<PAGE>
As filed with the Securities and Exchange
Commission on October 16, 1996
File Nos. 33-18647
811-5398
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF l933
Pre-Effective Amendment No.
Post-Effective Amendment No. 19 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 20 X
____________________________________
ALLIANCE 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 Office) (Zip Code)
Registrant's Telephone Number, including Area Code:
(800) 221-5672
____________________________________
EDMUND P. BERGAN, JR.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York l0105
(Name and address of agent for service)
______________________________________
Copies of communications to:
<PAGE>
Thomas G. MacDonald
Seward & Kissel
One Battery Park Plaza
New York, New York 10004
It is proposed that this filing will become effective
(check appropriate box)
immediately upon filing pursuant to paragraph (b)
_____ on (date), 1995 pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)(1)
_____ on (date) pursuant to paragraph (a)(1)
X 75 days after filing pursuant to paragraph (a)(2)
_____ on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
_____ this post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.
Registrant has registered an indefinite number of shares of
common stock pursuant to Rule 24f-2 under the Investment Company
Act of 1940. Registrant's Rule 24f-2 notice for its fiscal year
ended December 31, 1995 was filed on February 26, 1996 and
amended on March 6, 1996.
2
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404 (c))
N-1A ITEM NO. LOCATION IN PROSPECTUS
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Expense Information
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Description of the Portfolio
Item 5. Management of the Fund Management of the Fund;
General Information
Item 6. Capital Stock and Other Securities General Information; Dividends,
Distributions and Taxes
Item 7. Purchase of Securities Being Offered Purchase and Redemption of
Shares; General Information
Item 8. Redemption or Repurchase Purchase and Redemption of
Shares; General Information
Item 9. Pending Legal Proceedings Not Applicable
PART B LOCATION IN STATEMENT
OF ADDITIONAL INFORMATION
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information and History Management of the Fund;
General Information
Item 13. Investment Objectives and Policies Investment Policies and
Restrictions
3
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404 (c))
PART B
(Continued)
Item 14. Management of the Fund Management of the Fund
Item 15. Control Persons and Principal
Holders of Securities Management of the Fund;
General Information
Item 16. Investment Advisory and Other
Services Management of the Fund
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other Securities General Information
Item 19. Purchase, Redemption and Pricing Purchase and
of Securities Being Offered Redemption of Shares;
Net Asset Value
Item 20. Tax Status Dividends, Distributions
and Taxes
Item 21. Underwriters General Information
Item 22. Calculation of Performance Data General Information
Item 23. Financial Statements Financial Statements; Report
of Independent Auditors
4
00250292.AX8
<PAGE>
Incorporated herein by reference is the prospectus of Alliance Variable
Products Series Fund, Inc. (the "Fund") contained in Post-Effective Amendment
No. 15 to the Fund's Registration Statement on Form N-1A (File Nos. 33-18647
and 811-5398) filed April 30, 1996.
5
00250292.AX8
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
_________________________________________________________________
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
_________________________________________________________________
Alliance Variable Products Series Fund, Inc. (the "Fund") is
an open-end series investment company designed to fund variable
annuity contracts and variable life insurance policies to be
offered by the separate accounts of certain life insurance
companies.
_________________________________________________________________
REAL ESTATE INVESTMENT PORTFOLIO
_________________________________________________________________
The Real Estate Investment Portfolio (the "Portfolio") seeks
a total return on its assets from long-term growth of capital and
from income principally through investing in a portfolio of
equity securities of issuers that are primarily engaged in or
related to the real estate industry.
(R) : This is a registered mark used under license from the
owner, Alliance Capital Management L.P.
_________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PROSPECTUS/ , 1996
Investors are advised to carefully read this Prospectus
and to retain it for future reference.
6
00250292.AX8
<PAGE>
_________________________________________________________________
PURCHASE INFORMATION
_________________________________________________________________
The Fund will offer and sell the Portfolio's shares only
to separate accounts of certain life insurance companies, for the
purpose of funding variable annuity contracts and variable life
insurance policies. Sales will be made without sales charge at
the Portfolio's per share net asset value. Further information
can be obtained from Alliance Fund Services, Inc. at the address
or telephone number shown above.
An investment in the Portfolio is not a deposit or
obligation of, or guaranteed or endorsed by, any bank and is not
federally insured by the Federal Deposit Insurance Corporation,
the Federal Reserve Board or any other agency.
_________________________________________________________________
ADDITIONAL INFORMATION
_________________________________________________________________
This Prospectus sets forth concisely the information
which a prospective investor should know about the Fund and the
Portfolio before applying for certain variable annuity contracts
and variable life insurance policies offered by participating
insurance companies. It should be read in conjunction with the
Prospectus of the separate account of the specific insurance
product which accompanies this Prospectus. A "Statement of
Additional Information" dated , 1996 which
provides a further discussion of certain areas in this Prospectus
and other matters which may be of interest to some investors, has
been filed with the Securities and Exchange Commission (the
"Commission") and is incorporated herein by reference. For a free
copy, call or write Alliance Fund Services, Inc. at the address
or telephone number shown above.
2
<PAGE>
_________________________________________________________________
EXPENSE INFORMATION
_________________________________________________________________
Shareholder Transaction Expenses
The Portfolio has no sales load on purchases or
reinvested dividends, deferred sales load, redemption fee or
exchange fee.
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management Fees.......................... 0%*
Other Expenses........................... .95%*
_____
Total Portfolio Operating Expenses......... .95%
=====
____________________
* Net of expense reimbursement
Example
You would pay the following expenses on a $1,000
investment, assuming a 5% annual return (cumulatively through the
end of each time period).
1 Year 3 Years
$10 $30
The purpose of the foregoing table is to assist the
investor in understanding the various costs and expenses that an
investor in the Portfolio will bear directly and indirectly.
"Other Expenses" for the Portfolio are based on estimated amounts
for the Portfolio's current fiscal year. The estimated expense
information for the Portfolio is net of voluntary expense
reimbursements which are not required to be continued
indefinitely; however, the Adviser intends to continue such
reimbursements for the foreseeable future. The estimated
Management Fees and Other Expenses of the Portfolio before
expense reimbursements would be .90% and [ %], respectively.
The example should not be considered representative of future
expenses; actual expenses may be greater or less than those
shown.
3
<PAGE>
_________________________________________________________________
DESCRIPTION OF THE PORTFOLIO
_________________________________________________________________
Introduction to the Fund
The Fund was established as a Maryland corporation in
1987. The Fund is an open-end management investment company
commonly known as a "mutual fund" whose shares are offered in
separate series each referred to as a "portfolio." Because the
Fund offers multiple portfolios, it is known as a "series fund."
Each portfolio is a separate pool of assets constituting, in
effect, a separate fund with its own investment objectives and
policies.
A shareholder in the Portfolio will be entitled to his
or her pro rata share of all dividends and distributions arising
from the Portfolio's assets and, upon redeeming shares of the
Portfolio, the shareholder will receive the then current net
asset value of the Portfolio represented by the redeemed shares.
(See "Purchase and Redemption of Shares"). While the Fund has no
present intention of doing so, the Fund is empowered to
establish, without shareholder approval, additional portfolios
which may have different investment objectives.
In addition to the Portfolio, the Fund currently has 18
other portfolios: the Money Market Portfolio, the Premier Growth
Portfolio, the Growth and Income Portfolio, the U.S.
Government/High Grade Securities Portfolio, the High-Yield
Portfolio, the Total Return Portfolio, the International
Portfolio, the Short-Term Multi-Market Portfolio, the Global Bond
Portfolio, the North American Government Income Portfolio, the
Global Dollar Government Portfolio, the Utility Income Portfolio,
the Conservative Investors Portfolio, the Growth Investors
Portfolio, the Growth Portfolio, the Worldwide Privatization
Portfolio, the Technology Portfolio and the Quasar Portfolio.
The Fund is intended to serve as the investment medium
for variable annuity contracts and variable life insurance
policies to be offered by the separate accounts of certain life
insurance companies.
It is conceivable that in the future it may be
disadvantageous for variable annuity and variable life insurance
separate accounts to invest simultaneously in the Fund.
Currently, however, the Fund does not foresee any disadvantage to
the holders of variable annuity contracts and variable life
insurance policies arising from the fact that the interests of
the holders of such contracts and policies may differ.
Nevertheless, the Fund's Directors intend to monitor events in
4
<PAGE>
order to identify any material irreconcilable conflicts which may
possibly arise and to determine what action, if any, should be
taken in response thereto.
The investment objective and policies of the Portfolio
are set forth below. There can be, of course, no assurance that
the Portfolio will achieve its investment objective.
