nature, Extent and Quality of Services Provided
The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. The directors noted that the Adviser from time to time reviews the Fund’s investment strategies and from time to time proposes changes intended to improve the Fund’s relative or absolute performance for the directors’ consideration. They also noted the professional experience and qualifications of the Fund’s portfolio management team and other senior personnel of the Adviser. The directors also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services to the Fund by employees of the Adviser or its affiliates. Requests for these reimbursements are made on a quarterly basis and subject to approval by the directors. Reimbursements, to the extent requested and paid, result in a higher rate of total compensation from the Fund to the Adviser than the fee rate stated in the Advisory Agreement. The directors noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant at the request of the directors. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of the Fund’s other service providers, also was considered. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement.
Costs of Services Provided and Profitability
The directors reviewed a schedule of the revenues and expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2021 and 2022 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant at the request of the directors. The directors noted the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and understood that there are a number of potentially acceptable allocation methodologies for information of this type. The directors noted that the profitability information reflected all revenues and expenses of the Adviser’s relationship with the Fund, including those relating to its subsidiaries that provide transfer agency, distribution and brokerage services to the Fund. The directors recognized that it is difficult to make comparisons of the profitability of the Advisory Agreement with the profitability of fund advisory contracts for unaffiliated funds because comparative information is not generally publicly available and is affected by numerous
31
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| RELATIVE VALUE PORTFOLIO | | |
| CONTINUANCE DISCLOSURE | | |
| |
| (continued) | | AB Variable Products Series Fund |
factors. The directors focused on the profitability of the Adviser’s relationship with the Fund before taxes and distribution expenses. The directors concluded that the Adviser’s level of profitability from its relationship with the Fund was not unreasonable.
Fall-Out Benefits
The directors considered the other benefits to the Adviser and its affiliates from their relationships with the Fund, including, but not limited to, benefits relating to soft dollar arrangements (whereby investment advisers receive brokerage and research services from brokers that execute agency transactions for their clients); 12b-1 fees and sales charges received by the Fund’s principal underwriter (which is a wholly owned subsidiary of the Adviser) in respect of the Fund’s Class B shares; brokerage commissions paid by the Fund to brokers affiliated with the Adviser; and transfer agency fees paid by the Fund to a wholly owned subsidiary of the Adviser. The directors recognized that the Fund’s profitability to the Adviser would be somewhat lower without these benefits. The directors understood that the Adviser also might derive reputational and other benefits from its association with the Fund.
Investment Results
In addition to the information reviewed by the directors in connection with the Meeting, the directors receive detailed performance information for the Fund at each regular Board meeting during the year.
At the Meeting, the directors reviewed performance information prepared by an independent service provider (the “15(c) service provider”), showing the performance of the Class A Shares of the Fund against a group of similar funds (“peer group”) and a larger group of similar funds (“peer universe”), each selected by the 15(c) service provider, and information prepared by the Adviser showing performance of the Class A Shares against a broad-based securities market index, in each case for the 1-, 3-, 5- and 10-year periods ended February 28, 2023 and (in the case of comparisons with the broad-based securities market index) for the period from inception. Based on their review, the directors concluded that the Fund’s investment performance was acceptable.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate payable by the Fund to the Adviser and information prepared by the 15(c) service provider concerning advisory fee rates payable by other funds in the same category as the Fund. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The directors compared the Fund’s contractual effective advisory fee rate with a peer group median and took into account the impact on the advisory fee rate of the administrative expense reimbursement paid to the Adviser in the latest fiscal year.
The directors also considered the Adviser’s fee schedule for other clients utilizing investment strategies similar to those of the Fund. For this purpose, they reviewed the relevant advisory fee information from the Adviser’s Form ADV and in a report from the Fund’s Senior Vice President and noted the differences between the Fund’s fee schedule, on the one hand, and the Adviser’s institutional fee schedule and the schedule of fees charged by the Adviser to any offshore funds and for services to any sub-advised funds utilizing investment strategies similar to those of the Fund, on the other. The directors noted that the Adviser may, in some cases, agree to fee rates with large institutional clients that are lower than those reviewed by the directors and that they had previously discussed with the Adviser its policies in respect of such arrangements. The directors also compared the advisory fee rate for the Fund with that for another fund advised by the Adviser utilizing similar investment strategies.
The Adviser reviewed with the directors the significantly greater scope of the services it provides to the Fund relative to institutional, offshore fund and sub-advised fund clients. In this regard, the Adviser noted, among other things, that, compared to institutional and offshore or sub-advisory accounts, the Fund (i) demands considerably more portfolio management, research and trading resources due to significantly higher daily cash flows; (ii) has more tax and regulatory restrictions and compliance obligations; (iii) must prepare and file or distribute regulatory and other communications about fund operations; and (iv) must provide shareholder servicing to retail investors. The Adviser also reviewed the greater legal risks presented by the large and changing population of Fund shareholders who may assert claims against the Adviser in individual or class actions, and the greater entrepreneurial risk in offering new fund products, which require substantial investment to launch, may not succeed, and generally must be priced to compete with larger, more established funds resulting in lack of profitability to the Adviser until a new fund achieves scale. In light of the substantial differences in services rendered by the Adviser to institutional, offshore fund and sub-advised fund clients as compared to the Fund, and the different risk profile, the directors considered these fee comparisons inapt and did not place significant weight on them in their deliberations.
32
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| | | AB Variable Products Series Fund |
In connection with their review of the Fund’s advisory fee, the directors also considered the total expense ratio of the Class A shares of the Fund in comparison to the medians for a peer group and a peer universe selected by the 15(c) service provider. The Class A expense ratio of the Fund was based on the Fund’s latest fiscal year. The directors noted that it was likely that the expense ratios of some of the other funds in the Fund’s category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases might be voluntary or temporary. The directors view expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Fund by others. Based on their review, the directors concluded that the Fund’s expense ratio was acceptable.
Economies of Scale
The directors noted that the advisory fee schedule for the Fund contains breakpoints that reduce the fee rates on assets above specified levels. The directors took into consideration prior presentations by an independent consultant on economies of scale in the mutual fund industry and for the AB Funds, and presentations from time to time by the Adviser concerning certain of its views on economies of scale. The directors also had requested and received from the Adviser certain updates on economies of scale in advance of the Meeting. The directors believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there is no established methodology for setting breakpoints that give effect to the fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Fund’s shareholders would benefit from a sharing of economies of scale in the event the Fund’s net assets exceed a breakpoint in the future.
33
VPS-RV-0151-1223
DEC 12.31.23
ANNUAL REPORT
AB VARIABLE PRODUCTS SERIES FUND, INC.
| + | | AB SMALL CAP GROWTH PORTFOLIO |
Investment Products Offered
| | • | | Are Not Bank Guaranteed |
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AB family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the Adviser of the funds.
You may obtain a description of the Fund’s proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AB’s website at www.abfunds.com or go to the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov, or call AB at (800) 227 4618.
The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Commission’s website at www.sec.gov.
The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.
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| SMALL CAP GROWTH PORTFOLIO | | AB Variable Products Series Fund |
LETTER TO INVESTORS
February 15, 2024
The following is an update of AB Variable Products Series Fund—Small Cap Growth Portfolio (the “Portfolio”) for the annual reporting period ended December 31, 2023.
INVESTMENT OBJECTIVES AND POLICIES
The Portfolio’s investment objective is long-term growth of capital. The Portfolio invests primarily in a diversified portfolio of equity securities with relatively smaller capitalizations as compared to the overall US market. Under normal circumstances, the Portfolio invests at least 80% of its net assets in equity securities of smaller companies. For these purposes, “smaller companies” are those that, at the time of investment, fall within the lowest 20% of the total US equity market capitalization (excluding, for purposes of this calculation, companies with market capitalizations of less than $10 million). Because the Portfolio’s definition of smaller companies is dynamic, the limits on market capitalization will change with the markets.
The Portfolio may invest in any company and industry and in any type of equity security with potential for capital appreciation. It invests in well-known and established companies and in new and less-seasoned companies. The Portfolio’s investment policies emphasize investments in companies that are demonstrating improving financial results and a favorable earnings outlook. The Portfolio may invest in foreign securities.
The Portfolio invests primarily in equity securities but may also invest in other types of securities, such as preferred stocks. The Portfolio invests, at times, in shares of exchange-traded funds (“ETFs”) in lieu of making direct investments in securities. ETFs may provide more efficient and economical exposure to the types of companies and geographic locations in which the Portfolio seeks to invest than direct investments. The Portfolio may also invest up to 20% of its total assets in rights or warrants.
The Portfolio may enter into derivatives transactions, such as options, futures contracts, forwards and swaps. The Portfolio may use options strategies involving the purchase and/or writing of various combinations of call and/or put options, including on individual securities and stock indices, futures contracts (including futures contracts on individual securities and stock indices) or shares of ETFs. These transactions may be used, for example, in an effort to earn extra income, to adjust exposure to individual securities or markets, or to protect all or a portion of the Portfolio’s portfolio from a decline in value, sometimes within certain ranges.
INVESTMENT RESULTS
The table on page 3 shows the Portfolio’s performance compared with its benchmark, the Russell 2000 Growth Index, for the one-, five- and 10-year periods ended December 31, 2023.
All share classes of the Portfolio underperformed the benchmark for the annual period. Security selection detracted from performance, relative to the benchmark. Security selection within the financials and health care sectors detracted the most, while selection within technology and industrials contributed. Sector selection was positive, as underweights to utilities and health care added to gains and offset losses from an underweight to consumer staples and an overweight to energy.
The Portfolio did not use derivatives during the annual period.
MARKET REVIEW AND INVESTMENT STRATEGY
US, international and emerging-market stocks rose during the 12-month period ended December 31, 2023. Early in the period, aggressive central bank tightening—led by the US Federal Reserve—pressured global equity markets. Bouts of volatility continued as central banks reduced and then began to pause rate hikes but reiterated hawkish higher-for-longer rhetoric that weighed on sentiment. Later in the period, stronger-than-expected third-quarter economic growth triggered a rapid rise in bond yields—especially the 10-year US Treasury note, which briefly crossed the 5% threshold for the first time in 16 years. Headwinds from higher Treasury yields, conflict in the Middle East and mixed third-quarter earnings weighed on investor sentiment globally and briefly sent all major indices into correction territory in October. Equity markets rallied sharply during November and December, as optimism rose that the US Federal Reserve would begin to cut interest rates in 2024—both earlier and more than previously anticipated. Although US mega-cap technology stocks drove returns through much of the year, the rally broadened considerably during the fourth quarter as soft-landing expectations in the US continued to be underpinned by cooling inflation and moderating economic growth. Within large-cap markets, both growth- and value-oriented stocks rose, but growth significantly outperformed value, led by the technology sector and artificial intelligence optimism. Large-cap stocks outperformed small-cap stocks, although both rose in absolute terms.
The Portfolio continues to be built from the bottom up, with an emphasis on companies that can deliver fundamental outperformance. The Portfolio remains overweight in secular growth companies that have unique drivers or company-specific initiatives to support their future earnings growth, regardless of the macro backdrop. At the end of the reporting period, technology reflected the Portfolio’s largest overweight, with health care the largest underweight.
1
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| SMALL CAP GROWTH PORTFOLIO | | |
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| DISCLOSURES AND RISKS | | AB Variable Products Series Fund |
Benchmark Disclosure
The Russell 2000® Growth Index is unmanaged and does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The Russell 2000 Growth Index represents the performance of small-cap growth companies within the US. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Portfolio.
A Word About Risk
Market Risk: The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Sector Risk: The Portfolio may have more risk than a more diversified portfolio because it may invest to a significant extent in one or more particular market sectors, such as the technology or health care sector. To the extent it does so, market or economic factors affecting the relevant sector(s) could have a major effect on the value of the Portfolio’s investments.
Capitalization Risk: Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small- and mid-capitalization companies may have additional risks because these companies have limited product lines, markets or financial resources.
Foreign (Non-US) Risk: Investments in securities of non-US issuers may involve more risk than those of US issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
Management Risk: The Portfolio is subject to management risk because it is an actively managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
These risks are fully discussed in the Variable Products prospectus. As with all investments, you may lose money by investing in the Portfolio.
An Important Note About Historical Performance
The investment return and principal value of an investment in the Portfolio will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Performance shown in this report represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. Please contact your financial advisor or insurance agent representative at your financial institution to obtain portfolio performance information current to the most recent month-end.
Investors should consider the investment objectives, risks, charges and expenses of the Portfolio carefully before investing. For additional copies of the Portfolio’s prospectus or summary prospectus, which contains this and other information, call your financial advisor or (800) 227 4618. Please read the prospectus and/or summary prospectus carefully before investing.
All fees and expenses related to the operation of the Portfolio have been deducted, but no adjustment has been made for insurance company separate account or annuity contract charges, which would reduce total return to a contract owner. Performance assumes reinvestment of distributions and does not account for taxes.
There are additional fees and expenses associated with all Variable Products. These fees can include mortality and expense risk charges, administrative charges, and other charges that can significantly reduce investment returns. Those fees and expenses are not reflected in this annual report. You should consult your Variable Products prospectus for a description of those fees and expenses and speak to your insurance agent or financial representative if you have any questions. You should read the prospectus before investing or sending money.
2
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| SMALL CAP GROWTH PORTFOLIO | | |
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| HISTORICAL PERFORMANCE | | AB Variable Products Series Fund |
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| THE PORTFOLIO VS. ITS BENCHMARK | | Net Asset Value Returns | |
| PERIODS ENDED DECEMBER 31, 2023 (unaudited) | | 1 Year | | | 5 Years1 | | | 10 Years1 | |
| | | |
| Small Cap Growth Portfolio Class A2 | | | 18.02% | | | | 10.57% | | | | 8.53% | |
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| Small Cap Growth Portfolio Class B2 | | | 17.72% | | | | 10.29% | | | | 8.26% | |
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| Russell 2000 Growth Index | | | 18.66% | | | | 9.22% | | | | 7.16% | |
1 Average annual returns. 2 Includes the impact of proceeds received and credited to the Portfolio resulting from class-action settlements, which enhanced the performance of all share classes of the Portfolio for the annual period ended December 31, 2023, by 0.02%, respectively. | |
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The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.22% and 1.47% for Class A and Class B shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements limit the Portfolio’s annual operating expense ratios (excluding expenses associated with acquired fund fees and expenses other than the advisory fees of any AB mutual funds in which the Portfolio may invest, interest expense, taxes, extraordinary expenses, and brokerage commissions and other transaction costs) to 0.90% and 1.15% for Class A and Class B shares, respectively. These waivers/reimbursements may not be terminated before May 1, 2024, and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
GROWTH OF A $10,000 INVESTMENT
12/31/2013 TO 12/31/2023 (unaudited)
This chart illustrates the total value of an assumed $10,000 investment in Small Cap Growth Portfolio Class A shares (from 12/31/2013 to 12/31/2023) as compared with the performance of the Portfolio’s benchmark. The chart assumes the reinvestment of dividends and capital gains distributions.
See Disclosures, Risks and Note About Historical Performance on page 2.
3
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| SMALL CAP GROWTH PORTFOLIO | | |
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| EXPENSE EXAMPLE (unaudited) | | AB Variable Products Series Fund |
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of each classes’ table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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| | | Beginning
Account Value
July 1, 2023 | | | Ending
Account Value
December 31, 2023 | | | Expenses Paid
During Period* | | | Annualized
Expense Ratio* | |
Class A | | | | | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,014.20 | | | $ | 4.57 | | | | 0.90 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,020.67 | | | $ | 4.58 | | | | 0.90 | % |
| | | | | | | | | | | | | | | | |
Class B | | | | | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,012.70 | | | $ | 5.83 | | | | 1.15 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,019.41 | | | $ | 5.85 | | | | 1.15 | % |
| * | | Expenses are equal to each classes’ annualized expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
| ** | | Assumes 5% annual return before expenses. |
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| SMALL CAP GROWTH PORTFOLIO | | |
| TEN LARGEST HOLDINGS1 | | |
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| December 31, 2023 (unaudited) | | AB Variable Products Series Fund |
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| COMPANY | | U.S. $ VALUE | | | PERCENT OF NET ASSETS | |
Fabrinet | | $ | 1,172,623 | | | | 2.1 | % |
SPS Commerce, Inc. | | | 1,132,801 | | | | 2.0 | |
Onto Innovation, Inc. | | | 1,107,302 | | | | 1.9 | |
MACOM Technology Solutions Holdings, Inc. | | | 1,101,086 | | | | 1.9 | |
Altair Engineering, Inc.—Class A | | | 1,051,707 | | | | 1.8 | |
Freshworks, Inc.—Class A | | | 1,000,815 | | | | 1.8 | |
Comfort Systems USA, Inc. | | | 904,331 | | | | 1.6 | |
Universal Display Corp. | | | 849,959 | | | | 1.5 | |
NEXTracker, Inc.—Class A | | | 824,326 | | | | 1.4 | |
Leonardo DRS, Inc. | | | 813,664 | | | | 1.4 | |
| | | | | | | | | |
| | | $ | 9,958,614 | | | | 17.4 | % |
SECTOR BREAKDOWN2
December 31, 2023 (unaudited)
| | | | | | | | |
| SECTOR | | U.S. $ VALUE | | | PERCENT OF TOTAL INVESTMENTS | |
Information Technology | | $ | 15,071,699 | | | | 26.1 | % |
Health Care | | | 12,683,565 | | | | 22.0 | |
Industrials | | | 10,008,392 | | | | 17.3 | |
Consumer Discretionary | | | 8,444,683 | | | | 14.6 | |
Financials | | | 5,351,623 | | | | 9.3 | |
Consumer Staples | | | 2,537,123 | | | | 4.4 | |
Energy | | | 1,920,590 | | | | 3.3 | |
Materials | | | 682,144 | | | | 1.2 | |
Short-Term Investments | | | 1,030,554 | | | | 1.8 | |
| | | | | | | | | |
Total Investments | | $ | 57,730,373 | | | | 100.0 | % |
| 2 | | The Portfolio’s sector breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. |
Please note: The sector classifications presented herein are based on the Global Industry Classification Standard (GICS) which was developed by Morgan Stanley Capital International and Standard & Poor’s. The components are divided into sector, industry group, and industry sub-indices as classified by the GICS for each of the market capitalization indices in the broad market. These sector classifications are broadly defined. The “Portfolio of Investments” section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Portfolio’s prospectus.
5
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| SMALL CAP GROWTH PORTFOLIO | | |
| PORTFOLIO OF INVESTMENTS | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
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Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
COMMON STOCKS–99.3% | | | | | | | | |
| | | | | | | | |
INFORMATION TECHNOLOGY–26.4% | | | | | | | | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS–4.8% | | | | | | | | |
Allegro MicroSystems, Inc.(a) | | | 6,084 | | | $ | 184,163 | |
Fabrinet(a) | | | 6,161 | | | | 1,172,623 | |
Littelfuse, Inc. | | | 1,844 | | | | 493,380 | |
Novanta, Inc.(a) | | | 4,574 | | | | 770,307 | |
Shoals Technologies Group, Inc.–Class A(a) | | | 6,407 | | | | 99,565 | |
| | | | | | | | |
| | | | | | | 2,720,038 | |
| | | | | | | | |
IT SERVICES–1.3% | | | | | | | | |
Fastly, Inc.–Class A(a) | | | 40,830 | | | | 726,774 | |
| | | | | | | | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT–6.2% | | | | | | | | |
Lattice Semiconductor Corp.(a) | | | 7,085 | | | | 488,794 | |
MACOM Technology Solutions Holdings, Inc.(a) | | | 11,846 | | | | 1,101,086 | |
Onto Innovation, Inc.(a) | | | 7,242 | | | | 1,107,302 | |
Universal Display Corp. | | | 4,444 | | | | 849,959 | |
| | | | | | | | |
| | | | | | | 3,547,141 | |
| | | | | | | | |
SOFTWARE–12.8% | | | | | | | | |
Altair Engineering, Inc.–
Class A(a) | | | 12,498 | | | | 1,051,707 | |
Braze, Inc.–Class A(a) | | | 13,573 | | | | 721,134 | |
Clearwater Analytics Holdings, Inc.–Class A(a) | | | 24,815 | | | | 497,045 | |
Five9, Inc.(a) | | | 9,725 | | | | 765,260 | |
Freshworks, Inc.–Class A(a) | | | 42,606 | | | | 1,000,815 | |
Instructure Holdings, Inc.(a) | | | 15,316 | | | | 413,685 | |
Manhattan Associates, Inc.(a) | | | 2,316 | | | | 498,681 | |
Monday.com Ltd.(a) | | | 3,614 | | | | 678,745 | |
Smartsheet, Inc.–Class A(a) | | | 11,892 | | | | 568,675 | |
SPS Commerce, Inc.(a) | | | 5,844 | | | | 1,132,801 | |
| | | | | | | | |
| | | | | | | 7,328,548 | |
| | | | | | | | |
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS–1.3% | | | | | | | | |
ACV Auctions, Inc.–Class A(a) | | | 49,452 | | | | 749,198 | |
| | | | | | | | |
| | | | | | | 15,071,699 | |
| | | | | | | | |
HEALTH CARE–22.2% | | | | | | | | |
BIOTECHNOLOGY–13.3% | | | | | | | | |
Akero Therapeutics, Inc.(a) | | | 7,761 | | | | 181,219 | |
Ascendis Pharma A/S (ADR)(a) | | | 2,928 | | | | 368,782 | |
Blueprint Medicines Corp.(a) | | | 6,596 | | | | 608,415 | |
Bridgebio Pharma, Inc.(a) | | | 12,821 | | | | 517,584 | |
Disc Medicine, Inc.(a) | | | 3,070 | | | | 177,323 | |
Halozyme Therapeutics, Inc.(a) | | | 13,662 | | | | 504,948 | |
Insmed, Inc.(a) | | | 15,479 | | | | 479,694 | |
Intellia Therapeutics, Inc.(a) | | | 7,711 | | | | 235,108 | |
Karuna Therapeutics, Inc.(a) | | | 901 | | | | 285,175 | |
Legend Biotech Corp. (ADR)(a) | | | 5,760 | | | | 346,579 | |
Madrigal Pharmaceuticals, Inc.(a)(b) | | | 1,691 | | | | 391,264 | |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
MoonLake Immunotherapeutics(a) | | | 4,528 | | | $ | 273,446 | |
Natera, Inc.(a) | | | 12,679 | | | | 794,213 | |
RayzeBio, Inc.(a) | | | 5,678 | | | | 353,001 | |
Ultragenyx Pharmaceutical, Inc.(a) | | | 6,229 | | | | 297,871 | |
Vaxcyte, Inc.(a) | | | 9,581 | | | | 601,687 | |
Viking Therapeutics, Inc.(a) | | | 18,192 | | | | 338,553 | |
Vir Biotechnology, Inc.(a) | | | 13,256 | | | | 133,355 | |
Viridian Therapeutics, Inc.(a) | | | 14,794 | | | | 322,213 | |
Xenon Pharmaceuticals, Inc.(a) | | | 8,196 | | | | 377,508 | |
| | | | | | | | |
| | | | | | | 7,587,938 | |
| | | | | | | | |
HEALTH CARE EQUIPMENT & SUPPLIES–3.2% | | | | | | | | |
AtriCure, Inc.(a) | | | 16,137 | | | | 575,930 | |
iRhythm Technologies, Inc.(a) | | | 6,459 | | | | 691,371 | |
Lantheus Holdings, Inc.(a) | | | 9,132 | | | | 566,184 | |
| | | | | | | | |
| | | | | | | 1,833,485 | |
| | | | | | | | |
HEALTH CARE PROVIDERS & SERVICES–3.4% | | | | | | | | |
Guardant Health, Inc.(a) | | | 17,547 | | | | 474,646 | |
Inari Medical, Inc.(a) | | | 11,525 | | | | 748,203 | |
PROCEPT BioRobotics Corp.(a) | | | 17,605 | | | | 737,826 | |
| | | | | | | | |
| | | | | | | 1,960,675 | |
| | | | | | | | |
LIFE SCIENCES TOOLS & SERVICES–1.2% | | | | | | | | |
Quanterix Corp.(a) | | | 4,541 | | | | 124,151 | |
Repligen Corp.(a) | | | 2,947 | | | | 529,871 | |
| | | | | | | | |
| | | | | | | 654,022 | |
| | | | | | | | |
PHARMACEUTICALS–1.1% | | | | | | | | |
Intra-Cellular Therapies, Inc.(a) | | | 9,040 | | | | 647,445 | |
| | | | | | | | |
| | | | | | | 12,683,565 | |
| | | | | | | | |
INDUSTRIALS–17.5% | | | | | | | | |
AEROSPACE & DEFENSE–3.9% | | | | | | | | |
Curtiss-Wright Corp. | | | 2,979 | | | | 663,692 | |
Hexcel Corp. | | | 10,171 | | | | 750,111 | |
Leonardo DRS, Inc.(a) | | | 40,602 | | | | 813,664 | |
| | | | | | | | |
| | | | | | | 2,227,467 | |
| | | | | | | | |
BUILDING PRODUCTS–1.3% | | | | | | | | |
AZEK Co., Inc. (The)(a) | | | 20,185 | | | | 772,076 | |
| | | | | | | | |
COMMERCIAL SERVICES & SUPPLIES–1.2% | | | | | | | | |
Tetra Tech, Inc. | | | 4,292 | | | | 716,463 | |
| | | | | | | | |
CONSTRUCTION & ENGINEERING–1.6% | | | | | | | | |
Comfort Systems USA, Inc. | | | 4,397 | | | | 904,331 | |
| | | | | | | | |
ELECTRICAL EQUIPMENT–1.4% | | | | | | | | |
NEXTracker, Inc.–Class A(a)(b) | | | 17,595 | | | | 824,326 | |
| | | | | | | | |
GROUND TRANSPORTATION–2.2% | | | | | | | | |
Saia, Inc.(a) | | | 1,354 | | | | 593,350 | |
XPO, Inc.(a) | | | 7,429 | | | | 650,706 | |
| | | | | | | | |
| | | | | | | 1,244,056 | |
| | | | | | | | |
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| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
MACHINERY–3.6% | | | | | | | | |
Esab Corp. | | | 8,958 | | | $ | 775,942 | |
ITT, Inc. | | | 6,480 | | | | 773,193 | |
SPX Technologies, Inc.(a) | | | 4,770 | | | | 481,818 | |
| | | | | | | | |
| | | | | | | 2,030,953 | |
| | | | | | | | |
PROFESSIONAL SERVICES–1.1% | | | | | | | | |
FTI Consulting, Inc.(a) | | | 3,124 | | | | 622,145 | |
| | | | | | | | |
TRADING COMPANIES & DISTRIBUTORS–1.2% | | | | | | | | |
SiteOne Landscape Supply, Inc.(a) | | | 4,102 | | | | 666,575 | |
| | | | | | | | |
| | | | | | | 10,008,392 | |
| | | | | | | | |
CONSUMER DISCRETIONARY–14.8% | | | | | | | | |
BROADLINE RETAIL–0.7% | | | | | | | | |
Savers Value Village, Inc.(a) | | | 21,328 | | | | 370,681 | |
| | | | | | | | |
DIVERSIFIED CONSUMER SERVICES–0.4% | | | | | | | | |
European Wax Center, Inc.–Class A(a) | | | 18,728 | | | | 254,513 | |
| | | | | | | | |
HOTELS, RESTAURANTS & LEISURE–5.0% | | | | | | | | |
Cava Group, Inc.(a)(b) | | | 9,100 | | | | 391,118 | |
Hilton Grand Vacations, Inc.(a) | | | 16,690 | | | | 670,604 | |
Life Time Group Holdings, Inc.(a) | | | 33,828 | | | | 510,127 | |
Texas Roadhouse, Inc. | | | 5,944 | | | | 726,535 | |
Wingstop, Inc. | | | 2,181 | | | | 559,601 | |
| | | | | | | | |
| | | | | | | 2,857,985 | |
| | | | | | | | |
HOUSEHOLD DURABLES–3.7% | | | | | | | | |
Meritage Homes Corp. | | | 4,496 | | | | 783,203 | |
SharkNinja, Inc. | | | 12,440 | | | | 636,555 | |
Skyline Champion Corp.(a) | | | 9,547 | | | | 708,960 | |
| | | | | | | | |
| | | | | | | 2,128,718 | |
| | | | | | | | |
SPECIALTY RETAIL–5.0% | | | | | | | | |
Boot Barn Holdings, Inc.(a) | | | 8,581 | | | | 658,678 | |
Five Below, Inc.(a) | | | 3,752 | | | | 799,776 | |
Lithia Motors, Inc. | | | 2,341 | | | | 770,844 | |
Wayfair, Inc.–Class A(a) | | | 9,781 | | | | 603,488 | |
| | | | | | | | |
| | | | | | | 2,832,786 | |
| | | | | | | | |
| | | | | | | 8,444,683 | |
| | | | | | | | |
FINANCIALS–9.4% | | | | | | | | |
CAPITAL MARKETS–4.0% | | | | | | | | |
Houlihan Lokey, Inc. | | | 6,153 | | | | 737,806 | |
P10, Inc.–Class A | | | 21,373 | | | | 218,432 | |
StepStone Group, Inc.–Class A | | | 21,513 | | | | 684,759 | |
Stifel Financial Corp. | | | 8,830 | | | | 610,595 | |
| | | | | | | | |
| | | | | | | 2,251,592 | |
| | | | | | | | |
FINANCIAL SERVICES–2.1% | | | | | | | | |
Flywire Corp.(a) | | | 24,598 | | | | 569,443 | |
Shift4 Payments, Inc.–
Class A(a)(b) | | | 8,529 | | | | 634,046 | |
| | | | | | | | |
| | | | | | | 1,203,489 | |
| | | | | | | | |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
INSURANCE–3.3% | | | | | | | | |
Hamilton Insurance Group Ltd.–Class B(a) | | | 16,600 | | | $ | 248,170 | |
Kinsale Capital Group, Inc. | | | 1,467 | | | | 491,313 | |
RLI Corp. | | | 5,095 | | | | 678,246 | |
Ryan Specialty Holdings, Inc.(a) | | | 11,130 | | | | 478,813 | |
| | | | | | | | |
| | | | | | | 1,896,542 | |
| | | | | | | | |
| | | | | | | 5,351,623 | |
| | | | | | | | |
CONSUMER STAPLES–4.4% | | | | | | | | |
CONSUMER STAPLES DISTRIBUTION & RETAIL–2.3% | | | | | | | | |
Chefs’ Warehouse, Inc. (The)(a) | | | 23,991 | | | | 706,055 | |
Grocery Outlet Holding Corp.(a) | | | 22,918 | | | | 617,869 | |
| | | | | | | | |
| | | | | | | 1,323,924 | |
| | | | | | | | |
FOOD PRODUCTS–1.2% | | | | | | | | |
Freshpet, Inc.(a) | | | 8,227 | | | | 713,775 | |
| | | | | | | | |
PERSONAL CARE PRODUCTS–0.9% | | | | | | | | |
BellRing Brands, Inc.(a) | | | 9,010 | | | | 499,424 | |
| | | | | | | | |
| | | | | | | 2,537,123 | |
| | | | | | | | |
ENERGY–3.4% | | | | | | | | |
ENERGY EQUIPMENT & SERVICES–2.1% | | | | | | | | |
ChampionX Corp. | | | 24,870 | | | | 726,453 | |
TechnipFMC PLC | | | 21,664 | | | | 436,313 | |
| | | | | | | | |
| | | | | | | 1,162,766 | |
| | | | | | | | |
OIL, GAS & CONSUMABLE FUELS–1.3% | | | | | | | | |
Permian Resources Corp. | | | 30,371 | | | | 413,045 | |
Southwestern Energy Co.(a) | | | 52,638 | | | | 344,779 | |
| | | | | | | | |
| | | | | | | 757,824 | |
| | | | | | | | |
| | | | | | | 1,920,590 | |
| | | | | | | | |
MATERIALS–1.2% | | | | | | | | |
CHEMICALS–1.2% | | | | | | | | |
Element Solutions, Inc. | | | 29,479 | | | | 682,144 | |
| | | | | | | | |
Total Common Stocks
(cost $45,497,391) | | | | | | | 56,699,819 | |
| | | | | | | | |
SHORT-TERM INVESTMENTS–1.8% | | | | | | | | |
INVESTMENT COMPANIES–1.8% | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB, 5.27%(c)(d)(e)
(cost $1,030,554) | | | 1,030,554 | | | | 1,030,554 | |
| | | | | | | | |
TOTAL INVESTMENTS BEFORE SECURITY LENDING COLLATERAL FOR SECURITIES
LOANED–101.1%
(cost $46,527,945) | | | | | | | 57,730,373 | |
| | | | | | | | |
7
| | |
| SMALL CAP GROWTH PORTFOLIO | | |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED–0.7% | | | | | | | | |
INVESTMENT COMPANIES–0.7% | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB,
5.27%(c)(d)(e)
(cost $412,162) | | | 412,162 | | | $ | 412,162 | |
| | | | | | | | |
TOTAL INVESTMENTS–101.8%
(cost $46,940,107) | | | | | | | 58,142,535 | |
Other assets less
liabilities–(1.8)% | | | | | | | (1,015,122 | ) |
| | | | | | | | |
NET ASSETS–100.0% | | | | | | $ | 57,127,413 | |
| | | | | | | | |
| (a) | | Non-income producing security. |
| (b) | | Represents entire or partial securities out on loan. See Note E for securities lending information. |
| (c) | | Affiliated investments. |
| (d) | | The rate shown represents the 7-day yield as of period end. |
| (e) | | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
Glossary:
ADR—American Depositary Receipt
See notes to financial statements.
8
| | |
| SMALL CAP GROWTH PORTFOLIO | | |
| STATEMENT OF ASSETS & LIABILITIES | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
ASSETS | | | | |
Investments in securities, at value | | | | |
Unaffiliated issuers (cost $45,497,391) | | $ | 56,699,819 | (a) |
Affiliated issuers (cost $1,442,716—including investment of cash collateral for securities loaned of $412,162) | | | 1,442,716 | |
Cash | | | 21 | |
Receivable due from Adviser | | | 23,244 | |
Receivable for investment securities sold | | | 9,012 | |
Affiliated dividends receivable | | | 5,200 | |
Receivable for capital stock sold | | | 4,227 | |
Unaffiliated dividends receivable | | | 1,483 | |
| | | | |
Total assets | | | 58,185,722 | |
| | | | |
LIABILITIES | | | | |
Payable for collateral received on securities loaned | | | 412,162 | |
Payable for investment securities purchased | | | 268,311 | |
Payable for capital stock redeemed | | | 141,017 | |
Custody and accounting fees payable | | | 109,135 | |
Advisory fee payable | | | 35,189 | |
Administrative fee payable | | | 23,922 | |
Distribution fee payable | | | 7,685 | |
Transfer Agent fee payable | | | 150 | |
Accrued expenses | | | 60,738 | |
| | | | |
Total liabilities | | | 1,058,309 | |
| | | | |
NET ASSETS | | $ | 57,127,413 | |
| | | | |
COMPOSITION OF NET ASSETS | | | | |
Capital stock, at par | | $ | 6,539 | |
Additional paid-in capital | | | 57,581,292 | |
Accumulated loss | | | (460,418 | ) |
| | | | |
NET ASSETS | | $ | 57,127,413 | |
| | | | |
Net Asset Value Per Share—1 billion shares of capital stock authorized, $.001 par value
| | | | | | | | | | | | |
| Class | | Net Assets | | | Shares
Outstanding | | | Net Asset
Value | |
| | | |
| A | | $ | 19,464,776 | | | | 1,812,987 | | | $ | 10.74 | |
| | | |
| B | | $ | 37,662,637 | | | | 4,725,802 | | | $ | 7.97 | |
| (a) | | Includes securities on loan with a value of $2,189,863 (see Note E). |
See notes to financial statements.
9
| | |
| SMALL CAP GROWTH PORTFOLIO | | |
| STATEMENT OF OPERATIONS | | |
| |
| Year Ended December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
INVESTMENT INCOME | | | | |
Dividends | | | | |
Unaffiliated issuers | | $ | 209,755 | |
Affiliated issuers | | | 62,426 | |
Securities lending income | | | 5,072 | |
| | | | |
| | | 277,253 | |
| | | | |
EXPENSES | | | | |
Advisory fee (see Note B) | | | 397,712 | |
Distribution fee—Class B | | | 87,012 | |
Transfer agency—Class A | | | 1,461 | |
Transfer agency—Class B | | | 2,790 | |
Administrative | | | 95,711 | |
Custody and accounting | | | 66,119 | |
Audit and tax | | | 44,100 | |
Legal | | | 33,080 | |
Printing | | | 24,924 | |
Directors’ fees | | | 17,476 | |
Miscellaneous | | | 9,328 | |
| | | | |
Total expenses | | | 779,713 | |
Less: expenses waived and reimbursed by the Adviser (see Notes B & E) | | | (216,992 | ) |
| | | | |
Net expenses | | | 562,721 | |
| | | | |
Net investment loss | | | (285,468 | ) |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS | | | | |
Net realized loss on investment transactions | | | (805,999 | ) |
Net change in unrealized appreciation (depreciation) of investments | | | 9,867,204 | |
| | | | |
Net gain on investment transactions | | | 9,061,205 | |
| | | | |
Contributions from Affiliates (see Note B) | | | 90 | |
| | | | |
NET INCREASE IN NET ASSETS FROM OPERATIONS | | $ | 8,775,827 | |
| | | | |
See notes to financial statements.