Investment Objective
The Portfolio's investment objective is to seek a total
return on its assets from long-term growth of capital and from
income principally through investing in a portfolio of equity
securities of issuers that are primarily engaged in or related to
the real estate industry.
Investment Policies
Under normal circumstances, at least 65% of the
Portfolio's total assets will be invested in equity securities of
real estate investment trusts ("REITS") and other real estate
industry companies. A "real estate industry company" is a
company that derives at least 50% of its gross revenues or net
profits from the ownership, development, construction,
financing, management or sale of commercial, industrial or
residential real estate or interests therein. The equity
securities in which the Portfolio will invest for this purpose
consist of common stock, shares of beneficial interest of REITs
and securities with common stock characteristics, such as
preferred stock or convertible securities ("Real Estate Equity
Securities").
The Portfolio may invest up to 35% of its total assets
in (a) securities that directly or indirectly represent
participations in, or are collateralized by and payable from,
mortgage loans secured by real property ("Mortgage-Backed
Securities"), such as mortgage pass-through certificates, real
estate mortgage investment conduit ("REMIC") certificates and
collateralized mortgage obligations ("CMOs") and (b) short-term
investments. These instruments are described below. The risks
associated with the Portfolio's transactions in REMICs, CMOs and
other types of mortgage-backed securities, which are considered
to be derivative securities, may include some or all of the
following: market risk, leverage and volatility risk, correlation
risk, credit risk and liquidity and valuation risk. See "Risk
Considerations -- Mortgage Backed Securities" for a description
of these and other risks.
As to any investment in Real Estate Equity Securities,
the Adviser's analysis will focus on determining the degree to
which the company involved can achieve sustainable growth in cash
5
<PAGE>
flow and dividend paying capability. The Adviser believes that
the primary determinant of this capability is the economic
viability of property markets in which the company operates and
that the secondary determinant of this capability is the ability
of management to add value through strategic focus and operating
expertise. The Portfolio will purchase Real Estate Equity
Securities when, in the judgment of the Adviser, their market
price does not adequately reflect this potential. In making this
determination, the Adviser will take into account fundamental
trends in underlying property markets as determined by
proprietary models, site visits conducted by individuals
knowledgeable in local real estate markets, price-earnings ratios
(as defined for real estate companies), cash flow growth and
stability, the relationship between asset value and market price
of the securities, dividend payment history, and such other
factors which the Adviser may determine from time to time to be
relevant. The Adviser will attempt to purchase for the Portfolio
Real Estate Equity Securities of companies whose underlying
portfolios are diversified geographically and by property type.
The Portfolio may invest without limitation in shares of
REITs. REITs are pooled investment vehicles which invest
primarily in income producing real estate or real estate related
loans or interests. REITs are generally classified as equity
REITs, mortgage REITs or a combination of equity and mortgage
REITs. Equity REITs invest the majority of their assets directly
in real property and derive income primarily from the collection
of rents. Equity REITs can also realize capital gains by selling
properties that have appreciated in value. Mortgage REITs invest
the majority of their assets in real estate mortgages and derive
income from the collection of interest payments. Similar to
investment companies such as the Portfolio, REITs are not taxed
on income distributed to shareholders provided they comply with
several requirements of the Internal Revenue Code of 1986, as
amended ("the Code"). The Portfolio will indirectly bear its
proportionate share of expenses incurred by REITs in which the
Portfolio invests in addition to the expenses incurred directly
by the Portfolio.
INVESTMENT PROCESS FOR REAL ESTATE EQUITY SECURITIES.
The Portfolio's investment strategy with respect to Real Estate
Equity Securities is based on the premise that property market
fundamentals are the primary determinant of growth underlying the
success of Real Estate Equity Securities. Value added management
will further distinguish the most attractive Real Estate Equity
Securities. The Portfolio's research and investment process is
designed to identify those companies with strong property
fundamentals and strong management teams. This process is
comprised of real estate market research, specific property
inspection and securities analysis.
6
<PAGE>
The universe of property-owning real estate industry
firms consists of approximately 115 companies of sufficient size
and quality to merit consideration for investment by the
Portfolio. In implementing the Portfolio's research and
investment process, the Adviser will avail itself of the
consulting services of Koll Investment Management, a division of
Koll Real Estate Services ("Koll"), a national real estate
investment and property manager that oversees a 1,000 property
portfolio. As consultant to the Adviser, Koll provides access to
a proprietary model (Koll's National Real Estate Index) that
analyzes the approximately 9,000 properties owned by these
companies. Using proprietary databases and algorithms, Koll
analyzes local market rent, expense and occupancy trends, market
specific transaction pricing, demographic and economic trends,
and leading indicators of real estate supply such as building
permits. Over 300 asset-type specific geographic markets are
analyzed and ranked on a relative scale by Koll in compiling its
REIT-SCORE database. The relative attractiveness of these real
estate industry companies is similarly ranked based on the
composite rankings of the properties they own. See "Management
of the Fund -- Consultant To The Adviser" for more information
about Koll.
Once the universe of real estate industry companies has
been distilled through the market research process, Koll's local
market presence provides the capability to perform site specific
inspections of key properties. This analysis examines specific
property location, condition, and sub-market trends. Koll's use
of locally based real estate professionals provides the Adviser
with a window on the operations of the portfolio companies as
information gathered can immediately be put in the context of
local market events. Only those companies whose specific
property portfolios reflect the promise of their general markets
will be considered for initial and continued investment by the
Portfolio.
The Adviser further screens the universe of real estate
industry companies by using rigorous financial models and by
engaging in regular contact with management of targeted
companies. Each management's strategic plan and ability to
execute the plan are determined and analyzed. The Adviser will
make extensive use of Koll's network of industry analysts in
order to assess trends in tenant industries. This information is
then used to further interpret management's strategic plans.
Financial ratio analysis is used to isolate those companies with
the ability to make value-added acquisitions. This information
is combined with property market trends and used to project
future earnings potential.
The Adviser believes that this process will result in a
portfolio that will consist of Real Estate Equity Securities of
7
<PAGE>
companies that own assets in the most desirable markets across
the country, diversified geographically and by property type.
MORTGAGE-BACKED SECURITIES AND ASSOCIATED RISKS.
Mortgage-Backed Securities include mortgage pass-through
certificates and multiple-class pass-through securities, such as
REMIC pass-through certificates, CMOs and stripped mortgage-
backed securities ("SMBS"), and other types of Mortgage-Backed
Securities that may be available in the future.
GUARANTEED MORTGAGE PASS-THROUGH SECURITIES. The
Portfolio may invest in guaranteed mortgage pass-through
securities which represent participation interests in pools of
residential mortgage loans and are issued by U.S. governmental or
private lenders and guaranteed by the U.S. Government or one of
its agencies or instrumentalities, including but not limited to
the Government National Mortgage Association ("Ginnie Mae"), the
Federal National Mortgage Association ("Fannie Mae") and the
Federal Home Loan Mortgage Corporation ("Freddie Mac"). Ginnie
Mae certificates are guaranteed by the full faith and credit of
the United States Government for timely payment of principal and
interest on the certificates. Fannie Mae certificates are
guaranteed by Fannie Mae, a federally chartered and privately-
owned corporation for full and timely payment of principal and
interest on the certificates. Freddie Mac certificates are
guaranteed by Freddie Mac, a corporate instrumentality of the
United States Government, for timely payment of interest and the
ultimate collection of all principal of the related mortgage
loans.
MULTIPLE-CLASS PASS-THROUGH SECURITIES AND
COLLATERALIZED MORTGAGE OBLIGATIONS. Mortgage-Backed Securities
also include CMOs and REMIC pass-through or participation
certificates, which may be issued by, among others, U.S.
Government agencies and instrumentalities as well as private
lenders. CMOs and REMIC certificates are issued in multiple
classes and the principal of and interest on the mortgage assets
may be allocated among the several classes of CMOs or REMIC
certificates in various ways. Each class of CMOs or REMIC
certificates, often referred to as a "tranche," is issued at a
specific adjustable or fixed interest rate and must be fully
retired no later than its final distribution date. Generally,
interest is paid or accrues on all classes of CMOs or REMIC
certificates on a monthly basis. The Portfolio will not invest
in the lowest tranche of CMOs and REMIC certificates.
Typically, CMOs are collateralized by Ginnie Mae or
Freddie Mac certificates but also may be collateralized by other
mortgage assets such as whole loans or private mortgage pass-
through securities. Debt service on CMOs is provided from
8
<PAGE>
payments of principal and interest on collateral of mortgaged
assets and any reinvestment income thereon.
A REMIC is a CMO that qualifies for special tax
treatment under the Code and invests in certain mortgages
primarily secured by interests in real property and other
permitted investments. Investors may purchase "regular" and
"residual" interest shares of beneficial interest in REMIC trusts
although the Portfolio does not intend to invest in residual
interests.
RISKS. Investing in Mortgage-Backed Securities involves
certain unique risks in addition to those generally associated
with investing in the real estate industry in general. These
unique risks include the failure of a counterparty to meet its
commitments, adverse interest rate changes and the effects of
prepayments on mortgage cash flows. See "Risk Considerations"
for a more complete description of the characteristics of
Mortgage-Backed Securities and associated risks.
SHORT-TERM INVESTMENTS. The short-term investments in
which the Portfolio may invest are: corporate commercial paper
and other short-term commercial obligations, in each case rated
or issued by companies with similar securities outstanding that
are rated Prime-1, Aa or better by Moody's Investors Service,
Inc. ("Moody's") or A-1, AA or better by Standard & Poor's
Ratings Services ("S&P"); obligations (including certificates of
deposit, time deposits, demand deposits and bankers' acceptances)
of banks with securities outstanding that are rated Prime-1, Aa
or better by Moody's or A-1, AA or better by S&P; and obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities with remaining maturities not exceeding 18
months.
The Portfolio may invest in debt securities rated BBB or
higher by S&P or Baa or higher by Moody's or, if not so rated, of
equivalent credit quality as determined by the Adviser.
Securities rated BBB by S&P or Baa by Moody's are considered to
have speculative characteristics. Sustained periods of
deteriorating economic conditions or rising interest rates are
more likely to lead to a weakening in the issuer's capacity to
pay interest and repay principal than in the case of higher-rated
securities. The Portfolio expects that it will not retain a debt
security which is downgraded below BBB or Baa or, if unrated,
determined by the Adviser to have undergone similar credit
quality deterioration, subsequent to purchase by the Portfolio.
The Portfolio may also engage in the following
investment practices to the extent indicated: (i) invest up to
10% of its net assets in rights or warrants; (ii) invest up to
15% of its net assets in the convertible securities of companies
9
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whose common stocks are eligible for purchase by the Portfolio;
(iii) lend portfolio securities equal in value to not more than
25% of total assets; (iv) enter into repurchase agreements of up
to seven days' duration; (v) enter into forward commitment
transactions as long as the Portfolio's aggregate commitments
under such transactions are not more than 30% of the Portfolio's
total assets; (vi) enter into standby commitment agreements;
(vii) make short sales of securities or maintain a short position
but only if at all times when a short position is open not more
than 25% of the Portfolio's net assets (taken at market value) is
held as collateral for such sales; and (viii) invest in illiquid
securities unless, as a result, more than 15% of its net assets
would be so invested.
Additional Investment Policies And Practices
CONVERTIBLE SECURITIES. Prior to conversion,
convertible securities have the same general characteristics as
non-convertible debt securities, which provide a stable stream of
income with generally higher yields than those of equity
securities of the same or similar issuers. The price of a
convertible security will normally vary with changes in the price
of the underlying stock, although the higher yield tends to make
the convertible security less volatile than the underlying common
stock. As with debt securities, the market value of convertible
securities tends to decline as interest rates increase and
increase as interest rates decline. While convertible securities
generally offer lower interest or dividend yields than non-
convertible debt securities of similar quality, they enable
investors to benefit from increases in the market price of the
underlying common stock.
RIGHTS AND WARRANTS. The Portfolio will invest in
rights or warrants only if the underlying equity securities are
themselves deemed appropriate by the Adviser for inclusion in the
Portfolio's portfolio. Rights and warrants entitle the holder to
buy equity securities at a specific price for a specific period
of time. Rights are similar to warrants except that they have a
substantially shorter duration. Rights and warrants may be
considered more speculative than certain other types of
investments in that they do not entitle a holder to dividends or
voting rights with respect to the underlying securities nor do
they represent any rights in the assets of the issuing company.
The value of a right or warrant does not necessarily change with
the value of the underlying security, although the value of a
right or warrant may decline because of a decrease in the value
of the underlying security, the passage of time or a change in
perception as to the potential of the underlying security, or any
combination thereof. If the market price of the underlying
security is below the exercise price set forth in the warrant on
the expiration date, the warrant will expire worthless.
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Moreover, a right or warrant ceases to have value if it is not
exercised prior to the expiration date.
ILLIQUID SECURITIES. Subject to any more restrictive
applicable investment policy, the Portfolio will not maintain
more than 15% of its net assets in illiquid securities. Illiquid
securities will generally include direct placements or other
securities that are subject to legal or contractual restrictions
on resale or for which there is no readily available market
(e.g., when trading in the security is suspended or, in the case
of unlisted securities, when market makers do not exist or will
not entertain bids or offers) and repurchase agreements not
terminable within seven days.
Because of the absence of a trading market for illiquid
securities, the Portfolio may not be able to realize their full
value upon sale. The Adviser will monitor the illiquidity of
such securities with respect to the Portfolio under the
supervision of the Directors of the Fund. To the extent
permitted by applicable law, securities that may be resold
pursuant to Rule 144A under the Securities Act of 1933, as
amended ("the "Securities Act") ("Rule 144A securities") will not
be treated as "illiquid" for purposes of the foregoing
restriction so long as such securities meet liquidity guidelines
established by the Fund's Directors. The Portfolio may not be
able to readily sell securities for which there is no ready
market.
FORWARD COMMITMENTS. Forward commitments for the
purchase or sale of securities may include purchases on a "when-
issued" basis or purchases or sales on a "delayed delivery"
basis. In some cases, a forward commitment may be conditioned
upon the occurrence of a subsequent event, such as approval and
consummation of a merger, corporate reorganization or debt
restructuring (i.e., a "when, as and if issued" trade).
When forward commitment transactions are negotiated, the
price is fixed at the time the commitment is made, but delivery
and payment for the securities take place at a later date.
Normally, the settlement date occurs within two months after the
transaction, but settlements beyond two months may be negotiated.
Securities purchased or sold under a forward commitment are
subject to market fluctuation, and no interest or dividends
accrue to the purchaser prior to the settlement date. At the
time the Portfolio intends to enter into a forward commitment, it
records the transaction and thereafter reflects the value of the
security purchased or, if a sale, the proceeds to be received, in
determining its net asset value. Any unrealized appreciation or
depreciation reflected in such valuation of a "when, as and if
issued" security would be canceled in the event that the required
conditions did not occur and the trade was canceled.
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<PAGE>
The use of forward commitments enables the Portfolio to
protect against anticipated changes in interest rates and prices.
For instance, in periods of rising interest rates and falling
bond prices, the Portfolio might sell securities in its portfolio
on a forward commitment basis to limit its exposure to falling
prices. In periods of falling interest rates and rising bond
prices, the Portfolio might sell a security in its portfolio and
purchase the same or a similar security on a when-issued or
forward commitment basis, thereby obtaining the benefit of
currently higher cash yields. However, if the Adviser were to
forecast incorrectly the direction of interest rate movements,
the Portfolio might be required to complete such when-issued or
forward transactions at prices inferior to the then current
market values. When-issued securities and forward commitments
may be sold prior to the settlement date, but the Portfolio
enters into when-issued and forward commitments only with the
intention of actually receiving securities or delivering them, as
the case may be. If the Portfolio chooses to dispose of the
right to acquire a when-issued security prior to its acquisition
or dispose of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. Any significant
commitment of Portfolio assets to the purchase of securities on a
"when, as and if issued" basis may increase the volatility of the
Portfolio's net asset value. In the event the other party to a
forward commitment transaction were to default, the Portfolio
might lose the opportunity to invest money at favorable rates or
to dispose of securities at favorable prices.
STANDBY COMMITMENT AGREEMENTS. Standby commitment
agreements commit the Portfolio, for a stated period of time, to
purchase a stated amount of a security that may be issued and
sold to the Portfolio at the option of the issuer. The price and
coupon of the security are fixed at the time of the commitment.
At the time of entering into the agreement the Portfolio is paid
a commitment fee, regardless of whether the security ultimately
is issued, typically equal to approximately 0.5% of the aggregate
purchase price of the security the Portfolio has committed to
purchase. The Portfolio will enter into such agreements only for
the purpose of investing in the security underlying the
commitment at a yield and price considered advantageous to the
Portfolio and unavailable on a firm commitment basis.
Investments in standby commitments will be limited so that the
aggregate purchase price of the securities subject to the
commitments will not exceed 25% of the Portfolio's total assets
taken at the time of making the commitment.