10
| | |
| | |
| SMALL CAP GROWTH PORTFOLIO | | |
| |
| STATEMENT OF CHANGES IN NET ASSETS | | AB Variable Products Series Fund |
| | | | | | | | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | | | | | | | | |
Net investment loss | | $ | (285,468 | ) | | $ | (332,729 | ) |
Net realized loss on investment transactions | | | (805,999 | ) | | | (9,386,634 | ) |
Net change in unrealized appreciation (depreciation) of investments | | | 9,867,204 | | | | (23,397,350 | ) |
Contributions from Affiliates (see Note B) | | | 90 | | | | –0 | – |
| | | | | | | | |
Net increase (decrease) in net assets from operations | | | 8,775,827 | | | | (33,116,713 | ) |
Distributions to Shareholders | | | | | | | | |
Class A | | | –0 | – | | | (8,363,912 | ) |
Class B | | | –0 | – | | | (17,518,976 | ) |
CAPITAL STOCK TRANSACTIONS | | | | | | | | |
Net increase (decrease) | | | (1,352,135 | ) | | | 22,329,390 | |
| | | | | | | | |
Total increase (decrease) | | | 7,423,692 | | | | (36,670,211 | ) |
NET ASSETS | | | | | | | | |
Beginning of period | | | 49,703,721 | | | | 86,373,932 | |
| | | | | | | | |
End of period | | $ | 57,127,413 | | | $ | 49,703,721 | |
| | | | | | | | |
See notes to financial statements.
11
| | |
| SMALL CAP GROWTH PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
NOTE A: Significant Accounting Policies
The AB Small Cap Growth Portfolio (the “Portfolio”) is a series of AB Variable Products Series Fund, Inc. (the “Fund”). The Portfolio’s investment objective is long-term growth of capital. The Portfolio is diversified as defined under the Investment Company Act of 1940 (the “1940 Act”). The Fund was incorporated in the State of Maryland as an open-end series investment company. The Fund offers 10 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 U.S. generally accepted accounting principles (“U.S. GAAP”), 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 Portfolio is an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Portfolio.
1. Security Valuation
Portfolio securities are valued at market value determined on the basis of market quotations or, if market quotations are not readily available or are unreliable, at “fair value” as determined in accordance with procedures approved by and under the oversight of the Fund’s Board of Directors (the “Board”). Pursuant to these procedures, AllianceBernstein L.P. (the “Adviser”) serves as the Portfolio’s valuation designee pursuant to Rule 2a-5 of the 1940 Act. In this capacity, the Adviser is responsible, among other things, for making all fair value determinations relating to the Portfolio’s portfolio investments, subject to the Board’s oversight.
In general, the market values of securities which are readily available and deemed reliable are determined as follows: securities listed on a national securities exchange (other than securities listed on the NASDAQ Stock Market, Inc. (“NASDAQ”)) 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 last traded price from the previous day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price; listed or over the counter (“OTC”) market put or call options are valued at the mid level between the current bid and ask prices. If either a current bid or current ask price is unavailable, the Adviser will have discretion to determine the best valuation (e.g., last trade price in the case of listed options); open futures 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 valuation, the last available closing settlement price is used; U.S. Government securities and any other debt instruments having 60 days or less remaining until maturity are generally valued at market by an independent pricing vendor, if a market price is available. If a market price is not available, the securities are valued at amortized cost. This methodology is commonly used for short term securities that have an original maturity of 60 days or less, as well as short term securities that had an original term to maturity that exceeded 60 days. In instances when amortized cost is utilized, the Valuation Committee (the “Committee”) must reasonably conclude that the utilization of amortized cost is approximately the same as the fair value of the security. Factors the Committee will consider include, but are not limited to, an impairment of the creditworthiness of the issuer or material changes in interest rates. 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 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. Swaps and other derivatives are valued daily, primarily using independent pricing services, independent pricing models using market inputs, as well as third party broker-dealers or counterparties. Open-end mutual funds are valued at the closing net asset value per share, while exchange traded funds are valued at the closing market price per share.
Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value as deemed appropriate by the Adviser. Factors considered in making this determination may include, but are
12
| | |
| |
| | | AB Variable Products Series Fund |
not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer’s financial statements or other available documents. In addition, the Portfolio may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Portfolio values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Portfolio generally values many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available.
2. Fair Value Measurements
In accordance with U.S. GAAP regarding fair value measurements, fair value is defined as the price that the Portfolio would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability (including those valued based on their market values as described in Note A.1 above). Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Portfolio. Unobservable inputs reflect the Portfolio’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
| | • | | Level 1—quoted prices in active markets for identical investments |
| | • | | Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| | • | | Level 3—significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of investments) |
Where readily available market prices or relevant bid prices are not available for certain equity investments, such investments may be valued based on similar publicly traded investments, movements in relevant indices since last available prices or based upon underlying company fundamentals and comparable company data (such as multiples to earnings or other multiples to equity). Where an investment is valued using an observable input, such as another publicly traded security, the investment will be classified as Level 2. If management determines that an adjustment is appropriate based on restrictions on resale, illiquidity or uncertainty, and such adjustment is a significant component of the valuation, the investment will be classified as Level 3. An investment will also be classified as Level 3 where management uses company fundamentals and other significant inputs to determine the valuation.
The following table summarizes the valuation of the Portfolio’s investments by the above fair value hierarchy levels as of December 31, 2023:
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Common Stocks(a) | | $ | 56,699,819 | | | $ | –0 | – | | $ | –0 | – | | $ | 56,699,819 | |
Short-Term Investments | | | 1,030,554 | | | | –0 | – | | | –0 | – | | | 1,030,554 | |
Investments of Cash Collateral for Securities Loaned in Affiliated Money Market Fund | | | 412,162 | | | | –0 | – | | | –0 | – | | | 412,162 | |
| | | | | | | | | | | | | | | | |
Total Investments in Securities | | | 58,142,535 | | | | –0 | – | | | –0 | – | | | 58,142,535 | |
Other Financial Instruments(b) | | | –0 | – | | | –0 | – | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | |
Total | | $ | 58,142,535 | | | $ | –0 | – | | $ | –0 | – | | $ | 58,142,535 | |
| | | | | | | | | | | | | | | | |
| (a) | | See Portfolio of Investments for sector classifications. |
| (b) | | Other financial instruments are derivative instruments, such as futures, forwards and swaps, which are valued at the unrealized appreciation (depreciation) on the instrument. Other financial instruments may also include swaps with upfront premiums, written options and written swaptions which are valued at market value. |
13
| | |
| SMALL CAP GROWTH PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
3. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under forward currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and ask 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, 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 foreign currency denominated assets and liabilities.
4. 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. The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned.
In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, management has analyzed the Portfolio’s tax positions taken or expected to be taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Portfolio’s financial statements.
5. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Portfolio is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the date the securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. Non-cash dividends, if any, are recorded on the ex-dividend date at the fair value of the securities received. The Portfolio amortizes premiums and accretes discounts as adjustments to interest income. The Portfolio accounts for distributions received from REIT investments or from regulated investment companies as dividend income, realized gain, or return of capital based on information provided by the REIT or the investment company.
6. Class Allocations
All income earned and expenses incurred by the Portfolio 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 for class specific expenses which are allocated to the respective class. Expenses of the Fund are charged proportionately to each portfolio or based on other appropriate methods. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets.
7. Dividends and Distributions
Dividends and distributions to shareholders, if any, 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 U.S. GAAP. 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 the investment advisory agreement, the Portfolio pays the Adviser an advisory fee at an 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 Portfolio’s average daily net assets. The fee is accrued daily and paid monthly. The Adviser has agreed to waive its fees and bear certain expenses to the extent necessary to limit total operating expenses (excluding expenses associated with acquired fund fees and expenses other than the advisory fees of any AB mutual funds in which the Portfolio may invest, interest expense, taxes, extraordinary expenses, and brokerage commissions and other transaction costs) on an annual basis (the “Expense Caps”) to .90% and 1.15% of daily average net assets for Class A and Class B shares, respectively. For the year ended December 31, 2023, such
14
| | |
| |
| | | AB Variable Products Series Fund |
reimbursements/waivers amounted to $215,447. This fee waiver and/or expense reimbursement agreement extends through May 1, 2024 and then may be extended by the Adviser for additional one-year terms.
Pursuant to the investment advisory agreement, the Portfolio may reimburse the Adviser for certain legal and accounting services provided to the Portfolio by the Adviser. For the year ended December 31, 2023, the reimbursement for such services amounted to $95,711.
The Portfolio compensates AllianceBernstein Investor Services, Inc. (“ABIS”), 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 retained by ABIS amounted to $1,800 for the year ended December 31, 2023.
The Portfolio may invest in AB Government Money Market Portfolio (the “Government Money Market Portfolio”) which has a contractual annual advisory fee rate of .20% of the portfolio’s average daily net assets and bears its own expenses. The Adviser had contractually agreed to waive .10% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .10%) until August 31, 2023. Effective September 1, 2023, the Adviser has contractually agreed to waive .05% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .15%) until August 31, 2024. In connection with the investment by the Portfolio in Government Money Market Portfolio, the Adviser has contractually agreed to waive its advisory fee from the Portfolio in an amount equal to the Portfolio’s pro rata share of the effective advisory fee of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. For the year ended December 31, 2023, such waiver amounted to $1,454.
A summary of the Portfolio’s transactions in AB mutual funds for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | |
Portfolio | | Market Value
12/31/22
(000) | | | Purchases
at Cost
(000) | | | Sales
Proceeds
(000) | | | Market Value
12/31/23
(000) | | | Dividend
Income
(000) | |
Government Money Market Portfolio | | $ | 707 | | | $ | 16,875 | | | $ | 16,551 | | | $ | 1,031 | | | $ | 62 | |
Government Money Market Portfolio* | | | –0 | – | | | 4,800 | | | | 4,388 | | | | 412 | | | | 3 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | $ | 1,443 | | | $ | 65 | |
| | | | | | | | | | | | | | | | | | | | |
| * | | Investments of cash collateral for securities lending transactions (see Note E). |
During the year ended December 31, 2023, the Adviser reimbursed the Portfolio $90 for trading losses incurred due to a trade entry error.
NOTE C: Distribution Plan
The Portfolio has adopted a Distribution Plan (the “Plan”) for Class B shares pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Portfolio pays distribution and servicing fees to AllianceBernstein Investments, Inc. (the “Distributor”), 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 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 or 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.
15
| | |
| SMALL CAP GROWTH PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
NOTE D: Investment Transactions
Purchases and sales of investment securities (excluding short-term investments) for the year ended December 31, 2023 were as follows:
| | | | | | | | |
| | | Purchases | | | Sales | |
Investment securities (excluding U.S. government securities) | | $ | 35,951,560 | | | $ | 37,464,401 | |
U.S. government securities | | | –0 | – | | | –0 | – |
The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation are as follows:
| | | | |
Cost | | $ | 49,159,223 | |
| | | | |
Gross unrealized appreciation | | $ | 13,430,135 | |
Gross unrealized depreciation | | | (4,446,823 | ) |
| | | | |
Net unrealized appreciation | | $ | 8,983,312 | |
| | | | |
1. Derivative Financial Instruments
The Portfolio may use derivatives in an effort to earn income and enhance returns, to replace more traditional direct investments, to obtain exposure to otherwise inaccessible markets (collectively, “investment purposes”), or to hedge or adjust the risk profile of its portfolio.
The Portfolio did not engage in derivatives transactions for the year ended December 31, 2023.
2. Currency Transactions
The Portfolio may invest in non-U.S. Dollar-denominated securities on a currency hedged or unhedged basis. The Portfolio may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and other options. The Portfolio may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Portfolio and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Portfolio may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).
NOTE E: Securities Lending
The Portfolio may enter into securities lending transactions. Under the Portfolio’s securities lending program, all loans of securities will be collateralized continually by cash collateral and/or non-cash collateral. Non-cash collateral will include only securities issued or guaranteed by the U.S. government or its agencies or instrumentalities. If the Portfolio cannot sell or repledge any non-cash collateral, such collateral will not be reflected in the portfolio of investments. If a loan is collateralized by cash, the Portfolio will be compensated for the loan from a portion of the net return from the income earned on cash collateral after a rebate is paid to the borrower (in some cases, this rebate may be a “negative rebate” or fee paid by the borrower to the Portfolio in connection with the loan), and payments are made for fees of the securities lending agent and for certain other administrative expenses. If the Portfolio receives non-cash collateral, the Portfolio will receive a fee from the borrower generally equal to a negotiated percentage of the market value of the loaned securities. The Portfolio will have the right to call a loan and obtain the securities loaned at any time on notice to the borrower within the normal and customary settlement time for the securities. While the securities are on loan, the borrower is obligated to pay the Portfolio amounts equal to any dividend income or other distributions from the securities; however, these distributions will not be afforded the same preferential tax treatment as qualified dividends. The Portfolio will not be able to exercise voting rights with respect to any securities during the existence of a loan, but will have the right to regain ownership of loaned securities in order to exercise voting or other ownership rights. Collateral received and securities loaned are marked to market daily to ensure that the securities loaned are secured by collateral. The lending agent currently invests the cash collateral received in Government Money Market Portfolio, an eligible money market vehicle, in accordance with the investment restrictions of the Portfolio, and as approved by the Board. The collateral received on securities loaned is recorded as an asset as well as a corresponding liability in the statement of assets and liabilities. The collateral will be adjusted the next business day to maintain the required collateral amount. The amounts of securities lending income from the borrowers and Government Money Market Portfolio are reflected in the statement of operations. When the Portfolio earns net securities lending income from Government Money
16
| | |
| |
| | | AB Variable Products Series Fund |
Market Portfolio, the income is inclusive of a rebate expense paid to the borrower. In connection with the cash collateral investment by the Portfolio in Government Money Market Portfolio, the Adviser has agreed to waive a portion of the Portfolio’s share of the advisory fees of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. When the Portfolio lends securities, its investment performance will continue to reflect changes in the value of the securities loaned. A principal risk of lending portfolio securities is that the borrower may fail to return the loaned securities upon termination of the loan and that the collateral will not be sufficient to replace the loaned securities. The lending agent has agreed to indemnify the Portfolio in the case of default of any securities borrower.
A summary of the Portfolio’s transactions surrounding securities lending for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Government Money Market
Portfolio | |
Market Value of
Securities on Loan* | | | Cash Collateral* | | | Market Value of
Non-Cash
Collateral* | | | Income from
Borrowers | | | Income Earned | | | Advisory Fee
Waived | |
| $ | 2,189,863 | | | $ | 412,162 | | | $ | 1,861,598 | | | $ | 2,497 | | | $ | 2,575 | | | $ | 91 | |
| * | | As of December 31, 2023. |
NOTE F: Capital Stock
Each class consists of 500,000,000 authorized shares. Transactions in capital shares for each class were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | SHARES | | | | | | AMOUNT | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | | | | | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
Class A | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 240,943 | | | | 108,682 | | | | | | | $ | 2,405,631 | | | $ | 1,527,332 | |
Shares issued in reinvestment of distributions | | | –0 | – | | | 801,909 | | | | | | | | –0 | – | | | 8,363,912 | |
Shares redeemed | | | (320,406 | ) | | | (303,311 | ) | | | | | | | (3,234,270 | ) | | | (4,515,651 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (79,463 | ) | | | 607,280 | | | | | | | $ | (828,639 | ) | | $ | 5,375,593 | |
| | | | | | | | | | | | | | | | | | | | |
Class B | | | | | | | | | | | | | | | | | | | | |
Shares sold | | | 885,610 | | | | 977,425 | | | | | | | $ | 6,484,511 | | | $ | 10,088,393 | |
Shares issued on reinvestment of distributions | | | –0 | – | | | 2,254,695 | | | | | | | | –0 | – | | | 17,518,976 | |
Shares redeemed | | | (960,393 | ) | | | (964,903 | ) | | | | | | | (7,008,007 | ) | | | (10,653,572 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (74,783 | ) | | | 2,267,217 | | | | | | | $ | (523,496 | ) | | $ | 16,953,797 | |
| | | | | | | | | | | | | | | | | | | | |
At December 31, 2023, certain shareholders of the Portfolio owned 51% in aggregate of the Portfolio’s outstanding shares. Significant transactions by such shareholders, if any, may impact the Portfolio’s performance.
NOTE G: Risks Involved in Investing in the Portfolio
Market Risk—The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Sector Risk—The Portfolio may have more risk than a more diversified portfolio because it may invest to a significant extent in one or more particular market sectors, such as the information technology or health care sector. To the extent it does so, market or economic factors affecting the relevant sector(s) could have a major effect on the value of the Portfolio’s investments.
Capitalization Risk—Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small- and mid-capitalization companies may have additional risks because these companies have limited product lines, markets or financial resources.
17
| | |
| SMALL CAP GROWTH PORTFOLIO | | |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
Foreign (Non-U.S.) Risk—Investments in securities of non-U.S. issuers may involve more risk than those of U.S. issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
LIBOR Replacement Risk—The Portfolio may be exposed to debt securities, derivatives or other financial instruments that recently transitioned from the London Interbank Offered Rate, or “LIBOR,” as a “benchmark” or “reference rate” for various interest rate calculations. LIBOR’s administrator, ICE Benchmark Administration, ceased publishing most LIBOR settings (including some U.S. LIBOR settings) by the end of 2021 and the remaining (and most widely used) U.S. Dollar LIBOR settings after June 30, 2023. The United Kingdom Financial Conduct Authority, which regulates LIBOR, will permit the use of synthetic U.S. Dollar LIBOR rates for non-U.S. contracts through September 30, 2024, but any such rates would be considered non-representative of the underlying market. Since 2018 the Federal Reserve Bank of New York has published the Secured Overnight Financing Rate (referred to as SOFR), which is intended to replace U.S. Dollar LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities in the repurchase agreement (repo) market. There is no assurance that the composition or characteristics of SOFR or any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that the market for SOFR-linked financial instruments will have the same volume or liquidity as did the market for LIBOR-linked financial instruments prior to LIBOR’s discontinuance or unavailability. Neither the long-term effects of the LIBOR transition process nor its ultimate success can yet be known.
Indemnification Risk—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. Therefore, the Portfolio has not accrued any liability in connection with these indemnification provisions.
Management Risk—The Portfolio is subject to management risk because it is an actively-managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
NOTE H: Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $325 million revolving credit facility (the “Facility”) intended to provide short-term financing related to redemptions and other short term liquidity requirements, subject to certain restrictions. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Portfolio did not utilize the Facility during the year ended December 31, 2023.
NOTE I: Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended December 31, 2023 and December 31, 2022 were as follows:
| | | | | | | | |
| | | 2023 | | | 2022 | |
Distributions paid from: | | | | | | | | |
Ordinary income | | $ | –0 | – | | $ | 3,792,639 | |
Net long-term capital gains | | | –0 | – | | | 22,090,249 | |
| | | | | | | | |
Total taxable distributions paid | | $ | –0 | – | | $ | 25,882,888 | |
| | | | | | | | |
18
| | |
| |
| | | AB Variable Products Series Fund |
As of December 31, 2023, the components of accumulated earnings (deficit) on a tax basis were as follows:
| | | | |
Accumulated capital and other losses | | $ | (9,449,305 | )(a) |
Unrealized appreciation (depreciation) | | | 8,988,887 | (b) |
| | | | |
Total accumulated earnings (deficit) | | $ | (460,418 | ) |
| | | | |
| (a) | | As of December 31, 2023, the Portfolio had a net capital loss carryforward of $9,449,305. |
| (b) | | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable primarily to the tax treatment of passive foreign investment companies (PFICs) and the tax deferral of losses on wash sales. |
For tax purposes, net realized capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses for an indefinite period, and such losses will retain their character as either short-term or long-term capital losses. As of December 31, 2023, the Portfolio had a net short-term capital loss carryforward of $6,917,184 and a net long-term capital loss carryforward of $2,532,121, which may be carried forward for an indefinite period.
During the current fiscal year, permanent differences primarily due to the disallowance of a net operating loss and contributions from the Adviser resulted in a net decrease in accumulated loss and a net decrease in additional paid-in capital. These reclassifications had no effect on net assets.
NOTE J: Recent Accounting Pronouncements
In December 2022, the Financial Accounting Standards Board issued an Accounting Standards Update, ASU 2022-06, “Reference Rate Reform (Topic 848)—Deferral of the Sunset Date of Topic 848”. ASU 2022-06 is an amendment to ASU 2020-04, which provided optional guidance to ease the potential accounting burden due to the discontinuation of the LIBOR and other interbank-offered based reference rates and which was effective as of March 12, 2020 through December 31, 2022. ASU 2022-06 extends the effective period through December 31, 2024. Management is currently evaluating the impact, if any, of applying ASU 2022-06.
NOTE K: Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Portfolio’s financial statements through this date.
19
| | |
| | |
| SMALL CAP GROWTH PORTFOLIO | | |
| |
| FINANCIAL HIGHLIGHTS | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS A | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | | $ 9.10 | | | | $25.13 | | | | $28.76 | | | | $19.92 | | | | $16.58 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment loss(a)(b) | | | (.04 | ) | | | (.06 | ) | | | (.20 | ) | | | (.13 | ) | | | (.08 | ) |
Net realized and unrealized gain (loss) on investment transactions | | | 1.68 | | | | (8.86 | ) | | | 2.87 | | | | 10.49 | | | | 6.02 | |
Contributions from Affiliates | | | .00 | (c) | | | –0 | – | | | –0 | – | | | –0 | – | | | .00 | (c) |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 1.64 | | | | (8.92 | ) | | | 2.67 | | | | 10.36 | | | | 5.94 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Distributions | | | | | | | | | | | | | | | | | | | | |
Distributions from net realized gain on investment transactions | | | –0 | – | | | (7.11 | ) | | | (6.30 | ) | | | (1.52 | ) | | | (2.60 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $10.74 | | | | $ 9.10 | | | | $25.13 | | | | $28.76 | | | | $19.92 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset value(d)* | | | 18.02 | % | | | (39.09 | )% | | | 9.46 | % | | | 53.98 | % | | | 36.40 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | | $19,464 | | | | $17,213 | | | | $32,295 | | | | $34,314 | | | | $27,167 | |
Ratio to average net assets of: | | | | | | | | | | | | | | | | | | | | |
Expenses, net of waivers/reimbursements(e) | | | .90 | % | | | .90 | % | | | .91 | % | | | .90 | % | | | .90 | % |
Expenses, before waivers/reimbursements(e) | | | 1.31 | % | | | 1.22 | % | | | 1.08 | % | | | 1.09 | % | | | 1.16 | % |
Net investment loss(b) | | | (.38 | )% | | | (.42 | )% | | | (.71 | )% | | | (.60 | )% | | | (.39 | )% |
Portfolio turnover rate | | | 69 | % | | | 67 | % | | | 67 | % | | | 103 | % | | | 69 | % |
See footnote summary on page 21.
20
| | |
| |
| | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS B | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | | $ 6.77 | | | | $21.35 | | | | $25.36 | | | | $17.75 | | | | $15.03 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment loss(a)(b) | | | (.05 | ) | | | (.07 | ) | | | (.24 | ) | | | (.16 | ) | | | (.11 | ) |
Net realized and unrealized gain (loss) on investment transactions | | | 1.25 | | | | (7.40 | ) | | | 2.53 | | | | 9.29 | | | | 5.43 | |
Contributions from Affiliates | | | .00 | (c) | | | –0 | – | | | –0 | – | | | –0 | – | | | .00 | (c) |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 1.20 | | | | (7.47 | ) | | | 2.29 | | | | 9.13 | | | | 5.32 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Distributions | | | | | | | | | | | | | | | | | | | | |
Distributions from net realized gain on investment transactions | | | –0 | – | | | (7.11 | ) | | | (6.30 | ) | | | (1.52 | ) | | | (2.60 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $ 7.97 | | | | $ 6.77 | | | | $21.35 | | | | $25.36 | | | | $17.75 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset value(d)* | | | 17.72 | % | | | (39.26 | )% | | | 9.20 | % | | | 53.64 | % | | | 36.01 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | | $37,663 | | | | $32,491 | | | | $54,079 | | | | $84,816 | | | | $50,978 | |
Ratio to average net assets of: | | | | | | | | | | | | | | | | | | | | |
Expenses, net of waivers/reimbursements(e) | | | 1.15 | % | | | 1.15 | % | | | 1.15 | % | | | 1.15 | % | | | 1.15 | % |
Expenses, before waivers/reimbursements(e) | | | 1.56 | % | | | 1.47 | % | | | 1.31 | % | | | 1.33 | % | | | 1.42 | % |
Net investment loss(b) | | | (.62 | )% | | | (.67 | )% | | | (.96 | )% | | | (.84 | )% | | | (.64 | )% |
Portfolio turnover rate | | | 69 | % | | | 67 | % | | | 67 | % | | | 103 | % | | | 69 | % |
| (a) | | Based on average shares outstanding. |
| (b) | | Net of expenses waived/reimbursed by the Adviser. |
| (c) | | Amount is less than $.005. |
| (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 (i) insurance company’s separate account related expense charges and (ii) the deductions 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) | | The expense ratios presented below exclude interest/bank overdraft expense: |
| | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Class A | |
Net of waivers/reimbursements | | | .90 | % | | | .90 | % | | | .90 | % | | | .90 | % | | | .90 | % |
Before waivers/reimbursements | | | 1.31 | % | | | 1.22 | % | | | 1.07 | % | | | 1.09 | % | | | 1.16 | % |
Class B | |
Net of waivers/reimbursements | | | 1.15 | % | | | 1.15 | % | | | 1.15 | % | | | 1.15 | % | | | 1.15 | % |
Before waivers/reimbursements | | | 1.56 | % | | | 1.47 | % | | | 1.31 | % | | | 1.33 | % | | | 1.42 | % |
| * | | Includes the impact of proceeds received and credited to the Portfolio resulting from class action settlements, which enhanced the Portfolio’s performance for the years ended December 31, 2023 and December 31, 2021 by .02% and .03%, respectively. |
See notes to financial statements.
21
| | |
| | |
| REPORT OF INDEPENDENT REGISTERED | | |
| |
| PUBLIC ACCOUNTING FIRM | | AB Variable Products Series Fund |
To the Shareholders and the Board of Directors of AB Small Cap Growth Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of AB Small Cap Growth Portfolio (the “Portfolio”) (one of the series constituting AB Variable Products Series Fund, Inc. (the “Fund”)), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Portfolio (one of the series constituting AB Variable Products Series Fund, Inc.) at December 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Portfolio’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers or others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the AB investment companies since 1968.
New York, New York
February 14, 2024
22
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| SMALL CAP GROWTH PORTFOLIO | | AB Variable Products Series Fund |
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| BOARD OF DIRECTORS | | |
Garry L. Moody(1), Chairman Jorge A. Bermudez(1) Michael J. Downey(1) Onur Erzan, President and
Chief Executive Officer | | Nancy P. Jacklin(1) Jeanette W. Loeb(1) Carol C. McMullen(1) Marshall C. Turner, Jr.(1) Emilie D. Wrapp, Advisory Board Member |
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| OFFICERS | | |
Esteban Gomez(2), Vice President Samantha S. Lau(2), Vice President Heather Pavlak(2), Vice President Wen-Tse Tseng(2), Vice President Nancy E. Hay, Secretary | | Michael B. Reyes, Senior Vice President Stephen M. Woetzel, Treasurer and
Chief Financial Officer Phyllis J. Clarke, Controller Jennifer Friedland, Chief Compliance Officer |
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| CUSTODIANAND ACCOUNTING AGENT | | LEGAL COUNSEL |
State Street Bank and Trust Company One Congress Street, Suite 1 Boston, MA 02114 | | Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 |
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| DISTRIBUTOR | | TRANSFER AGENT |
AllianceBernstein Investments, Inc. 501 Commerce Street Nashville, TN 37203 | | AllianceBernstein Investor Services, Inc. P.O. Box 786003 San Antonio, TX 78278 Toll-Free (800) 221-5672 |
| | |
| INDEPENDENT REGISTERED PUBLIC | | |
| ACCOUNTING FIRM | | |
Ernst & Young LLP One Manhattan West New York, NY 10001 | | |
| (1) | | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
| (2) | | The management of, and investment decisions for, the Portfolio’s portfolio are made by the Adviser’s Small Cap Growth Investment Team. Messrs. Gomez and Tseng, and Mses. Lau and Pavlak are the investment professionals with the most significant responsibility for the day-to-day management of the Portfolio’s portfolio. |
23
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| SMALL CAP GROWTH PORTFOLIO | | |
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| MANAGEMENT OF THE FUND | | AB Variable Products Series Fund |
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund’s Directors and Advisory Board member is set forth below.
| | | | | | | | |
NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
| INTERESTED DIRECTOR | | | | | | |
| | | | | | | | |
Onur Erzan,# 1345 Avenue of the Americas New York, NY 10105 48 (2021) | | Senior Vice President of the Adviser**, Head of Global Client Group and Head of Private Wealth. He oversees AB’s entire private wealth management business and third-party institutional and retail franchise, where he is responsible for all client services, sales and marketing, as well as product strategy, management and development worldwide. Director, President and Chief Executive Officer of the AB Mutual Funds as of April 1, 2021. He is also a member of the Equitable Holdings Management Committee. Prior to joining the firm in January 2021, he spent 19 years with McKinsey (management consulting firm), most recently as a senior partner and co-leader of its Wealth & Asset Management practice. In addition, he co-led McKinsey’s Banking & Securities Solutions (a portfolio of data, analytics, and digital assets and capabilities) globally. | | | 82 | | | None |
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| DISINTERESTED DIRECTORS | | | | | | |
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Garry L. Moody## Chairman of the Board 71 (2008) | | Private Investor since prior to 2019. Formerly, Partner, Deloitte & Touche LLP (1995-2008) where he held a number of senior positions, including Vice Chairman, and U.S. and Global Investment Management Practice Managing Partner; President, Fidelity Accounting and Custody Services Company (1993-1995), where he was responsible for accounting, pricing, custody and reporting for the Fidelity mutual funds; and Partner, Ernst & Young LLP (1975-1993), where he served as the National Director of Mutual Fund Tax Services and Managing Partner of its Chicago Office Tax department. He served as a member of the Investment Company Institute’s Board of Governors and the Independent Directors Council’s Governing Council from October 2019 through September 2023, where he also served as Chairman of the Governance Committee from October 2021 through September 2023. He is Chairman of the AB Funds and Chairman of the Independent Directors Committees since January 2023; he has served as a director or trustee since 2008, and served as Chairman of the Audit Committee of such funds from 2008 to February 2023. | | | 82 | | | None |
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24
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| | | AB Variable Products Series Fund |
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NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
DISINTERESTED DIRECTORS (continued) | | | | | | |
| | | | | | | | |
Jorge A. Bermudez,## 72 (2020) | | Private Investor since prior to 2019. Formerly, Chief Risk Officer of Citigroup, Inc., a global financial services company, from November 2007 to March 2008, Chief Executive Officer of Citigroup’s Commercial Business Group in North America and Citibank Texas from 2005 to 2007, and a variety of other executive and leadership roles at various businesses within Citigroup prior to then; Chairman (2017-2018) of the Texas A&M Foundation Board of Trustees (Trustee 2014-2021) and Chairman of the Smart Grid Center Board at Texas A&M University since 2012; director of, among others, Citibank N.A. from 2005 to 2008, the Federal Reserve Bank of Dallas, Houston Branch from 2009 to 2011, the Federal Reserve Bank of Dallas from 2011 to 2017, and the Electric Reliability Council of Texas from 2010 to 2016; and Chair of the Audit Committee of the Board of Directors of Moody’s Corporation since December 2022. He has served as director or trustee of the AB Funds since January 2020. | | | 82 | | | Moody’s Corporation
since April 2011 |
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Michael J. Downey,## 80 (2005) | | Private Investor since prior to 2019. Formerly, Chairman of The Asia Pacific Fund, Inc. (registered investment company) from 2002 until January 2019. From 1987 until 1993, Chairman and CEO of Prudential Mutual Fund Management, director of the Prudential mutual funds, and member of the Executive Committee of Prudential Securities, Inc. He has served as a director or trustee of the AB Funds since 2005. | | | 82 | | | None |
| | | | | | | | |
Nancy P. Jacklin,## 75 (2006) | | Private Investor since prior to 2019. Professorial Lecturer at the Johns Hopkins School of Advanced International Studies (2008-2015). U.S. Executive Director of the International Monetary Fund (which is responsible for ensuring the stability of the international monetary system), (December 2002-May 2006); Partner, Clifford Chance (1992-2002); Sector Counsel, International Banking and Finance, and Associate General Counsel, Citicorp (1985-1992); Assistant General Counsel (International), Federal Reserve Board of Governors (1982-1985); and Attorney Advisor, U.S. Department of the Treasury (1973-1982). Member of the Bar of the District of Columbia and of New York; and member of the Council on Foreign Relations. She has served as a director or trustee of the AB Funds since 2006 and served as Chair of the Governance and Nominating Committees of the AB Funds from 2014 to August 2023. | | | 82 | | | None |
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25
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| SMALL CAP GROWTH PORTFOLIO | | |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
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NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
DISINTERESTED DIRECTORS (continued) | | | | | | |
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Jeanette W. Loeb,## 71 (2020) | | Private Investor since prior to 2019. Director of New York City Center since 2005. Formerly, Chief Executive Officer of PetCareRx (e-commerce pet pharmacy) from 2002 to 2011 and 2015 to April 2023. She was a director of MidCap Financial Investment Corporation (business development company) from August 2011 to July 2023 and a director of AB Multi-Manager Alternative Fund (fund of hedge funds) from 2012 to 2018. Formerly, affiliated with Goldman Sachs Group, Inc. (financial services) from 1977 to 1994, including as a partner thereof from 1986 to 1994. She has served as director or trustee of the AB Funds since April 2020 and serves as Chair of the Governance and Nominating Committees of the AB Funds since August 2023. | | | 82 | | | None |
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Carol C. McMullen,## 68 (2016) | | Private Investor and a member of the Advisory Board of Butcher Box (since 2018) and serves as Advisory Board Chair as of June 2023. Formerly, Managing Director of Slalom Consulting (consulting) from 2014 until July 2023; member, Mass General Brigham (formerly, Partners Healthcare) Investment Committee (2010-2019); Director of Norfolk & Dedham Group (mutual property and casualty insurance) from 2011 until November 2016; Director of Partners Community Physicians Organization (healthcare) from 2014 until December 2016; and Managing Director of The Crossland Group (consulting) from 2012 until 2013. She has held a number of senior positions in the asset and wealth management industries, including at Eastern Bank (where her roles included President of Eastern Wealth Management), Thomson Financial (Global Head of Sales for Investment Management), and Putnam Investments (where her roles included Chief Investment Officer, Core and Growth and Head of Global Investment Research). She has served on a number of private company and non-profit boards, and as a director or trustee of the AB Funds since June 2016, and serves as Chair of the Audit Committees of such funds since February 2023. | | | 82 | | | None |
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26
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| | | AB Variable Products Series Fund |
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NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
DISINTERESTED DIRECTORS (continued) | | | | | | |
| | | | | | | | |
Marshall C. Turner, Jr.## 82 (2005) | | Private Investor since prior to 2019. He was a Director of Xilinx, Inc. (programmable logic semi-conductors and adaptable, intelligent computing) from 2007 through August 2020, and is a former director of 33 other companies and organizations. Former Chairman and CEO of Dupont Photomasks, Inc. (semi-conductor manufacturing equipment) from 2003 through 2006. He has extensive operating leadership and venture capital investing experience, including five interim or full-time CEO roles, and prior service as general partner of institutional venture capital partnerships. He also has extensive non-profit board leadership experience, and currently serves on the board of the George Lucas Educational Foundation. He has served as a director of one AB Fund since 1992, and director or trustee of all AB Funds since 2005. He has served as both Chairman of the AB Funds and Chairman of the Independent Directors Committees from 2014 through December 2022. | | | 82 | | | None |
| | | | | | | | |
| ADVISORY BOARD MEMBER | | | | | | |
| | | | | | | | |
Emilie D. Wrapp,# 68 (2024) | | Former Senior Vice President, Counsel, Assistant Secretary & Senior Mutual Fund Legal Advisor of the Adviser (January 2023–June 2023). Prior thereto, Senior Vice President, Assistant Secretary, Counsel, and Head of Mutual Fund & Retail Legal of the Adviser; Assistant General Counsel and Assistant Secretary of ABI since prior to 2019 until June 2023. | | | 82 | | | None |
| * | The address for each of the Fund’s disinterested Directors and Advisory Board member is c/o AllianceBernstein L.P., Attention: Legal & Compliance Department—Mutual Fund Legal, 1345 Avenue of the Americas, New York, NY 10105. |
| ** | There is no stated term of office for the Fund’s Directors or Advisory Board member. |
| *** | The information above includes each Director’s principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Director’s qualifications to serve as a Director, which led to the conclusion that each Director should serve as a Director for the Fund. |
| # | Mr. Erzan is an “interested person” of the Fund, as defined in the “1940 Act”, due to his position as a Senior Vice President of the Adviser. Ms. Wrapp is an “interested person” of the Fund, as defined in the 1940 Act, due to her former role with the Adviser. |
| ## | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
27
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| SMALL CAP GROWTH PORTFOLIO | | |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
Officer Information
Certain information concerning the Portfolio’s Officers is listed below.
| | | | |
NAME, ADDRESS*
AND AGE | | PRINCIPAL POSITION(S)
HELD WITH FUND | | PRINCIPAL OCCUPATION
DURING PAST FIVE YEARS |
Onur Erzan 48 | | President and Chief Executive Officer | | See biography above. |
| | | | |
Esteban Gomez 40 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated in a substantially similar capacity since prior to 2019. |
| | | | |
Samantha S. Lau 51 | | Vice President | | Senior Vice President of the Adviser**, with which she has been associated since prior to 2019. She is also Chief Investment Officer of Small and SMID Cap Growth Equities. |
| | | | |
Heather Pavlak 40 | | Vice President | | Senior Vice President of the Adviser**, with which she has been associated since 2019. |
| | | | |
Wen-Tse Tseng 58 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated since prior to 2019. |
| | | | |
Nancy E. Hay 51 | | Secretary | | Senior Vice President and Counsel of the Adviser**, with which she has been associated since prior to 2019 and Assistant Secretary of ABI**. |
| | | | |
Michael B. Reyes 47 | | Senior Vice President | | Vice President of the Adviser**, with which he has been associated since prior to 2019. |
| | | | |
Stephen M. Woetzel 52 | | Treasurer and Chief
Financial Officer | | Senior Vice President of ABIS**, with which he has been associated since prior to 2019. |
| | | | |
Phyllis J. Clarke 63 | | Controller | | Vice President of ABIS**, with which she has been associated since prior to 2019. |
| | | | |
Jennifer Friedland 49 | | Chief Compliance Officer | | Vice President of the Adviser** since 2020 and Mutual Fund Chief Compliance Officer (of all Funds since January 2023 and of the ETF Funds since 2022). Before joining the Adviser in 2020, she was Chief Compliance Officer at WestEnd Advisors, LLC from 2013 until 2019. |
| * | | The address for each of the Portfolio’s Officers is 1345 Avenue of the Americas, New York, NY 10105. |
| ** | | The Adviser, ABI and ABIS are affiliates of the Fund. |
| | | The Fund’s Statement of Additional Information (SAI) has additional information about the Fund’s Directors and Officers and is available without charge upon request. Contact your financial representative or the Adviser at (800) 227-4618, or visit www. abfunds.com, for a free prospectus or SAI. |
28
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| SMALL CAP GROWTH PORTFOLIO | | AB Variable Products Series Fund |
OPERATION AND EFFECTIVENESS OF THE PORTFOLIO’S LIQUIDITY RISK MANAGEMENT PROGRAM:
In October 2016, the Securities and Exchange Commission (“SEC”) adopted the open-end fund liquidity rule (the “Liquidity Rule”). In June 2018 the SEC adopted a requirement that funds disclose information about the operation and effectiveness of their Liquidity Risk Management Program (“LRMP”) in their reports to shareholders.