There is no guarantee that the securities subject to a
standby commitment will be issued, and the value of the security,
if issued, on the delivery date may be more or less than its
purchase price. Since the issuance of the security underlying
the commitment is at the option of the issuer, the Portfolio will
12
<PAGE>
bear the risk of capital loss in the event the value of the
security declines and may not benefit from an appreciation in the
value of the security during the commitment period if the issuer
decides not to issue and sell the security to the Portfolio.
REPURCHASE AGREEMENTS. A repurchase agreement arises
when a buyer purchases a security and simultaneously agrees to
resell it to the vendor at an agreed-upon future date, normally a
day or a few days later. The resale price is greater than the
purchase price, reflecting an agreed-upon interest rate for the
period the buyer's money is invested in the security. Such
agreements permit the Portfolio to keep all of its assets at work
while retaining "overnight" flexibility in pursuit of investments
of a longer-term nature. If a vendor defaults on its repurchase
obligation, the Portfolio would suffer a loss to the extent that
the proceeds from the sale of the collateral were less than the
repurchase price. If a vendor goes bankrupt, the Portfolio might
be delayed in, or prevented from, selling the collateral for its
benefit. The Adviser monitors the creditworthiness of the
vendors with which the Portfolio enters into repurchase
agreements.
SHORT SALES. A short sale is a transaction in which the
Portfolio sells a security it does not own but has borrowed in
anticipation that the market price of that security will decline.
When the Portfolio makes a short sale of a security that it does
not own, it must borrow from a broker-dealer the security sold
short and deliver the security to the broker-dealer upon
conclusion of the short sale. The Portfolio may be required to
pay a fee to borrow particular securities and is often obligated
to pay over any payments received on such borrowed securities.
The Portfolio's obligation to replace the borrowed security will
be secured by collateral deposited with a broker-dealer qualified
as a custodian and will consist of cash or securities. Depending
on the arrangements the Portfolio makes with the broker-dealer
from which it borrowed the security regarding remittance of any
payments received by the Portfolio on such security, the
Portfolio may not receive any payments (including interest) on
its collateral deposited with the broker-dealer.
If the price of the security sold short increases
between the time of the short sale and the time the Portfolio
replaces the borrowed security, the Portfolio will incur a loss;
conversely, if the price declines, the Portfolio will realize a
short-term capital gain. Any gain will be decreased, and any
loss increased, by the transaction costs described above.
Although the Portfolio's gain is limited to the price at which it
sold the security short, its potential loss is theoretically
unlimited. In order to defer realization of gain or loss for
U.S. federal income tax purposes, the Portfolio may also make
short sales "against the box." In this type of short sale, at
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the time of the sale, the Portfolio owns or has the immediate and
unconditional right to acquire at no additional cost the
identical security.
The Portfolio may not make a short sale unless at all
times when a short position is open not more than 25% of the
Portfolio's net assets (taken at market value) is held as
collateral for such sales at any one time. Certain special
federal income tax considerations may apply to short sales
entered into by the Portfolio. See "Dividends, Distributions and
Taxes."
LOANS OF PORTFOLIO SECURITIES. The risks in lending
portfolio securities, as with other extensions of credit, consist
of possible loss of rights in the collateral should the borrower
fail financially. In determining whether the Portfolio is to
lend securities to a particular borrower, the Adviser will
consider all relevant facts and circumstances, including the
creditworthiness of the borrower. While securities are on loan,
the borrower will pay the Portfolio any income earned thereon,
and the Portfolio may invest any cash collateral in portfolio
securities, thereby earning additional income, or receive an
agreed upon amount of income from a borrower who has delivered
equivalent collateral. The Portfolio will have the right to
regain record ownership of loaned securities or equivalent
securities in order to exercise ownership rights such as voting
rights, subscription rights and rights to dividends, interest or
distributions. The Portfolio may pay reasonable finders',
administrative and custodial fees in connection with a loan. The
Portfolio will not lend portfolio securities in excess of 25% of
the value of its total assets, nor will the Portfolio lend its
portfolio securities to any officer, director, employee or
affiliate of the Portfolio or the Adviser. The Board of
Directors of the Fund will monitor the Portfolio's lending of
portfolio securities.
GENERAL. The successful use of the foregoing investment
practices draws upon the Adviser's special skills and experience
with respect to such instruments and usually depends on the
adviser's ability to forecast price movements correctly. Should
prices move unexpectedly, the Portfolio may not achieve the
anticipated benefits of the transactions or may realize losses
and thus be in a worse position than if such strategies had not
been used. In addition, the correlation between movements in the
prices of such instruments and movements in the prices of the
securities hedged will not be perfect and could produce
unanticipated losses.
FUTURE DEVELOPMENTS. The Portfolio may, following
written notice to its shareholders, take advantage of other
investment practices that are not currently contemplated for use
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by the Portfolio or are not available but may yet be developed,
to the extent such investment practices are consistent with the
Portfolio's investment objective and legally permissible for the
Portfolio. Such investment practices, if they arise, may involve
risks that exceed those involved in the activities described
above.
DEFENSIVE POSITION. For temporary defensive purposes,
the Portfolio may increase without limit its position in short-
term, liquid, high-grade debt securities, which may include
securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities ("U.S. Government securities"),
bank deposits, money market instruments, short-term debt
securities, including notes and bonds. For a description of the
types of securities in which the Portfolio may invest while in a
temporary defensive position, please see the Statement of
Additional Information.
PORTFOLIO TURNOVER. The Adviser anticipates that the
Portfolio's annual rate of turnover will not exceed 100%. A 100%
annual turnover rate would occur if all of the securities in the
Portfolio's portfolio are replaced once in a period of one year.
A higher rate of portfolio turnover involves correspondingly
greater brokerage and other expenses than a lower rate, which
must be borne by the Portfolio and its shareholders. High
portfolio turnover also may result in the realization of
substantial net short-term capital gains. See "Dividends,
Distributions and Taxes."
Risk Considerations
RISK FACTORS ASSOCIATED WITH THE REAL ESTATE INDUSTRY.
Although the Portfolio does not invest directly in real estate,
it does invest primarily in Real Estate Equity Securities and
does have a policy of concentration of its investments in the
real estate industry. Therefore, an investment in the Portfolio
is subject to certain risks associated with the direct ownership
of real estate and with the real estate industry in general.
These risks include, among others: possible declines in the value
of real estate; risks related to general and local economic
conditions; possible lack of availability of mortgage funds;
overbuilding; extended vacancies of properties; increases in
competition, property taxes and operating expenses; changes in
zoning laws; costs resulting from the clean-up of, and liability
to third parties for damages resulting from, environmental
problems; casualty or condemnation losses; uninsured damages from
floods, earthquakes or other natural disasters; limitations on
and variations in rents; and changes in interest rates. To the
extent that assets underlying the Portfolio's investments are
concentrated geographically, by property type or in certain other
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respects, the Portfolio may be subject to certain of the
foregoing risks to greater extent.
In addition, if the Portfolio receives rental income or
income from the disposition of real property acquired as a result
of a default on securities the Portfolio owns, the receipt of
such income may adversely affect the Portfolio's ability to
retain its tax status as a regulated investment company. See
"Dividends, Distributions and Taxes." Investments by the
Portfolio in securities of companies providing mortgage servicing
will be subject to the risks associated with refinancings and
their impact on servicing rights.
REITS. Investing in REITs involves certain unique risks
in addition to those risks associated with investing in the real
estate industry in general. Equity REITs may be affected by
changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any
credit extended. REITs are dependent upon management skills, are
not diversified, are subject to heavy cash flow dependency,
default by borrowers and self-liquidation. REITs are also
subject to the possibilities of failing to qualify for tax free
pass-through of income under the Code and failing to maintain
their exemptions from registration under the Investment Company
Act of 1940, as amended (the "1940 Act").
REITs (especially mortgage REITs) are also subject to
interest rate risks. When interest rates decline, the value of a
REIT's investment in fixed rate obligations can be expected to
rise. Conversely, when interest rates rise, the value of a
REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate
mortgage loans are reset periodically, yields on a REIT's
investments in such loans will gradually align themselves to
reflect changes in market interest rates, causing the value of
such investments to fluctuate less dramatically in response to
interest rate fluctuations than would investments in fixed rate
obligations.
Investing in REITs involves risks similar to those
associated with investing in small capitalization companies.
REITs may have limited financial resources, may trade less
frequently and in a limited volume and may be subject to more
abrupt or erratic price movements than larger company securities.
Historically, small capitalization stocks, such as REITs, have
been more volatile in price than the larger capitalization stocks
included in the S&P Index of 500 Common Stocks.
MORTGAGE-BACKED SECURITIES. As discussed above,
investing in Mortgage-Backed Securities involves certain unique
risks in addition to those risks associated with investment in
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the real estate industry in general. These risks include the
failure of a counterparty to meet its commitments, adverse
interest rate changes and the effects of prepayments on mortgage
cash flows. When interest rates decline, the value of an
investment in fixed rate obligations can be expected to rise.