One of the requirements of the Liquidity Rule is for the Portfolio to designate an Administrator of the Portfolio’s Liquidity Risk Management Program. The Administrator of the Portfolio’s LRMP is AllianceBernstein L.P., the Portfolio’s investment adviser (the “Adviser”). The Adviser has delegated the responsibility to its Liquidity Risk Management Committee (the “Committee”).
Another requirement of the Liquidity Rule is for the Portfolio’s Board of Directors/Trustees (the “Fund Board”) to receive an annual written report from the Administrator of the LRMP, which addresses the operation of the Portfolio’s LRMP and assesses its adequacy and effectiveness. The Adviser provided the Fund Board with such annual report during the first quarter of 2024, which covered the period January 1, 2023 through December 31, 2023 (the “Program Reporting Period”).
The LRMP’s principal objectives include supporting the Portfolio’s compliance with limits on investments in illiquid assets and mitigating the risk that the Portfolio will be unable to meet its redemption obligations in a timely manner.
Pursuant to the LRMP, the Portfolio classifies the liquidity of its portfolio investments into one of the four categories defined by the SEC: Highly Liquid, Moderately Liquid, Less Liquid, and Illiquid. These classifications are reported to the SEC on Form N-PORT.
During the Program Reporting Period, the Committee reviewed whether the Portfolio’s strategy is appropriate for an open-end structure, incorporating any holdings of less liquid and illiquid assets. If the Portfolio participated in derivative transactions, the exposure from such transactions were considered in the LRMP.
The Committee also performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum (“HLIM”). The Committee also incorporated the following information when determining the Portfolio’s reasonably anticipated trading size for purposes of liquidity monitoring: historical net redemption activity, a Portfolio’s concentration in an issuer, shareholder concentration, investment performance, total net assets, and distribution channels.
The Adviser informed the Fund Board that the Committee believes the Portfolio’s LRMP is adequately designed, has been implemented as intended, and has operated effectively since its inception. No material exceptions have been noted since the implementation of the LRMP. During the Program Reporting Period, liquidity in all markets was challenged due to rising rates and economic uncertainty. However, markets also remained orderly during the Program Reporting Period. There were no liquidity events that impacted the Portfolio or its ability to timely meet redemptions during the Program Reporting Period.
29
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| SMALL CAP GROWTH PORTFOLIO | | |
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| CONTINUANCE DISCLOSURE | | AB Variable Products Series Fund |
INFORMATION REGARDING THE REVIEW AND APPROVAL OF THE FUND’S ADVISORY AGREEMENT
The disinterested directors (the “directors”) of AB Variable Products Series Fund, Inc. (the “Company”) unanimously approved the continuance of the Company’s Advisory Agreement with the Adviser in respect of AB Small Cap Growth Portfolio (the “Fund”) at a meeting held in-person on May 2-4, 2023 (the “Meeting”).
Prior to approval of the continuance of the Advisory Agreement, the directors had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The directors also reviewed additional materials, including comparative analytical data prepared by the Senior Vice President of the Fund. The directors also discussed the proposed continuance in private sessions with counsel.
The directors considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as directors or trustees of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the directors and its responsiveness, frankness and attention to concerns raised by the directors in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AB Funds. The directors noted that they have four regular meetings each year, at each of which they review extensive materials and information from the Adviser, including information on the investment performance of the Fund.
The directors also considered all factors they believed relevant, including the specific matters discussed below. During the course of their deliberations, the directors evaluated, among other things, the reasonableness of the advisory fee. The directors did not identify any particular information that was all-important or controlling, and different directors may have attributed different weights to the various factors. The directors determined that the selection of the Adviser to manage the Fund and the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors’ determinations included the following:
Nature, Extent and Quality of Services Provided
The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. The directors noted that the Adviser from time to time reviews the Fund’s investment strategies and from time to time proposes changes intended to improve the Fund’s relative or absolute performance for the directors’ consideration. They also noted the professional experience and qualifications of the Fund’s portfolio management team and other senior personnel of the Adviser. The directors also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services to the Fund by employees of the Adviser or its affiliates. Requests for these reimbursements are made on a quarterly basis and subject to approval by the directors. Reimbursements, to the extent requested and paid, result in a higher rate of total compensation from the Fund to the Adviser than the fee rate stated in the Advisory Agreement. The directors noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant at the request of the directors. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of the Fund’s other service providers, also was considered. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement.
Costs of Services Provided and Profitability
The directors reviewed a schedule of the revenues and expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2021 and 2022 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant at the request of the directors. The directors noted the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and understood that there are a number of potentially acceptable allocation methodologies for information of this type. The directors noted that the profitability information reflected all revenues and expenses of the Adviser’s relationship with the Fund, including those relating to its subsidiaries that provide transfer agency, distribution and brokerage services to the Fund. The directors recognized that it is difficult to make comparisons of the profitability of the Advisory Agreement with the profitability of fund advisory contracts for unaffiliated funds because comparative information is not generally publicly available and is affected by numerous
30
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| | | AB Variable Products Series Fund |
factors. The directors focused on the profitability of the Adviser’s relationship with the Fund before taxes and distribution expenses. The directors concluded that the Adviser’s level of profitability from its relationship with the Fund was not unreasonable.
Fall-Out Benefits
The directors considered the other benefits to the Adviser and its affiliates from their relationships with the Fund, including, but not limited to, benefits relating to soft dollar arrangements (whereby investment advisers receive brokerage and research services from brokers that execute agency transactions for their clients); 12b-1 fees and sales charges received by the Fund’s principal underwriter (which is a wholly owned subsidiary of the Adviser) in respect of the Fund’s Class B shares; brokerage commissions paid by the Fund to brokers affiliated with the Adviser; and transfer agency fees paid by the Fund to a wholly owned subsidiary of the Adviser. The directors recognized that the Adviser’s profitability would be somewhat lower without these benefits. The directors understood that the Adviser also might derive reputational and other benefits from its association with the Fund.
Investment Results
In addition to the information reviewed by the directors in connection with the Meeting, the directors receive detailed performance information for the Fund at each regular Board meeting during the year.
At the Meeting, the directors reviewed performance information prepared by an independent service provider (the “15(c) service provider”), showing the performance of the Class A Shares of the Fund against a group of similar funds (“peer group”) and a larger group of similar funds (“peer universe”), each selected by the 15(c) service provider, and information prepared by the Adviser showing performance of the Class A Shares against a broad-based securities market index, in each case for the 1-, 3-, 5- and 10-year periods ended February 28, 2023 and (in the case of comparisons with the broad-based securities market index) for the period from inception. Based on their review, the directors concluded that the Fund’s investment performance was acceptable.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate payable by the Fund to the Adviser and information prepared by the 15(c) service provider concerning advisory fee rates payable by other funds in the same category as the Fund. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The directors compared the Fund’s contractual effective advisory fee rate with a peer group median. Taking into account the administrative expense reimbursement paid to the Adviser in the latest fiscal year, the directors noted that the Adviser’s total rate of compensation was above the median and discussed with the Adviser the reasons it was above the median.
The directors also considered the Adviser’s fee schedule for other clients utilizing investment strategies similar to those of the Fund. For this purpose, they reviewed the relevant advisory fee information from the Adviser’s Form ADV and in a report from the Fund’s Senior Vice President and noted the differences between the Fund’s fee schedule, on the one hand, and the Adviser’s institutional fee schedule and the schedule of fees charged by the Adviser to any offshore funds and for services to any sub-advised funds utilizing investment strategies similar to those of the Fund, on the other. The directors noted that the Adviser may, in some cases, agree to fee rates with large institutional clients that are lower than those reviewed by the directors and that they had previously discussed with the Adviser its policies in respect of such arrangements. The directors also compared the advisory fee rate for the Fund with those for two other funds advised by the Adviser utilizing similar investment strategies.
The Adviser reviewed with the directors the significantly greater scope of the services it provides to the Fund relative to institutional, offshore fund and sub-advised fund clients. In this regard, the Adviser noted, among other things, that, compared to institutional and offshore or sub-advisory accounts, the Fund (i) demands considerably more portfolio management, research and trading resources due to significantly higher daily cash flows; (ii) has more tax and regulatory restrictions and compliance obligations; (iii) must prepare and file or distribute regulatory and other communications about fund operations; and (iv) must provide shareholder servicing to retail investors. The Adviser also reviewed the greater legal risks presented by the large and changing population of Fund shareholders who may assert claims against the Adviser in individual or class actions, and the greater entrepreneurial risk in offering new fund products, which require substantial investment to launch, may not succeed, and generally must be priced to compete with larger, more established funds resulting in lack of profitability to the Adviser until a new fund achieves scale. In light of the substantial differences in services rendered by the
31
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| SMALL CAP GROWTH PORTFOLIO | | |
| CONTINUANCE DISCLOSURE | | |
| |
| (continued) | | AB Variable Products Series Fund |
Adviser to institutional, offshore fund and sub-advised fund clients as compared to the Fund, and the different risk profile, the directors considered these fee comparisons inapt and did not place significant weight on them in their deliberations.
In connection with their review of the Fund’s advisory fee, the directors also considered the total expense ratio of the Class A shares of the Fund in comparison to the medians for a peer group and a peer universe selected by the 15(c) service provider. The Class A expense ratio of the Fund was based on the Fund’s latest fiscal year and the directors considered the Adviser’s expense cap for the Fund. The directors noted that it was likely that the expense ratios of some of the other funds in the Fund’s category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases might be voluntary or temporary. The directors view expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Fund by others. The directors noted that the Fund’s expense ratio was close to a median. Based on their review, the directors concluded that the Fund’s expense ratio was acceptable.
Economies of Scale
The directors noted that the advisory fee schedule for the Fund contains breakpoints that reduce the fee rates on assets above specified levels. The directors took into consideration prior presentations by an independent consultant on economies of scale in the mutual fund industry and for the AB Funds, and presentations from time to time by the Adviser concerning certain of its views on economies of scale. The directors also had requested and received from the Adviser certain updates on economies of scale in advance of the Meeting. The directors believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there is no established methodology for setting breakpoints that give effect to the fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Fund’s shareholders would benefit from a sharing of economies of scale in the event the Fund’s net assets exceed a breakpoint in the future.
32
VPS-SCG- 0151-1223
DEC 12.31.23
ANNUAL REPORT
AB VARIABLE PRODUCTS
SERIES FUND, INC.
| + | | AB SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
Investment Products Offered
| | • | | Are Not Bank Guaranteed |
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AB family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the Adviser of the funds.
You may obtain a description of the Fund’s proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AB’s website at www.abfunds.com or go to the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov, or call AB at (800) 227 4618.
The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Commission’s website at www.sec.gov.
The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.
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| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO | | AB Variable Products Series Fund |
LETTER TO INVESTORS
February 14, 2024
The following is an update of AB Variable Products Series Fund—Sustainable Global Thematic Portfolio (the “Portfolio”) for the annual reporting period ended December 31, 2023.
INVESTMENT OBJECTIVE AND POLICIES
The Portfolio’s investment objective is long-term growth of capital. The Portfolio pursues opportunistic growth by investing in a global universe of companies whose business activities the Adviser believes position the company to benefit from certain sustainable investment themes that align with one or more of the United Nations Sustainable Development Goals (“SDGs”). These themes principally include the advancement of climate, health and empowerment. Under normal circumstances, the Portfolio invests at least 80% of its net assets in equity securities of issuers located throughout the world that satisfy the Portfolio’s sustainable thematic criteria. An issuer that derives at least 25% of its total revenues from activities consistent with the achievement of the SDGs meets such criteria, although many of the issuers in which the Portfolio invests will derive a much greater portion of their revenues from such activities.
The Adviser employs a combination of “top-down” and “bottom-up” investment processes with the goal of identifying, based on its internal research and analysis, securities of companies worldwide that fit into sustainable investment themes. First, the Adviser identifies through its “top-down” process the sustainable investment themes. In addition to this “top-down” thematic approach, the Adviser then uses a “bottom-up” analysis of individual companies that focuses on prospective earnings growth, valuation, and quality of company management and on evaluating a company’s risks, including those related to environmental, social and corporate governance (“ESG”) factors. ESG factors, which can vary across companies and industries, may include environmental impact, corporate governance, ethical business practices, diversity and employee practices, product safety, supply-chain management and community impact. Eligible investments include securities of issuers that the Adviser believes will maximize total return while also contributing to positive societal impact aligned with one or more SDGs. While the Adviser emphasizes company-specific positive selection criteria over broad-based negative screens in assessing a company’s exposure to ESG factors, the Portfolio will not invest in companies that derive revenue from direct involvement in adult entertainment, alcohol, coal, controversial weapons, firearms, gambling, genetically modified organisms, military contracting, prisons or tobacco.
The Adviser considers a large universe of companies worldwide for investment. The Portfolio typically invests primarily in mid- to large-capitalization companies and invests, to a lesser degree, in small-capitalization companies.
The Portfolio invests in securities issued by US and non-US companies from multiple industry sectors in an attempt to maximize opportunity, which should also tend to reduce risk. The Portfolio invests in both developed- and emerging-market countries. Under normal market conditions, the Portfolio invests significantly (at least 40%—unless market conditions are not deemed favorable by the Adviser) in securities of non-US companies. In addition, the Portfolio invests, under normal circumstances, in the equity securities of companies located in at least three countries. The percentage of the Portfolio’s assets invested in securities of companies in a particular country or denominated in a particular currency varies in accordance with the Adviser’s assessment of the appreciation potential of such securities.
Currency exposures can have a dramatic impact on equity return, significantly adding to returns in some years and greatly diminishing them in others. The Adviser may seek to hedge the currency exposure resulting from a securities position when it finds the currency exposure unattractive. To hedge all or a portion of its currency risk, the Portfolio may from time to time invest in currency-related derivatives, including forward currency exchange contracts, futures contracts, options on futures contracts, swaps and options. Decisions regarding portfolio investments and whether to hedge currency exposure are evaluated separately by the Adviser. The Adviser may also seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives.
INVESTMENT RESULTS
The table on page 5 shows the Portfolio’s performance compared with its benchmark, the Morgan Stanley Capital International All Country World Index (“MSCI ACWI”) (net), for the one-, five- and 10-year periods ended December 31, 2023.
All share classes of the Portfolio underperformed the benchmark for the 12-month period. Security selection drove underperformance, relative to the benchmark. Security selection within the technology and industrials sectors detracted the most, while selection within health care contributed. Sector allocation was positive. An overweight to technology and an underweight to energy helped offset losses from an overweight to health care and an underweight to communication services. Country selection (a result of bottom-up security analysis driven by fundamental research) was positive; losses from overweights to
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| | | AB Variable Products Series Fund |
Hong Kong and India detracted most but were offset by underweights to China and Canada, which contributed.
The Climate theme consists of companies that improve overall resource efficiency and provide environmentally positive solutions in fields such as energy production, manufacturing, construction, transportation, agriculture and sanitation. The Health theme consists of companies that develop innovative health treatments and therapies, broaden access to high-quality and affordable care, ensure a steady supply of nutritious food and clean water, and promote overall physical and emotional well-being. The Empowerment theme consists of companies that provide the physical, financial and technological infrastructure and services that allow more people to gain control of their lives by enabling sustainable economic development, employment growth, poverty eradication, knowledge sharing and social inclusion.
The Portfolio used derivatives in the form of currency forwards for hedging purposes, which had no material impact on absolute returns for the annual period.
MARKET REVIEW AND INVESTMENT STRATEGY
US, international and emerging-market stocks rose during the 12-month period ended December 31, 2023. Early in the period, aggressive central bank tightening—led by the US Federal Reserve—pressured global equity markets. Bouts of volatility continued as central banks reduced and then began to pause rate hikes but reiterated hawkish higher-for-longer rhetoric that weighed on sentiment. Later in the period, stronger-than-expected third-quarter economic growth triggered a rapid rise in bond yields—especially the 10-year US Treasury note, which briefly crossed the 5% threshold for the first time in 16 years. Headwinds from higher Treasury yields, conflict in the Middle East and mixed third-quarter earnings weighed on investor sentiment globally and briefly sent all major indices into correction territory in October. Equity markets rallied sharply during November and December, as optimism rose that the US Federal Reserve would begin to cut interest rates in 2024—both earlier and more than previously anticipated. Although US mega-cap technology stocks drove returns through much of the year, the rally broadened considerably during the fourth quarter as soft-landing expectations in the US continued to be underpinned by cooling inflation and moderating economic growth. Within large-cap markets, both growth-and value-oriented stocks rose, but growth significantly outperformed value, led by the technology sector and artificial intelligence optimism. Large-cap stocks outperformed small-cap stocks, although both rose in absolute terms.
The Portfolio’s exposures remain focused on secular growth themes, particularly those related to providing solutions to some of the world’s largest and most persistent sustainability challenges. This has helped the Portfolio’s Senior Investment Management Team (the “Team”) to identify financially strong companies that the Team believes are less dependent on overall macroeconomic strength for success, leading to more resilient earnings growth. The Team also believes higher quality attributes like lower leverage, durable earnings growth, and profitability, are more likely to hold up well during challenging economic periods. The Portfolio is positioned particularly well in this regard.
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| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
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| DISCLOSURES AND RISKS | | AB Variable Products Series Fund |
Benchmark Disclosure
The MSCI ACWI is unmanaged and does not reflect fees and expenses associated with the active management of a mutual fund portfolio. The MSCI ACWI (net, free float-adjusted, market capitalization weighted) represents the equity market performance of developed and emerging markets. MSCI makes no express or implied warranties or representations, and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices, any securities or financial products. This report is not approved, reviewed or produced by MSCI. Net returns reflect the reinvestment of dividends after deduction of non-US withholding tax. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Portfolio.
A Word About Risk
Market Risk: The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Sector Risk: The Portfolio may have more risk than a more diversified portfolio because it may invest to a significant extent in one or more particular market sectors, such as the technology sector. To the extent it does so, market or economic factors affecting the relevant sector(s) could have a major effect on the value of the Portfolio’s investments.
ESG Risk: Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for non-investment reasons and, therefore, the Portfolio may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with ESG practices may shift into and out of favor depending on market and economic conditions, and the Portfolio’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria. Furthermore, ESG and sustainability criteria are not uniformly defined, and the Portfolio’s ESG and sustainability criteria may differ from those used by other funds. In addition, in evaluating an investment, the Adviser is dependent upon information and data that may be incomplete, inaccurate or unavailable, which could adversely affect the analysis of the ESG and sustainability factors relevant to a particular investment.
Foreign (Non-US) Risk: Investments in securities of non-US issuers may involve more risk than those of US issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
Emerging-Market Risk: Investments in emerging-market countries may have more risk because the markets are less developed and less liquid, and because these investments may be subject to increased economic, political, regulatory or other uncertainties.
Currency Risk: Fluctuations in currency exchange rates may negatively affect the value of the Portfolio’s investments or reduce its returns.
Capitalization Risk: Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small- and mid-capitalization companies may have additional risks because these companies may have limited product lines, markets or financial resources.
Derivatives Risk: Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
Focused Portfolio Risk: Investments in a limited number of companies may have more risk because changes in the value of a single security may have a more significant effect, either negative or positive, on the Portfolio’s net asset value (“NAV”), than would be the case if the Portfolio were invested in a larger number of companies.
(Disclosures, Risks and Note About Historical Performance continued on next page)
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| DISCLOSURES AND RISKS | | |
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| (continued) | | AB Variable Products Series Fund |
Management Risk: The Portfolio is subject to management risk because it is an actively managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
These risks are fully discussed in the Variable Products prospectus. As with all investments, you may lose money by investing in the Portfolio.
An Important Note About Historical Performance
The investment return and principal value of an investment in the Portfolio will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Performance shown in this report represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. Please contact your financial advisor or insurance agent representative at your financial institution to obtain portfolio performance information current to the most recent month-end.
Investors should consider the investment objectives, risks, charges and expenses of the Portfolio carefully before investing. For additional copies of the Portfolio’s prospectus or summary prospectus, which contains this and other information, call your financial advisor or (800) 227 4618. Please read the prospectus and/or summary prospectus carefully before investing.
All fees and expenses related to the operation of the Portfolio have been deducted, but no adjustment has been made for insurance company separate account or annuity contract charges, which would reduce total return to a contract owner. Performance assumes reinvestment of distributions and does not account for taxes.
There are additional fees and expenses associated with all Variable Products. These fees can include mortality and expense risk charges, administrative charges, and other charges that can significantly reduce investment returns. Those fees and expenses are not reflected in this annual report. You should consult your Variable Products prospectus for a description of those fees and expenses and speak to your insurance agent or financial representative if you have any questions. You should read the prospectus before investing or sending money.
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| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
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| HISTORICAL PERFORMANCE | | AB Variable Products Series Fund |
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| THE PORTFOLIO VS. ITS BENCHMARK | | Net Asset Value Returns | |
| PERIODS ENDED DECEMBER 31, 2023 (unaudited) | | 1 Year | | | 5 Years1 | | | 10 Years1 | |
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| Sustainable Global Thematic Portfolio Class A | | | 16.01% | | | | 13.56% | | | | 9.60% | |
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| Sustainable Global Thematic Portfolio Class B | | | 15.70% | | | | 13.27% | | | | 9.33% | |
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| MSCI ACWI (net) | | | 22.20% | | | | 11.72% | | | | 7.93% | |
1 Average annual returns. | | | | | | | | | | | | |
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The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 0.96% and 1.21% for Class A and Class B shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements reduced the Portfolio’s total annual operating expense ratios to 0.90% and 1.15% for Class A and Class B shares, respectively. These waivers/reimbursements may not be terminated before May 1, 2024, and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
GROWTH OF A $10,000 INVESTMENT
12/31/2013 TO 12/31/2023 (unaudited)
This chart illustrates the total value of an assumed $10,000 investment in Sustainable Global Thematic Portfolio Class A shares (from 12/31/2013 to 12/31/2023) as compared with the performance of the Portfolio’s benchmark. The chart assumes the reinvestment of dividends and capital gains distributions.
See Disclosures, Risks and Note About Historical Performance on pages 3-4.
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| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
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| EXPENSE EXAMPLE (unaudited) | | AB Variable Products Series Fund |
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.
Actual Expenses
The first line of each class’ table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Hypothetical Example for Comparison Purposes
The second line of each class’ table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of each classes’ table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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| | | Beginning
Account Value
July 1, 2023 | | | Ending
Account Value
December 31, 2023 | | | Expenses Paid
During Period* | | | Annualized
Expense Ratio* | |
Class A | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,036.70 | | | $ | 4.77 | | | | 0.93 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,020.52 | | | $ | 4.74 | | | | 0.93 | % |
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Class B | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,035.30 | | | $ | 6.05 | | | | 1.18 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,019.26 | | | $ | 6.01 | | | | 1.18 | % |
| * | | Expenses are equal to each classes’ annualized expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
| ** | | Assumes 5% annual return before expenses. |
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| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| TEN LARGEST HOLDINGS1 | | |
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| December 31, 2023 (unaudited) | | AB Variable Products Series Fund |
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| COMPANY | | U.S. $ VALUE | | | PERCENT OF NET ASSETS | |
Visa, Inc.—Class A | | $ | 5,152,327 | | | | 3.1 | % |
Microsoft Corp. | | | 5,085,941 | | | | 3.1 | |
Partners Group Holding AG | | | 4,616,918 | | | | 2.8 | |
Waste Management, Inc. | | | 4,500,425 | | | | 2.7 | |
Accenture PLC—Class A | | | 4,090,909 | | | | 2.5 | |
MSCI, Inc. | | | 4,081,165 | | | | 2.5 | |
Deutsche Boerse AG | | | 4,036,320 | | | | 2.5 | |
London Stock Exchange Group PLC | | | 3,946,846 | | | | 2.4 | |
Flex Ltd. | | | 3,847,006 | | | | 2.3 | |
Intuit, Inc. | | | 3,755,805 | | | | 2.3 | |
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| | | $ | 43,113,662 | | | | 26.2 | % |
SECTOR BREAKDOWN2
December 31, 2023 (unaudited)
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| SECTOR | | U.S. $ VALUE | | | PERCENT OF TOTAL INVESTMENTS | |
Information Technology | | $ | 53,258,557 | | | | 32.6 | % |
Health Care | | | 28,157,535 | | | | 17.2 | |
Industrials | | | 28,009,087 | | | | 17.2 | |
Financials | | | 27,594,326 | | | | 16.9 | |
Consumer Staples | | | 10,493,082 | | | | 6.4 | |
Consumer Discretionary | | | 8,425,352 | | | | 5.2 | |
Utilities | | | 4,430,577 | | | | 2.7 | |
Energy | | | 2,148,346 | | | | 1.3 | |
Materials | | | 265,859 | | | | 0.2 | |
Short-Term Investments | | | 535,667 | | | | 0.3 | |
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Total Investments | | $ | 163,318,388 | | | | 100.0 | % |
| 2 | | The Portfolio’s sector breakdown is expressed as a percentage of total investments and may vary over time. The Portfolio also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). |
Please note: The sector classifications presented herein are based on the Global Industry Classification Standard (GICS) which was developed by Morgan Stanley Capital International and Standard & Poor’s. The components are divided into sector, industry group, and industry sub-indices as classified by the GICS for each of the market capitalization indices in the broad market. These sector classifications are broadly defined. The “Portfolio of Investments” section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Portfolio’s prospectus.
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| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| COUNTRY BREAKDOWN1 | | |
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| December 31, 2023 (unaudited) | | AB Variable Products Series Fund |
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| COUNTRY | | U.S. $ VALUE | | | PERCENT OF TOTAL INVESTMENTS | |
United States | | $ | 110,971,923 | | | | 67.9 | % |
United Kingdom | | | 8,619,863 | | | | 5.3 | |
Germany | | | 7,654,215 | | | | 4.7 | |
Switzerland | | | 7,585,582 | | | | 4.6 | |
India | | | 5,316,132 | | | | 3.3 | |
Japan | | | 4,856,199 | | | | 3.0 | |
Taiwan | | | 3,201,647 | | | | 2.0 | |
Netherlands | | | 3,174,302 | | | | 1.9 | |
China | | | 3,006,725 | | | | 1.8 | |
Hong Kong | | | 2,245,343 | | | | 1.4 | |
Canada | | | 2,231,039 | | | | 1.4 | |
Finland | | | 2,148,346 | | | | 1.3 | |
Norway | | | 1,505,546 | | | | 0.9 | |
Denmark | | | 265,859 | | | | 0.2 | |
Short-Term Investments | | | 535,667 | | | | 0.3 | |
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Total Investments | | $ | 163,318,388 | | | | 100.0 | % |
| 1 | | The Portfolio’s country breakdown is expressed as a percentage of total investments and may vary over time. The Portfolio also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). |
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| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
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| December 31, 2023 | | AB Variable Products Series Fund |
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Company | | Shares | | | U.S. $ Value | |
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COMMON STOCKS–99.4% | | | | | | | | |
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INFORMATION TECHNOLOGY–32.5% | | | | | | | | |
COMMUNICATIONS EQUIPMENT–1.3% | | | | | | | | |
Calix, Inc.(a) | | | 50,827 | | | $ | 2,220,632 | |
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ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS–5.8% | | | | | | | | |
Flex Ltd.(a) | | | 126,297 | | | | 3,847,006 | |
Keyence Corp. | | | 4,600 | | | | 2,021,039 | |
Keysight Technologies, Inc.(a) | | | 22,854 | | | | 3,635,843 | |
| | | | | | | | |
| | | | | | | 9,503,888 | |
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IT SERVICES–2.5% | | | | | | | | |
Accenture PLC–Class A | | | 11,658 | | | | 4,090,909 | |
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SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT–10.3% | | | | | | | | |
ASML Holding NV | | | 4,205 | | | | 3,174,302 | |
Infineon Technologies AG | | | 86,630 | | | | 3,617,895 | |
NVIDIA Corp. | | | 5,010 | | | | 2,481,052 | |
NXP Semiconductors NV | | | 10,376 | | | | 2,383,160 | |
ON Semiconductor Corp.(a) | | | 24,112 | | | | 2,014,075 | |
Taiwan Semiconductor Manufacturing Co., Ltd. | | | 167,000 | | | | 3,201,647 | |
| | | | | | | | |
| | | | | | | 16,872,131 | |
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SOFTWARE–12.6% | |
Adobe, Inc.(a) | | | 6,160 | | | | 3,675,056 | |
Bentley Systems, Inc.–Class B | | | 38,684 | | | | 2,018,531 | |
Fair Isaac Corp.(a) | | | 2,848 | | | | 3,315,101 | |
Intuit, Inc. | | | 6,009 | | | | 3,755,805 | |
Microsoft Corp. | | | 13,525 | | | | 5,085,941 | |
Palo Alto Networks, Inc.(a) | | | 9,226 | | | | 2,720,563 | |
| | | | | | | | |
| | | | | | | 20,570,997 | |
| | | | | | | | |
| | | | | | | 53,258,557 | |
| | | | | | | | |
HEALTH CARE–17.2% | |
HEALTH CARE EQUIPMENT & SUPPLIES–5.3% | | | | | | | | |
Alcon, Inc. | | | 37,945 | | | | 2,968,664 | |
Becton Dickinson & Co. | | | 12,261 | | | | 2,989,599 | |
STERIS PLC | | | 12,101 | | | | 2,660,405 | |
| | | | | | | | |
| | | | | | | 8,618,668 | |
| | | | | | | | |
HEALTH CARE PROVIDERS & SERVICES–3.0% | | | | | | | | |
Apollo Hospitals Enterprise Ltd. | | | 40,797 | | | | 2,796,678 | |
Laboratory Corp. of America Holdings | | | 9,226 | | | | 2,096,978 | |
| | | | | | | | |
| | | | | | | 4,893,656 | |
| | | | | | | | |
LIFE SCIENCES TOOLS & SERVICES–7.6% | | | | | | | | |
Bio-Rad Laboratories, Inc.–Class A(a) | | | 4,836 | | | | 1,561,496 | |
Bruker Corp. | | | 25,666 | | | | 1,885,938 | |
Danaher Corp. | | | 13,826 | | | | 3,198,507 | |
ICON PLC(a) | | | 12,751 | | | | 3,609,425 | |
West Pharmaceutical Services, Inc. | | | 6,276 | | | | 2,209,905 | |
| | | | | | | | |
| | | | | | | 12,465,271 | |
| | | | | | | | |
| | | | | | | | |
PHARMACEUTICALS–1.3% | | | | | | | | |
Johnson & Johnson | | | 13,908 | | | $ | 2,179,940 | |
| | | | | | | | |
| | | | | | | 28,157,535 | |
| | | | | | | | |
INDUSTRIALS–17.1% | | | | | | | | |
AEROSPACE & DEFENSE–1.6% | | | | | | | | |
Hexcel Corp. | | | 35,767 | | | | 2,637,816 | |
| | | | | | | | |
COMMERCIAL SERVICES & SUPPLIES–6.6% | | | | | | | | |
Tetra Tech, Inc. | | | 19,823 | | | | 3,309,053 | |
Veralto Corp. | | | 35,896 | | | | 2,952,805 | |
Waste Management, Inc. | | | 25,128 | | | | 4,500,425 | |
| | | | | | | | |
| | | | | | | 10,762,283 | |
| | | | | | | | |
CONSTRUCTION & ENGINEERING–1.4% | | | | | | | | |
WSP Global, Inc. | | | 15,916 | | | | 2,231,039 | |
| | | | | | | | |
MACHINERY–4.3% | | | | | | | | |
Deere & Co. | | | 6,775 | | | | 2,709,119 | |
SMC Corp. | | | 5,300 | | | | 2,835,161 | |
TOMRA Systems ASA | | | 124,178 | | | | 1,505,547 | |
| | | | | | | | |
| | | | | | | 7,049,827 | |
| | | | | | | | |
PROFESSIONAL SERVICES–3.2% | | | | | | | | |
Experian PLC | | | 83,317 | | | | 3,398,943 | |
RELX PLC (London) | | | 48,626 | | | | 1,929,179 | |
| | | | | | | | |
| | | | | | | 5,328,122 | |
| | | | | | | | |
| | | | | | | 28,009,087 | |
| | | | | | | | |
FINANCIALS–16.9% | | | | | | | | |
CAPITAL MARKETS–10.2% | | | | | | | | |
Deutsche Boerse AG | | | 19,600 | | | | 4,036,320 | |
London Stock Exchange Group PLC | | | 33,388 | | | | 3,946,846 | |
MSCI, Inc. | | | 7,215 | | | | 4,081,165 | |
Partners Group Holding AG | | | 3,193 | | | | 4,616,918 | |
| | | | | | | | |
| | | | | | | 16,681,249 | |
| | | | | | | | |
FINANCIAL SERVICES–3.2% | | | | | | | | |
Visa, Inc.–Class A | | | 19,790 | | | | 5,152,327 | |
| | | | | | | | |
INSURANCE–3.5% | | | | | | | | |
Aflac, Inc. | | | 42,611 | | | | 3,515,407 | |
AIA Group Ltd. | | | 258,000 | | | | 2,245,343 | |
| | | | | | | | |
| | | | | | | 5,760,750 | |
| | | | | | | | |
| | | | | | | 27,594,326 | |
| | | | | | | | |
CONSUMER STAPLES–6.4% | | | | | | | | |
HOUSEHOLD PRODUCTS–1.6% | | | | | | | | |
Procter & Gamble Co. (The) | | | 17,511 | | | | 2,566,062 | |
| | | | | | | | |
PERSONAL CARE PRODUCTS–4.8% | | | | | | | | |
Dabur India Ltd. | | | 376,777 | | | | 2,519,454 | |
Haleon PLC | | | 650,599 | | | | 2,663,728 | |
Unilever PLC | | | 56,678 | | | | 2,743,838 | |
| | | | | | | | |
| | | | | | | 7,927,020 | |
| | | | | | | | |
| | | | | | | 10,493,082 | |
| | | | | | | | |
CONSUMER DISCRETIONARY–5.1% | | | | | | | | |
AUTOMOBILE COMPONENTS–1.6% | | | | | | | | |
Aptiv PLC(a) | | | 29,664 | | | | 2,661,454 | |
| | | | | | | | |
9
| | |
| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
Company | | Shares | | | U.S. $ Value | |
| | | | | | | | |
AUTOMOBILES–1.8% | | | | | | | | |
BYD Co., Ltd.–Class H | | | 109,000 | | | $ | 3,006,725 | |
| | | | | | | | |
HOUSEHOLD DURABLES–1.7% | | | | | | | | |
TopBuild Corp.(a) | | | 7,367 | | | | 2,757,173 | |
| | | | | | | | |
| | | | | | | 8,425,352 | |
| | | | | | | | |
UTILITIES–2.7% | | | | | | | | |
ELECTRIC UTILITIES–1.7% | | | | | | | | |
NextEra Energy, Inc. | | | 46,893 | | | | 2,848,281 | |
| | | | | | | | |
WATER UTILITIES–1.0% | | | | | | | | |
American Water Works Co., Inc. | | | 11,988 | | | | 1,582,296 | |
| | | | | | | | |
| | | | | | | 4,430,577 | |
| | | | | | | | |
ENERGY–1.3% | | | | | | | | |
OIL, GAS & CONSUMABLE FUELS–1.3% | | | | | | | | |
Neste Oyj | | | 60,432 | | | | 2,148,346 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
MATERIALS–0.2% | | | | | | | | |
CHEMICALS–0.2% | | | | | | | | |
Chr Hansen Holding A/S | | | 3,170 | | | | 265,859 | |
| | | | | | | | |
Total Common Stocks
(cost $121,336,290) | | | | | | | 162,782,721 | |
| | | | | | | | |
SHORT-TERM INVESTMENTS–0.3% | | | | | | | | |
INVESTMENT COMPANIES–0.3% | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB,
5.27%(b)(c)(d)
(cost $535,667) | | | 535,667 | | | | 535,667 | |
| | | | | | | | |
TOTAL INVESTMENTS–99.7%
(cost $121,871,957) | | | | | | | 163,318,388 | |
Other assets less liabilities–0.3% | | | | | | | 426,925 | |
| | | | | | | | |
NET ASSETS–100.0% | | | | | | $ | 163,745,313 | |
| | | | | | | | |
FORWARD CURRENCY EXCHANGE CONTRACTS (see Note D)
| | | | | | | | | | | | | | | | | | | | | | | | |
| Counterparty | | Contracts to
Deliver
(000) | | | In Exchange
For
(000) | | | Settlement
Date | | | Unrealized
Appreciation
(Depreciation) | |
Bank of America, NA | | | CNH | | | | 13,387 | | | | USD | | | | 1,842 | | | | 01/11/2024 | | | $ | (37,656 | ) |
Bank of America, NA | | | USD | | | | 3,080 | | | | CNH | | | | 22,379 | | | | 01/11/2024 | | | | 62,875 | |
Bank of America, NA | | | USD | | | | 3,939 | | | | JPY | | | | 581,403 | | | | 01/12/2024 | | | | 189,390 | |
Bank of America, NA | | | NOK | | | | 6,605 | | | | USD | | | | 609 | | | | 02/16/2024 | | | | (41,666 | ) |
Barclays Bank PLC | | | BRL | | | | 3,851 | | | | USD | | | | 795 | | | | 01/03/2024 | | | | 2,669 | |
Barclays Bank PLC | | | USD | | | | 783 | | | | BRL | | | | 3,851 | | | | 01/03/2024 | | | | 9,585 | |
Barclays Bank PLC | | | USD | | | | 1,139 | | | | SEK | | | | 11,865 | | | | 02/16/2024 | | | | 39,269 | |
Barclays Bank PLC | | | INR | | | | 198,673 | | | | USD | | | | 2,376 | | | | 03/14/2024 | | | | (3,957 | ) |
Citibank, NA | | | USD | | | | 1,795 | | | | KRW | | | | 2,418,517 | | | | 01/18/2024 | | | | 72,405 | |
Citibank, NA | | | CHF | | | | 2,699 | | | | USD | | | | 3,056 | | | | 02/15/2024 | | | | (167,201 | ) |
Citibank, NA | | | TWD | | | | 19,469 | | | | USD | | | | 625 | | | | 02/26/2024 | | | | (18,237 | ) |
Citibank, NA | | | HKD | | | | 9,960 | | | | USD | | | | 1,279 | | | | 03/14/2024 | | | | 1,308 | |
Morgan Stanley Capital Services, Inc. | | | BRL | | | | 3,851 | | | | USD | | | | 797 | | | | 01/03/2024 | | | | 4,530 | |
Morgan Stanley Capital Services, Inc. | | | USD | | | | 795 | | | | BRL | | | | 3,851 | | | | 01/03/2024 | | | | (2,669 | ) |
Morgan Stanley Capital Services, Inc. | | | USD | | | | 809 | | | | EUR | | | | 740 | | | | 01/10/2024 | | | | 8,368 | |
Morgan Stanley Capital Services, Inc. | | | GBP | | | | 6,515 | | | | USD | | | | 8,095 | | | | 01/25/2024 | | | | (210,711 | ) |
Morgan Stanley Capital Services, Inc. | | | USD | | | | 794 | | | | BRL | | | | 3,851 | | | | 02/02/2024 | | | | (2,659 | ) |
State Street Bank & Trust Co. | | | EUR | | | | 353 | | | | USD | | | | 378 | | | | 01/10/2024 | | | | (11,866 | ) |
State Street Bank & Trust Co. | | | USD | | | | 376 | | | | EUR | | | | 353 | | | | 01/10/2024 | | | | 13,771 | |
State Street Bank & Trust Co. | | | CNH | | | | 2,077 | | | | USD | | | | 284 | | | | 01/11/2024 | | | | (7,721 | ) |
State Street Bank & Trust Co. | | | USD | | | | 492 | | | | CNH | | | | 3,534 | | | | 01/11/2024 | | | | 4,055 | |
State Street Bank & Trust Co. | | | JPY | | | | 129,329 | | | | USD | | | | 882 | | | | 01/12/2024 | | | | (36,191 | ) |
State Street Bank & Trust Co. | | | USD | | | | 395 | | | | JPY | | | | 57,827 | | | | 01/12/2024 | | | | 15,945 | |
State Street Bank & Trust Co. | | | GBP | | | | 511 | | | | USD | | | | 645 | | | | 01/25/2024 | | | | (6,572 | ) |
State Street Bank & Trust Co. | | | USD | | | | 475 | | | | ZAR | | | | 9,091 | | | | 02/07/2024 | | | | 20,674 | |
State Street Bank & Trust Co. | | | CHF | | | | 281 | | | | USD | | | | 326 | | | | 02/15/2024 | | | | (9,399 | ) |
10
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Counterparty | | Contracts to
Deliver
(000) | | | In Exchange
For
(000) | | | Settlement
Date | | | Unrealized
Appreciation
(Depreciation) | |
State Street Bank & Trust Co. | | | NOK | | | | 4,176 | | | | USD | | | | 381 | | | | 02/16/2024 | | | $ | (30,473 | ) |
UBS AG | | | USD | | | | 1,947 | | | | CAD | | | | 2,680 | | | | 01/10/2024 | | | | 76,078 | |
UBS AG | | | USD | | | | 2,471 | | | | AUD | | | | 3,791 | | | | 01/25/2024 | | | | 114,259 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 48,203 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | | Non-income producing security. |
| (b) | | Affiliated investments. |
| (c) | | The rate shown represents the 7-day yield as of period end. |
| (d) | | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
Currency Abbreviations:
AUD—Australian Dollar
BRL—Brazilian Real
CAD—Canadian Dollar
CHF—Swiss Franc
CNH—Chinese Yuan Renminbi (Offshore)
EUR—Euro
GBP—Great British Pound
HKD—Hong Kong Dollar
INR—Indian Rupee
JPY—Japanese Yen
KRW—South Korean Won
NOK—Norwegian Krone
SEK—Swedish Krona
TWD—New Taiwan Dollar
USD—United States Dollar
ZAR—South African Rand
See notes to financial statements.
11
| | |
| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| STATEMENT OF ASSETS & LIABILITIES | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
ASSETS | | | | |
Investments in securities, at value | | | | |
Unaffiliated issuers (cost $121,336,290) | | $ | 162,782,721 | |
Affiliated issuers (cost $535,667) | | | 535,667 | |
Foreign currencies, at value (cost $653,528) | | | 666,539 | |
Unrealized appreciation on forward currency exchange contracts | | | 635,181 | |
Unaffiliated dividends receivable | | | 231,444 | |
Receivable for investment securities sold | | | 44,328 | |
Receivable due from Advisor | | | 6,946 | |
Affiliated dividends receivable | | | 4,746 | |
Receivable for capital stock sold | | | 2,387 | |
| | | | |
Total assets | | | 164,909,959 | |
| | | | |
LIABILITIES | | | | |
Unrealized depreciation on forward currency exchange contracts | | | 586,978 | |
Foreign capital gains tax payable | | | 179,830 | |
Custody and accounting fees payable | | | 132,507 | |
Advisory fee payable | | | 102,142 | |
Payable for capital stock redeemed | | | 34,657 | |
Administrative fee payable | | | 23,300 | |
Distribution fee payable | | | 21,961 | |
Transfer Agent fee payable | | | 150 | |
Accrued expenses | | | 83,121 | |
| | | | |
Total liabilities | | | 1,164,646 | |
| | | | |
NET ASSETS | | $ | 163,745,313 | |
| | | | |
COMPOSITION OF NET ASSETS | | | | |
Capital stock, at par | | $ | 5,154 | |
Additional paid-in capital | | | 122,293,371 | |
Distributable earnings | | | 41,446,788 | |
| | | | |
NET ASSETS | | $ | 163,745,313 | |
| | | | |
Net Asset Value Per Share—1 billion shares of capital stock authorized, $.001 par value
| | | | | | | | | | | | |
| Class | | Net Assets | | | Shares
Outstanding | | | Net Asset
Value | |
| | | |
| A | | $ | 58,246,685 | | | | 1,756,219 | | | $ | 33.17 | |
| | | |
| B | | $ | 105,498,628 | | | | 3,397,917 | | | $ | 31.05 | |
See notes to financial statements.
12
| | |
| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| STATEMENT OF OPERATIONS | | |
| |
| Year Ended December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
INVESTMENT INCOME | |
Dividends | |
Unaffiliated issuers (net of foreign taxes withheld of $147,130) | | $ | 1,703,372 | |
Affiliated issuers | | | 224,027 | |
Interest | | | 1,451 | |
Securities lending income | | | 3,510 | |
Other income | | | 67 | |
| | | | |
| | | 1,932,427 | |
| | | | |
EXPENSES | |
Advisory fee (see Note B) | | | 1,171,880 | |
Distribution fee—Class B | | | 253,819 | |
Transfer agency—Class A | | | 2,002 | |
Transfer agency—Class B | | | 3,710 | |
Administrative | | | 94,632 | |
Custody and accounting | | | 82,237 | |
Audit and tax | | | 64,640 | |
Legal | | | 36,592 | |
Printing | | | 26,898 | |
Directors’ fees | | | 18,752 | |
Miscellaneous | | | 17,543 | |
| | | | |
Total expenses | | | 1,772,705 | |
Less: expenses waived and reimbursed by the Adviser (see Note B) | | | (83,266 | ) |
| | | | |
Net expenses | | | 1,689,439 | |
| | | | |
Net investment income | | | 242,988 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS | | | | |
Net realized gain (loss) on: | | | | |
Investment transactions(a) | | | 1,275,766 | |
Forward currency exchange contracts | | | (419,408 | ) |
Foreign currency transactions | | | 7,680 | |
Net change in unrealized appreciation (depreciation) of: | | | | |
Investments(b) | | | 22,763,844 | |
Forward currency exchange contracts | | | (654,576 | ) |
Foreign currency denominated assets and liabilities | | | 21,239 | |
| | | | |
Net gain on investment and foreign currency transactions | | | 22,994,545 | |
| | | | |
NET INCREASE IN NET ASSETS FROM OPERATIONS | | $ | 23,237,533 | |
| | | | |
| (a) | | Net of foreign realized capital gains taxes of $71,136. |
| (b) | | Net of decrease in accrued foreign capital gains taxes on unrealized gains of $32,256. |
See notes to financial statements.
13
| | |
| | |
| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| |
| STATEMENT OF CHANGES IN NET ASSETS | | AB Variable Products Series Fund |
| | | | | | | | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | |
Net investment income | | $ | 242,988 | | | $ | 52,469 | |
Net realized gain on investment and foreign currency transactions | | | 864,038 | | | | 9,249,524 | |
Net change in unrealized appreciation (depreciation) of investments and foreign currency denominated assets and liabilities | | | 22,130,507 | | | | (68,416,642 | ) |
| | | | | | | | |
Net increase (decrease) in net assets from operations | | | 23,237,533 | | | | (59,114,649 | ) |
Distributions to Shareholders | | | | | | | | |
Class A | | | (3,403,390 | ) | | | (5,619,793 | ) |
Class B | | | (6,377,144 | ) | | | (11,762,309 | ) |
CAPITAL STOCK TRANSACTIONS | |
Net increase (decrease) | | | (2,769,396 | ) | | | 9,023,323 | |
| | | | | | | | |
Total increase (decrease) | | | 10,687,603 | | | | (67,473,428 | ) |
NET ASSETS | |
Beginning of period | | | 153,057,710 | | | | 220,531,138 | |
| | | | | | | | |
End of period | | $ | 163,745,313 | | | $ | 153,057,710 | |
| | | | | | | | |
See notes to financial statements.
14
| | |
| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
NOTE A: Significant Accounting Policies
The AB Sustainable Global Thematic Portfolio (the “Portfolio”) (formerly known as AB Global Thematic Growth Portfolio) is a series of AB Variable Products Series Fund, Inc. (the “Fund”). The Portfolio’s investment objective is long-term growth of capital. The Portfolio is diversified as defined under the Investment Company Act of 1940 (the “1940 Act”). The Fund was incorporated in the State of Maryland as an open-end series investment company. The Fund offers 10 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 U.S. generally accepted accounting principles (“U.S. GAAP”), 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 Portfolio is an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Portfolio.
1. Security Valuation
Portfolio securities are valued at market value determined on the basis of market quotations or, if market quotations are not readily available or are unreliable, at “fair value” as determined in accordance with procedures approved by and under the oversight of the Fund’s Board of Directors (the “Board”). Pursuant to these procedures, AllianceBernstein L.P. (the “Adviser”) serves as the Portfolio’s valuation designee pursuant to Rule 2a-5 of the 1940 Act. In this capacity, the Adviser is responsible, among other things, for making all fair value determinations relating to the Portfolio’s portfolio investments, subject to the Board’s oversight.
In general, the market values of securities which are readily available and deemed reliable are determined as follows: securities listed on a national securities exchange (other than securities listed on the NASDAQ Stock Market, Inc. (“NASDAQ”)) 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 last traded price from the previous day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price; listed or over the counter (“OTC”) market put or call options are valued at the mid level between the current bid and ask prices. If either a current bid or current ask price is unavailable, the Adviser will have discretion to determine the best valuation (e.g., last trade price in the case of listed options); open futures 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 valuation, the last available closing settlement price is used; U.S. Government securities and any other debt instruments having 60 days or less remaining until maturity are generally valued at market by an independent pricing vendor, if a market price is available. If a market price is not available, the securities are valued at amortized cost. This methodology is commonly used for short term securities that have an original maturity of 60 days or less, as well as short term securities that had an original term to maturity that exceeded 60 days. In instances when amortized cost is utilized, the Valuation Committee (the “Committee”) must reasonably conclude that the utilization of amortized cost is approximately the same as the fair value of the security. Factors the Committee will consider include, but are not limited to, an impairment of the creditworthiness of the issuer or material changes in interest rates. 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 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. Swaps and other derivatives are valued daily, primarily using independent pricing services, independent pricing models using market inputs, as well as third party broker-dealers or counterparties. Open-end mutual funds are valued at the closing net asset value per share, while exchange-traded funds are valued at the closing market price per share.
15
| | |
| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value as deemed appropriate by the Adviser. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer’s financial statements or other available documents. In addition, the Portfolio may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Portfolio values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Portfolio generally values many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available.
2. Fair Value Measurements
In accordance with U.S. GAAP regarding fair value measurements, fair value is defined as the price that the Portfolio would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability (including those valued based on their market values as described in Note A.1 above). Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Portfolio. Unobservable inputs reflect the Portfolio’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
| | • | | Level 1—quoted prices in active markets for identical investments |
| | • | | Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| | • | | Level 3—significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of investments) |
The fair value of debt instruments, such as bonds, and over-the-counter derivatives is generally based on market price quotations, recently executed market transactions (where observable) or industry recognized modeling techniques and are generally classified as Level 2. Pricing vendor inputs to Level 2 valuations may include quoted prices for similar investments in active markets, interest rate curves, coupon rates, currency rates, yield curves, option adjusted spreads, default rates, credit spreads and other unique security features in order to estimate the relevant cash flows which are then discounted to calculate fair values. If these inputs are unobservable and significant to the fair value, these investments will be classified as Level 3.
Where readily available market prices or relevant bid prices are not available for certain equity investments, such investments may be valued based on similar publicly traded investments, movements in relevant indices since last available prices or based upon underlying company fundamentals and comparable company data (such as multiples to earnings or other multiples to equity). Where an investment is valued using an observable input, such as another publicly traded security, the investment will be classified as Level 2. If management determines that an adjustment is appropriate based on restrictions on resale, illiquidity or uncertainty, and such adjustment is a significant component of the valuation, the investment will be classified as Level 3. An investment will also be classified as Level 3 where management uses company fundamentals and other significant inputs to determine the valuation.
The following table summarizes the valuation of the Portfolio’s investments by the above fair value hierarchy levels as of December 31, 2023:
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Assets: | |
Common Stocks: | | | | | | | | | | | | | | | | |
Information Technology | | $ | 41,243,674 | | | $ | 12,014,883 | | | $ | –0 | – | | $ | 53,258,557 | |
Health Care | | | 22,392,193 | | | | 5,765,342 | | | | –0 | – | | | 28,157,535 | |
Industrials | | | 18,340,257 | | | | 9,668,830 | | | | –0 | – | | | 28,009,087 | |
Financials | | | 12,748,899 | | | | 14,845,427 | | | | –0 | – | | | 27,594,326 | |
Consumer Staples | | | 2,566,062 | | | | 7,927,020 | | | | –0 | – | | | 10,493,082 | |
16
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Consumer Discretionary | | $ | 5,418,627 | | | $ | 3,006,725 | | | $ | –0 | – | | $ | 8,425,352 | |
Utilities | | | 4,430,577 | | | | –0 | – | | | –0 | – | | | 4,430,577 | |
Energy | | | –0 | – | | | 2,148,346 | | | | –0 | – | | | 2,148,346 | |
Materials | | | –0 | – | | | 265,859 | | | | –0 | – | | | 265,859 | |
Short-Term Investments | | | 535,667 | | | | –0 | – | | | –0 | – | | | 535,667 | |
| | | | | | | | | | | | | | | | |
Total Investments in Securities | | | 107,675,956 | | | | 55,642,432 | (a) | | | –0 | – | | | 163,318,388 | |
Other Financial Instruments(b): | | | | | | | | | | | | | | | | |
Assets: | |
Forward Currency Exchange Contracts | | | –0 | – | | | 635,181 | | | | –0 | – | | | 635,181 | |
Liabilities: | |
Forward Currency Exchange Contracts | | | –0 | – | | | (586,978 | ) | | | –0 | – | | | (586,978 | ) |
| | | | | | | | | | | | | | | | |
Total | | $ | 107,675,956 | | | $ | 55,690,635 | | | $ | –0 | – | | $ | 163,366,591 | |
| | | | | | | | | | | | | | | | |
| (a) | | A significant portion of the Portfolio’s foreign equity investments are categorized as Level 2 investments since they are valued using fair value prices based on third party vendor modeling tools to the extent available, see Note A.1. |
| (b) | | Other financial instruments are derivative instruments, such as futures, forwards and swaps, which are valued at the unrealized appreciation (depreciation) on the instrument. Other financial instruments may also include swaps with upfront premiums, written options and written swaptions which are valued at market value. |
3. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under forward currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and ask 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, 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 foreign currency denominated assets and liabilities.
4. 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. The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned.
In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, management has analyzed the Portfolio’s tax positions taken or expected to be taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Portfolio’s financial statements.
5. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Portfolio is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the date the securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. Non-cash dividends, if any, are recorded on the ex-dividend date at the fair value of the securities received. The Portfolio amortizes premiums and accretes discounts as adjustments to interest income. The Portfolio accounts for distributions received from REIT investments or from regulated investment companies as dividend income, realized gain, or return of capital based on information provided by the REIT or the investment company.
17
| | |
| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
6. Class Allocations
All income earned and expenses incurred by the Portfolio 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 for class specific expenses which are allocated to the respective class. Expenses of the Fund are charged proportionately to each portfolio or based on other appropriate methods. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets.
7. Dividends and Distributions
Dividends and distributions to shareholders, if any, 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 U.S. GAAP. 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 the investment advisory agreement, the Portfolio pays the Adviser an advisory fee at an 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 Portfolio’s average daily net assets. The fee is accrued daily and paid monthly. The Adviser has contractually agreed to waive its management fee and/or bear expenses of the Portfolio in order to reduce the Portfolio’s total operating expenses by an amount equal to .05% on an annual basis of the average net assets for Class A and Class B. For the year ended December 31, 2023, such reimbursements/waivers amounted to $78,128. This fee waiver and/or expense reimbursement agreement extends through May 1, 2024 and then may be extended by the Adviser for additional one-year terms.
Pursuant to the investment advisory agreement, the Portfolio may reimburse the Adviser for certain legal and accounting services provided to the Portfolio by the Adviser. For the year ended December 31, 2023, the reimbursement for such services amounted to $94,632.
The Portfolio compensates AllianceBernstein Investor Services, Inc. (“ABIS”), 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 retained by ABIS amounted to $1,800 for the year ended December 31, 2023.
The Portfolio may invest in AB Government Money Market Portfolio (the “Government Money Market Portfolio”) which has a contractual annual advisory fee rate of .20% of the portfolio’s average daily net assets and bears its own expenses. The Adviser had contractually agreed to waive .10% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .10%) until August 31, 2023. Effective September 1, 2023, the Adviser has contractually agreed to waive .05% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .15%) until August 31, 2024. In connection with the investment by the Portfolio in Government Money Market Portfolio, the Adviser has contractually agreed to waive its advisory fee from the Portfolio in an amount equal to the Portfolio’s pro rata share of the effective advisory fee of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. For the year ended December 31, 2023, such waiver amounted to $5,138.
A summary of the Portfolio’s transactions in AB mutual funds for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | |
Portfolio | | Market Value
12/31/22
(000) | | | Purchases
at Cost
(000) | | | Sales
Proceeds
(000) | | | Market Value
12/31/23
(000) | | | Dividend
Income
(000) | |
Government Money Market Portfolio | | $ | 5,497 | | | $ | 31,249 | | | $ | 36,210 | | | $ | 536 | | | $ | 224 | |
NOTE C: Distribution Plan
The Portfolio has adopted a Distribution Plan (the “Plan”) for Class B shares pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Portfolio pays distribution and servicing fees to AllianceBernstein Investments, Inc. (the “Distributor”), 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 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
18
| | |
| |
| | | AB Variable Products Series Fund |
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 or 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 year ended December 31, 2023 were as follows:
| | | | | | | | |
| | | Purchases | | | Sales | |
Investment securities (excluding U.S. government securities) | | $ | 47,883,025 | | | $ | 55,567,274 | |
U.S. government securities | | | –0 | – | | | –0 | – |
The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation are as follows:
| | | | |
Cost | | $ | 122,192,479 | |
| | | | |
Gross unrealized appreciation | | $ | 44,666,924 | |
Gross unrealized depreciation | | | (3,557,944 | ) |
| | | | |
Net unrealized appreciation | | $ | 41,108,980 | |
| | | | |
1. Derivative Financial Instruments
The Portfolio may use derivatives in an effort to earn income and enhance returns, to replace more traditional direct investments, to obtain exposure to otherwise inaccessible markets (collectively, “investment purposes”), or to hedge or adjust the risk profile of its portfolio.
The principal type of derivative utilized by the Portfolio, as well as the methods in which they may be used are:
| | • | | Forward Currency Exchange Contracts |
The Portfolio may enter into forward currency exchange 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 sale commitments denominated in foreign currencies and for non-hedging purposes as a means of making direct investments in foreign currencies, as described below under “Currency Transactions”.
A forward currency exchange contract is a commitment to purchase or sell a foreign currency at 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 forward currency exchange contracts. Fluctuations in the value of open forward currency exchange contracts are recorded for financial reporting purposes as unrealized appreciation and/or depreciation by the Portfolio. 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.
During the year ended December 31, 2023, the Portfolio held forward currency exchange contracts for hedging purposes.
The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements (“ISDA Master Agreement”) with its OTC derivative contract counterparties in order to, among other things, reduce its credit risk to OTC counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the OTC counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default or termination. In the event of a default by an OTC counterparty, the return of collateral with market value in excess of the Portfolio’s net liability, held by the defaulting party, may be delayed or denied.
The Portfolio’s ISDA Master Agreements may contain provisions for early termination of OTC derivative transactions in the event the net assets of the Portfolio decline below specific levels (“net asset contingent features”). If these levels are triggered, the Portfolio’s OTC counterparty has the right to terminate such transaction and require the Portfolio to pay or receive a settlement amount in connection with the terminated transaction. If OTC derivatives were held at period end, please refer to netting arrangements by the OTC counterparty table below for additional details.
19
| | |
| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
During the year ended December 31, 2023, the Portfolio had entered into the following derivatives:
| | | | | | | | | | | | |
| | | Asset Derivatives | | | Liability Derivatives | |
Derivative Type | | Statement of
Assets and Liabilities
Location | | Fair Value | | | Statement of
Assets and Liabilities
Location | | Fair Value | |
Foreign currency contracts | | Unrealized appreciation on forward currency exchange contracts | | $ | 635,181 | | | Unrealized depreciation on forward currency exchange contracts | | $ | 586,978 | |
| | | | | | | | | | | | |
Total | | | | $ | 635,181 | | | | | $ | 586,978 | |
| | | | | | | | | | | | |
| | | | | | | | | | |
Derivative Type | | Location of Gain or (Loss) on Derivatives
Within Statement of Operations | | Realized Gain or
(Loss) on
Derivatives | | | Change in Unrealized
Appreciation or
(Depreciation) | |
Foreign currency contracts | | Net realized gain (loss) on forward currency exchange contracts; Net change in unrealized appreciation (depreciation) of forward currency exchange contracts | | $ | (419,408 | ) | | $ | (654,576 | ) |
| | | | | | | | | | |
Total | | | | $ | (419,408 | ) | | $ | (654,576 | ) |
| | | | | | | | | | |
The following table represents the average monthly volume of the Portfolio’s derivative transactions during the year ended December 31, 2023:
| | | | |
Forward Currency Exchange Contracts: | | | | |
Average principal amount of buy contracts | | $ | 24,102,617 | |
Average principal amount of sale contracts | | $ | 25,435,845 | |
For financial reporting purposes, the Portfolio does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the statement of assets and liabilities.
All OTC derivatives held at period end were subject to netting arrangements. The following table presents the Portfolio’s derivative assets and liabilities by OTC counterparty net of amounts available for offset under ISDA Master Agreements (“MA”) and net of the related collateral received/pledged by the Portfolio as of December 31, 2023. Exchange-traded derivatives and centrally cleared swaps are not subject to netting arrangements and as such are excluded from the table.
| | | | | | | | | | | | | | | | | | | | |
Counterparty | | Derivative Assets
Subject to a MA | | | Derivatives
Available for
Offset | | | Cash Collateral
Received* | | | Security Collateral
Received* | | | Net Amount of
Derivative Assets | |
Bank of America, NA | | $ | 252,265 | | | $ | (79,322 | ) | | $ | –0 | – | | $ | –0 | – | | $ | 172,943 | |
Barclays Bank PLC | | | 51,523 | | | | (3,957 | ) | | | –0 | – | | | –0 | – | | | 47,566 | |
Citibank, NA | | | 73,713 | | | | (73,713 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
Morgan Stanley Capital Services, Inc. | | | 12,898 | | | | (12,898 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
State Street Bank & Trust Co. | | | 54,445 | | | | (54,445 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
UBS | | | 190,337 | | | | –0 | – | | | –0 | – | | | –0 | – | | | 190,337 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 635,181 | | | $ | (224,335 | ) | | $ | –0 | – | | $ | –0 | – | | $ | 410,846 | ^ |
| | | | | | | | | | | | | | | | | | | | |
20
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | | | | | | | | | | | |
Counterparty | | DerivativeLiabilities
Subjectto a MA | | | Derivatives
Available for
Offset | | | Cash Collateral
Pledged* | | | Security Collateral
Pledged* | | | Net Amount of
Derivative Liabilities | |
Bank of America, NA | | $ | 79,322 | | | $ | (79,322 | ) | | $ | –0 | – | | $ | –0 | – | | $ | –0 | – |
Barclays Bank PLC | | | 3,957 | | | | (3,957 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
Citibank, NA | | | 185,438 | | | | (73,713 | ) | | | –0 | – | | | –0 | – | | | 111,725 | |
Morgan Stanley Capital Services, Inc. | | | 216,039 | | | | (12,898 | ) | | | –0 | – | | | –0 | – | | | 203,141 | |
State Street Bank & Trust Co. | | | 102,222 | | | | (54,445 | ) | | | –0 | – | | | –0 | – | | | 47,777 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 586,978 | | | $ | (224,335 | ) | | $ | –0 | – | | $ | –0 | – | | $ | 362,643 | ^ |
| | | | | | | | | | | | | | | | | | | | |
| * | | The actual collateral received/pledged may be more than the amount reported due to over-collateralization. |
| ^ | | Net amount represents the net receivable/payable that would be due from/to the counterparty in the event of default or termination. The net amount from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same counterparty. |
2. Currency Transactions
The Portfolio may invest in non-U.S. Dollar-denominated securities on a currency hedged or unhedged basis. The Portfolio may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and other options. The Portfolio may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Portfolio and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Portfolio may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).
NOTE E: Securities Lending
The Portfolio may enter into securities lending transactions. Under the Portfolio’s securities lending program, all loans of securities will be collateralized continually by cash collateral and/or non-cash collateral. Non-cash collateral will include only securities issued or guaranteed by the U.S. government or its agencies or instrumentalities. If the Portfolio cannot sell or repledge any non-cash collateral, such collateral will not be reflected in the portfolio of investments. If a loan is collateralized by cash, the Portfolio will be compensated for the loan from a portion of the net return from the income earned on cash collateral after a rebate is paid to the borrower (in some cases, this rebate may be a “negative rebate” or fee paid by the borrower to the Portfolio in connection with the loan), and payments are made for fees of the securities lending agent and for certain other administrative expenses. If the Portfolio receives non-cash collateral, the Portfolio will receive a fee from the borrower generally equal to a negotiated percentage of the market value of the loaned securities. The Portfolio will have the right to call a loan and obtain the securities loaned at any time on notice to the borrower within the normal and customary settlement time for the securities. While the securities are on loan, the borrower is obligated to pay the Portfolio amounts equal to any dividend income or other distributions from the securities; however, these distributions will not be afforded the same preferential tax treatment as qualified dividends. The Portfolio will not be able to exercise voting rights with respect to any securities during the existence of a loan, but will have the right to regain ownership of loaned securities in order to exercise voting or other ownership rights. Collateral received and securities loaned are marked to market daily to ensure that the securities loaned are secured by collateral. The lending agent currently invests the cash collateral received in Government Money Market Portfolio, an eligible money market vehicle, in accordance with the investment restrictions of the Portfolio, and as approved by the Board. The collateral received on securities loaned is recorded as an asset as well as a corresponding liability in the statement of assets and liabilities. The collateral will be adjusted the next business day to maintain the required collateral amount. The amounts of securities lending income from the borrowers and Government Money Market Portfolio are reflected in the statement of operations. When the Portfolio earns net securities lending income from Government Money Market Portfolio, the income is inclusive of a rebate expense paid to the borrower. In connection with the cash collateral investment by the Portfolio in Government Money Market Portfolio, the Adviser has agreed to waive a portion of the Portfolio’s share of the advisory fees of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. When the Portfolio lends securities, its investment performance will continue to reflect changes in the value of the securities loaned. A principal risk of lending portfolio securities is that the borrower may fail to return the loaned securities upon termination of the loan and that the collateral will not be sufficient to replace the loaned securities. The lending agent has agreed to indemnify the Portfolio in the case of default of any securities borrower.
21
| | |
| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
A summary of the Portfolio’s transactions surrounding securities lending for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Government Money Market
Portfolio | |
Market Value of
Securities on Loan* | | | Cash Collateral* | | | Market Value of
Non-Cash
Collateral* | | | Income from
Borrowers | | | Income Earned | | | Advisory Fee
Waived | |
| $ | –0 | – | | $ | –0 | – | | $ | –0 | – | | $ | 3,510 | | | $ | –0 | – | | $ | –0 | – |
| * | | As of December 31, 2023. |
NOTE F: Capital Stock
Each class consists of 500,000,000 authorized shares. Transactions in capital shares for each class were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | SHARES | | | | | | AMOUNT | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | | | | | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
Class A | |
Shares sold | | | 129,672 | | | | 203,270 | | | | | | | $ | 4,084,925 | | | $ | 7,169,402 | |
Shares issued in reinvestment of dividends and distributions | | | 106,924 | | | | 170,090 | | | | | | | | 3,403,390 | | | | 5,619,793 | |
Shares redeemed | | | (207,721 | ) | | | (176,800 | ) | | | | | | | (6,621,923 | ) | | | (6,064,541 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase | | | 28,875 | | | | 196,560 | | | | | | | $ | 866,392 | | | $ | 6,724,654 | |
| | | | | | | | | | | | | | | | | | | | |
Class B | |
Shares sold | | | 197,320 | | | | 342,113 | | | | | | | $ | 5,765,234 | | | $ | 11,115,948 | |
Shares issued on reinvestment of dividends and distributions | | | 213,783 | | | | 378,453 | | | | | | | | 6,377,144 | | | | 11,762,309 | |
Shares redeemed | | | (529,397 | ) | | | (624,992 | ) | | | | | | | (15,778,166 | ) | | | (20,579,588 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (118,294 | ) | | | 95,574 | | | | | | | $ | (3,635,788 | ) | | $ | 2,298,669 | |
| | | | | | | | | | | | | | | | | | | | |
At December 31, 2023, certain shareholders of the Portfolio owned 59% in aggregate of the Portfolio’s outstanding shares. Significant transactions by such shareholders, if any, may impact the Portfolio’s performance.
NOTE G: Risks Involved in Investing in the Portfolio
Market Risk—The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Sector Risk—The Portfolio may have more risk than a more diversified portfolio because it may invest to a significant extent in one or more particular market sectors, such as the information technology sector. To the extent it does so, market or economic factors affecting the relevant sector(s) could have a major effect on the value of the Portfolio’s investments.
ESG Risk—Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for non-investment reasons and, therefore, the Portfolio may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with ESG practices may shift into and out of favor depending on market and economic conditions, and the Portfolio’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria. Furthermore, ESG and sustainability criteria are not uniformly defined, and the Portfolio’s ESG and sustainability criteria may differ from those used by other funds. In addition, in evaluating an investment, the Adviser is dependent upon information and data that may be incomplete, inaccurate or unavailable, which could adversely affect the analysis of the ESG and sustainability factors relevant to a particular investment.