Conversely, when interest rates rise, the value of an investment
in fixed rate obligations can be expected to decline. In
contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on investments in such loans will
gradually align themselves to reflect changes in market interest
rates, causing the value of such investments to fluctuate less
dramatically in response to interest rate fluctuations than would
investments in fixed rate obligations.
Further, the yield characteristics of Mortgage-Backed
Securities, such as those in which the Portfolio may invest,
differ from those of traditional fixed income securities. The
major differences typically include more frequent interest and
principal payments (usually monthly), the adjustability of
interest rates, and the possibility that prepayments of principal
may be made substantially earlier than their final distribution
dates.
Prepayment rates are influenced by changes in current
interest rates and a variety of economic, geographic, social and
other factors, and cannot be predicted with certainty. Both
adjustable rate mortgage loans and fixed rate mortgage loans may
be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of
principal prepayments in an increasing interest rate environment.
Early payment associated with Mortgage-Backed Securities causes
these securities to experience significantly greater price and
yield volatility than that experienced by traditional fixed-
income securities. Under certain interest rate and prepayment
rate scenarios, the Portfolio may fail to recoup fully its
investment in Mortgage-Backed Securities notwithstanding any
direct or indirect governmental or agency guarantee. When the
Portfolio reinvests amounts representing payments and unscheduled
prepayments of principal, it may receive a rate of interest that
is lower than the rate on existing adjustable rate mortgage pass-
through securities. Thus, Mortgage-Backed Securities, and
adjustable rate mortgage pass-through securities in particular,
may be less effective than other types of U.S. Government
securities as a means of "locking in" interest rates.
SECURITIES RATINGS. The ratings of securities by S&P,
Moody's, Duff & Phelps Credit Rating Co. ("Duff & Phelps") and
Fitch Investors Service, Inc. ("Fitch") are a generally accepted
barometer of credit risk. They are, however, subject to certain
limitations from an investor's standpoint. The rating of an
issuer is heavily weighted by past developments and does not
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necessarily reflect probable future conditions. There is
frequently a lag between the time a rating is assigned and the
time it is updated. In addition, there may be varying degrees of
difference in credit risk of securities within each rating
category.
Certain Fundamental Investment Policies
In addition to its fundamental investment objective, the
Portfolio has adopted the following fundamental investment
policies, which may not be changed without the approval of its
shareholders. Additional fundamental and non-fundamental
investment policies are set forth in the Statement of Additional
Information.
The Portfolio may not: (i) with respect to 75% of its
total assets, have such assets represented by other than:
(a) cash and cash items, (b) U.S. Government securities, or
(c) securities of any one issuer (other than the U.S. Government
and its agencies or instrumentalities) not greater in value than
5% of the Portfolio's total assets, and not more than 10% of the
outstanding voting securities of such issuer; (ii) purchase the
securities of any one issuer, other than the U.S. Government and
its agencies or instrumentalities, if as a result (a) the value
of the holdings of the Portfolio in the securities of such issuer
exceeds 25% of its total assets, or (b) the Portfolio owns more
than 25% of the outstanding securities of any one class of
securities of such issuer; (iii) invest 25% or more of its total
assets in the securities of issuers conducting their principal
business activities in any one industry, other than the real
estate industry in which the Portfolio will invest at least 25%
or more of its total assets, except that this restriction does
not apply to U.S. Government securities; (iv) purchase or sell
real estate, except that it may purchase and sell securities of
companies which deal in real estate or interests therein,
including Real Estate Equity Securities; or (v) borrow money
except for temporary or emergency purposes or to meet redemption
requests, in an amount not exceeding 5% of the value of its total
assets at the time the borrowing is made.
_________________________________________________________________
MANAGEMENT OF THE FUND
_________________________________________________________________
Directors
John D. Carifa, Chairman of the Board and President, is
President of Alliance Capital Management Corporation ("ACMC"),
the sole general partner of the Adviser, with which he has been
associated since prior to 1991.
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Ruth Block is a Director of Ecolab Incorporated
(specialty chemicals) and Amoco Corporation (oil and gas). She
was formerly an Executive Vice President and the Chief Insurance
Officer of The Equitable Life Assurance Society of the United
States since prior to 1991.
David H. Dievler was formerly President of the Fund, and
a Senior Vice President of ACMC, with which he has been
associated since prior to 1991.
John H. Dobkin is President of Historic Hudson Valley
(historic preservation) since prior to 1991. Previously, he was
Director of the National Academy of Design. From 1987 to 1992,
he was a Director of ACMC.
William H. Foulk, Jr. was formerly a Senior Manager of
Barrett Associates, Inc., a registered investment adviser, with
which he has been associated since prior to 1991.
Dr. James M. Hester is President of the Harry Frank
Guggenheim Foundation and a Director of Union Carbide Corporation
since prior to 1991. He was formerly President of New York
University, The New York Botanical Garden and Rector of the
United Nations University.
Clifford L. Michel is a member of the law firm of Cahill
Gordon & Reindel, with which he has been associated since prior
to 1991.
Robert C. White is a Vice President and the Chief
Financial Officer of the Howard Hughes Medical Institute, with
which he has been associated since prior to 1991.
Adviser
Alliance Capital Management L.P., a Delaware limited
partnership with principal offices at 1345 Avenue of the
Americas, New York, New York 10105 has been retained under an
investment advisory agreement (the "Investment Advisory
Agreement") to provide investment advice and, in general, to
conduct the management and investment program of the Portfolio
subject to the general supervision and control of the Board of
Directors of the Fund. The employee of the Adviser principally
responsible for the Portfolio's investment program since its
inception is Daniel G. Pine. Mr. Pine has been associated with
the Adviser since May of 1996. Prior thereto, Mr. Pine was
Senior Vice President of Desai Capital Management since prior to
1991.
The Adviser is a leading international investment
manager supervising client accounts with assets as of June 30,
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1996 totaling $168 billion (of which more than $55 billion
represented the assets of investment companies). The Adviser's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundations and endowment funds. The 50 registered investment
companies managed by the Adviser comprising over 100 separate
investment portfolios currently have over two million
shareholders. As of June 30, 1996, the Adviser was retained as
an investment manager by 33 of the Fortune 100 companies.
ACMC, the sole general partner of, and the owner of a 1%
general partnership interest in, the Adviser, is an indirect
wholly-owned subsidiary of The Equitable Life Assurance Society
of the United States ("Equitable"), one of the largest life
insurance companies in the United States and a wholly owned
subsidiary of the Equitable Companies Incorporated, a holding
company which is controlled by AXA, a French insurance holding
company. Certain information concerning the ownership and
control of Equitable by AXA is set forth in the Statement of
Additional Information under "Management of the Fund."
The Adviser provides investment advisory services and
order placement facilities for each of the Fund's portfolios and
pays all compensation of Directors and officers of the Fund who
are affiliated persons of the Adviser. The Adviser or its
affiliates also furnish the Fund, without charge, management
supervision and assistance and office facilities and provide
persons satisfactory to the Fund's Board of Directors to serve as
the Fund's officers. The Portfolio pays the Adviser at an annual
rate of .90% of the average daily value of its net assets. The
fees are accrued daily and paid monthly.
Consultant To The Adviser
In providing advisory services to the Portfolio and
other clients investing in real estate securities, the Adviser
has access to the research services of Koll Investment
Management, the Investment Management Division of Koll, which
acts as a consultant to the Adviser with respect to the real
estate market. As a consultant, Koll provides to the Adviser, at
The Adviser's expense, such in-depth information regarding the
real-estate market, the factors influencing regional valuations
and analysis of recent transactions in office, retail, industrial
and multi-family properties as the Adviser shall from time to
time request. Koll will not furnish investment advice or make
recommendations regarding the purchase or sale of securities by
the Portfolio nor will it be responsible for making investment
decisions involving Portfolio assets.
Koll is one of the largest fee-based property management
firms in the United States as well as one of the largest
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publishers of real estate research, with approximately 2,600
employees nationwide. Koll will provide the Adviser with
exclusive access to its REIT-SCORE model which ranks
approximately 115 REITs based on the relative attractiveness of
the property markets in which they own real estate. This model
scores the approximately 9,000 individual properties owned by
these companies. REIT-SCORE is in turn based on Koll's National
Real Estate Index which gathers, analyzes and publishes targeted
research data for the 65 largest U.S. real estate markets based
on a variety of public- and private-sector sources as well as
Koll's proprietary database of 45,000 commercial property
transactions representing over $250 billion of investment
property and over 2,000 tracked properties which report rent and
expense data quarterly. Koll has previously provided access to
its REIT-SCORE model results primarily to the institutional
market through subscriptions. The model is no longer provided to
any research publications, and the Portfolio and another mutual
fund managed by the Adviser are currently the only mutual funds
available to retail investors that have access to Koll's REIT-
SCORE model.