Foreign (Non-U.S.) Risk—Investments in securities of non-U.S. issuers may involve more risk than those of U.S. issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
22
| | |
| |
| | | AB Variable Products Series Fund |
Emerging-Market Risk—Investments in emerging market countries may have more risk because the markets are less developed and less liquid, and because these investments may be subject to increased economic, political, regulatory or other uncertainties.
Currency Risk—Fluctuations in currency exchange rates may negatively affect the value of the Portfolio’s investments or reduce its returns.
Capitalization Risk—Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small- and mid-capitalization companies may have additional risks because these companies may have limited product lines, markets or financial resources.
Derivatives Risk—Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
Focused Portfolio Risk—Investments in a limited number of companies may have more risk because changes in the value of a single security may have a more significant effect, either negative or positive, on the Portfolio’s net asset value, or NAV, than would be the case if the Portfolio were invested in a larger number of companies.
LIBOR Replacement Risk—The Portfolio may be exposed to debt securities, derivatives or other financial instruments that recently transitioned from the London Interbank Offered Rate, or “LIBOR,” as a “benchmark” or “reference rate” for various interest rate calculations. LIBOR’s administrator, ICE Benchmark Administration, ceased publishing most LIBOR settings (including some U.S. LIBOR settings) by the end of 2021 and the remaining (and most widely used) U.S. Dollar LIBOR settings after June 30, 2023. The United Kingdom Financial Conduct Authority, which regulates LIBOR, will permit the use of synthetic U.S. Dollar LIBOR rates for non-U.S. contracts through September 30, 2024, but any such rates would be considered non-representative of the underlying market. Since 2018 the Federal Reserve Bank of New York has published the Secured Overnight Financing Rate (referred to as SOFR), which is intended to replace U.S. Dollar LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities in the repurchase agreement (repo) market. There is no assurance that the composition or characteristics of SOFR or any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that the market for SOFR-linked financial instruments will have the same volume or liquidity as did the market for LIBOR-linked financial instruments prior to LIBOR’s discontinuance or unavailability. Neither the long-term effects of the LIBOR transition process nor its ultimate success can yet be known.
Indemnification Risk—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. Therefore, the Portfolio has not accrued any liability in connection with these indemnification provisions.
Management Risk—The Portfolio is subject to management risk because it is an actively-managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
NOTE H: Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $325 million revolving credit facility (the “Facility”) intended to provide short-term financing related to redemptions and other short term liquidity requirements, subject to certain restrictions. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Portfolio did not utilize the Facility during the year ended December 31, 2023.
23
| | |
| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
NOTE I: Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended December 31, 2023 and December 31, 2022 were as follows:
| | | | | | | | |
| | | 2023 | | | 2022 | |
Distributions paid from: | | | | | | | | |
Ordinary income | | $ | 186,160 | | | $ | 176,259 | |
Net long-term capital gains | | | 9,594,374 | | | | 17,205,843 | |
| | | | | | | | |
Total taxable distributions paid | | $ | 9,780,534 | | | $ | 17,382,102 | |
| | | | | | | | |
As of December 31, 2023, the components of accumulated earnings (deficit) on a tax basis were as follows:
| | | | |
Undistributed capital gains | | $ | 498,580 | |
Unrealized appreciation (depreciation) | | | 40,948,208 | (a) |
| | | | |
Total accumulated earnings (deficit) | | $ | 41,446,788 | |
| | | | |
| (a) | | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable primarily to the recognition for tax purposes of unrealized gains/losses on certain derivative instruments and the tax deferral of losses on wash sales. |
For tax purposes, net realized capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses for an indefinite period, and such losses will retain their character as either short-term or long-term capital losses. As of December 31, 2023, the Portfolio did not have any capital loss carryforwards.
During the current fiscal year, permanent differences primarily due to the disallowance of a net operating loss resulted in a net increase in distributable earnings and a net decrease in additional paid-in capital. These reclassifications had no effect on net assets.
NOTE J: Recent Accounting Pronouncements
In December 2022, the Financial Accounting Standards Board issued an Accounting Standards Update, ASU 2022-06, “Reference Rate Reform (Topic 848)—Deferral of the Sunset Date of Topic 848”. ASU 2022-06 is an amendment to ASU 2020-04, which provided optional guidance to ease the potential accounting burden due to the discontinuation of the LIBOR and other interbank-offered based reference rates and which was effective as of March 12, 2020 through December 31, 2022. ASU 2022-06 extends the effective period through December 31, 2024. Management is currently evaluating the impact, if any, of applying ASU 2022-06.
NOTE K: Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Portfolio’s financial statements through this date.
24
| | |
| | |
| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| |
| FINANCIAL HIGHLIGHTS | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS A | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | $ | 30.42 | | | $ | 46.20 | | | $ | 42.40 | | | $ | 33.52 | | | $ | 27.35 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss)(a)(b) | | | .10 | | | | .07 | | | | (.10 | ) | | | (.10 | ) | | | .08 | |
Net realized and unrealized gain (loss) on investment and foreign currency transactions | | | 4.68 | | | | (12.25 | ) | | | 9.46 | | | | 12.64 | | | | 8.00 | |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 4.78 | | | | (12.18 | ) | | | 9.36 | | | | 12.54 | | | | 8.08 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Dividends and Distributions | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (.09 | ) | | | –0 | – | | | –0 | – | | | (.24 | ) | | | (.13 | ) |
Distributions from net realized gain on investment transactions | | | (1.94 | ) | | | (3.60 | ) | | | (5.56 | ) | | | (3.42 | ) | | | (1.78 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (2.03 | ) | | | (3.60 | ) | | | (5.56 | ) | | | (3.66 | ) | | | (1.91 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 33.17 | | | $ | 30.42 | | | $ | 46.20 | | | $ | 42.40 | | | $ | 33.52 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset value(c) | | | 16.01 | % | | | (26.98 | )% | | | 22.87 | % | | | 39.41 | % | | | 30.16 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 58,246 | | | $ | 52,543 | | | $ | 70,723 | | | $ | 58,316 | | | $ | 43,237 | |
Ratio to average net assets of: | | | | | | | | | | | | | | | | | | | | |
Expenses, net of waivers/reimbursements(d)‡ | | | .92 | % | | | .90 | % | | | .88 | % | | | .94 | % | | | .99 | % |
Expenses, before waivers/reimbursements(d)‡ | | | .97 | % | | | .96 | % | | | .93 | % | | | 1.00 | % | | | 1.04 | % |
Net investment income (loss)(b) | | | .32 | % | | | .20 | % | | | (.22 | )% | | | (.29 | )% | | | .27 | % |
Portfolio turnover rate | | | 32 | % | | | 43 | % | | | 24 | % | | | 44 | % | | | 43 | % |
| | | | | | | | | | | | | | | | | | | | |
‡ Expense ratios exclude the estimated acquired fund fees of the affiliated/unaffiliated underlying | |
portfolios | | | .00 | % | | | .00 | % | | | .00 | % | | | .01 | % | | | .00 | % |
See footnote summary on page 26.
25
| | |
| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| FINANCIAL HIGHLIGHTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS B | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | $ | 28.59 | | | $ | 43.80 | | | $ | 40.54 | | | $ | 32.19 | | | $ | 26.33 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss)(a)(b) | | | .02 | | | | (.02 | ) | | | (.20 | ) | | | (.18 | ) | | | .01 | |
Net realized and unrealized gain (loss) on investment and foreign currency transactions | | | 4.39 | | | | (11.59 | ) | | | 9.02 | | | | 12.11 | | | | 7.68 | |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 4.41 | | | | (11.61 | ) | | | 8.82 | | | | 11.93 | | | | 7.69 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Dividends and Distributions | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (.01 | ) | | | –0 | – | | | –0 | – | | | (.16 | ) | | | (.05 | ) |
Distributions from net realized gain on investment transactions | | | (1.94 | ) | | | (3.60 | ) | | | (5.56 | ) | | | (3.42 | ) | | | (1.78 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (1.95 | ) | | | (3.60 | ) | | | (5.56 | ) | | | (3.58 | ) | | | (1.83 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 31.05 | | | $ | 28.59 | | | $ | 43.80 | | | $ | 40.54 | | | $ | 32.19 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset value(c) | | | 15.70 | % | | | (27.17 | )% | | | 22.57 | % | | | 39.08 | % | | | 29.78 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 105,499 | | | $ | 100,515 | | | $ | 149,808 | | | $ | 127,062 | | | $ | 93,645 | |
Ratio to average net assets of: | | | | | | | | | | | | | | | | | | | | |
Expenses, net of waivers/reimbursements(d)‡ | | | 1.17 | % | | | 1.15 | % | | | 1.13 | % | | | 1.19 | % | | | 1.24 | % |
Expenses, before waivers/reimbursements(d)‡ | | | 1.22 | % | | | 1.21 | % | | | 1.18 | % | | | 1.25 | % | | | 1.29 | % |
Net investment income (loss)(b) | | | .07 | % | | | (.05 | )% | | | (.47 | )% | | | (.54 | )% | | | .02 | % |
Portfolio turnover rate | | | 32 | % | | | 43 | % | | | 24 | % | | | 44 | % | | | 43 | % |
| | | | | | | | | | | | | | | | | | | | |
‡ Expense ratios exclude the estimated acquired fund fees of the affiliated/unaffiliated underlying | |
portfolios | | | .00 | % | | | .00 | % | | | .00 | % | | | .01 | % | | | .00 | % |
| (a) | | Based on average shares outstanding. |
| (b) | | Net of expenses waived/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 (i) insurance company’s separate account related expense charges and (ii) the deductions 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) | | In connection with the Portfolio’s investments in affiliated underlying portfolios, the Portfolio incurs no direct expenses, but bears proportionate shares of the fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated underlying portfolios. The Adviser has contractually agreed to waive its fees from the Portfolio in an amount equal to the Portfolio’s pro rata share of certain acquired fund fees and expenses, and for the year ended December 31, 2020, such waiver amounted to .01%. |
See notes to financial statements.
26
| | |
| | | |
| REPORT OF INDEPENDENT REGISTERED | | |
| |
| PUBLIC ACCOUNTING FIRM | | AB Variable Products Series Fund |
To the Shareholders and the Board of Directors of AB Sustainable Global Thematic Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of AB Sustainable Global Thematic Portfolio (the “Portfolio”) (one of the series constituting AB Variable Products Series Fund, Inc. (the “Fund”)), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Portfolio (one of the series constituting AB Variable Products Series Fund, Inc.) at December 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Portfolio’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers or others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the AB investment companies since 1968.
New York, New York
February 14, 2024
27
| | |
| | |
| | |
| |
| 2023 FEDERAL TAX INFORMATION (unaudited) | | AB Variable Products Series Fund |
For Federal income tax purposes, the following information is furnished with respect to the distributions paid by the Portfolio during the taxable year ended December 31, 2023. For corporate shareholders, 100% of dividends paid qualify for the dividends received deduction. The Portfolio designates $9,594,374 of dividends paid as long-term capital gain dividends.
28
| | |
|
| | |
| |
| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO | | AB Variable Products Series Fund |
| | |
| BOARD OF DIRECTORS | | |
Garry L. Moody(1), Chairman Jorge A. Bermudez(1) Michael J. Downey(1) Onur Erzan, President and
Chief Executive Officer | | Nancy P. Jacklin(1) Jeanette W. Loeb(1) Carol C. McMullen(1) Marshall C. Turner, Jr.(1) Emilie D. Wrapp, Advisory Board Member |
| | |
| OFFICERS | | |
Daniel C. Roarty(2), Vice President Benjamin Ruegsegger(2), Vice President Nancy E. Hay, Secretary Michael B. Reyes, Senior Vice President | | Stephen M. Woetzel, Treasurer and
Chief Financial Officer Phyllis J. Clarke, Controller Jennifer Friedland, Chief Compliance Officer |
| | |
| CUSTODIANAND ACCOUNTING AGENT | | LEGAL COUNSEL |
| State Street Bank and Trust Company | | Seward & Kissel LLP |
One Congress Street, Suite 1 Boston, MA 02114 | | One Battery Park Plaza New York, NY 10004 |
| | |
| DISTRIBUTOR | | TRANSFER AGENT |
| AllianceBernstein Investments, Inc. | | AllianceBernstein Investor Services, Inc. |
501 Commerce Street Nashville, TN 37203 | | P.O. Box 786003 San Antonio, TX 78278 Toll-Free (800) 221-5672 |
| | |
| INDEPENDENT REGISTERED PUBLIC | | |
| ACCOUNTING FIRM | | |
| Ernst & Young LLP | | |
One Manhattan West New York, NY 10001 | | |
| (1) | | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
| (2) | | The day-to-day management of, and investment decisions for, the Portfolio’s portfolio are made by the Adviser’s Sustainable Thematic Equities Investment Team. Messrs. Roarty and Ruegsegger are the investment professional with the most significant responsibility for the day-to-day management of the Portfolio’s portfolio. |
29
| | |
| | | |
| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| |
| MANAGEMENT OF THE FUND | | AB Variable Products Series Fund |
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund’s Directors and Advisory Board Member is set forth below.
| | | | | | | | |
NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
| INTERESTED DIRECTOR | | | | | | |
| | | | | | | | |
Onur Erzan,# 1345 Avenue of the Americas New York, NY 10105 48 (2021) | | Senior Vice President of the Adviser**, Head of Global Client Group and Head of Private Wealth. He oversees AB’s entire private wealth management business and third-party institutional and retail franchise, where he is responsible for all client services, sales and marketing, as well as product strategy, management and development worldwide. Director, President and Chief Executive Officer of the AB Mutual Funds as of April 1, 2021. He is also a member of the Equitable Holdings Management Committee. Prior to joining the firm in January 2021, he spent 20 years with McKinsey (management consulting firm), most recently as a senior partner and co-leader of its Wealth & Asset Management practice. In addition, he co-led McKinsey’s Banking & Securities Solutions (a portfolio of data, analytics, and digital assets and capabilities) globally. | | | 82 | | | None |
| | | | | | | | |
| DISINTERESTED DIRECTORS | | | | | | |
| | | | | | | | |
Garry L. Moody## Chairman of the Board 71 (2008) | | Private Investor since prior to 2019. Formerly, Partner, Deloitte & Touche LLP (1995–2008) where he held a number of senior positions, including Vice Chairman, and U.S. and Global Investment Management Practice Managing Partner; President, Fidelity Accounting and Custody Services Company (1993–1995), where he was responsible for accounting, pricing, custody and reporting for the Fidelity mutual funds; and Partner, Ernst & Young LLP (1975–1993), where he served as the National Director of Mutual Fund Tax Services and Managing Partner of its Chicago Office Tax department. He served as a member of the Investment Company Institute’s Board of Governors and the Independent Directors Council’s Governing Council from October 2019 through September 2023, where he also served as Chairman of the Governance Committee from October 2021 through September 2023. He is Chairman of the AB Funds and Chairman of the Independent Directors Committees since January 2023; he has served as a director or trustee since 2008, and served as Chairman of the Audit Committee of such funds from 2008 to February 2023. | | | 82 | | | None |
30
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
DISINTERESTED DIRECTORS
(continued) | | | | | | |
| | | | | | | | |
Jorge A. Bermudez,## 72 (2020) | | Private Investor since prior to 2019. Formerly, Chief Risk Officer of Citigroup, Inc., a global financial services company, from November 2007 to March 2008; Chief Executive Officer of Citigroup’s Commercial Business Group in North America and Citibank Texas from 2005 to 2007; and a variety of other executive and leadership roles at various businesses within Citigroup prior to then; Chairman (2017–2018) of the Texas A&M Foundation Board of Trustees (Trustee 2014–2021) and Chairman of the Smart Grid Center Board at Texas A&M University since 2012; director of, among others, Citibank N.A. from 2005 to 2008, the Federal Reserve Bank of Dallas, Houston Branch from 2009 to 2011, the Federal Reserve Bank of Dallas from 2011 to 2017, and the Electric Reliability Council of Texas from 2010 to 2016; and Chair of the Audit Committee of the Board of Directors of Moody’s Corporation since December 2022. He has served as director or trustee of the AB Funds since January 2020. | | | 82 | | | Moody’s Corporation since April 2011 |
| | | | | | | | |
Michael J. Downey,## 80 (2005) | | Private Investor since prior to 2019. Formerly, Chairman of The Asia Pacific Fund, Inc. (registered investment company) since prior to 2018 until January 2019. From 1987 until 1993, Chairman and CEO of Prudential Mutual Fund Management, director of the Prudential mutual funds, and member of the Executive Committee of Prudential Securities, Inc. He has served as a director or trustee of the AB Funds since 2005. | | | 82 | | | None |
| | | | | | | | |
Nancy P. Jacklin,## 75 (2006) | | Private Investor since prior to 2019. Professorial Lecturer at the Johns Hopkins School of Advanced International Studies (2008–2015). U.S. Executive Director of the International Monetary Fund (which is responsible for ensuring the stability of the international monetary system), (December 2002–May 2006); Partner, Clifford Chance (1992–2002); Sector Counsel, International Banking and Finance, and Associate General Counsel, Citicorp (1985–1992); Assistant General Counsel (International), Federal Reserve Board of Governors (1982–1985); and Attorney Advisor, U.S. Department of the Treasury (1973–1982). Member of the Bar of the District of Columbia and of New York; and member of the Council on Foreign Relations. She has served as a director or trustee of the AB Funds since 2006 and served as Chair of the Governance and Nominating Committees of the AB Funds from 2014 to August 2023. | | | 82 | | | None |
31
| | |
| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
DISINTERESTED DIRECTORS
(continued) | | | | | | |
| | | | | | | | |
Jeanette W. Loeb,##
71
(2020) | | Private Investor since prior to 2019. Director of New York City Center since 2005. Formerly, Chief Executive Officer of PetCareRx (e-commerce pet pharmacy) from 2002 to 2011 and 2015 to April 2023. She was a director of MidCap Financial Investment Corporation (business development company) from August 2011 to July 2023 and a director of AB Multi-Manager Alternative Fund (fund of hedge funds) from 2012 to 2018. Formerly, affiliated with Goldman Sachs Group, Inc. (financial services) from 1977 to 1994, including as a partner thereof from 1986 to 1994. She has served as director or trustee of the AB Funds since April 2020 and serves as Chair of the Governance and Nominating Committees of the AB Funds since August 2023. | | | 82 | | | None |
| | | | | | | | |
Carol C. McMullen,## 68 (2016) | | Private Investor and a member of the Advisory Board of Butcher Box (since 2018) and serves as Advisory Board Chair as of June 2023. Formerly, Managing Director of Slalom Consulting (consulting) from 2014 until July 2023; member, Mass General Brigham (formerly, Partners Healthcare) Investment Committee (2010-2019); Director of Norfolk & Dedham Group (mutual property and casualty insurance) from 2011 until November 2016; Director of Partners Community Physicians Organization (healthcare) from 2014 until December 2016; and Managing Director of The Crossland Group (consulting) from 2012 until 2013. She has held a number of senior positions in the asset and wealth management industries, including at Eastern Bank (where her roles included President of Eastern Wealth Management), Thomson Financial (Global Head of Sales for Investment Management), and Putnam Investments (where her roles included Chief Investment Officer, Core and Growth and Head of Global Investment Research). She has served on a number of private company and non-profit boards, and as a director or trustee of the AB Funds since June 2016 and serves as Chair of the Audit Committees of such funds since February 2023. | | | 82 | | | None |
| | | | | | | | |
Marshall C. Turner, Jr.## 82 (2005) | | Private Investor since prior to 2019. He was a Director of Xilinx, Inc. (programmable logic semi-conductors and adaptable, intelligent computing) from 2007 through August 2020, and is a former director of 33 other companies and organizations. Former Chairman and CEO of Dupont Photomasks, Inc. (semi-conductor manufacturing equipment) from 2003 through 2006. He has extensive operating leadership and venture capital investing experience, including five interim or full-time CEO roles, and prior service as general partner of institutional venture capital partnerships. He also has extensive non-profit board leadership experience, and currently serves on the board of the George Lucas Educational Foundation. He has served as a director of one AB Fund since 1992, and director or trustee of all AB Funds since 2005. He has served as both Chairman of the AB Funds and Chairman of the Independent Directors Committees from 2014 through December 2022. | | | 82 | | | None |
32
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| | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
| ADVISORY BOARD MEMBER | | | | | | |
| | | | | | | | |
Emilie D. Wrapp,# 68 (2024) | | Former Senior Vice President, Counsel, Assistant Secretary & Senior Mutual Fund Legal Advisor of the Adviser (January 2023-June 2023). Prior thereto, Senior Vice President, Assistant Secretary, Counsel, and Head of Mutual Fund & Retail Legal of the Adviser; Assistant General Counsel and Assistant Secretary of ABI since prior to 2019 until June 2023. | | | 82 | | | None |
| * | The address for each of the Fund’s disinterested Directors and Advisory Board member is c/o AllianceBernstein L.P., Attention: Legal & Compliance Department—Mutual Fund Legal, 1345 Avenue of the Americas, New York, NY 10105 |
| ** | There is no stated term of office for the Fund’s Directors or Advisory Board member. |
| *** | The information above includes each Director’s principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to each Director’s qualifications to serve as a Director, which led to the conclusion that each Director should serve as a Director for the Fund. |
| # | Mr. Erzan is an “interested person” of the Fund, as defined in the “1940 Act”, due to his position as a Senior Vice President of the Adviser. Ms. Wrapp is an “interested person” of the Fund, as defined in the 1940 Act, due to her former role with the Adviser. |
| ## | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
33
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| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
Officer Information
Certain information concerning the Portfolio’s Officers is listed below.
| | | | |
NAME, ADDRESS,* AGE | | PRINCIPAL POSITION(S)
HELD WITH FUND | | PRINCIPAL OCCUPATION
DURING PAST FIVE YEARS |
Onur Erzan 48 | | President and Chief
Executive Officer | | See biography above. |
| | | | |
Daniel C. Roarty
52 | | Vice President
| | Senior Vice President of the Adviser**, with which he has been associated since prior to 2019. He is also Chief Investment Officer of Sustainable Thematic Equities. |
| | | | |
Benjamin Ruegsegger 44 | | Vice President | | Senior Vice President and Senior Research Analyst of the Adviser**, with which he has been associated since prior to 2019. |
| | | | |
Nancy E. Hay
51 | | Secretary | | Senior Vice President and Counsel of the Adviser**, with which she has been associated since prior to 2019 and Assistant Secretary of ABI**. |
| | | | |
Michael B. Reyes
47 | | Senior Vice President | | Vice President of the Adviser**, with which he has been associated since prior to 2019. |
| | | | |
Stephen M. Woetzel 52 | | Treasurer and Chief
Financial Officer | | Senior Vice President of ABIS**, with which he has been associated since prior to 2019. |
| | | | |
Phyllis J. Clarke
63 | | Controller | | Vice President of ABIS**, with which she has been associated since prior to 2019. |
| | | | |
Jennifer Friedland
49 | | Chief Compliance Officer | | Vice President of the Adviser** since 2020 and Mutual Fund Chief Compliance Officer (of all Funds since January 2023 and of the ETF Funds since 2022). Before joining the Adviser in 2020, she was Chief Compliance Officer at WestEnd Advisors, LLC from 2013 until 2019. |
| * | | The address for each of the Portfolio’s Officers is 1345 Avenue of the Americas, New York, NY 10105. |
| ** | | The Adviser, ABI and ABIS are affiliates of the Fund. |
| | | The Fund’s Statement of Additional Information (“SAI”) has additional information about the Fund’s Directors and Officers and is available without charge upon request. Contact your financial representative or the Adviser at (800) 227-4618, or visit www.abfunds.com, for a free prospectus or SAI. |
34
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| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO | | AB Variable Products Series Fund |
OPERATION AND EFFECTIVENESS OF THE PORTFOLIO’S LIQUIDITY RISK MANAGEMENT PROGRAM:
In October 2016, the Securities and Exchange Commission (“SEC”) adopted the open-end fund liquidity rule (the “Liquidity Rule”). In June 2018 the SEC adopted a requirement that funds disclose information about the operation and effectiveness of their Liquidity Risk Management Program (“LRMP”) in their reports to shareholders.
One of the requirements of the Liquidity Rule is for the Portfolio to designate an Administrator of the Portfolio’s Liquidity Risk Management Program. The Administrator of the Portfolio’s LRMP is AllianceBernstein L.P., the Portfolio’s investment adviser (the “Adviser”). The Adviser has delegated the responsibility to its Liquidity Risk Management Committee (the “Committee”).
Another requirement of the Liquidity Rule is for the Portfolio’s Board of Directors/Trustees (the “Fund Board”) to receive an annual written report from the Administrator of the LRMP, which addresses the operation of the Portfolio’s LRMP and assesses its adequacy and effectiveness. The Adviser provided the Fund Board with such annual report during the first quarter of 2024, which covered the period January 1, 2023 through December 31, 2023 (the “Program Reporting Period”).
The LRMP’s principal objectives include supporting the Portfolio’s compliance with limits on investments in illiquid assets and mitigating the risk that the Portfolio will be unable to meet its redemption obligations in a timely manner.
Pursuant to the LRMP, the Portfolio classifies the liquidity of its portfolio investments into one of the four categories defined by the SEC: Highly Liquid, Moderately Liquid, Less Liquid, and Illiquid. These classifications are reported to the SEC on Form N-PORT.
During the Program Reporting Period, the Committee reviewed whether the Portfolio’s strategy is appropriate for an open-end structure, incorporating any holdings of less liquid and illiquid assets. If the Portfolio participated in derivative transactions, the exposure from such transactions were considered in the LRMP.
The Committee also performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum (“HLIM”). The Committee also incorporated the following information when determining the Portfolio’s reasonably anticipated trading size for purposes of liquidity monitoring: historical net redemption activity, a Portfolio’s concentration in an issuer, shareholder concentration, investment performance, total net assets, and distribution channels.
The Adviser informed the Fund Board that the Committee believes the Portfolio’s LRMP is adequately designed, has been implemented as intended, and has operated effectively since its inception. No material exceptions have been noted since the implementation of the LRMP. During the Program Reporting Period, liquidity in all markets was challenged due to rising rates and economic uncertainty. However, markets also remained orderly during the Program Reporting Period. There were no liquidity events that impacted the Portfolio or its ability to timely meet redemptions during the Program Reporting Period.
35
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| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| |
| CONTINUANCE DISCLOSURE | | AB Variable Products Series Fund |
INFORMATION REGARDING THE REVIEW AND APPROVAL OF THE FUND’S ADVISORY AGREEMENT
The disinterested directors (the “directors”) of AB Variable Products Series Fund, Inc. (the “Company”) unanimously approved the continuance of the Company’s Advisory Agreement with the Adviser in respect of AB Sustainable Global Thematic Portfolio (formerly AB Global Thematic Growth Portfolio) (the “Fund”) at a meeting held in-person on May 2-4, 2023 (the “Meeting”).
Prior to approval of the continuance of the Advisory Agreement, the directors had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The directors also reviewed additional materials, including comparative analytical data prepared by the Senior Vice President of the Fund. The directors also discussed the proposed continuance in private sessions with counsel.
The directors considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as directors or trustees of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the directors and its responsiveness, frankness and attention to concerns raised by the directors in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AB Funds. The directors noted that they have four regular meetings each year, at each of which they review extensive materials and information from the Adviser, including information on the investment performance of the Fund.
The directors also considered all factors they believed relevant, including the specific matters discussed below. During the course of their deliberations, the directors evaluated, among other things, the reasonableness of the advisory fee. The directors did not identify any particular information that was all-important or controlling, and different directors may have attributed different weights to the various factors. The directors determined that the selection of the Adviser to manage the Fund and the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors’ determinations included the following:
Nature, Extent and Quality of Services Provided
The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. The directors noted that the Adviser from time to time reviews the Fund’s investment strategies and from time to time proposes changes intended to improve the Fund’s relative or absolute performance for the directors’ consideration. They also noted the professional experience and qualifications of the Fund’s portfolio management team and other senior personnel of the Adviser. The directors also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services to the Fund by employees of the Adviser or its affiliates. Requests for these reimbursements are made on a quarterly basis and subject to approval by the directors. Reimbursements, to the extent requested and paid, result in a higher rate of total compensation from the Fund to the Adviser than the fee rate stated in the Advisory Agreement. The directors noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant at the request of the directors. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of the Fund’s other service providers, also was considered. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement.
Costs of Services Provided and Profitability
The directors reviewed a schedule of the revenues and expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2021 and 2022 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant at the request of the directors. The directors noted the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and understood that there are a number of potentially acceptable allocation methodologies for information of this type. The directors noted that the profitability information reflected all revenues and expenses of the Adviser’s relationship with the Fund, including those relating to its subsidiaries that provide transfer agency, distribution and brokerage services to the Fund. The directors recognized that it is difficult to make comparisons of the profitability of the Advisory Agreement with the profitability of fund advisory contracts
36
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| | | AB Variable Products Series Fund |
for unaffiliated funds because comparative information is not generally publicly available and is affected by numerous factors. The directors focused on the profitability of the Adviser’s relationship with the Fund before taxes and distribution expenses. The directors concluded that the Adviser’s level of profitability from its relationship with the Fund was not unreasonable.
Fall-Out Benefits
The directors considered the other benefits to the Adviser and its affiliates from their relationships with the Fund, including, but not limited to, benefits relating to soft dollar arrangements (whereby investment advisers receive brokerage and research services from brokers that execute agency transactions for their clients); 12b-1 fees and sales charges received by the Fund’s principal underwriter (which is a wholly owned subsidiary of the Adviser) in respect of the Fund’s Class B shares; brokerage commissions paid by the Fund to brokers affiliated with the Adviser; and transfer agency fees paid by the Fund to a wholly owned subsidiary of the Adviser. The directors recognized that the Adviser’s profitability would be somewhat lower without these benefits. The directors understood that the Adviser also might derive reputational and other benefits from its association with the Fund.
Investment Results
In addition to the information reviewed by the directors in connection with the Meeting, the directors receive detailed performance information for the Fund at each regular Board meeting during the year.
At the Meeting, the directors reviewed performance information prepared by an independent service provider (the “15(c) service provider”), showing the performance of the Class A Shares of the Fund against a group of similar funds (“peer group”) and a larger group of similar funds (“peer universe”), each selected by the 15(c) service provider, and information prepared by the Adviser showing performance of the Class A Shares against a broad-based securities market index, in each case for the 1-, 3-, 5- and 10-year periods ended February 28, 2023. Based on their review, the directors concluded that the Fund’s investment performance was acceptable.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate payable by the Fund to the Adviser and information prepared by the 15(c) service provider concerning advisory fee rates payable by other funds in the same category as the Fund. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The directors compared the Fund’s contractual effective advisory fee rate with a peer group median and the directors took into account the impact on the advisory fee rate of the administrative expense reimbursement paid to the Adviser in the latest fiscal year.
The directors also considered the Adviser’s fee schedule for other clients utilizing investment strategies similar to those of the Fund. For this purpose, they reviewed the relevant advisory fee information from the Adviser’s Form ADV and in a report from the Fund’s Senior Vice President and noted the differences between the Fund’s fee schedule, on the one hand, and the Adviser’s institutional fee schedule and the schedule of fees charged by the Adviser to any offshore funds and for services to any sub-advised funds utilizing investment strategies similar to those of the Fund, on the other. The directors noted that the Adviser may, in some cases, agree to fee rates with large institutional clients that are lower than those reviewed by the directors and that they had previously discussed with the Adviser its policies in respect of such arrangements. The directors also compared the advisory fee rate for the Fund with that for another fund advised by the Adviser utilizing similar investment strategies.
The Adviser reviewed with the directors the significantly greater scope of the services it provides to the Fund relative to institutional, offshore fund and sub-advised fund clients. In this regard, the Adviser noted, among other things, that, compared to institutional and offshore or sub-advisory accounts, the Fund (i) demands considerably more portfolio management, research and trading resources due to significantly higher daily cash flows; (ii) has more tax and regulatory restrictions and compliance obligations; (iii) must prepare and file or distribute regulatory and other communications about fund operations; and (iv) must provide shareholder servicing to retail investors. The Adviser also reviewed the greater legal risks presented by the large and changing population of Fund shareholders who may assert claims against the Adviser in individual or class actions, and the greater entrepreneurial risk in offering new fund products, which require substantial investment to launch, may not succeed, and generally must be priced to compete with larger, more established funds resulting in lack of profitability to the Adviser until a new fund achieves scale. In light of the substantial differences in services rendered by the Adviser to institutional, offshore fund and sub-advised fund clients as compared to funds such as the Fund, and the different risk profile, the directors considered these fee comparisons inapt and did not place significant weight on them in their deliberations.
37
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| SUSTAINABLE GLOBAL THEMATIC PORTFOLIO |
| CONTINUANCE DISCLOSURE | | |
| |
| (continued) | | AB Variable Products Series Fund |
In connection with their review of the Fund’s advisory fee, the directors also considered the total expense ratio of the Class A shares of the Fund in comparison to the medians for a peer group and a peer universe selected by the 15(c) service provider. The Class A expense ratio of the Fund was based on the Fund’s latest fiscal year. The directors noted that it was likely that the expense ratios of some of the other funds in the Fund’s category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases might be voluntary or temporary. The directors view expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Fund by others. The directors noted that the Fund’s expense ratio was above the medians, after giving effect to a voluntary waiver by the Adviser. After reviewing and discussing the Adviser’s explanations of the reasons for this, the directors concluded that the Fund’s expense ratio was acceptable.
Economies of Scale
The directors noted that the advisory fee schedule for the Fund contains breakpoints that reduce the fee rates on assets above specified levels. The directors took into consideration prior presentations by an independent consultant on economies of scale in the mutual fund industry and for the AB Funds, and presentations from time to time by the Adviser concerning certain of its views on economies of scale. The directors also had requested and received from the Adviser certain updates on economies of scale in advance of the Meeting. The directors believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there is no established methodology for setting breakpoints that give effect to the fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Fund’s shareholders would benefit from a sharing of economies of scale in the event the Fund’s net assets exceed a breakpoint in the future.
38
VPS-SGT-0151-1223
DEC 12.31.23
ANNUAL REPORT
AB VARIABLE PRODUCTS
SERIES FUND, INC.
| + | | AB SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
Investment Products Offered
| | • | | Are Not Bank Guaranteed |
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AB family of mutual funds. ABI is a member of FINRA and is an affiliate of AllianceBernstein L.P., the Adviser of the funds.
You may obtain a description of the Fund’s proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AB’s website at www.abfunds.com or go to the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov, or call AB at (800) 227 4618.
The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Commission’s website at www.sec.gov.
The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.
| | |
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| SUSTAINABLE INTERNATIONAL | | |
| |
| THEMATIC PORTFOLIO | | AB Variable Products Series Fund |
LETTER TO INVESTORS
February 14, 2024
The following is an update of AB Variable Products Series Fund—Sustainable International Thematic Portfolio (the “Portfolio”) for the annual reporting period ended December 31, 2023.
INVESTMENT OBJECTIVE AND POLICIES
The Portfolio’s investment objective is long-term growth of capital. The Portfolio invests primarily in a focused international portfolio of equity securities of companies whose business activities the Adviser believes position the company to benefit from certain sustainable investment themes that align with one or more of the United Nations Sustainable Development Goals (“SDGs”) and thereby are expected to experience growth. These themes principally include the advancement of climate, health and empowerment. Under normal circumstances, the Portfolio invests at least 80% of its net assets in equity securities of issuers located outside of the United States that satisfy the Portfolio’s sustainability thematic criteria and in derivative instruments related to such securities. An issuer that derives at least 25% of its total revenues from activities consistent with the achievement of the SDGs meets such criteria, although many of the issuers in which the Portfolio invests will derive a much greater portion of their revenues from such activities.
The Adviser employs a combination of “top-down” and “bottom-up” investment processes with the goal of identifying, based on its internal research and analysis, securities of companies worldwide that fit into sustainable investment themes. First, the Adviser identifies through its “top-down” process the sustainable investment themes. In addition to this “top-down” thematic approach, the Adviser then uses a “bottom-up” analysis of individual companies that focuses on prospective earnings growth, valuation, and quality of company management and on evaluating a company’s risks, including those related to environmental, social and corporate governance (“ESG”) factors. ESG factors, which can vary across companies and industries, may include environmental impact, corporate governance, ethical business practices, diversity and employee practices, product safety, supply-chain management and community impact. Eligible investments include securities of issuers that the Adviser believes will maximize total return while also contributing to positive societal impact aligned with one or more SDGs. While the Adviser emphasizes company-specific positive selection criteria over broad-based negative screens in assessing a company’s exposure to ESG factors, the Portfolio will not invest in companies that derive revenue in adult entertainment, alcohol, coal, controversial weapons, firearms, gambling, genetically modified organisms, military contracting, prisons or tobacco.