Expenses of the Portfolio
In addition to the payments to the Adviser under the
Investment Advisory Agreement described above, the Portfolio pays
certain other costs including (a) custody, transfer and dividend
disbursing expenses, (b) fees of Directors who are not affiliated
with the Adviser, (c) legal and auditing expenses, (d) clerical,
accounting and other office costs, (e) costs of printing the
Fund's prospectuses and shareholder reports, (f) cost of
maintaining the Fund's existence, (g) interest charges, taxes,
brokerage fees and commissions, (h) costs of stationery and
supplies, (i) expenses and fees related to registration and
filing with the Commission and with state regulatory authorities,
and (j) cost of certain personnel of the Adviser or its
affiliates rendering clerical, accounting and other services to
the Fund.
As to the obtaining of clerical and accounting services
not required to be provided to the Fund by the Adviser under the
Investment Advisory Agreement, the Fund may employ its own
personnel. For such services, it may also utilize personnel
employed by the Adviser or by its affiliates; in such event, the
services are provided to the Fund at cost and the payments
specifically approved in advance by the Fund's Board of
Directors.
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_________________________________________________________________
PURCHASE AND REDEMPTION OF SHARES
_________________________________________________________________
Purchase of Shares
Shares of the Portfolio are offered on a continuous
basis directly by the Fund and by Alliance Fund Distributors,
Inc., the Fund's Principal Underwriter, to the separate accounts
of certain life insurance companies without any sales or other
charge, at the Portfolio's net asset value, as described below.
The separate accounts of insurance companies place orders to
purchase shares of the Portfolio based on, among other things,
the amount of premium payments to be invested and surrender and
transfer requests to be effected on that day pursuant to variable
annuity contracts and variable life insurance policies which are
funded by shares of the Portfolios. The Fund reserves the right
to suspend the sale of the Fund's shares in response to
conditions in the securities markets or for other reasons.
Individuals may not place orders directly with the Fund. See the
Prospectus of the separate account of the participating insurance
company for more information on the purchase of Portfolio shares.
The public offering price of the Portfolio's shares is
their net asset value. The per share net asset value of the
Portfolio is computed in accordance with the Fund's Articles of
Incorporation and By-Laws, at the next close of regular trading
on the New York Stock Exchange (the "Exchange") (currently 4:00
p.m. Eastern time), following receipt of a purchase or redemption
order by the Fund, on each Fund business day on which such an
order is received and trading in the types of securities in which
the Fund invests might materially affect the value of Fund
shares. The Fund's per share net asset value is computed by
dividing the value of the Fund's total assets, less its
liabilities, by the total number of its shares then outstanding.
A Fund business day is any weekday exclusive of days on which the
Exchange is closed (most national holidays and Good Friday). For
purposes of this computation, the securities in the Portfolio are
valued at their current market value determined on the basis of
market quotations or, if such quotations are not readily
available, such other methods as the Directors believe would
accurately reflect fair market value. Portfolio securities may
also be valued on the basis of prices provided by a pricing
service when such prices are believed by the Adviser to reflect
the fair market value of such securities.
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Redemption of Shares
An insurance company separate account may redeem all or
any portion of the shares of the Portfolio in its account at any
time at the net asset value per share of the Portfolio next
determined after a redemption request in proper form is furnished
to the Fund or the Principal Underwriter. Any certificates
representing shares being redeemed must be submitted with the
redemption request. Shares redeemed are entitled to earn
dividends, if any, up to and including the day redemption is
effected. There is no redemption charge. Payment of the
redemption price will normally be made within seven days after
receipt of such tender for redemption. The right of redemption
may be suspended or the date of payment may be postponed for any
period during which the Exchange is closed (other than customary
weekend and holiday closings) or during which the Commission
determines that trading thereon is restricted, or for any period
during which an emergency (as determined by the Commission)
exists as a result of which disposal by the Fund of securities
owned by the Portfolio is not reasonably practicable or as a
result of which it is not reasonably practicable for the Fund
fairly to determine the value of the Portfolio's net assets, or
for such other periods as the Commission may by order permit for
the protection of security holders of the Fund.
_________________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES
_________________________________________________________________
The Portfolio will declare and distribute dividends from
net investment income and will distribute its net capital gains,
if any, at least annually. Such income and capital gains
distributions will be made in shares of the Portfolio.
The Portfolio intends to qualify to be taxed as a
regulated investment company under Subchapter M of the Internal
Revenue Code (the "Code"). If so qualified, the Portfolio will
not be subject to Federal income or excise taxes on its
investment company taxable income and net capital gains to the
extent such investment company taxable income and net capital
gains are distributed to the separate accounts of insurance
companies which hold its shares. Under current tax law, capital
gains or dividends from the Portfolio are not currently taxable
when left to accumulate within a variable annuity (other than an
annuity interest owned by a person who is not a natural person)
or variable life insurance contract. Distributions of net
investment income and net short-term capital gain will be treated
as ordinary income and distributions of net long-term capital
gain will be treated as long-term capital gain in the hands of
the insurance companies.
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Section 817(h) of the Code requires that the investments
of a segregated asset account of an insurance company be
"adequately diversified," in accordance with Treasury Regulations
promulgated thereunder, in order for the holders of the variable
annuity contracts or variable life insurance policies underlying
the account to receive the tax-deferred or tax-free treatment
generally afforded holders of annuities or life insurance
policies under the Code. The Department of the Treasury has
issued Regulations under section 817(h) which, among other
things, provide the manner in which a segregated asset account
will treat investments in a regulated investment company for
purposes of the applicable diversification requirements. Under
the Regulations, if a regulated investment company satisfies
certain conditions, a segregated asset account owning shares of
the regulated investment company will not be treated as a single
investment for these purposes, but rather the account will be
treated as owning its proportionate share of each of the assets
of the regulated investment company. The Portfolio plans to
satisfy these conditions at all times so that the shares of the
Portfolio owned by a segregated asset account of a life insurance
company will be subject to this treatment under the Code. For
information concerning federal income tax consequences for the
holders of variable annuity contracts and variable rate insurance
policies, such holders should consult the prospectus used in
connection with the issuance of their particular contracts or
policies.
_________________________________________________________________
GENERAL INFORMATION
_________________________________________________________________
Portfolio Transactions
Subject to the general supervision of the Board of
Directors of the Fund, the Adviser is responsible for the
investment decisions and the placing of the orders for portfolio
transactions for the Portfolio.
The Fund has no obligation to enter into transactions in
portfolio securities with any broker, dealer, issuer, underwriter
or other entity. In placing orders, it is the policy of the Fund
to obtain the best price and execution for its transactions.
Consistent with the objective of obtaining best execution, the
Fund may use brokers and dealers who provide research,
statistical and other information to the Adviser. There may be
occasions where the transaction cost charged by a broker may be
greater than that which another broker may charge if the Fund
determines in good faith that the amount of such transaction cost
is reasonable in relation to the value of the brokerage and
research and statistical services provided by the executing
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broker. Consistent with the Conduct Rules of the National
Association of Securities Dealers, Inc., and subject to seeking
best price and execution, the Fund may consider sales of shares
of the Fund as a factor in the selection of brokers and dealers
to enter into portfolio transactions with the Fund. The Fund may
from time to time place orders for the purchase or sale of
securities on an agency basis with Donaldson, Lufkin & Jenrette
Securities Corporation, an affiliate of the Adviser, and with
brokers which may have their transactions cleared or settled, or
both, by the Pershing Division of Donaldson, Lufkin and Jenrette
Securities Corporation, for which Donaldson, Lufkin and Jenrette
Securities Corporation may receive a portion of the brokerage
commission. In such instances, the placement of orders with such
brokers would be consistent with the Fund's objective of
obtaining best execution and would not be dependent upon the fact
that Donaldson, Lufkin & Jenrette Securities Corporation is an
affiliate of the Adviser.
Organization
The Fund is a Maryland corporation organized on
November 17, 1987. The authorized capital stock of the Fund
consists solely of 10,000,000,000 shares of Common Stock having a
par value of $.001 per share, which may, without shareholder
approval, be divided into an unlimited number of series. Such
shares are currently divided into 18 series, one underlying each
portfolio. Shares of each portfolio are normally entitled to one
vote for all purposes. Generally, shares of all portfolios vote
as a single series on matters, such as the election of Directors,
that affect all portfolios in substantially the same manner.