The Adviser normally considers a large universe of mid- to large-capitalization companies worldwide for investment, but may invest in companies of any size. The Portfolio invests, under normal circumstances, in the equity securities of companies located in at least three countries (and normally substantially more) other than the United States. The Portfolio invests in securities of companies in both developed- and emerging-market countries, with the stock selection process determining the geographic distribution of the Portfolio’s investments. The Portfolio also invests in the equity securities of companies located in the United States with exposure to international markets. The Portfolio may sell securities that no longer meet the investment criteria described above.
Currency exposures can have a dramatic impact on equity return, significantly adding to returns in some years and greatly diminishing them in others. The Adviser may seek to hedge the currency exposure resulting from a securities position when it finds the currency exposure unattractive. To hedge all or a portion of its currency risk, the Portfolio may from time to time invest in currency-related derivatives, including forward currency exchange contracts, futures contracts, options on futures contracts, swaps and options. Decisions regarding portfolio investments and whether to hedge currency exposure are evaluated separately by the Adviser. The Adviser also may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives.
The Portfolio may enter into other derivatives transactions, such as options, futures contracts, forwards and swaps. The Portfolio may use options strategies involving the purchase and/or writing of various combinations of call and/or put options, including on individual securities and stock indices or futures contracts (including futures contracts on individual securities and stock indices). These transactions may be used, for example, in an effort to earn extra income, to adjust exposure to individual securities or markets, or to protect all or a portion of the Portfolio’s portfolio from a decline in value, sometimes within certain ranges.
INVESTMENT RESULTS
The table on page 5 shows the Portfolio’s performance compared with its primary benchmark, the Morgan Stanley Capital International All Country World Index (“MSCI ACWI”) ex USA (net), and the Morgan Stanley Capital International (“MSCI”) World Index ex USA (net), for the one-, five- and 10-year periods ended December 31, 2023.
1
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All share classes of the Portfolio underperformed the primary benchmark and the MSCI World ex USA Index (net) for the annual period. Overall security selection detracted, relative to the primary benchmark, especially within the technology and utilities sectors. Security selection within health care and consumer discretionary added to gains. Sector allocation contributed, as an overweight to technology and an underweight to communication services helped offset losses from overweights to health care and consumer staples. Country selection (a result of bottom-up security analysis driven by fundamental research) contributed as an overweight to the US and an underweight to China helped offset losses from an underweight to Japan and an overweight to Finland.
The Climate theme consists of companies that improve overall resource efficiency and provide environmentally positive solutions in fields such as energy production, manufacturing, construction, transportation, agriculture and sanitation. The Health theme consists of companies that develop innovative health treatments and therapies, broaden access to high-quality and affordable care, ensure a steady supply of nutritious food and clean water, and promote overall physical and emotional well-being. The Empowerment theme consists of companies that provide the physical, financial and technological infrastructure and services that allow more people to gain control of their lives by enabling sustainable economic development, employment growth, poverty eradication, knowledge sharing and social inclusion.
The Portfolio used derivatives in the form of currency forwards for hedging purposes, which had no material impact on absolute returns for the annual period.
MARKET REVIEW AND INVESTMENT STRATEGY
US, international and emerging-market stocks rose during the 12-month period ended December 31, 2023. Early in the period, aggressive central bank tightening—led by the US Federal Reserve—pressured global equity markets. Bouts of volatility continued as central banks reduced and then began to pause rate hikes but reiterated hawkish higher-for-longer rhetoric that weighed on sentiment. Later in the period, stronger-than-expected third-quarter economic growth triggered a rapid rise in bond yields—especially the 10-year US Treasury note, which briefly crossed the 5% threshold for the first time in 16 years. Headwinds from higher Treasury yields, conflict in the Middle East and mixed third-quarter earnings weighed on investor sentiment globally and briefly sent all major indices into correction territory in October. Equity markets rallied sharply during November and December, as optimism rose that the US Federal Reserve would begin to cut interest rates in 2024—both earlier and more than previously anticipated. Although US mega-cap technology stocks drove returns through much of the year, the rally broadened considerably during the fourth quarter as soft-landing expectations in the US continued to be underpinned by cooling inflation and moderating economic growth. Within large-cap markets, both growth-and value-oriented stocks rose, but growth significantly outperformed value, led by the technology sector and artificial intelligence optimism. Large-cap stocks outperformed small-cap stocks, although both rose in absolute terms.
The Portfolio’s exposures remain focused on secular growth themes, particularly those related to providing solutions to some of the world’s largest and most persistent sustainability challenges. This has helped the Portfolio’s Senior Investment Management Team (the “Team”) to identify financially strong companies that the Team believes are less dependent on overall macroeconomic strength for success, leading to more resilient earnings growth. The Team also believes higher quality attributes like lower leverage, durable earnings growth, and profitability, are more likely to hold up well during challenging economic periods. The Portfolio is positioned particularly well in this regard.
2
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| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
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| DISCLOSURES AND RISKS | | AB Variable Products Series Fund |
Benchmark Disclosure
All indices are unmanaged and do not reflect fees and expenses associated with the active management of a mutual fund portfolio. The MSCI ACWI ex USA (net, free float-adjusted, market capitalization weighted) represents the equity market performance of developed and emerging markets, excluding the US. The MSCI World Index ex USA (net, free float-adjusted, market capitalization weighted) represents the equity market performance of developed markets, excluding the US. MSCI makes no express or implied warranties or representations, and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices, any securities or financial products. This report is not approved, reviewed or produced by MSCI. Net returns include the reinvestment of dividends after deduction of non-US withholding tax. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Portfolio.
A Word About Risk
Market Risk: The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Focused Portfolio Risk: Investments in a limited number of companies may have more risk because changes in the value of a single security may have a more significant effect, either negative or positive, on the Portfolio’s net asset value (“NAV”), than would be the case if the Portfolio were invested in a larger number of companies.
Sector Risk: The Portfolio may have more risk because it may invest to a significant extent in one or more particular market sectors, such as the technology or financial-services sector. To the extent it does so, market or economic factors affecting the relevant sector(s) could have a major effect on the value of the Portfolio’s investments.
ESG Risk: Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for non-investment reasons and, therefore, the Portfolio may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with ESG practices may shift into and out of favor depending on market and economic conditions, and the Portfolio’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria. Furthermore, ESG and sustainability criteria are not uniformly defined, and the Portfolio’s ESG and sustainability criteria may differ from those used by other funds. In addition, in evaluating an investment, the Adviser is dependent upon information and data that may be incomplete, inaccurate or unavailable, which could adversely affect the analysis of the ESG and sustainability factors relevant to a particular investment.
Foreign (Non-US) Risk: Investments in securities of non-US issuers may involve more risk than those of US issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
Emerging-Market Risk: Investments in emerging-market countries may have more risk because the markets are less developed and less liquid, and because these investments may be subject to increased economic, political, regulatory or other uncertainties.
Currency Risk: Fluctuations in currency exchange rates may negatively affect the value of the Portfolio’s investments or reduce its returns.
Capitalization Risk: Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small- and mid-capitalization companies may have additional risks because these companies have limited product lines, markets or financial resources.
Derivatives Risk: Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the
(Disclosures, Risks and Note About Historical Performance continued on next page)
3
| | |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| DISCLOSURES AND RISKS | | |
| |
| (continued) | | AB Variable Products Series Fund |
counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
Management Risk: The Portfolio is subject to management risk because it is an actively managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
These risks are fully discussed in the Variable Products prospectus. As with all investments, you may lose money by investing in the Portfolio.
An Important Note About Historical Performance
The investment return and principal value of an investment in the Portfolio will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Performance shown in this report represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. Please contact your financial advisor or insurance agent representative at your financial institution to obtain portfolio performance information current to the most recent month-end.
Investors should consider the investment objectives, risks, charges and expenses of the Portfolio carefully before investing. For additional copies of the Portfolio’s prospectus or summary prospectus, which contains this and other information, call your financial advisor or (800) 227 4618. Please read the prospectus and/or summary prospectus carefully before investing.
All fees and expenses related to the operation of the Portfolio have been deducted, but no adjustment has been made for insurance company separate account or annuity contract charges, which would reduce total return to a contract owner. Performance assumes reinvestment of distributions and does not account for taxes.
There are additional fees and expenses associated with all Variable Products. These fees can include mortality and expense risk charges, administrative charges, and other charges that can significantly reduce investment returns. Those fees and expenses are not reflected in this annual report. You should consult your Variable Products prospectus for a description of those fees and expenses and speak to your insurance agent or financial representative if you have any questions. You should read the prospectus before investing or sending money.
4
| | |
| | |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| |
| HISTORICAL PERFORMANCE | | AB Variable Products Series Fund |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| THE PORTFOLIO VS. ITS BENCHMARKS | | Net Asset Value Returns | |
| PERIODS ENDED DECEMBER 31, 2023 (unaudited) | | 1 Year | | | 5 Years1 | | | 10 Years1 | |
| | | |
| Sustainable International Thematic Portfolio Class A | | | 12.63% | | | | 7.90% | | | | 3.95% | |
| | | |
| Sustainable International Thematic Portfolio Class B | | | 12.35% | | | | 7.63% | | | | 3.69% | |
| | | |
| Primary Benchmark: MSCI ACWI ex USA (net) | | | 15.62% | | | | 7.08% | | | | 3.83% | |
| | | |
| MSCI World Index ex USA (net) | | | 17.94% | | | | 8.45% | | | | 4.32% | |
1 Average annual returns. | |
The Portfolio’s current prospectus fee table shows the Portfolio’s total annual operating expense ratios as 1.60% and 1.85% for Class A and Class B shares, respectively, gross of any fee waivers or expense reimbursements. Contractual fee waivers and/or expense reimbursements reduced the Portfolio’s total annual operating expense ratios to 1.54% and 1.79% for Class A and Class B shares, respectively. These waivers/reimbursements may not be terminated before May 1, 2024, and may be extended by the Adviser for additional one-year terms. Absent reimbursements or waivers, performance would have been lower. The Financial Highlights section of this report sets forth expense ratio data for the current reporting period; the expense ratios shown above may differ from the expense ratios in the Financial Highlights section since they are based on different time periods.
GROWTH OF A $10,000 INVESTMENT
12/31/2013 TO 12/31/2023 (unaudited)
This chart illustrates the total value of an assumed $10,000 investment in Sustainable International Thematic Portfolio Class A shares (from 12/31/2013 to 12/31/2023) as compared with the performance of the Portfolio’s benchmarks. The chart assumes the reinvestment of dividends and capital gains distributions.
See Disclosures, Risks and Note About Historical Performance on pages 3-4.
5
| | |
| | |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| |
| EXPENSE EXAMPLE (unaudited) | | AB Variable Products Series Fund |
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. The estimate of expenses does not include fees or other expenses of any variable insurance product. If such expenses were included, the estimate of expenses you paid during the period would be higher and your ending account value would be lower.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of each class’ table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Beginning
Account Value
July 1, 2023 | | | Ending
Account Value
December 31, 2023 | | | Expenses Paid
During Period* | | | Annualized
Expense Ratio* | | | Total
Expenses Paid
During Period+ | | | Total
Annualized
Expense Ratio+ | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,028.80 | | | $ | 8.13 | | | | 1.59 | % | | $ | 8.18 | | | | 1.60 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,017.19 | | | $ | 8.08 | | | | 1.59 | % | | $ | 8.13 | | | | 1.60 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Class B | | | | | | | | | | | | | | | | | | | | | | | | |
Actual | | $ | 1,000 | | | $ | 1,027.90 | | | $ | 9.41 | | | | 1.84 | % | | $ | 9.46 | | | | 1.85 | % |
Hypothetical** | | $ | 1,000 | | | $ | 1,015.93 | | | $ | 9.35 | | | | 1.84 | % | | $ | 9.40 | | | | 1.85 | % |
| * | | Expenses are equal to each classes’ annualized expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
| ** | | Assumes 5% annual return before expenses. |
| + | | In connection with the Portfolio’s investments in affiliated/unaffiliated underlying portfolios, the Portfolio incurs no direct expenses, but bears proportionate shares of the fund fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated/unaffiliated underlying portfolios. The Adviser has contractually agreed to waive its fees and expenses from the Portfolio in an amount equal to the Portfolio’s pro rata share of certain affiliated/unaffiliated underlying portfolios acquired fund fees and expenses. The Portfolio’s total expenses are equal to the classes’ annualized expense ratio plus the Portfolio’s pro-rata share of the weighted average expense ratio of the affiliated/unaffiliated underlying portfolios in which it invests, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
6
| | |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| TEN LARGEST HOLDINGS1 | | |
| |
| December 31, 2023 (unaudited) | | AB Variable Products Series Fund |
| | | | | | | | |
| COMPANY | | U.S. $ VALUE | | | PERCENT OF NET ASSETS | |
Partners Group Holding AG | | $ | 1,483,545 | | | | 3.8 | % |
BYD Co., Ltd.—Class H | | | 1,365,439 | | | | 3.5 | |
Veralto Corp. | | | 1,217,283 | | | | 3.1 | |
London Stock Exchange Group PLC | | | 1,160,719 | | | | 3.0 | |
Accenture PLC—Class A | | | 1,153,441 | | | | 2.9 | |
Danone SA | | | 1,145,301 | | | | 2.9 | |
Deutsche Boerse AG | | | 1,102,780 | | | | 2.8 | |
ICON PLC | | | 1,101,708 | | | | 2.8 | |
Autoliv, Inc. | | | 1,033,472 | | | | 2.6 | |
Halma PLC | | | 1,030,392 | | | | 2.6 | |
| | | | | | | | | |
| | | $ | 11,794,080 | | | | 30.0 | % |
SECTOR BREAKDOWN2
December 31, 2023 (unaudited)
| | | | | | | | |
| SECTOR | | U.S. $ VALUE | | | PERCENT OF TOTAL INVESTMENTS | |
Financials | | $ | 8,769,955 | | | | 22.4 | % |
Information Technology | | | 8,238,133 | | | | 21.0 | |
Health Care | | | 6,659,268 | | | | 17.0 | |
Industrials | | | 5,660,620 | | | | 14.5 | |
Consumer Staples | | | 4,798,652 | | | | 12.2 | |
Consumer Discretionary | | | 2,398,911 | | | | 6.1 | |
Materials | | | 732,042 | | | | 1.9 | |
Energy | | | 685,578 | | | | 1.8 | |
Short-Term Investments | | | 1,229,764 | | | | 3.1 | |
| | | | | | | | | |
Total Investments | | $ | 39,172,923 | | | | 100.0 | % |
| 2 | | The Portfolio’s sector breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. The Portfolio also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). |
Please note: The sector classifications presented herein are based on the Global Industry Classification Standard (GICS) which was developed by Morgan Stanley Capital International and Standard & Poor’s. The components are divided into sector, industry group, and industry sub-indices as classified by the GICS for each of the market capitalization indices in the broad market. These sector classifications are broadly defined. The “Portfolio of Investments” section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Portfolio’s prospectus.
7
| | |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| COUNTRY BREAKDOWN1 | | |
| |
| December 31, 2023 (unaudited) | | AB Variable Products Series Fund |
| | | | | | | | |
| COUNTRY | | U.S. $ VALUE | | | PERCENT OF TOTAL INVESTMENTS | |
United States | | $ | 9,033,849 | | | | 23.1 | % |
United Kingdom | | | 4,678,836 | | | | 11.9 | |
Switzerland | | | 4,568,877 | | | | 11.7 | |
India | | | 2,875,633 | | | | 7.3 | |
France | | | 2,744,777 | | | | 7.0 | |
Germany | | | 2,127,175 | | | | 5.4 | |
Canada | | | 1,796,153 | | | | 4.6 | |
Japan | | | 1,587,542 | | | | 4.1 | |
China | | | 1,365,439 | | | | 3.5 | |
Finland | | | 1,324,779 | | | | 3.4 | |
Sweden | | | 1,033,472 | | | | 2.6 | |
Hong Kong | | | 983,167 | | | | 2.5 | |
Taiwan | | | 958,577 | | | | 2.5 | |
Other | | | 2,864,883 | | | | 7.3 | |
Short-Term Investments | | | 1,229,764 | | | | 3.1 | |
| | | | | | | | | |
Total Investments | | $ | 39,172,923 | | | | 100.0 | % |
| 1 | | The Portfolio’s country breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. “Other” country weightings represent 2.4% or less in the following: Denmark, Indonesia, Ireland, Netherlands and Norway. The Portfolio also enters into derivative transactions, which may be used for hedging or investment purposes (see “Portfolio of Investments” section of the report for additional details). |
8
| | |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
| | | | | | | | |
| Company | |
Shares | | | U.S. $ Value | |
| | | | | | | | |
COMMON STOCKS–96.6% | | | | | | | | |
FINANCIALS–22.3% | | | | | | | | |
BANKS–4.1% | | | | | | | | |
Bank Mandiri Persero Tbk PT | | | 2,103,500 | | | $ | 826,333 | |
HDFC Bank Ltd. | | | 38,359 | | | | 785,164 | |
| | | | | | | | |
| | | | | | | 1,611,497 | |
| | | | | | | | |
CAPITAL MARKETS–9.5% | | | | | | | | |
Deutsche Boerse AG | | | 5,355 | | | | 1,102,780 | |
London Stock Exchange Group PLC | | | 9,819 | | | | 1,160,719 | |
Partners Group Holding AG | | | 1,026 | | | | 1,483,545 | |
| | | | | | | | |
| | | | | | | 3,747,044 | |
| | | | | | | | |
FINANCIAL SERVICES–2.3% | | | | | | | | |
Edenred SE | | | 14,791 | | | | 885,163 | |
| | | | | | | | |
INSURANCE–6.4% | | | | | | | | |
Aflac, Inc. | | | 12,368 | | | | 1,020,360 | |
AIA Group Ltd. | | | 78,200 | | | | 680,565 | |
Beazley PLC | | | 78,657 | | | | 522,724 | |
Prudential PLC | | | 26,820 | | | | 302,602 | |
| | | | | | | | |
| | | | | | | 2,526,251 | |
| | | | | | | | |
| | | | | | | 8,769,955 | |
| | | | | | | | |
INFORMATION TECHNOLOGY–21.0% | | | | | | | | |
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS–5.1% | | | | | | | | |
Flex Ltd.(a) | | | 13,583 | | | | 413,738 | |
Halma PLC | | | 35,438 | | | | 1,030,392 | |
Keyence Corp. | | | 1,300 | | | | 571,163 | |
| | | | | | | | |
| | | | | | | 2,015,293 | |
| | | | | | | | |
IT SERVICES–3.0% | | | | | | | | |
Accenture PLC–Class A | | | 3,287 | | | | 1,153,441 | |
| | | | | | | | |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT–11.3% | | | | | | | | |
ASML Holding NV | | | 1,256 | | | | 948,138 | |
Infineon Technologies AG | | | 24,529 | | | | 1,024,395 | |
NXP Semiconductors NV | | | 3,426 | | | | 786,884 | |
STMicroelectronics NV | | | 14,241 | | | | 714,314 | |
Taiwan Semiconductor Manufacturing Co., Ltd. | | | 50,000 | | | | 958,577 | |
| | | | | | | | |
| | | | | | | 4,432,308 | |
| | | | | | | | |
SOFTWARE–1.6% | | | | | | | | |
Descartes Systems Group, Inc. (The)(a) | | | 7,579 | | | | 637,091 | |
| | | | | | | | |
| | | | | | | 8,238,133 | |
| | | | | | | | |
HEALTH CARE–17.0% | |
HEALTH CARE EQUIPMENT & SUPPLIES–5.4% | | | | | | | | |
Alcon, Inc. | | | 9,983 | | | | 781,030 | |
ConvaTec Group PLC(b) | | | 147,185 | | | | 458,023 | |
STERIS PLC | | | 4,049 | | | | 890,173 | |
| | | | | | | | |
| | | | | | | 2,129,226 | |
| | | | | | | | |
| | | | | | | | |
HEALTH CARE PROVIDERS & SERVICES–2.4% | | | | | | | | |
Apollo Hospitals Enterprise Ltd. | | | 13,650 | | | | 935,722 | |
| | | | | | | | |
LIFE SCIENCES TOOLS & SERVICES–6.6% | | | | | | | | |
Danaher Corp. | | | 2,905 | | | | 672,043 | |
ICON PLC(a) | | | 3,892 | | | | 1,101,708 | |
Tecan Group AG (REG) | | | 1,993 | | | | 815,351 | |
| | | | | | | | |
| | | | | | | 2,589,102 | |
| | | | | | | | |
PHARMACEUTICALS–2.6% | | | | | | | | |
Roche Holding AG (Genusschein) | | | 3,458 | | | | 1,005,218 | |
| | | | | | | | |
| | | | | | | 6,659,268 | |
| | | | | | | | |
INDUSTRIALS–14.4% | | | | | | | | |
COMMERCIAL SERVICES & SUPPLIES–3.1% | | | | | | | | |
Veralto Corp. | | | 14,798 | | | | 1,217,283 | |
| | | | | | | | |
CONSTRUCTION & ENGINEERING–2.0% | | | | | | | | |
WSP Global, Inc.(c) | | | 5,727 | | | | 802,787 | |
| | | | | | | | |
MACHINERY–4.6% | | | | | | | | |
ATS Corp.(a) | | | 8,272 | | | | 356,275 | |
SMC Corp. | | | 1,900 | | | | 1,016,379 | |
TOMRA Systems ASA | | | 34,628 | | | | 419,833 | |
| | | | | | | | |
| | | | | | | 1,792,487 | |
| | | | | | | | |
PROFESSIONAL SERVICES–4.7% | | | | | | | | |
Experian PLC | | | 25,061 | | | | 1,022,372 | |
RELX PLC (London) | | | 20,812 | | | | 825,691 | |
| | | | | | | | |
| | | | | | | 1,848,063 | |
| | | | | | | | |
| | | | | | | 5,660,620 | |
| | | | | | | | |
CONSUMER STAPLES–12.2% | | | | | |
FOOD PRODUCTS–6.7% | | | | | | | | |
Danone SA | | | 17,653 | | | | 1,145,301 | |
Kerry Group PLC–Class A | | | 6,656 | | | | 577,736 | |
Marico Ltd. | | | 65,958 | | | | 433,582 | |
Nestle SA (REG) | | | 4,173 | | | | 483,734 | |
| | | | | | | | |
| | | | | | | 2,640,353 | |
| | | | | | | | |
PERSONAL CARE PRODUCTS–5.5% | | | | | | | | |
Dabur India Ltd. | | | 107,848 | | | | 721,164 | |
Haleon PLC | | | 184,611 | | | | 755,847 | |
Unilever PLC | | | 14,073 | | | | 681,288 | |
| | | | | | | | |
| | | | | | | 2,158,299 | |
| | | | | | | | |
| | | | | | | 4,798,652 | |
| | | | | | | | |
CONSUMER DISCRETIONARY–6.1% | | | | | | | | |
AUTOMOBILE COMPONENTS–2.6% | | | | | | | | |
Autoliv, Inc. | | | 9,379 | | | | 1,033,472 | |
| | | | | | | | |
AUTOMOBILES–3.5% | | | | | | | | |
BYD Co., Ltd.–Class H(c) | | | 49,500 | | | | 1,365,439 | |
| | | | | | | | |
| | | | | | | 2,398,911 | |
| | | | | | | | |
9
| | |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
| Company | |
Shares | | | U.S. $ Value | |
| | | | | | | | |
MATERIALS–1.9% | | | | | | | | |
CHEMICALS–0.3% | | | | | | | | |
Chr Hansen Holding A/S | | | 1,107 | | | $ | 92,841 | |
| | | | | | | | |
CONTAINERS & PACKAGING–1.6% | | | | | | | | |
Huhtamaki Oyj(c) | | | 15,748 | | | | 639,201 | |
| | | | | | | | |
| | | | | | | 732,042 | |
| | | | | | | | |
ENERGY–1.7% | | | | | | | | |
OIL, GAS & CONSUMABLE FUELS–1.7% | | | | | | | | |
Neste Oyj | | | 19,285 | | | | 685,578 | |
| | | | | | | | |
Total Common Stocks
(cost $30,202,178) | | | | | | | 37,943,159 | |
| | | | | | | | |
SHORT-TERM INVESTMENTS–3.1% | | | | | | | | |
INVESTMENT COMPANIES–3.1% | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB,
5.27%(d)(e)(f)
(cost $1,229,764) | | | 1,229,764 | | | | 1,229,764 | |
| | | | | | | | |
Total Investments Before Security Lending Collateral for Securities Loaned–99.7%
(cost $31,431,942) | | | | | | | 39,172,923 | |
| | | | | | | | |
| | | | | | | | |
INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED–1.7% | | | | | | | | |
INVESTMENT COMPANIES–1.7% | | | | | | | | |
AB Fixed Income Shares, Inc.–Government Money Market Portfolio–Class AB,
5.27%(d)(e)(f)
(cost $673,583) | | | 673,583 | | | | 673,583 | |
| | | | | | | | |
TOTAL
INVESTMENTS–101.4%
(cost $32,105,525) | | | | | | | 39,846,506 | |
Other assets less liabilities–(1.4)% | | | | | | | (568,954 | ) |
| | | | | | | | |
NET ASSETS–100.0% | | | | | | $ | 39,277,552 | |
| | | | | | | | |
FORWARD CURRENCY EXCHANGE CONTRACTS (see Note D)
| | | | | | | | | | | | | | | | | | | | | | | | |
| Counterparty | | Contracts to
Deliver
(000) | | | In Exchange
For
(000) | | | Settlement
Date | | | Unrealized
Appreciation
(Depreciation) | |
Bank of America, NA | | | USD | | | | 2,609 | | | | CNH | | | | 18,961 | | | | 01/11/2024 | | | $ | 53,121 | |
Bank of America, NA | | | USD | | | | 4,027 | | | | JPY | | | | 594,500 | | | | 01/12/2024 | | | | 193,656 | |
Bank of America, NA | | | USD | | | | 94 | | | | INR | | | | 7,864 | | | | 03/14/2024 | | | | 155 | |
Barclays Bank PLC | | | BRL | | | | 2,841 | | | | USD | | | | 587 | | | | 01/03/2024 | | | | 1,969 | |
Barclays Bank PLC | | | USD | | | | 578 | | | | BRL | | | | 2,841 | | | | 01/03/2024 | | | | 7,071 | |
Barclays Bank PLC | | | USD | | | | 111 | | | | KRW | | | | 145,047 | | | | 01/18/2024 | | | | 1,059 | |
Barclays Bank PLC | | | HKD | | | | 3,986 | | | | USD | | | | 511 | | | | 03/14/2024 | | | | (94 | ) |
Barclays Bank PLC | | | INR | | | | 74,193 | | | | USD | | | | 887 | | | | 03/14/2024 | | | | (1,478 | ) |
Citibank, NA | | | KRW | | | | 138,363 | | | | USD | | | | 103 | | | | 01/18/2024 | | | | (3,744 | ) |
Citibank, NA | | | USD | | | | 1,224 | | | | KRW | | | | 1,649,986 | | | | 01/18/2024 | | | | 49,397 | |
Citibank, NA | | | IDR | | | | 8,511,440 | | | | USD | | | | 545 | | | | 01/25/2024 | | | | (8,038 | ) |
Citibank, NA | | | CHF | | | | 1,826 | | | | USD | | | | 2,067 | | | | 02/15/2024 | | | | (113,119 | ) |
Citibank, NA | | | USD | | | | 719 | | | | TWD | | | | 22,393 | | | | 02/26/2024 | | | | 20,976 | |
Deutsche Bank AG | | | CNH | | | | 3,257 | | | | USD | | | | 454 | | | | 01/11/2024 | | | | (3,553 | ) |
Deutsche Bank AG | | | INR | | | | 13,541 | | | | USD | | | | 162 | | | | 03/14/2024 | | | | 40 | |
Deutsche Bank AG | | | USD | | | | 511 | | | | HKD | | | | 3,986 | | | | 03/14/2024 | | | | 284 | |
Goldman Sachs Bank USA | | | KRW | | | | 71,084 | | | | USD | | | | 55 | | | | 01/18/2024 | | | | 374 | |
Morgan Stanley Capital Services, Inc. | | | BRL | | | | 2,841 | | | | USD | | | | 588 | | | | 01/03/2024 | | | | 3,342 | |
Morgan Stanley Capital Services, Inc. | | | USD | | | | 587 | | | | BRL | | | | 2,841 | | | | 01/03/2024 | | | | (1,969 | ) |
10
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Counterparty | | Contracts to
Deliver
(000) | | | In Exchange
For
(000) | | | Settlement
Date | | | Unrealized
Appreciation
(Depreciation) | |
Morgan Stanley Capital Services, Inc. | | | USD | | | | 95 | | | | KRW | | | | 124,274 | | | | 01/18/2024 | | | $ | 1,261 | |
Morgan Stanley Capital Services, Inc. | | | GBP | | | | 2,473 | | | | USD | | | | 3,073 | | | | 01/25/2024 | | | | (79,983 | ) |
Morgan Stanley Capital Services, Inc. | | | USD | | | | 586 | | | | BRL | | | | 2,841 | | | | 02/02/2024 | | | | (1,962 | ) |
Morgan Stanley Capital Services, Inc. | | | USD | | | | 60 | | | | INR | | | | 5,058 | | | | 03/14/2024 | | | | 109 | |
State Street Bank & Trust Co. | | | CAD | | | | 74 | | | | USD | | | | 54 | | | | 01/10/2024 | | | | (2,041 | ) |
State Street Bank & Trust Co. | | | EUR | | | | 441 | | | | USD | | | | 477 | | | | 01/10/2024 | | | | (10,149 | ) |
State Street Bank & Trust Co. | | | USD | | | | 283 | | | | CAD | | | | 383 | | | | 01/10/2024 | | | | 5,721 | |
State Street Bank & Trust Co. | | | USD | | | | 2,009 | | | | EUR | | | | 1,862 | | | | 01/10/2024 | | | | 47,414 | |
State Street Bank & Trust Co. | | | USD | | | | 107 | | | | EUR | | | | 96 | | | | 01/10/2024 | | | | (658 | ) |
State Street Bank & Trust Co. | | | CNH | | | | 4,433 | | | | USD | | | | 609 | | | | 01/11/2024 | | | | (13,073 | ) |
State Street Bank & Trust Co. | | | JPY | | | | 93,376 | | | | USD | | | | 643 | | | | 01/12/2024 | | | | (19,791 | ) |
State Street Bank & Trust Co. | | | USD | | | | 496 | | | | JPY | | | | 72,716 | | | | 01/12/2024 | | | | 20,289 | |
State Street Bank & Trust Co. | | | ILS | | | | 216 | | | | USD | | | | 54 | | | | 01/17/2024 | | | | (5,729 | ) |
State Street Bank & Trust Co. | | | USD | | | | 152 | | | | ILS | | | | 602 | | | | 01/17/2024 | | | | 14,638 | |
State Street Bank & Trust Co. | | | USD | | | | 235 | | | | MXN | | | | 4,137 | | | | 01/18/2024 | | | | 7,667 | |
State Street Bank & Trust Co. | | | USD | | | | 285 | | | | SGD | | | | 384 | | | | 01/18/2024 | | | | 6,445 | |
State Street Bank & Trust Co. | | | GBP | | | | 363 | | | | USD | | | | 456 | | | | 01/25/2024 | | | | (6,719 | ) |
State Street Bank & Trust Co. | | | USD | | | | 179 | | | | AUD | | | | 269 | | | | 01/25/2024 | | | | 4,265 | |
State Street Bank & Trust Co. | | | USD | | | | 466 | | | | GBP | | | | 370 | | | | 01/25/2024 | | | | 5,937 | |
State Street Bank & Trust Co. | | | USD | | | | 95 | | | | GBP | | | | 74 | | | | 01/25/2024 | | | | (310 | ) |
State Street Bank & Trust Co. | | | USD | | | | 258 | | | | ZAR | | | | 4,946 | | | | 02/07/2024 | | | | 11,248 | |
State Street Bank & Trust Co. | | | CHF | | | | 296 | | | | USD | | | | 342 | | | | 02/15/2024 | | | | (11,318 | ) |
State Street Bank & Trust Co. | | | USD | | | | 518 | | | | CHF | | | | 448 | | | | 02/15/2024 | | | | 17,288 | |
State Street Bank & Trust Co. | | | NOK | | | | 2,072 | | | | USD | | | | 190 | | | | 02/16/2024 | | | | (14,102 | ) |
State Street Bank & Trust Co. | | | USD | | | | 746 | | | | SEK | | | | 7,692 | | | | 02/16/2024 | | | | 17,877 | |
UBS AG | | | USD | | | | 867 | | | | CAD | | | | 1,194 | | | | 01/10/2024 | | | | 33,894 | |
UBS AG | | | USD | | | | 1,588 | | | | AUD | | | | 2,437 | | | | 01/25/2024 | | | | 73,450 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | $ | 301,117 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | | Non-income producing security. |
| (b) | | Security is exempt from registration under Rule 144A or Regulation S of the Securities Act of 1933. This security is considered restricted, but liquid and may be resold in transactions exempt from registration. At December 31, 2023, the market value of this security amounted to $458,023 or 1.2% of net assets. |
| (c) | | Represents entire or partial securities out on loan. See Note E for securities lending information. |
| (d) | | Affiliated investments. |
| (e) | | The rate shown represents the 7-day yield as of period end. |
| (f) | | To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618. |
11
| | |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| PORTFOLIO OF INVESTMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
Currency Abbreviations:
AUD—Australian Dollar
BRL—Brazilian Real
CAD—Canadian Dollar
CHF—Swiss Franc
CNH—Chinese Yuan Renminbi (Offshore)
EUR—Euro
GBP—Great British Pound
HKD—Hong Kong Dollar
IDR—Indonesian Rupiah
ILS—Israeli Shekel
INR—Indian Rupee
JPY—Japanese Yen
KRW—South Korean Won
MXN—Mexican Peso
NOK—Norwegian Krone
SEK—Swedish Krona
SGD—Singapore Dollar
TWD—New Taiwan Dollar
USD—United States Dollar
ZAR—South African Rand
Glossary:
REG—Registered Shares
See notes to financial statements.
12
| | |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| STATEMENT OF ASSETS & LIABILITIES | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
ASSETS | | | | |
Investments in securities, at value | | | | |
Unaffiliated issuers (cost $30,202,178) | | $ | 37,943,159 | (a) |
Affiliated issuers (cost $1,903,347—including investment of cash collateral for securities loaned of $673,583) | | | 1,903,347 | |
Cash | | | 47 | |
Foreign currencies, at value (cost $38,223) | | | 38,821 | |
Unrealized appreciation on forward currency exchange contracts | | | 598,947 | |
Unaffiliated dividends receivable | | | 116,261 | |
Receivable for investment securities sold | | | 14,944 | |
Affiliated dividends receivable | | | 4,906 | |
Receivable due from Adviser | | | 1,786 | |
Receivable for capital stock sold | | | 608 | |
| | | | |
Total assets | | | 40,622,826 | |
| | | | |
LIABILITIES | | | | |
Payable for collateral received on securities loaned | | | 673,583 | |
Unrealized depreciation on forward currency exchange contracts | | | 297,830 | |
Custody and accounting fees payable | | | 109,160 | |
Payable for capital stock redeemed | | | 78,233 | |
Foreign capital gains tax payable | | | 60,176 | |
Advisory fee payable | | | 24,380 | |
Administrative fee payable | | | 23,937 | |
Distribution fee payable | | | 4,289 | |
Transfer Agent fee payable | | | 150 | |
Accrued expenses | | | 73,536 | |
| | | | |
Total liabilities | | | 1,345,274 | |
| | | | |
NET ASSETS | | $ | 39,277,552 | |
| | | | |
COMPOSITION OF NET ASSETS | | | | |
Capital stock, at par | | $ | 2,234 | |
Additional paid-in capital | | | 31,316,012 | |
Distributable earnings | | | 7,959,306 | |
| | | | |
NET ASSETS | | $ | 39,277,552 | |
| | | | |
Net Asset Value Per Share—1 billion shares of capital stock authorized, $.001 par value
| | | | | | | | | | | | |
| Class | | Net Assets | | | Shares
Outstanding | | | Net Asset
Value | |
| | | |
| A | | $ | 18,503,767 | | | | 1,035,359 | | | $ | 17.87 | |
| | | |
| B | | $ | 20,773,785 | | | | 1,198,585 | | | $ | 17.33 | |
| (a) | | Includes securities on loan with a value of $2,122,516 (see Note E). |
See notes to financial statements.
13
| | |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| STATEMENT OF OPERATIONS | | |
| |
| Year Ended December 31, 2023 | | AB Variable Products Series Fund |
| | | | |
INVESTMENT INCOME | | | | |
Dividends | | | | |
Unaffiliated issuers (net of foreign taxes withheld of $81,117) | | $ | 599,633 | |
Affiliated issuers | | | 91,681 | |
Interest | | | 5,246 | |
Securities lending income | | | 1,958 | |
| | | | |
| | | 698,518 | |
| | | | |
EXPENSES | | | | |
Advisory fee (see Note B) | | | 292,460 | |
Distribution fee—Class B | | | 51,710 | |
Transfer agency—Class A | | | 1,912 | |
Transfer agency—Class B | | | 2,160 | |
Administrative | | | 95,094 | |
Custody and accounting | | | 67,572 | |
Audit and tax | | | 66,239 | |
Legal | | | 29,409 | |
Printing | | | 26,477 | |
Directors’ fees | | | 17,312 | |
Miscellaneous | | | 17,071 | |
| | | | |
Total expenses | | | 667,416 | |
Less: expenses waived and reimbursed by the Adviser (see Notes B & E) | | | (21,762 | ) |
| | | | |
Net expenses | | | 645,654 | |
| | | | |
Net investment income | | | 52,864 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS | | | | |
Net realized gain (loss) on: | | | | |
Investment transactions(a) | | | 331,160 | |
Forward currency exchange contracts | | | (586,191 | ) |
Foreign currency transactions | | | (18,658 | ) |
Net change in unrealized appreciation (depreciation) of: | | | | |
Investments(b) | | | 5,095,963 | |
Forward currency exchange contracts | | | (258,447 | ) |
Foreign currency denominated assets and liabilities | | | 7,917 | |
| | | | |
Net gain on investment and foreign currency transactions | | | 4,571,744 | |
| | | | |
NET INCREASE IN NET ASSETS FROM OPERATIONS | | $ | 4,624,608 | |
| | | | |
| (a) | | Net of foreign realized capital gains taxes of $24,380. |
| (b) | | Net of decrease in accrued foreign capital gains taxes on unrealized gains of $8,564. |
See notes to financial statements.
14
| | |
|
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| |
| STATEMENT OF CHANGES IN NET ASSETS | | AB Variable Products Series Fund |
| | | | | | | | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | |
Net investment income (loss) | | $ | 52,864 | | | $ | (8,120 | ) |
Net realized gain (loss) on investment and foreign currency transactions | | | (273,689 | ) | | | 347,829 | |
Net change in unrealized appreciation (depreciation) of investments and foreign currency denominated assets and liabilities | | | 4,845,433 | | | | (16,078,192 | ) |
| | | | | | | | |
Net increase (decrease) in net assets from operations | | | 4,624,608 | | | | (15,738,483 | ) |
Distributions to Shareholders | |
Class A | | | (673,198 | ) | | | (3,231,780 | ) |
Class B | | | (774,059 | ) | | | (3,834,063 | ) |
CAPITAL STOCK TRANSACTIONS | |
Net increase (decrease) | | | (2,786,817 | ) | | | 4,146,604 | |
| | | | | | | | |
Total increase (decrease) | | | 390,534 | | | | (18,657,722 | ) |
NET ASSETS | |
Beginning of period | | | 38,887,018 | | | | 57,544,740 | |
| | | | | | | | |
End of period | | $ | 39,277,552 | | | $ | 38,887,018 | |
| | | | | | | | |
See notes to financial statements.
15
| | |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| December 31, 2023 | | AB Variable Products Series Fund |
NOTE A: Significant Accounting Policies
The AB Sustainable International Thematic Portfolio (the “Portfolio”) (formerly known as AB International Growth Portfolio) is a series of AB Variable Products Series Fund, Inc. (the “Fund”). The Portfolio’s investment objective is long-term growth of capital. The Portfolio is diversified as defined under the Investment Company Act of 1940 (the “1940 Act”). The Fund was incorporated in the State of Maryland as an open-end series investment company. The Fund offers 10 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 U.S. generally accepted accounting principles (“U.S. GAAP”), 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 Portfolio is an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. The following is a summary of significant accounting policies followed by the Portfolio.
1. Security Valuation
Portfolio securities are valued at market value determined on the basis of market quotations or, if market quotations are not readily available or are unreliable, at “fair value” as determined in accordance with procedures approved by and under the oversight of the Fund’s Board of Directors (the “Board”). Pursuant to these procedures, AllianceBernstein L.P. (the “Adviser”) serves as the Portfolio’s valuation designee pursuant to Rule 2a-5 of the 1940 Act. In this capacity, the Adviser is responsible, among other things, for making all fair value determinations relating to the Portfolio’s portfolio investments, subject to the Board’s oversight.
In general, the market values of securities which are readily available and deemed reliable are determined as follows: securities listed on a national securities exchange (other than securities listed on the NASDAQ Stock Market, Inc. (“NASDAQ”)) 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 last traded price from the previous day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price; listed or over the counter (“OTC”) market put or call options are valued at the mid level between the current bid and ask prices. If either a current bid or current ask price is unavailable, the Adviser will have discretion to determine the best valuation (e.g., last trade price in the case of listed options); open futures 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 valuation, the last available closing settlement price is used; U.S. Government securities and any other debt instruments having 60 days or less remaining until maturity are generally valued at market by an independent pricing vendor, if a market price is available. If a market price is not available, the securities are valued at amortized cost. This methodology is commonly used for short term securities that have an original maturity of 60 days or less, as well as short term securities that had an original term to maturity that exceeded 60 days. In instances when amortized cost is utilized, the Valuation Committee (the “Committee”) must reasonably conclude that the utilization of amortized cost is approximately the same as the fair value of the security. Factors the Committee will consider include, but are not limited to, an impairment of the creditworthiness of the issuer or material changes in interest rates. 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 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. Swaps and other derivatives are valued daily, primarily using independent pricing services, independent pricing models using market inputs, as well as third party broker-dealers or counterparties. Open-end mutual funds are valued at the closing net asset value per share, while exchange traded funds are valued at the closing market price per share.
Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value as deemed appropriate by the Adviser. Factors considered in making this determination may include, but
16
| | |
| |
| | | AB Variable Products Series Fund |
are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer’s financial statements or other available documents. In addition, the Portfolio may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Portfolio values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Portfolio generally values many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available.
2. Fair Value Measurements
In accordance with U.S. GAAP regarding fair value measurements, fair value is defined as the price that the Portfolio would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability (including those valued based on their market values as described in Note A.1 above). Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Portfolio. Unobservable inputs reflect the Portfolio’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
| | • | | Level 1—quoted prices in active markets for identical investments |
| | • | | Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
| | • | | Level 3—significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of investments) |
The fair value of debt instruments, such as bonds, and over-the-counter derivatives is generally based on market price quotations, recently executed market transactions (where observable) or industry recognized modeling techniques and are generally classified as Level 2. Pricing vendor inputs to Level 2 valuations may include quoted prices for similar investments in active markets, interest rate curves, coupon rates, currency rates, yield curves, option adjusted spreads, default rates, credit spreads and other unique security features in order to estimate the relevant cash flows which are then discounted to calculate fair values. If these inputs are unobservable and significant to the fair value, these investments will be classified as Level 3.
Where readily available market prices or relevant bid prices are not available for certain equity investments, such investments may be valued based on similar publicly traded investments, movements in relevant indices since last available prices or based upon underlying company fundamentals and comparable company data (such as multiples to earnings or other multiples to equity). Where an investment is valued using an observable input, such as another publicly traded security, the investment will be classified as Level 2. If management determines that an adjustment is appropriate based on restrictions on resale, illiquidity or uncertainty, and such adjustment is a significant component of the valuation, the investment will be classified as Level 3. An investment will also be classified as Level 3 where management uses company fundamentals and other significant inputs to determine the valuation.
The following table summarizes the valuation of the Portfolio’s investments by the above fair value hierarchy levels as of December 31, 2023:
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Investments in Securities: | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Common Stocks: | | | | | | | | | | | | | | | | |
Financials | | $ | 1,020,360 | | | $ | 7,749,595 | | | $ | –0 | – | | $ | 8,769,955 | |
Information Technology | | | 2,991,154 | | | | 5,246,979 | | | | –0 | – | | | 8,238,133 | |
Health Care | | | 2,663,924 | | | | 3,995,344 | | | | –0 | – | | | 6,659,268 | |
Industrials | | | 2,376,345 | | | | 3,284,275 | | | | –0 | – | | | 5,660,620 | |
Consumer Staples | | | –0 | – | | | 4,798,652 | | | | –0 | – | | | 4,798,652 | |
Consumer Discretionary | | | 1,033,472 | | | | 1,365,439 | | | | –0 | – | | | 2,398,911 | |
17
| | |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Materials | | $ | –0 | – | | $ | 732,042 | | | $ | –0 | – | | $ | 732,042 | |
Energy | | | –0 | – | | | 685,578 | | | | –0 | – | | | 685,578 | |
Short-Term Investments | | | 1,229,764 | | | | –0 | – | | | –0 | – | | | 1,229,764 | |
Investments of Cash Collateral for Securities Loaned in Affiliated Money Market Fund | | | 673,583 | | | | –0 | – | | | –0 | – | | | 673,583 | |
| | | | | | | | | | | | | | | | |
Total Investments in Securities | | | 11,988,602 | | | | 27,857,904 | (a) | | | –0 | – | | | 39,846,506 | |
Other Financial Instruments(b): | | | | | | | | | | | | | | | | |
Assets: | |
Forward Currency Exchange Contracts | | | –0 | – | | | 598,947 | | | | –0 | – | | | 598,947 | |
Liabilities: | |
Forward Currency Exchange Contracts | | | –0 | – | | | (297,830 | ) | | | –0 | – | | | (297,830 | ) |
| | | | | | | | | | | | | | | | |
Total | | $ | 11,988,602 | | | $ | 28,159,021 | | | $ | –0 | – | | $ | 40,147,623 | |
| | | | | | | | | | | | | | | | |
| (a) | | A significant portion of the Portfolio’s foreign equity investments are categorized as Level 2 investments since they are valued using fair value prices based on third party vendor modeling tools to the extent available, see Note A.1. |
| (b) | | Other financial instruments are derivative instruments, such as futures, forwards and swaps, which are valued at the unrealized appreciation (depreciation) on the instrument. Other financial instruments may also include swaps with upfront premiums, written options and written swaptions which are valued at market value. |
3. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under forward currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and ask 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, 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 foreign currency denominated assets and liabilities.
4. 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. The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned.
In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, management has analyzed the Portfolio’s tax positions taken or expected to be taken on federal and state income tax returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is required in the Portfolio’s financial statements.
5. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Portfolio is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the date the securities are purchased or sold. Investment gains or losses are determined on the identified cost basis. Non-cash dividends, if any, are recorded on the ex-dividend date at the fair value of the securities received. The Portfolio amortizes premiums and accretes discounts as adjustments to interest income. The Portfolio accounts for distributions received from REIT investments or from regulated investment companies as dividend income, realized gain, or return of capital based on information provided by the REIT or the investment company.
18
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| | | AB Variable Products Series Fund |
6. Class Allocations
All income earned and expenses incurred by the Portfolio 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 for class specific expenses which are allocated to the respective class. Expenses of the Fund are charged proportionately to each portfolio or based on other appropriate methods. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets.
7. Dividends and Distributions
Dividends and distributions to shareholders, if any, 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 U.S. GAAP. 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 the investment advisory agreement, the Portfolio pays the Adviser an advisory fee at an 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 Portfolio’s average daily net assets. The fee is accrued daily and paid monthly. The Adviser has contractually agreed to waive its management fee and/or bear expenses of the Portfolio in order to reduce the Portfolio’s total operating expenses by an amount equal to .05% on an annual basis of the average net assets for Class A and Class B. For the year ended December 31, 2023, such reimbursements/waivers amounted to $19,498. This fee waiver and/or expense reimbursement agreement extends through May 1, 2024 and then may be extended by the Adviser for additional one-year terms.
Pursuant to the investment advisory agreement, the Portfolio may reimburse the Adviser for certain legal and accounting services provided to the Portfolio by the Adviser. For the year ended December 31, 2023, the reimbursement for such services amounted to $95,094.
The Portfolio compensates AllianceBernstein Investor Services, Inc. (“ABIS”), 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 retained by ABIS amounted to $1,800 for the year ended December 31, 2023.
The Portfolio may invest in AB Government Money Market Portfolio (the “Government Money Market Portfolio”) which has a contractual annual advisory fee rate of .20% of the portfolio’s average daily net assets and bears its own expenses. The Adviser had contractually agreed to waive .10% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .10%) until August 31, 2023. Effective September 1, 2023, the Adviser has contractually agreed to waive .05% of the advisory fee of Government Money Market Portfolio (resulting in a net advisory fee of .15%) until August 31, 2024. In connection with the investment by the Portfolio in Government Money Market Portfolio, the Adviser has contractually agreed to waive its advisory fee from the Portfolio in an amount equal to the Portfolio’s pro rata share of the effective advisory fee of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. For the year ended December 31, 2023, such waiver amounted to $2,100.
A summary of the Portfolio’s transactions in AB mutual funds for the year ended December 31, 2023 is as follows:
| | | | | | | | | | | | | | | | | | | | |
Portfolio | | Market Value
12/31/22
(000) | | | Purchases
at Cost
(000) | | | Sales
Proceeds
(000) | | | Market Value
12/31/23
(000) | | | Dividend
Income
(000) | |
Government Money Market Portfolio | | $ | 1,145 | | | $ | 10,943 | | | $ | 10,859 | | | $ | 1,229 | | | $ | 92 | |
Government Money Market Portfolio* | | | –0 | – | | | 5,963 | | | | 5,289 | | | | 674 | | | | 1 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | $ | 1,903 | | | $ | 93 | |
| | | | | | | | | | | | | | | | | | | | |
| * | | Investments of cash collateral for securities lending transactions (see Note E). |
NOTE C: Distribution Plan
The Portfolio has adopted a Distribution Plan (the “Plan”) for Class B shares pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Portfolio pays distribution and servicing fees to AllianceBernstein Investments, Inc. (the “Distributor”), 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 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.
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| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
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 or 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 year ended December 31, 2023 were as follows:
| | | | | | | | |
| | | Purchases | | | Sales | |
Investment securities (excluding U.S. government securities) | | $ | 10,624,350 | | | $ | 15,307,444 | |
U.S. government securities | | | –0 | – | | | –0 | – |
The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation are as follows:
| | | | |
Cost | | $ | 32,184,686 | |
| | | | |
Gross unrealized appreciation | | $ | 9,336,777 | |
Gross unrealized depreciation | | | (1,655,384 | ) |
| | | | |
Net unrealized appreciation | | $ | 7,681,393 | |
| | | | |
1. Derivative Financial Instruments
The Portfolio may use derivatives in an effort to earn income and enhance returns, to replace more traditional direct investments, to obtain exposure to otherwise inaccessible markets (collectively, “investment purposes”), or to hedge or adjust the risk profile of its portfolio.
The principal type of derivative utilized by the Portfolio, as well as the methods in which they may be used are:
| | • | | Forward Currency Exchange Contracts |
The Portfolio may enter into forward currency exchange 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 sale commitments denominated in foreign currencies and for non-hedging purposes as a means of making direct investments in foreign currencies, as described below under “Currency Transactions”.
A forward currency exchange contract is a commitment to purchase or sell a foreign currency at 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 forward currency exchange contracts. Fluctuations in the value of open forward currency exchange contracts are recorded for financial reporting purposes as unrealized appreciation and/or depreciation by the Portfolio. 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.
During the year ended December 31, 2023, the Portfolio held forward currency exchange contracts for hedging purposes.
The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements (“ISDA Master Agreement”) with its OTC derivative contract counterparties in order to, among other things, reduce its credit risk to OTC counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the OTC counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single
20
| | |
| |
| | | AB Variable Products Series Fund |
net payment (close-out netting) in the event of default or termination. In the event of a default by an OTC counterparty, the return of collateral with market value in excess of the Portfolio’s net liability, held by the defaulting party, may be delayed or denied.
The Portfolio’s ISDA Master Agreements may contain provisions for early termination of OTC derivative transactions in the event the net assets of the Portfolio decline below specific levels (“net asset contingent features”). If these levels are triggered, the Portfolio’s OTC counterparty has the right to terminate such transaction and require the Portfolio to pay or receive a settlement amount in connection with the terminated transaction. If OTC derivatives were held at period end, please refer to netting arrangements by the OTC counterparty table below for additional details.
During the year ended December 31, 2023, the Portfolio had entered into the following derivatives:
| | | | | | | | | | | | |
| | | Asset Derivatives | | | Liability Derivatives | |
Derivative Type | | Statement of
Assets and Liabilities
Location | | Fair Value | | | Statement of
Assets and Liabilities
Location | | Fair Value | |
Foreign currency contracts | | Unrealized appreciation on forward currency exchange contracts | | $ | 598,947 | | | Unrealized depreciation on forward currency exchange contracts | | $ | 297,830 | |
| | | | | | | | | | | | |
Total | | | | $ | 598,947 | | | | | $ | 297,830 | |
| | | | | | | | | | | | |
| | | | | | | | | | |
Derivative Type | | Location of Gain or (Loss) on Derivatives
Within Statement of Operations | | Realized Gain or
(Loss) on
Derivatives | | | Change in Unrealized
Appreciation or
(Depreciation) | |
Foreign currency contracts | | Net realized gain (loss) on forward currency exchange contracts; Net change in unrealized appreciation (depreciation) of forward currency exchange contracts | | $ | (586,191 | ) | | $ | (258,447 | ) |
| | | | | | | | | | |
Total | | | | $ | (586,191 | ) | | $ | (258,447 | ) |
| | | | | | | | | | |
The following table represents the average monthly volume of the Portfolio’s derivative transactions during the year ended December 31, 2023:
| | | | |
Forward Currency Exchange Contracts: | | | | |
Average principal amount of buy contracts | | $ | 18,005,899 | |
Average principal amount of sale contracts | | $ | 10,951,741 | |
For financial reporting purposes, the Portfolio does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the statement of assets and liabilities.
All OTC derivatives held at period end were subject to netting arrangements. The following table presents the Portfolio’s derivative assets and liabilities by OTC counterparty net of amounts available for offset under ISDA Master Agreements (“MA”) and net of the related collateral received/pledged by the Portfolio as of December 31, 2023. Exchange-traded derivatives and centrally cleared swaps are not subject to netting arrangements and as such are excluded from the table.
| | | | | | | | | | | | | | | | | | | | |
Counterparty | | Derivative
Assets Subject
to a MA | | | Derivatives
Available for
Offset | | | Cash Collateral
Received* | | | Security Collateral
Received* | | | Net Amount of
Derivative
Assets | |
Bank of America, NA | | $ | 246,932 | | | $ | –0 | – | | $ | –0 | – | | $ | –0 | – | | $ | 246,932 | |
Barclays Bank PLC | | | 10,099 | | | | (1,572 | ) | | | –0 | – | | | –0 | – | | | 8,527 | |
Citibank, NA | | | 70,373 | | | | (70,373 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
Deutsche Bank AG | | | 324 | | | | (324 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
Goldman Sachs Bank USA | | | 374 | | | | –0 | – | | | –0 | – | | | –0 | – | | | 374 | |
Morgan Stanley Capital Services, Inc. | | | 4,712 | | | | (4,712 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
State Street Bank & Trust Co. | | | 158,789 | | | | (83,890 | ) | | | –0 | – | | | –0 | – | | | 74,899 | |
UBS AG | | | 107,344 | | | | –0 | – | | | –0 | – | | | –0 | – | | | 107,344 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 598,947 | | | $ | (160,871 | ) | | $ | –0 | – | | $ | –0 | – | | $ | 438,076 | ^ |
| | | | | | | | | | | | | | | | | | | | |
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| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | | | | | | | | | | | | | |
Counterparty | | Derivative
Liabilities Subject
to a MA | | | Derivatives
Available for
Offset | | | Cash Collateral
Pledged* | | | Security Collateral
Pledged* | | | Net Amount of
Derivative
Liabilities | |
Barclays Bank PLC | | $ | 1,572 | | | $ | (1,572 | ) | | $ | –0 | – | | $ | –0 | – | | $ | –0 | – |
Citibank, NA | | | 124,901 | | | | (70,373 | ) | | | –0 | – | | | –0 | – | | | 54,528 | |
Deutsche Bank AG | | | 3,553 | | | | (324 | ) | | | –0 | – | | | –0 | – | | | 3,229 | |
Morgan Stanley Capital Services, Inc. | | | 83,914 | | | | (4,712 | ) | | | –0 | – | | | –0 | – | | | 79,202 | |
State Street Bank & Trust Co. | | | 83,890 | | | | (83,890 | ) | | | –0 | – | | | –0 | – | | | –0 | – |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 297,830 | | | $ | (160,871 | ) | | $ | –0 | – | | $ | –0 | – | | $ | 136,959 | ^ |
| | | | | | | | | | | | | | | | | | | | |
| * | | The actual collateral received/pledged may be more than the amount reported due to over-collateralization. |
| ^ | | Net amount represents the net receivable/payable that would be due from/to the counterparty in the event of default or termination. The net amount from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same counterparty. |
2. Currency Transactions
The Portfolio may invest in non-U.S. Dollar-denominated securities on a currency hedged or unhedged basis. The Portfolio may seek investment opportunities by taking long or short positions in currencies through the use of currency-related derivatives, including forward currency exchange contracts, futures and options on futures, swaps, and other options. The Portfolio may enter into transactions for investment opportunities when it anticipates that a foreign currency will appreciate or depreciate in value but securities denominated in that currency are not held by the Portfolio and do not present attractive investment opportunities. Such transactions may also be used when the Adviser believes that it may be more efficient than a direct investment in a foreign currency-denominated security. The Portfolio may also conduct currency exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing in the currency exchange market for buying or selling currencies).
NOTE E: Securities Lending
The Portfolio may enter into securities lending transactions. Under the Portfolio’s securities lending program, all loans of securities will be collateralized continually by cash collateral and/or non-cash collateral. Non-cash collateral will include only securities issued or guaranteed by the U.S. government or its agencies or instrumentalities. If the Portfolio cannot sell or repledge any non-cash collateral, such collateral will not be reflected in the portfolio of investments. If a loan is collateralized by cash, the Portfolio will be compensated for the loan from a portion of the net return from the income earned on cash collateral after a rebate is paid to the borrower (in some cases, this rebate may be a “negative rebate” or fee paid by the borrower to the Portfolio in connection with the loan), and payments are made for fees of the securities lending agent and for certain other administrative expenses. If the Portfolio receives non-cash collateral, the Portfolio will receive a fee from the borrower generally equal to a negotiated percentage of the market value of the loaned securities. The Portfolio will have the right to call a loan and obtain the securities loaned at any time on notice to the borrower within the normal and customary settlement time for the securities. While the securities are on loan, the borrower is obligated to pay the Portfolio amounts equal to any dividend income or other distributions from the securities; however, these distributions will not be afforded the same preferential tax treatment as qualified dividends. The Portfolio will not be able to exercise voting rights with respect to any securities during the existence of a loan, but will have the right to regain ownership of loaned securities in order to exercise voting or other ownership rights. Collateral received and securities loaned are marked to market daily to ensure that the securities loaned are secured by collateral. The lending agent currently invests the cash collateral received in Government Money Market Portfolio, an eligible money market vehicle, in accordance with the investment restrictions of the Portfolio, and as approved by the Board. The collateral received on securities loaned is recorded as an asset as well as a corresponding liability in the statement of assets and liabilities. The collateral will be adjusted the next business day to maintain the required collateral amount. The amounts of securities lending income from the borrowers and Government Money Market Portfolio are reflected in the statement of operations. When the Portfolio earns net securities lending income from Government Money Market Portfolio, the income is inclusive of a rebate expense paid to the borrower. In connection with the cash collateral investment by the Portfolio in Government Money Market Portfolio, the Adviser has agreed to waive a portion of the Portfolio’s share of the advisory fees of Government Money Market Portfolio, as borne indirectly by the Portfolio as an acquired fund fee and expense. When the Portfolio lends securities, its investment performance will continue to reflect changes in the value of the securities loaned. A principal risk of lending portfolio securities is that the borrower may fail to return the loaned securities upon termination of the loan and that the collateral will not be sufficient to replace the loaned securities. The lending agent has agreed to indemnify the Portfolio in the case of default of any securities borrower.
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| |
| | | AB Variable Products Series Fund |
A summary of the Portfolio’s transactions surrounding securities lending for the year ended December 31, 2023 is as follows:
| | | | | | | | | | |
| | | | | | | | | Government Money Market
Portfolio |
Market Value of
Securities
on Loan* | | Cash Collateral* | | Market Value of
Non-Cash
Collateral* | | Income from
Borrowers | | Income
Earned | | Advisory Fee
Waived |
| $2,122,516 | | $673,583 | | $1,563,206 | | $1,407 | | $551 | | $164 |
| * | | As of December 31, 2023. |
NOTE F: Capital Stock
Each class consists of 500,000,000 authorized shares. Transactions in capital shares for each class were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | SHARES | | | | | | AMOUNT | |
| | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | | | | | | Year Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | |
Class A | |
Shares sold | | | 30,025 | | | | 46,298 | | | | | | | $ | 508,454 | | | $ | 910,370 | |
Shares issued in reinvestment of distributions | | | 39,004 | | | | 182,587 | | | | | | | | 673,198 | | | | 3,231,780 | |
Shares redeemed | | | (136,516 | ) | | | (108,658 | ) | | | | | | | (2,344,683 | ) | | | (2,111,779 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (67,487 | ) | | | 120,227 | | | | | | | $ | (1,163,031 | ) | | $ | 2,030,371 | |
| | | | | | | | | | | | | | | | | | | | |
Class B | |
Shares sold | | | 83,117 | | | | 80,711 | | | | | | | $ | 1,404,702 | | | $ | 1,510,744 | |
Shares issued on reinvestment of distributions | | | 46,212 | | | | 222,393 | | | | | | | | 774,059 | | | | 3,834,063 | |
Shares redeemed | | | (225,443 | ) | | | (171,634 | ) | | | | | | | (3,802,547 | ) | | | (3,228,574 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (96,114 | ) | | | 131,470 | | | | | | | $ | (1,623,786 | ) | | $ | 2,116,233 | |
| | | | | | | | | | | | | | | | | | | | |
At December 31, 2023, certain shareholders of the Portfolio owned 78% in aggregate of the Portfolio’s outstanding shares. Significant transactions by such shareholders, if any, may impact the Portfolio’s performance.
NOTE G: Risks Involved in Investing in the Portfolio
Market Risk—The value of the Portfolio’s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events, including public health crises (including the occurrence of a contagious disease or illness) and regional and global conflicts, that affect large portions of the market. It includes the risk that a particular style of investing may underperform the market generally.
Focused Portfolio Risk—Investments in a limited number of companies may have more risk because changes in the value of a single security may have a more significant effect, either negative or positive, on the Portfolio’s net asset value, or NAV, than would be the case if the Portfolio were invested in a larger number of companies.
Sector Risk—The Portfolio may have more risk than a more diversified portfolio because it may invest to a significant extent in one or more particular market sectors, such as the information technology or financial services sector. To the extent it does so, market or economic factors affecting the relevant sector(s) could have a major effect on the value of the Portfolio’s investments.
ESG Risk—Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for non-investment reasons and, therefore, the Portfolio may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with ESG practices may shift into and out of favor depending on market and economic conditions, and the Portfolio’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria. Furthermore, ESG and sustainability criteria are not uniformly defined, and the Portfolio’s ESG and sustainability criteria may differ from those used by other funds. In addition, in evaluating an investment, the Adviser is dependent upon information and data that may be incomplete, inaccurate or unavailable, which could adversely affect the analysis of the ESG and sustainability factors relevant to a particular investment.
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| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| NOTES TO FINANCIAL STATEMENTS | | |
| |
| (continued) | | AB Variable Products Series Fund |
Foreign (Non-U.S.) Risk—Investments in securities of non-U.S. issuers may involve more risk than those of U.S. issuers. These securities may fluctuate more widely in price and may be more difficult to trade due to adverse market, economic, political, regulatory or other factors.
Emerging-Market Risk—Investments in emerging market countries may have more risk because the markets are less developed and less liquid, and because these investments may be subject to increased economic, political, regulatory or other uncertainties.
Currency Risk—Fluctuations in currency exchange rates may negatively affect the value of the Portfolio’s investments or reduce its returns.
Capitalization Risk—Investments in small- and mid-capitalization companies may be more volatile than investments in large-capitalization companies. Investments in small- and mid-capitalization companies may have additional risks because these companies have limited product lines, markets or financial resources.
Derivatives Risk—Derivatives may be difficult to price or unwind and leveraged so that small changes may produce disproportionate losses for the Portfolio. A short position in a derivative instrument involves the risk of a theoretically unlimited increase in the value of the underlying asset, which could cause the Portfolio to suffer a potentially unlimited loss. Derivatives, especially over-the-counter derivatives, are also subject to counterparty risk, which is the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable or unwilling to honor its contractual obligations to the Portfolio.
LIBOR Replacement Risk—The Portfolio may be exposed to debt securities, derivatives or other financial instruments that utilize the London Interbank Offered Rate, or “LIBOR,” as a “benchmark” or “reference rate” for various interest rate calculations. LIBOR’s administrator, ICE Benchmark Administration, ceased publishing most LIBOR settings (including some U.S. LIBOR settings) by the end of 2021 and the remaining (and most widely used) U.S. Dollar LIBOR settings after June 30, 2023. The United Kingdom Financial Conduct Authority, which regulates LIBOR, will permit the use of synthetic U.S. Dollar LIBOR rates for non-U.S. contracts through September 30, 2024, but any such rates would be considered non-representative of the underlying market. Since 2018 the Federal Reserve Bank of New York has published the Secured Overnight Financing Rate (referred to as SOFR), which is intended to replace U.S. Dollar LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities in the repurchase agreement (repo) market. There is no assurance that the composition or characteristics of SOFR or any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that the market for SOFR-linked financial instruments will have the same volume or liquidity as did the market for LIBOR-linked financial instruments prior to LIBOR’s discontinuance or unavailability. Neither the long-term effects of the LIBOR transition process nor its ultimate success can yet be known.
Indemnification Risk—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. Therefore, the Portfolio has not accrued any liability in connection with these indemnification provisions.
Management Risk—The Portfolio is subject to management risk because it is an actively-managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions for the Portfolio, but there is no guarantee that its techniques will produce the intended results. Some of these techniques may incorporate, or rely upon, quantitative models, but there is no guarantee that these models will generate accurate forecasts, reduce risk or otherwise perform as expected.
NOTE H: Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Portfolio, participate in a $325 million revolving credit facility (the “Facility”) intended to provide short-term financing related to redemptions and other short term liquidity requirements, subject to certain restrictions. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Portfolio did not utilize the Facility during the year ended December 31, 2023.
24
| | |
| |
| | | AB Variable Products Series Fund |
NOTE I: Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended December 31, 2023 and December 31, 2022 were as follows:
| | | | | | | | |
| | | 2023 | | | 2022 | |
Distributions paid from: | | | | | | | | |
Net long-term capital gains | | $ | 1,447,257 | | | | 7,065,843 | |
| | | | | | | | |
Total taxable distributions paid | | $ | 1,447,257 | | | $ | 7,065,843 | |
| | | | | | | | |
As of December 31, 2023, the components of accumulated earnings (deficit) on a tax basis were as follows:
| | | | |
Undistributed capital gains | | $ | 332,597 | |
Unrealized appreciation (depreciation) | | | 7,626,709 | (a) |
| | | | |
Total accumulated earnings (deficit) | | $ | 7,959,306 | |
| | | | |
| (a) | | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable primarily to the recognition for tax purposes of unrealized gains/losses on certain derivative instruments and the tax deferral of losses on wash sales. |
For tax purposes, net realized capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses for an indefinite period, and such losses will retain their character as either short-term or long-term capital losses. As of December 31, 2023, the Portfolio did not have any capital loss carryforwards.
During the current fiscal year, permanent differences primarily due to the disallowance of a net operating loss resulted in a net increase in distributable earnings and a net decrease in additional paid-in capital. These reclassifications had no effect on net assets.
NOTE J: Recent Accounting Pronouncements
In December 2022, the Financial Accounting Standards Board issued an Accounting Standards Update, ASU 2022-06, “Reference Rate Reform (Topic 848)—Deferral of the Sunset Date of Topic 848”. ASU 2022-06 is an amendment to ASU 2020-04, which provided optional guidance to ease the potential accounting burden due to the discontinuation of the LIBOR and other interbank-offered based reference rates and which was effective as of March 12, 2020 through December 31, 2022. ASU 2022-06 extends the effective period through December 31, 2024. Management is currently evaluating the impact, if any, of applying ASU 2022-06.
NOTE K: Subsequent Events
At a meeting of the Board held on October 31-November 2, 2023, the Board approved the liquidation and termination of the Portfolio (the “Liquidation”). The Portfolio expects to make liquidating distributions on or about April 16, 2024 and will convert its assets to cash shortly before this date. The insurance company separate accounts through which owners of variable insurance contracts hold interests in the Portfolio will give such Contractholders notice of the Liquidation as well as information about allocating their variable insurance contract assets to other investment options available under their contracts.
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no other material events that would require disclosure in the Portfolio’s financial statements through this date.
25
| | |
| | | |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| |
| FINANCIAL HIGHLIGHTS | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS A | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | | $16.46 | | | | $27.11 | | | | $27.56 | | | | $23.49 | | | | $18.99 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss)(a)(b) | | | .05 | | | | .02 | | | | (.02 | ) | | | (.10 | ) | | | .08 | |
Net realized and unrealized gain (loss) on investment and foreign currency transactions | | | 2.01 | | | | (7.27 | ) | | | 2.29 | | | | 6.65 | | | | 5.08 | |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 2.06 | | | | (7.25 | ) | | | 2.27 | | | | 6.55 | | | | 5.16 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Dividends and Distributions | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | –0 | – | | | –0 | – | | | –0 | – | | | (.34 | ) | | | (.13 | ) |
Distributions from net realized gain on investment transactions | | | (.65 | ) | | | (3.40 | ) | | | (2.72 | ) | | | (2.14 | ) | | | (.53 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (.65 | ) | | | (3.40 | ) | | | (2.72 | ) | | | (2.48 | ) | | | (.66 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $17.87 | | | | $16.46 | | | | $27.11 | | | | $27.56 | | | | $23.49 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset value(c) | | | 12.63 | % | | | (27.61 | )% | | | 8.25 | % | | | 29.94 | % | | | 27.53 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | | $18,504 | | | | $18,149 | | | | $26,641 | | | | $27,410 | | | | $24,123 | |
Ratio to average net assets of: | | | | | | | | | | | | | | | | | | | | |
Expenses, net of waivers/reimbursements(d)‡ | | | 1.52 | % | | | 1.53 | % | | | 1.23 | % | | | 1.31 | % | | | 1.36 | % |
Expenses, before waivers/reimbursements(d)‡ | | | 1.58 | % | | | 1.59 | % | | | 1.28 | % | | | 1.37 | % | | | 1.41 | % |
Net investment income (loss)(b) | | | .27 | % | | | .12 | % | | | (.09 | )% | | | (.42 | )% | | | .40 | % |
Portfolio turnover rate | | | 29 | % | | | 38 | % | | | 25 | % | | | 34 | % | | | 49 | % |
| | | | | | | | | | | | | | | | | | | | |
‡ Expense ratios exclude the estimated acquired fund fees of the affiliated/unaffiliated underlying | |
portfolios | | | .01 | % | | | .01 | % | | | .00 | % | | | .00 | % | | | .00 | % |
See footnote summary on page 27.