Maryland law does not require a registered investment company to
hold annual meetings of shareholders and it is anticipated that
shareholder meetings will be held only when specifically required
by federal or state law. Shareholders have available certain
procedures for the removal of Directors. Shares of each
portfolio are freely transferable, are entitled to dividends as
determined by the Board of Directors and, in liquidation of the
Fund, are entitled to receive the net assets of that portfolio.
Shareholders have no preference, pre-emptive or conversion
rights. In accordance with current law, it is anticipated that
an insurance company issuing a variable annuity contract or
variable life insurance policy that participates in the Fund will
request voting instructions from contract or policyholders and
will vote shares in the separate account in accordance with the
voting instructions received.
Principal Underwriter
Alliance Fund Distributors, Inc., 1345 Avenue of the
Americas, New York, New York 10105, an indirect wholly-owned
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subsidiary of the Adviser, is the Principal Underwriter of shares
of the Fund.
Custodian
State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110, acts as Custodian for the
securities and cash of the Fund and as its dividend disbursing
agent, but plays no part in deciding on the purchase or sale of
portfolio securities.
Registrar and Dividend-Disbursing Agent
Alliance Fund Services, Inc., an indirect wholly-owned
subsidiary of the Adviser, located at 500 Plaza Drive, Secaucus,
New Jersey, 07094, acts as the Fund's registrar and dividend-
disbursing agent.
Additional Information
Any shareholder inquiries may be directed to Alliance
Fund Services, Inc. at the address or telephone number shown on
the front cover of this Prospectus. This Prospectus and the
Statement of Additional Information which has been incorporated
by reference herein, does not contain all the information set
forth in the Registration Statement filed by the Fund with the
Commission under the Securities Act of 1933, as amended. Copies
of the Registration Statement may be obtained at a reasonable
charge from the Commission or may be examined, without charge, at
the offices of the Commission in Washington, D.C.
This Prospectus does not constitute an offering in any
state in which such offering may not lawfully be made.
26
<PAGE>
Incorporated herein by reference is the statement of additional
information of Alliance Variable Products Series Fund, Inc. (the
"Fund") contained in Post-Effective Amendment No. 15 to the
Fund's Registration Statement on Form N-1A (File Nos. 33-18647
and 811-5398) filed April 30, 1996.
27
<PAGE>
ALLIANCE VARIABLE PRODUCTS
SERIES FUND, INC.
- Real Estate Investment Portfolio
_________________________________________________________________
P. O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618
_________________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
____________, 1996
_________________________________________________________________
This Statement of Additional Information is not a
prospectus but supplements and should be read in conjunction with
the Portfolio's current Prospectus dated ____________ __, 1996.
Copies of such Prospectus may be obtained by contacting Alliance
Fund Services, Inc. at the address or the "For Literature"
telephone number shown above.
TABLE OF CONTENTS
PAGE
Introduction
Investment Policies and Restrictions
Management of the Fund
Purchase and Redemption of Shares
Net Asset Value
Portfolio Transactions
Dividends, Distributions and Taxes
General Information
(R): This registered service mark used under license from the
owner, Alliance Capital Management L.P.
28
<PAGE>
_________________________________________________________________
INTRODUCTION
_________________________________________________________________
The Real Estate Investment Portfolio (the "Portfolio")
is a portfolio of the Alliance Variable Products Series Fund,
Inc. ("the Fund"), an open-end series investment company designed
to fund variable annuity contracts and variable life insurance
policies offered by the separate accounts of certain life
insurance companies.
The investment objective of the Portfolio is to seek a
total return on its assets from long-term growth of capital and
from income principally through investing in a portfolio of
equity securities of issuers that are primarily engaged in or
related to the real estate industry.
Except as otherwise indicated, the investment policies
of the Portfolio are not "fundamental policies" and may,
therefore, be changed by the Board of Directors without a
shareholder vote. However, the Portfolio will not change its
investment policies without contemporaneous written notice to its
shareholders. The Portfolio's investment objective may not be
changed without shareholder approval.
Under normal circumstances, at least 65% of the
Portfolio's total assets will be invested in equity securities of
real estate investment trusts ("REITs") and other real estate
industry companies. A "real estate industry company" is a
company that derives at least 50% of its gross revenues or net
profits from the ownership, development, construction, financing,
management or sale of commercial, industrial or residential real
estate or interests therein. The equity securities in which the
Portfolio will invest for this purpose consist of common stock,
shares of beneficial interest of REITs and securities with common
stock characteristics, such as preferred stock or convertible
securities ("Real Estate Equity Securities").
The Portfolio may invest up to 35% of its total assets
in (a) securities that directly or indirectly represent
participations in, or are collateralized by and payable from,
mortgage loans secured by real property ("Mortgage-Backed
Securities"), such as mortgage pass-through certificates, real
estate mortgage investment conduit ("REMIC") certificates and
collateralized mortgage obligations ("CMOs") and (b) short-term
investments. These instruments are described below. The risks
associated with the Portfolio's transactions in REMICs, CMOs and
other types of mortgage-backed securities, which are considered
to be derivative securities, may include some or all of the
following: market risk, leverage and volatility risk, correlation
2
<PAGE>
risk, credit risk and liquidity and valuation risk. See ["Risk
Considerations--Risk Factors Associated with the Real Estate
Industry"] in the Prospectus for a description of these and other
risks.
As to any investment in Real Estate Equity Securities,
the analysis of Alliance Capital Management, L.P., the
Portfolio's investment adviser (the "Adviser") will focus on
determining the degree to which the company involved can achieve
sustainable growth in cash flow and dividend paying capability.
The Adviser believes that the primary determinant of this
capability is the economic viability of property markets in which
the company operates and that the secondary determinant of this
capability is the ability of management to add value through
strategic focus and operating expertise. The Portfolio will
purchase Real Estate Equity Securities when, in the judgment of
the Adviser, their market price does not adequately reflect this
potential. In making this determination, the Adviser will take
into account fundamental trends in underlying property markets as
determined by proprietary models, site visits conducted by
individuals knowledgeable in local real estate markets, price-
earnings ratios (as defined for real estate companies), cash flow
growth and stability, the relationship between asset value and
market price of the securities, dividend payment history, and
such other factors which the Adviser may determine from time to
time to be relevant. The Adviser will attempt to purchase for
the Portfolio Real Estate Equity Securities of companies whose
underlying portfolios are diversified geographically and by
property type.
The Portfolio may invest without limitation in shares of
REITs. REITs are pooled investment vehicles which invest
primarily in income producing real estate or real estate related
loans or interests. REITs are generally classified as equity
REITs, mortgage REITs or a combination of equity and mortgage
REITs. Equity REITs invest the majority of their assets directly
in real property and derive income primarily from the collection
of rents. Equity REITs can also realize capital gains by selling
properties that have appreciated in value. Mortgage REITs invest
the majority of their assets in real estate mortgages and derive
income from the collection of interest payments. Similar to
investment companies such as the Portfolio, REITs are not taxed
on income distributed to shareholders provided they comply with
several requirements of the Internal Revenue Code of 1986, as
amended (the "Code"). The Portfolio will indirectly bear its
proportionate share of expenses incurred by REITs in which the
Portfolio invests in addition to the expenses incurred directly
by the Portfolio. The Portfolio may invest up to 5% of its
total assets in Real Estate Equity Securities of non-U.S.
issuers.
3
<PAGE>
Additional Investment Policies And Practices
To the extent not described in the Portfolio's
Prospectus, set forth below is additional information regarding
the Portfolio's investment policies and practices. Except as
otherwise noted, the Portfolio's investment policies are not
designated "fundamental policies" within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act") and,
therefore, may be changed by the Directors of the Fund without a
shareholder vote. However, the Portfolio will not change its
investment policies without contemporaneous written notice to
shareholders.
Convertible Securities. The Portfolio may invest up to
25% of its total assets in convertible securities of issuers
whose common stocks are eligible for purchase by the Portfolio
under the investment policies described above. Convertible
securities include bonds, debentures, corporate notes and
preferred stocks. Convertible securities are instruments that are
convertible at a stated exchange rate into common stock. Prior
to their conversion, convertible securities have the same general
characteristics as non-convertible securities which provide a
stable stream of income with generally higher yields than those
of equity securities of the same or similar issuers. The market
value of convertible securities tends to decline as interest
rates increase and, conversely, to increase as interest rates
decline. While convertible securities generally offer lower
interest yields than non-convertible debt securities of similar
quality, they do enable the investor to benefit from increases in
the market price of the underlying common stock.
When the market price of the common stock underlying a
convertible security increases, the price of the convertible
security increasingly reflects the value of the underlying common
stock and may rise accordingly. As the market price of the
underlying common stock declines, the convertible security tends
to trade increasingly on a yield basis, and thus may not
depreciate to the same extent as the underlying common stock.