26
| | |
|
| | |
| |
| | | AB Variable Products Series Fund |
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
| | | | | | | | | | | | | | | | | | | | |
| | | CLASS B | |
| | | Year Ended December 31, | |
| | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
Net asset value, beginning of period | | | $16.02 | | | | $26.57 | | | | $27.12 | | | | $23.15 | | | | $18.71 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Income From Investment Operations | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss)(a)(b) | | | .00 | (e) | | | (.03 | ) | | | (.09 | ) | | | (.15 | ) | | | .03 | |
Net realized and unrealized gain (loss) on investment and foreign currency transactions | | | 1.96 | | | | (7.12 | ) | | | 2.26 | | | | 6.54 | | | | 5.00 | |
| | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value from operations | | | 1.96 | | | | (7.15 | ) | | | 2.17 | | | | 6.39 | | | | 5.03 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Less: Dividends and Distributions | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | –0 | – | | | –0 | – | | | –0 | – | | | (.28 | ) | | | (.06 | ) |
Distributions from net realized gain on investment transactions | | | (.65 | ) | | | (3.40 | ) | | | (2.72 | ) | | | (2.14 | ) | | | (.53 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (.65 | ) | | | (3.40 | ) | | | (2.72 | ) | | | (2.42 | ) | | | (.59 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | | $17.33 | | | | $16.02 | | | | $26.57 | | | | $27.12 | | | | $23.15 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total Return | | | | | | | | | | | | | | | | | | | | |
Total investment return based on net asset value(c) | | | 12.35 | % | | | (27.81 | )% | | | 8.01 | % | | | 29.60 | % | | | 27.23 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | | $20,774 | | | | $20,738 | | | | $30,904 | | | | $32,068 | | | | $29,756 | |
Ratio to average net assets of: | | | | | | | | | | | | | | | | | | | | |
Expenses, net of waivers/reimbursements(d)‡ | | | 1.77 | % | | | 1.78 | % | | | 1.48 | % | | | 1.56 | % | | | 1.61 | % |
Expenses, before waivers/reimbursements(d)‡ | | | 1.83 | % | | | 1.84 | % | | | 1.53 | % | | | 1.62 | % | | | 1.66 | % |
Net investment income (loss)(b) | | | .02 | % | | | (.14 | )% | | | (.34 | )% | | | (.67 | )% | | | .15 | % |
Portfolio turnover rate | | | 29 | % | | | 38 | % | | | 25 | % | | | 34 | % | | | 49 | % |
| | | | | | | | | | | | | | | | | | | | |
‡ Expense ratios exclude the estimated acquired fund fees of the affiliated/unaffiliated underlying | |
portfolios | | | .01 | % | | | .01 | % | | | .00 | % | | | .00 | % | | | .00 | % |
| (a) | | Based on average shares outstanding. |
| (b) | | Net of expenses waived/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 (i) insurance company’s separate account related expense charges and (ii) the deductions 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) | | In connection with the Portfolio’s investments in affiliated underlying portfolios, the Portfolio incurs no direct expenses, but bears proportionate shares of the fees and expenses (i.e., operating, administrative and investment advisory fees) of the affiliated underlying portfolios. The Adviser has contractually agreed to waive its fees from the Portfolio in an amount equal to the Portfolio’s pro rata share of certain acquired fund fees and expenses, and for the years ended December 31, 2023 and December 31, 2022, such waiver amounted to .01% and .01%, respectively. |
| (e) | | Amount is less than $.005. |
See notes to financial statements.
27
| | |
| | |
| REPORT OF INDEPENDENT REGISTERED | | |
| |
| PUBLIC ACCOUNTING FIRM | | AB Variable Products Series Fund |
To the Shareholders and the Board of Directors of AB Sustainable International Thematic Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of AB Sustainable International Thematic Portfolio (the “Portfolio”) (one of the series constituting AB Variable Products Series Fund, Inc. (the “Fund”)), including the portfolio of investments, as of December 31, 2023, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Portfolio (one of the series constituting AB Variable Products Series Fund, Inc.) at December 31, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Portfolio’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers or others, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more of the AB investment companies since 1968.
New York, New York
February 14, 2024
28
| | |
| | |
| | |
| |
| 2023 TAX INFORMATION (unaudited) | | AB Variable Products Series Fund |
For Federal income tax purposes, the following information is furnished with respect to the earnings of the Portfolio for the taxable year ended December 31, 2023. The Portfolio designates $1,447,257 of dividends paid as long-term capital gain dividends.
29
| | |
| | |
| |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO | | AB Variable Products Series Fund |
| | |
| BOARD OF DIRECTORS | | |
Garry L. Moody(1), Chairman Jorge A. Bermudez(1) Michael J. Downey(1) Onur Erzan, President and
Chief Executive Officer | | Nancy P. Jacklin(1) Jeanette W. Loeb(1) Carol C. McMullen(1) Marshall C. Turner, Jr.(1) Emilie D. Wrapp, Advisory Board Member |
| | |
| | |
| OFFICERS | | |
Daniel C. Roarty(2), Vice President Benjamin Ruegsegger(2), Vice President Nancy E. Hay, Secretary Michael B. Reyes, Senior Vice President | | Stephen M. Woetzel, Treasurer and
Chief Financial Officer Phyllis J. Clarke, Controller Jennifer Friedland, Chief Compliance Officer |
| | |
| | |
CUSTODIANAND ACCOUNTING AGENT State Street Bank and Trust Company One Congress Street, Suite 1 Boston, MA 02114 | | LEGAL COUNSEL Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 |
| | |
| | |
DISTRIBUTOR AllianceBernstein Investments, Inc. 501 Commerce Street Nashville, TN 37203 | | TRANSFER AGENT AllianceBernstein Investor Services, Inc. P.O. Box 786003 San Antonio, TX 78278 Toll-Free (800) 221-5672 |
| | |
| | |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP One Manhattan West New York, NY 10001 | | |
| (1) | | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
| (2) | | The day-to-day management of, and investment decisions for, the Portfolio’s portfolio are made by the Adviser’s Sustainable Thematic Equities Investment Team. Messrs. Roarty and Ruegsegger are the investment professionals with the most significant responsibility for the day-to-day management of the Portfolio’s portfolio. |
30
| | |
| | |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| |
| MANAGEMENT OF THE FUND | | AB Variable Products Series Fund |
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the Board of Directors. Certain information concerning the Fund’s Directors and Advisory Board member is set forth below.
| | | | | | | | |
NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
| | | | | | | | |
| INTERESTED DIRECTOR | | | | | | |
| | | | | | | | |
Onur Erzan,#
1345 Avenue of the Americas
48 New York, NY 10105
(2021) | | Senior Vice President of the Adviser**, Head of Global Client Group and Head of Private Wealth. He oversees AB’s entire private wealth management business and third-party institutional and retail franchise, where he is responsible for all client services, sales and marketing, as well as product strategy, management and development worldwide. Director, President and Chief Executive Officer of the AB Mutual Funds as of April 1, 2021. He is also a member of the Equitable Holdings Management Committee. Prior to joining the firm in January 2021, he spent 19 years with McKinsey (management consulting firm), most recently as a senior partner and co-leader of its Wealth & Asset Management practice. In addition, he co-led McKinsey’s Banking & Securities Solutions (a portfolio of data, analytics, and digital assets and capabilities) globally. | | | 82 | | | None |
| | | | | | | | |
| DISINTERESTED DIRECTORS | | | | | | |
| | | | | | | | |
Garry L. Moody,##
Chairman of the Board
71
(2008) | | Private Investor since prior to 2019. Formerly, Partner, Deloitte & Touche LLP (1995-2008) where he held a number of senior positions, including Vice Chairman, and U.S. and Global Investment Management Practice Managing Partner; President, Fidelity Accounting and Custody Services Company (1993-1995), where he was responsible for accounting, pricing, custody and reporting for the Fidelity mutual funds; and Partner, Ernst & Young LLP (1975-1993), where he served as the National Director of Mutual Fund Tax Services and Managing Partner of its Chicago Office Tax department. He served as a member of the Investment Company Institute’s Board of Governors and the Independent Directors Council’s Governing Council from October 2019 through September 2023, where he also served as Chairman of the Governance Committee from October 2021 through September 2023. He is Chairman of the AB Funds and Chairman of the Independent Directors Committees since January 2023; he has served as a director or trustee since 2008, and served as Chairman of the Audit Committee of such funds from 2008 to February 2023. | | | 82 | | | None |
| | | | | | | | |
31
| | |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
DISINTERESTED DIRECTORS
(continued) | | | | | | |
| | | | | | | | |
Jorge A. Bermudez,##
72
(2020) | | Private Investor since prior to 2019. Formerly, Chief Risk Officer of Citigroup, Inc., a global financial services company, from November 2007 to March 2008, Chief Executive Officer of Citigroup’s Commercial Business Group in North America and Citibank Texas from 2005 to 2007, and a variety of other executive and leadership roles at various businesses within Citigroup prior to then; Chairman (2017–2018) of the Texas A&M Foundation Board of Trustees (Trustee 2014–2021) and Chairman of the Smart Grid Center Board at Texas A&M University since 2012; director of, among others, Citibank N.A. from 2005 to 2008, the Federal Reserve Bank of Dallas, Houston Branch from 2009 to 2011, the Federal Reserve Bank of Dallas from 2011 to 2017, and the Electric Reliability Council of Texas from 2010 to 2016; and Chair of the Audit Committee of the Board of Directors of Moody’s Corporation since December 2022. He has served as director or trustee of the AB Funds since January 2020. | | | 82 | | | Moody’s Corporation since April 2011 |
| | | | | | | | |
Michael J. Downey,##
80
(2005) | | Private Investor since prior to 2019. Formerly, Chairman of The Asia Pacific Fund, Inc. (registered investment company) from 2002 until January 2019. From 1987 until 1993, Chairman and CEO of Prudential Mutual Fund Management, director of the Prudential mutual funds, and member of the Executive Committee of Prudential Securities, Inc. He has served as a director or trustee of the AB Funds since 2005. | | | 82 | | | None |
| | | | | | | | |
Nancy P. Jacklin,##
75
(2006) | | Private Investor since prior to 2019. Professorial Lecturer at the Johns Hopkins School of Advanced International Studies (2008–2015). U.S. Executive Director of the International Monetary Fund (which is responsible for ensuring the stability of the international monetary system), (December 2002–May 2006); Partner, Clifford Chance (1992–2002); Sector Counsel, International Banking and Finance, and Associate General Counsel, Citicorp (1985–1992); Assistant General Counsel (International), Federal Reserve Board of Governors (1982–1985); and Attorney Advisor, U.S. Department of the Treasury (1973–1982). Member of the Bar of the District of Columbia and of New York; and member of the Council on Foreign Relations. She has served as a director or trustee of the AB Funds since 2006 and served as Chair of the Governance and Nominating Committees of the AB Funds from 2014 to August 2023. | | | 82 | | | None |
| | | | | | | | |
32
| | |
| |
| | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
DISINTERESTED DIRECTORS
(continued) | | | | | | |
| | | | | | | | |
Jeanette W. Loeb,##
71
(2020) | | Private Investor since prior to 2019. Director of New York City Center since 2005. Formerly, Chief Executive Officer of PetCareRx (e-commerce pet pharmacy) from 2002 to 2011 and 2015 to April 2023. She was a director of MidCap Financial Investment Corporation (business development company) from August 2011 to July 2023 and a director of AB Multi-Manager Alternative Fund (fund of hedge funds) from 2012 to 2018. Formerly, affiliated with Goldman Sachs Group, Inc. (financial services) from 1977 to 1994, including as a partner thereof from 1986 to 1994. She has served as director or trustee of the AB Funds since April 2020 and serves as Chair of the Governance and Nominating Committees of the AB Funds since August 2023. | | | 82 | | | None |
| | | | | | | | |
Carol C. McMullen,##
68
(2016) | | Private Investor and a member of the Advisory Board of Butcher Box (since 2018) and serves as Advisory Board Chair as of June 2023. Formerly, Managing Director of Slalom Consulting (consulting) from 2014 until July 2023; member, Mass General Brigham (formerly, Partners Healthcare) Investment Committee (2010-2019); Director of Norfolk & Dedham Group (mutual property and casualty insurance) from 2011 until November 2016; Director of Partners Community Physicians Organization (healthcare) from 2014 until December 2016; and Managing Director of The Crossland Group (consulting) from 2012 until 2013. She has held a number of senior positions in the asset and wealth management industries, including at Eastern Bank (where her roles included President of Eastern Wealth Management), Thomson Financial (Global Head of Sales for Investment Management), and Putnam Investments (where her roles included Chief Investment Officer, Core and Growth and Head of Global Investment Research). She has served on a number of private company and non-profit boards, and as a director or trustee of the AB Funds since June 2016, and serves as Chair of the Audit Committees of such funds since February 2023. | | | 82 | | | None |
| | | | | | | | |
33
| | |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| MANAGEMENT OF THE FUND | | |
| |
| (continued) | | AB Variable Products Series Fund |
| | | | | | | | |
NAME, ADDRESS*,
AGE,
(YEAR FIRST ELECTED**) | | PRINCIPAL
OCCUPATION(S)
DURING PAST FIVE YEARS
AND OTHER INFORMATION*** | | PORTFOLIOS
IN AB FUND
COMPLEX
OVERSEEN BY
DIRECTOR | | | OTHER PUBLIC
COMPANY
DIRECTORSHIPS
CURRENTLY
HELD BY
DIRECTOR |
DISINTERESTED DIRECTORS
(continued) | | | | | | |
| | | | | | | | |
Marshall C. Turner, Jr. ##
82
(2005) | | Private Investor since prior to 2019. He was a Director of Xilinx, Inc. (programmable logic semi-conductors and adaptable, intelligent computing) from 2007 through August 2020, and is a former director of 33 other companies and organizations. Former Chairman and CEO of Dupont Photomasks, Inc. (semi-conductor manufacturing equipment) from 2003 through 2006. He has extensive operating leadership and venture capital investing experience, including five interim or full-time CEO roles, and prior service as general partner of institutional venture capital partnerships. He also has extensive non-profit board leadership experience, and currently serves on the board of the George Lucas Educational Foundation. He has served as a director of one AB Fund since 1992, and director or trustee of all AB Funds since 2005. He has served as both Chairman of the AB Funds and Chairman of the Independent Directors Committees from 2014 through December 2022. | | | 82 | | | None |
| | | | | | | | |
| ADVISORY BOARD MEMBER |
| | | | | | | | |
Emilie D. Wrapp,#
68
(2024) | | Former Senior Vice President, Counsel, Assistant Secretary & Senior Mutual Fund Legal Advisor of the Adviser (January 2023–June 2023). Prior thereto, Senior Vice President, Assistant Secretary, Counsel, and Head of Mutual Fund & Retail Legal of the Adviser; Assistant General Counsel and Assistant Secretary of ABI since prior to 2019 until June 2023. | | | 82 | | | None |
| * | The address for the Portfolio’s disinterested Directors and Advisory Board member is c/o AllianceBernstein L.P., Attention: Legal & Compliance Department—Mutual Fund Legal, 1345 Avenue of the Americas, New York, NY 10105. |
| ** | There is no stated term of office for the Fund’s Directors or Advisory Board member. |
| *** | The information above includes each Director’s principal occupation during the last five years and other information relating to the experience, attributes and skills relevant to each Director’s qualifications to serve as a Director, which led to the conclusion that each Director should serve as a Director for the Fund. |
| # | Mr. Erzan is an “interested person” of the Fund, as defined in the “1940 Act”, due to his position as a Senior Vice President of the Adviser. Ms. Wrapp is an “interested person” of the Fund, as defined in the 1940 Act, due to her former role with the Adviser. |
| ## | Member of the Audit Committee, the Governance and Nominating Committee, and the Independent Directors Committee. |
34
| | |
| | |
| | |
| |
| | | AB Variable Products Series Fund |
Officer Information
Certain information concerning the Portfolio’s Officers is listed below.
| | | | |
NAME, ADDRESS*
AND AGE | | PRINCIPAL POSITION(S)
HELD WITH FUND | | PRINCIPAL OCCUPATION
DURING PAST FIVE YEARS |
Onur Erzan
48 | | President and Chief Executive Officer | | See biography above. |
| | | | |
Daniel C. Roarty
52 | | Vice President | | Senior Vice President of the Adviser**, with which he has been associated since prior to 2019. He is also Chief Investment Officer of Sustainable Thematic Equities. |
| | | | |
Benjamin Ruegsegger
44 | | Vice President | | Senior Vice President and Senior Research Analyst of the Adviser**, with which he has been associated since prior to 2019. |
| | | | |
Nancy E. Hay
51 | | Secretary | | Senior Vice President and Counsel of the Adviser**, with which she has been associated since prior to 2019 and Assistant Secretary of ABI**. |
| | | | |
Michael B. Reyes 47 | | Senior Vice President | | Vice President of the Adviser**, with which he has been associated since prior to 2019. |
| | | | |
Stephen M. Woetzel
52 | | Treasurer and Chief Financial Officer | | Senior Vice President of ABIS**, with which he has been associated since prior to 2019. |
| | | | |
Phyllis J. Clarke
63 | | Controller | | Vice President of ABIS**, with which she has been associated since prior to 2019. |
| | | | |
Jennifer Friedland
49 | | Chief Compliance Officer | | Vice President of the Adviser** since 2020 and Mutual Fund Chief Compliance Officer (of all Funds since January 2023 and of the ETF Funds since 2022). Before joining the Adviser in 2020, she was Chief Compliance Officer at WestEnd Advisors, LLC from 2013 until 2019. |
| * | | The address for each of the Portfolio’s Officers is 1345 Avenue of the Americas, New York, NY 10105. |
| ** | | The Adviser, ABIS and ABI are affiliates of the Fund. |
| | | The Fund’s Statement of Additional Information (“SAI”) has additional information about the Fund’s Directors and Officers and is available without charge upon request. Contact your financial representative or the Adviser at (800) 227-4618, or visit www.abfunds.com, for a free prospectus or SAI. |
35
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| | |
| |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO | | AB Variable Products Series Fund |
OPERATION AND EFFECTIVENESS OF THE PORTFOLIO’S LIQUIDITY RISK MANAGEMENT PROGRAM:
In October 2016, the Securities and Exchange Commission (“SEC”) adopted the open-end fund liquidity rule (the “Liquidity Rule”). In June 2018 the SEC adopted a requirement that funds disclose information about the operation and effectiveness of their Liquidity Risk Management Program (“LRMP”) in their reports to shareholders.
One of the requirements of the Liquidity Rule is for the Portfolio to designate an Administrator of the Portfolio’s Liquidity Risk Management Program. The Administrator of the Portfolio’s LRMP is AllianceBernstein L.P., the Portfolio’s investment adviser (the “Adviser”). The Adviser has delegated the responsibility to its Liquidity Risk Management Committee (the “Committee”).
Another requirement of the Liquidity Rule is for the Portfolio’s Board of Directors/Trustees (the “Fund Board”) to receive an annual written report from the Administrator of the LRMP, which addresses the operation of the Portfolio’s LRMP and assesses its adequacy and effectiveness. The Adviser provided the Fund Board with such annual report during the first quarter of 2024, which covered the period January 1, 2023 through December 31, 2023 (the “Program Reporting Period”).
The LRMP’s principal objectives include supporting the Portfolio’s compliance with limits on investments in illiquid assets and mitigating the risk that the Portfolio will be unable to meet its redemption obligations in a timely manner.
Pursuant to the LRMP, the Portfolio classifies the liquidity of its portfolio investments into one of the four categories defined by the SEC: Highly Liquid, Moderately Liquid, Less Liquid, and Illiquid. These classifications are reported to the SEC on Form N-PORT.
During the Program Reporting Period, the Committee reviewed whether the Portfolio’s strategy is appropriate for an open-end structure, incorporating any holdings of less liquid and illiquid assets. If the Portfolio participated in derivative transactions, the exposure from such transactions were considered in the LRMP.
The Committee also performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum (“HLIM”). The Committee also incorporated the following information when determining the Portfolio’s reasonably anticipated trading size for purposes of liquidity monitoring: historical net redemption activity, a Portfolio’s concentration in an issuer, shareholder concentration, investment performance, total net assets, and distribution channels.
The Adviser informed the Fund Board that the Committee believes the Portfolio’s LRMP is adequately designed, has been implemented as intended, and has operated effectively since its inception. No material exceptions have been noted since the implementation of the LRMP. During the Program Reporting Period, liquidity in all markets was challenged due to rising rates and economic uncertainty. However, markets also remained orderly during the Program Reporting Period. There were no liquidity events that impacted the Portfolio or its ability to timely meet redemptions during the Program Reporting Period.
36
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| |
| SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
| |
| CONTINUANCE DISCLOSURE | | AB Variable Products Series Fund |
INFORMATION REGARDING THE REVIEW AND APPROVAL OF THE FUND’S ADVISORY AGREEMENT
The disinterested directors (the “directors”) of AB Variable Products Series Fund, Inc. (the “Company”) unanimously approved the continuance of the Company’s Advisory Agreement with the Adviser in respect of AB Sustainable International Thematic Portfolio (formerly AB International Growth Portfolio) (the “Fund”) at a meeting held in-person on May 2-4, 2023 (the “Meeting”).
Prior to approval of the continuance of the Advisory Agreement, the directors had requested from the Adviser, and received and evaluated, extensive materials. They reviewed the proposed continuance of the Advisory Agreement with the Adviser and with experienced counsel who are independent of the Adviser, who advised on the relevant legal standards. The directors also reviewed additional materials, including comparative analytical data prepared by the Senior Vice President of the Fund. The directors also discussed the proposed continuance in private sessions with counsel.
The directors considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as directors or trustees of most of the registered investment companies advised by the Adviser, their overall confidence in the Adviser’s integrity and competence they have gained from that experience, the Adviser’s initiative in identifying and raising potential issues with the directors and its responsiveness, frankness and attention to concerns raised by the directors in the past, including the Adviser’s willingness to consider and implement organizational and operational changes designed to improve investment results and the services provided to the AB Funds. The directors noted that they have four regular meetings each year, at each of which they review extensive materials and information from the Adviser, including information on the investment performance of the Fund.
The directors also considered all factors they believed relevant, including the specific matters discussed below. During the course of their deliberations, the directors evaluated, among other things, the reasonableness of the advisory fee. The directors did not identify any particular information that was all-important or controlling, and different directors may have attributed different weights to the various factors. The directors determined that the selection of the Adviser to manage the Fund and the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, including the advisory fee, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors’ determinations included the following:
Nature, Extent and Quality of Services Provided
The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement, including the quality of the investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. The directors noted that the Adviser from time to time reviews the Fund’s investment strategies and from time to time proposes changes intended to improve the Fund’s relative or absolute performance for the directors’ consideration. They also noted the professional experience and qualifications of the Fund’s portfolio management team and other senior personnel of the Adviser. The directors also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost to it of providing certain clerical, accounting, administrative and other services to the Fund by employees of the Adviser or its affiliates. Requests for these reimbursements are made on a quarterly basis and subject to approval by the directors. Reimbursements, to the extent requested and paid, result in a higher rate of total compensation from the Fund to the Adviser than the fee rate stated in the Advisory Agreement. The directors noted that the methodology used to determine the reimbursement amounts had been reviewed by an independent consultant at the request of the directors. The quality of administrative and other services, including the Adviser’s role in coordinating the activities of the Fund’s other service providers, also was considered. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement.
Costs of Services Provided and Profitability
The directors reviewed a schedule of the revenues and expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2021 and 2022 that had been prepared with an expense allocation methodology arrived at in consultation with an independent consultant at the request of the directors. The directors noted the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data and understood that there are a number of potentially acceptable allocation methodologies for information of this type. The directors noted that the profitability information reflected all revenues and expenses of the Adviser’s relationship with the Fund, including those relating to its subsidiaries that provide transfer agency, distribution and brokerage services to the Fund. The directors recognized that it is difficult to make comparisons of the profitability of the Advisory Agreement with the profitability of fund advisory contracts
37
| | |
SUSTAINABLE INTERNATIONAL THEMATIC PORTFOLIO |
CONTINUANCE DISCLOSURE | | |
| |
| (continued) | | AB Variable Products Series Fund |
for unaffiliated funds because comparative information is not generally publicly available and is affected by numerous factors. The directors focused on the profitability of the Adviser’s relationship with the Fund before taxes and distribution expenses. The directors concluded that the Adviser’s level of profitability from its relationship with the Fund was not unreasonable.
Fall-Out Benefits
The directors considered the other benefits to the Adviser and its affiliates from their relationships with the Fund, including, but not limited to, benefits relating to soft dollar arrangements (whereby investment advisers receive brokerage and research services from brokers that execute agency transactions for their clients); 12b-1 fees and sales charges received by the Fund’s principal underwriter (which is a wholly owned subsidiary of the Adviser) in respect of the Fund’s Class B shares; brokerage commissions paid by the Fund to brokers affiliated with the Adviser; and transfer agency fees paid by the Fund to a wholly owned subsidiary of the Adviser. The directors recognized that the Adviser’s profitability would be somewhat lower without these benefits. The directors understood that the Adviser also might derive reputational and other benefits from its association with the Fund.
Investment Results
In addition to the information reviewed by the directors in connection with the Meeting, the directors receive detailed performance information for the Fund at each regular Board meeting during the year.
At the Meeting, the directors reviewed performance information prepared by an independent service provider (the “15(c) service provider”), showing the performance of the Class A Shares of the Fund against a group of similar funds (“peer group”) and a larger group of similar funds (“peer universe”), each selected by the 15(c) service provider, and information prepared by the Adviser showing performance of the Class A Shares against a broad-based securities market index, in each case for the 1-, 3-, 5- and 10-year periods ended February 28, 2023 and (in the case of comparisons with the broad-based securities market index) for the period from inception. Based on their review, the directors concluded that the Fund’s investment performance was acceptable.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate payable by the Fund to the Adviser and information prepared by the 15(c) service provider concerning advisory fee rates payable by other funds in the same category as the Fund. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The directors compared the Fund’s contractual effective advisory fee rate with a peer group median. Taking into account the administrative expense reimbursement paid to the Adviser in the latest fiscal year, the directors noted that the Adviser’s total rate of compensation was above the median and discussed with the Adviser the reasons it was above the median.
The directors also considered the Adviser’s fee schedule for other clients utilizing investment strategies similar to those of the Fund. For this purpose, they reviewed the relevant advisory fee information from the Adviser’s Form ADV and in a report from the Fund’s Senior Vice President and noted the differences between the Fund’s fee schedule, on the one hand, and the Adviser’s institutional fee schedule, on the other. The directors noted that the Adviser may, in some cases, agree to fee rates with large institutional clients that are lower than those reviewed by the directors and that they had previously discussed with the Adviser its policies in respect of such arrangements. The directors also compared the advisory fee rate for the Fund with that for another fund advised by the Adviser utilizing similar investment strategies.
The Adviser reviewed with the directors the significantly greater scope of the services it provides to the Fund relative to institutional clients. In this regard, the Adviser noted, among other things, that, compared to institutional accounts, the Fund (i) demands considerably more portfolio management, research and trading resources due to significantly higher daily cash flows; (ii) has more tax and regulatory restrictions and compliance obligations; (iii) must prepare and file or distribute regulatory and other communications about fund operations; and (iv) must provide shareholder servicing to retail investors. The Adviser also reviewed the greater legal risks presented by the large and changing population of Fund shareholders who may assert claims against the Adviser in individual or class actions, and the greater entrepreneurial risk in offering new fund products, which require substantial investment to launch, may not succeed, and generally must be priced to compete with larger, more established funds resulting in lack of profitability to the Adviser until a new fund achieves scale. In light of the substantial differences in services rendered by the Adviser to institutional clients as compared to the Fund, and the different risk profile, the directors considered these fee comparisons inapt and did not place significant weight on them in their deliberations.
38
| | |
| |
| | | AB Variable Products Series Fund |
In connection with their review of the Fund’s advisory fee, the directors also considered the total expense ratio of the Class A shares of the Fund in comparison to the medians for a peer group and a peer universe selected by the 15(c) service provider. The Class A expense ratio of the Fund was based on the Fund’s latest fiscal year. The directors noted that it was likely that the expense ratios of some of the other funds in the Fund’s category were lowered by waivers or reimbursements by those funds’ investment advisers, which in some cases might be voluntary or temporary. The directors view expense ratio information as relevant to their evaluation of the Adviser’s services because the Adviser is responsible for coordinating services provided to the Fund by others. The directors noted that the Fund’s expense ratio was above the medians, after giving effect to a voluntary waiver by the Adviser. After reviewing and discussing the Adviser’s explanations of the reasons for this, the directors concluded that the Fund’s expense ratio was acceptable.
Economies of Scale
The directors noted that the advisory fee schedule for the Fund contains breakpoints that reduce the fee rates on assets above specified levels. The directors took into consideration prior presentations by an independent consultant on economies of scale in the mutual fund industry and for the AB Funds, and presentations from time to time by the Adviser concerning certain of its views on economies of scale. The directors also had requested and received from the Adviser certain updates on economies of scale in advance of the Meeting. The directors believe that economies of scale may be realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there is no established methodology for setting breakpoints that give effect to the fund-specific services provided by a fund’s adviser and to the economies of scale that an adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect a fund’s operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Fund’s shareholders would benefit from a sharing of economies of scale in the event the Fund’s net assets exceed a breakpoint in the future.
39
VPS-SIT-0151-1223
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer and principal accounting officer. A copy of the registrant’s code of ethics is filed herewith as Exhibit 12(a)(1).
(b) During the period covered by this report, no material amendments were made to the provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, no implicit or explicit waivers to the provisions of the code of ethics adopted in 2(a) above were granted.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant’s Board of Directors has determined that independent directors Garry L. Moody, Marshall C. Turner, Jr., Jorge A. Bermudez and Carol C. McMullen qualify as audit committee financial experts.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) - (c) The following table sets forth the aggregate fees billed by the independent auditor Ernst & Young LLP, for the Fund’s last two fiscal years for professional services rendered for: (i) the audit of the Fund’s annual financial statements included in the Fund’s annual report to stockholders; (ii) assurance and related services that are reasonably related to the performance of the audit of the Fund’s financial statements and are not reported under (i), which include multi-class distribution testing, advice and education on accounting and auditing issues, and consent letters; and (iii) tax compliance, tax advice and tax return preparation.
| | | | | | | | | | | | | | | | |
| | | | | | Audit
Fees | | | Audit-Related
Fees | | | Tax
Fees | |
AB Balanced Hedged Allocation Portfolio | | | 2022 | | | | 75,807 | | | | — | | | | 13,457 | |
| | | 2023 | | | | 60,807 | | | | — | | | | 29,670 | |
AB Sustainable Global Thematic Portfolio | | | 2022 | | | | 44,022 | | | | — | | | | 1,816 | |
| | | 2023 | | | | 44,022 | | | | — | | | | 19,327 | |
AB Relative Value Portfolio | | | 2022 | | | | 32,974 | | | | — | | | | 2,648 | |
| | | 2023 | | | | 32,974 | | | | — | | | | 19,617 | |
AB Sustainable International Thematic Portfolio | | | 2022 | | | | 44,022 | | | | — | | | | 3,551 | |
| | | 2023 | | | | 44,022 | | | | — | | | | 22,330 | |
AB International Value Portfolio | | | 2022 | | | | 44,022 | | | | — | | | | 20,557 | |
| | | 2023 | | | | 44,022 | | | | — | | | | 46,938 | |
AB Large Cap Growth Portfolio | | | 2022 | | | | 32,974 | | | | — | | | | 1,831 | |
| | | 2023 | | | | 32,974 | | | | — | | | | 17,220 | |
AB Small Cap Growth Portfolio | | | 2022 | | | | 32,974 | | | | — | | | | 2,696 | |
| | | 2023 | | | | 32,974 | | | | — | | | | 18,663 | |
AB Discovery Value Portfolio | | | 2022 | | | | 37,394 | | | | — | | | | 6,897 | |
| | | 2023 | | | | 37,394 | | | | — | | | | 19,663 | |
AB Dynamic Asset Allocation Portfolio | | | 2022 | | | | 89,404 | | | | — | | | | 16,219 | |
| | | 2023 | | | | 89,404 | | | | — | | | | 59,547 | |
AB Global Risk Allocation-Moderate Portfolio | | | 2022 | | | | 58,830 | | | | — | | | | 14,577 | |
| | | 2023 | | | | 58,830 | | | | — | | | | 34,712 | |
(d) Not applicable.
(e) (1) Beginning with audit and non-audit service contracts entered into on or after May 6, 2003, the Fund’s Audit Committee policies and procedures require the pre-approval of all audit and non-audit services provided to the Fund by the Fund’s independent registered public accounting firm. The Fund’s Audit Committee policies and procedures also require pre-approval of all audit and non-audit services provided to the Adviser and Service Affiliates to the extent that these services are directly related to the operations or financial reporting of the Fund.
(e) (2) No percentage of services addressed by (b) and (c) of this Item 4 were approved pursuant to the waiver provision of paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. No amounts are reported for Item 4 (d).
(f) Not applicable.
(g) The following table sets forth the aggregate non-audit services provided to the Fund, the Fund’s Adviser and entities that control, are controlled by or under common control with the Adviser that provide ongoing services to the Fund:
| | | | | | | | | | | | |
| | | | | | All Fees for
Non-Audit Services
Provided to the
Portfolio, the Adviser
and Service
Affiliates | | | Total Amount of
Foregoing Column Pre-
approved by the Audit
Committee
(Portion Comprised of
Audit Related Fees)
(Portion Comprised of
Tax Fees) | |
AB Balanced Hedged Allocation Portfolio | | | 2022 | | | $ | 1,998,140 | | | $ | 13,457 | |
| | | | | | | | | | | — | |
| | | | | | | | | | $ | (13,457 | ) |
| | | 2023 | | | $ | 1,917,111 | | | $ | 29,670 | |
| | | | | | | | | | | — | |
| | | | | | | | | | | (29,670 | ) |
AB Sustainable Global Thematic Portfolio | | | 2022 | | | $ | 1,986,499 | | | $ | 1,816 | |
| | | | | | | | | | | — | |
| | | | | | | | | | $ | (1,816 | ) |
| | | 2023 | | | $ | 1,906,768 | | | $ | 19,327 | |
| | | | | | | | | | | — | |
| | | | | | | | | | | (19,327 | ) |
AB Relative Value Portfolio | | | 2022 | | | $ | 1,987,331 | | | $ | 2,648 | |
| | | | | | | | | | $ | — | |
| | | | | | | | | | $ | (2,648 | ) |
| | | 2023 | | | $ | 1,907,058 | | | $ | 19,617 | |
| | | | | | | | | | | — | |
| | | | | | | | | | | (19,617 | ) |
AB Sustainable International Thematic Portfolio | | | 2022 | | | $ | 1,988,234 | | | $ | 3,551 | |
| | | | | | | | | | | — | |
| | | | | | | | | | $ | (3,551 | ) |
| | | 2023 | | | $ | 1,909,771 | | | $ | 22,330 | |
| | | | | | | | | | | — | |
| | | | | | | | | | | (22,330 | ) |
AB International Value Portfolio | | | 2022 | | | $ | 2,005,240 | | | $ | 20,557 | |
| | | | | | | | | | | — | |
| | | | | | | | | | $ | (20,557 | ) |
| | | 2023 | | | $ | 1,934,379 | | | $ | 46,938 | |
| | | | | | | | | | | — | |
| | | | | | | | | | | (46,938 | ) |
AB Large Cap Growth Portfolio | | | 2022 | | | $ | 1,986,514 | | | $ | 1,831 | |
| | | | | | | | | | | — | |
| | | | | | | | | | $ | (1,831 | ) |
| | | 2023 | | | $ | 1,904,661 | | | $ | 17,220 | |
| | | | | | | | | | | — | |
| | | | | | | | | | | (17,220 | ) |
AB Small Cap Growth Portfolio | | | 2022 | | | $ | 1,987,379 | | | $ | 2,696 | |
| | | | | | | | | | | — | |
| | | | | | | | | | $ | (2,696 | ) |
| | | 2023 | | | $ | 1,906,104 | | | $ | 18,663 | |
| | | | | | | | | | | — | |
| | | | | | | | | | | (18,663 | ) |
AB Discovery Value Portfolio | | | 2022 | | | $ | 1,991,580 | | | $ | 6,897 | |
| | | | | | | | | | | — | |
| | | | | | | | | | $ | (6,897 | ) |
| | | 2023 | | | $ | 1,907,104 | | | $ | 19,663 | |
| | | | | | | | | | | — | |
| | | | | | | | | | | (19,663 | ) |
AB Dynamic Asset Allocation Portfolio | | | 2022 | | | $ | 2,000,902 | | | $ | 16,219 | |
| | | | | | | | | | | — | |
| | | | | | | | | | $ | (16,219 | ) |
| | | 2023 | | | $ | 1,946,988 | | | $ | 59,547 | |
| | | | | | | | | | | — | |
| | | | | | | | | | | (59,547 | ) |
AB Global Risk Allocation-Moderate Portfolio | | | 2022 | | | $ | 1,999,260 | | | $ | 14,577 | |
| | | | | | | | | | | — | |
| | | | | | | | | | $ | (14,577 | ) |
| | | 2023 | | | $ | 1,922,153 | | | $ | 34,712 | |
| | | | | | | | | | | — | |
| | | | | | | | | | | (34,712 | ) |
(h) The Audit Committee of the Fund has considered whether the provision of any non-audit services not pre-approved by the Audit Committee provided by the Fund’s independent registered public accounting firm to the Adviser and Service Affiliates is compatible with maintaining the auditor’s independence.
(i) Not applicable.
(j) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may recommend nominees to the Fund’s Board of Directors since the Fund last provided disclosure in response to this item.
ITEM 11. 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-3(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 changes in the registrant’s internal controls over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 13. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
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): AB Variable Products Series Fund, Inc. |
| |
| By: | | /s/ Onur Erzan |
| | Onur Erzan |
| | President |
Date: February 14, 2024
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/ Onur Erzan |
| | Onur Erzan |
| | President |
Date: February 14, 2024
| | |
| |
| By: | | /s/ Stephen M. Woetzel |
| | Stephen M. Woetzel |
| | Treasurer and Chief Financial Officer |
Date: February 14, 2024