Convertible securities rank senior to common stocks in an
issuer's capital structure. They are consequently of higher
quality and entail less risk than the issuer's common stock,
although the extent to which such risk is reduced depends in
large measure upon the degree to which the convertible security
sells above its value as a fixed income security.
Forward Commitments. No forward commitments will be
made by the Portfolio if, as a result, the Portfolio's aggregate
commitments under such transactions would be more than 30% of the
then current value of the Portfolio's total assets. The
Portfolio's right to receive or deliver a security under a
forward commitment may be sold prior to the settlement date, but
4
<PAGE>
the Fund will enter into forward commitments only with the
intention of actually receiving or delivering the securities, as
the case may be. To facilitate such transactions, the Fund's
custodian will maintain, in a segregated account of the Fund,
cash and/or securities having value equal to, or greater than,
any commitments to purchase securities on a forward commitment
basis and, with respect to forward commitments to sell portfolio
securities of the Fund, the portfolio securities themselves. If
the Fund, however, chooses to dispose of the right to receive or
deliver a security subject to a forward commitment prior to the
settlement date of the transaction, it may incur a gain or loss.
In the event the other party to a forward commitment transaction
were to default, the Fund might lose the opportunity to invest
money at favorable rates or to dispose of securities at favorable
prices.
Standby Commitment Agreements. The purchase of a
security subject to a standby commitment agreement and the
related commitment fee will be recorded on the date on which the
security can reasonably be expected to be issued and the value of
the security will thereafter be reflected in the calculation of
the Portfolio's net asset value. The cost basis of the security
will be adjusted by the amount of the commitment fee. In the
event the security is not issued, the commitment fee will be
recorded as income on the expiration date of the standby
commitment. The Portfolio will at all times maintain a
segregated account with its custodian of cash and/or securities
in an aggregate amount equal to the purchase price of the
securities underlying the commitment.
There can be no assurance that the securities subject to
a standby commitment will be issued and the value of the
security, if issued, on the delivery date may be more or less
than its purchase price. Since the issuance of the security
underlying the commitment is at the option of the issuer, the
Portfolio will bear the risk of capital loss in the event the
value of the security declines and may not benefit from an
appreciation in the value of the security during the commitment
period if the issuer decides not to issue and sell the security
to the Portfolio.
Repurchase Agreements. The Portfolio may enter into
repurchase agreements pertaining to U.S. Government Securities
with member banks of the Federal Reserve System or "primary
dealers" (as designated by the Federal Reserve Bank of New York)
in such securities. There is no percentage restriction on the
Portfolio's ability to enter into repurchase agreements.
Currently, the Portfolio intends to enter into repurchase
agreements only with its custodian and such primary dealers. A
repurchase agreement arises when a buyer purchases a security and
simultaneously agrees to resell it to the vendor at an agreed-
5
<PAGE>
upon future date, normally one day or a few days later. The
resale price is greater than the purchase price, reflecting an
agreed-upon interest rate which is effective for the period of
time the buyer's money is invested in the security and which is
related to the current market rate rather than the coupon rate on
the purchased security. This results in a fixed rate of return
insulated from market fluctuations during such period. Such
agreements permit the Portfolio to keep all of its assets at work
while retaining "overnight" flexibility in pursuit of investments
of a longer-term nature. The Portfolio requires continual
maintenance by its Custodian for its account in the Federal
Reserve/Treasury Book Entry System of collateral in an amount
equal to, or in excess of, the resale price. In the event a
vendor defaulted on its repurchase obligation, the Portfolio
might suffer a loss to the extent that the proceeds from the sale
of the collateral were less than the repurchase price. In the
event of a vendor's bankruptcy, the Portfolio might be delayed
in, or prevented from, selling the collateral for its benefit.
The Fund's Board of Directors has established procedures, which
are periodically reviewed by the Board, pursuant to which the
Adviser monitors the creditworthiness of the dealers with which
the Portfolio enters into repurchase agreement transactions.
Short Sales. When engaging in a short sale, in addition
to depositing collateral with a broker-dealer, the Portfolio is
currently required under the 1940 Act to establish a segregated
account with its custodian and to maintain therein cash or
securities in an amount that, when added to cash or securities
deposited with the broker-dealer, will at all times equal at
least 100% of the current market value of the security sold
short.
Illiquid Securities. Historically, illiquid securities
have included securities subject to contractual or legal
restrictions on resale because they have not been registered
under the Securities Act of 1933, as amended (the "Securities
Act"), securities which are otherwise not readily marketable and
repurchase agreements having a maturity of longer than seven
days. Securities which have not been registered under the
Securities Act are referred to as private placements or
restricted securities and are purchased directly from the issuer
or in the secondary market. Mutual funds do not typically hold a
significant amount of these restricted or other illiquid
securities because of the potential for delays on resale and
uncertainty in valuation. Limitations on resale may have an
adverse effect on the marketability of portfolio securities and a
mutual fund might be unable to dispose of restricted or other
illiquid securities promptly or at reasonable prices and might
thereby experience difficulty satisfying redemptions within seven
days. A mutual fund might also have to register such restricted
securities in order to dispose of them resulting in additional
6
<PAGE>
expense and delay. Adverse market conditions could impede such a
public offering of securities.
In recent years, however, a large institutional market
has developed for certain securities that are not registered
under the Securities Act, including repurchase agreements,
commercial paper, foreign securities, municipal securities and
corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security
can be readily resold or on an issuer's ability to honor a demand
for repayment. The fact that there are contractual or legal
restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such
investments.
The Portfolio may invest in restricted securities issued
under Section 4(2) of the Securities Act, which exempts from
registration "transactions by an issuer not involving any public
offering." Section 4(2) instruments are restricted in the sense
that they can only be resold through the issuing dealer to
institutional investors and in private transactions; they cannot
be resold to the general public without registration.
Rule 144A under the Securities Act allows a broader
institutional trading market for securities otherwise subject to
restriction on resale to the general public. Rule 144A
establishes a "safe harbor" from the registration requirements of
the Securities Act for resales of certain securities to qualified
institutional buyers. An insufficient number of qualified
institutional buyers interested in purchasing certain restricted
securities held by the Portfolio, however, could affect adversely
the marketability of such portfolio securities and the Portfolio
might be unable to dispose of such securities promptly or at
reasonable prices. Rule 144A has already produced enhanced
liquidity for many restricted securities, and market liquidity
for such securities may continue to expand as a result of this
regulation and the consequent inception of the PORTAL System, an
automated system for the trading, clearance and settlement of
unregistered securities of domestic and foreign issuers sponsored
by the National Association of Securities Dealers, Inc.
The Adviser, under the supervision of the Fund's Board
of Directors, will monitor the liquidity of restricted securities
in the Portfolio's portfolio. In reaching liquidity decisions,
the Adviser will consider, among other factors, the following:
(1) the frequency of trades and quotes for the security; (2) the
number of dealers making quotations to purchase or sell the
security; (3) the number of other potential purchasers of the
security; (4) the number of dealers undertaking to make a market
in the security; (5) the nature of the security (including its
unregistered nature) and the nature of the marketplace for the
7
<PAGE>
security (e.g., the time needed to dispose of the security, the
method of soliciting offers and the mechanics of the transfer);
and (6) any applicable Securities and Exchange Commission (the
"Commission") interpretation or position with respect to such
type of security.
Defensive Position. For temporary defensive purposes,
the Portfolio may vary from its investment objectives during
periods in which conditions in securities markets or other
economic or political conditions warrant. During such periods,
the Portfolio may increase without limit its position in short-
term, liquid, high- grade debt securities, which may include
securities issued by the U.S. government, its agencies and,
instrumentalities ("U.S. Government Securities"), bank deposit,
money market instruments, short-term (for this purpose,
securities with a remaining maturity of one year or less) debt
securities, including notes and bonds, and short-term foreign
currency denominated debt securities rated A or higher by Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings
Services ("S&P") Duff & Phelps Credit Rating Co. ("Duff &
Phelps") or Fitch Investors Service, Inc. ("Fitch") or, if not so
rated, of equivalent investment quality as determined by the
Adviser.
Subject to its policy of investing at least 65% of its
total assets in equity securities of real estate investment
trusts and other real estate industry companies, the Portfolio
may also at any time temporarily invest funds awaiting
reinvestment or held as reserves for dividends and other
distributions to shareholders in money market instruments
referred to above.
Portfolio Turnover. Generally, the Portfolio's policy
with respect to portfolio turnover is to purchase securities with
a view to holding them for periods of time sufficient to assure
that the Portfolio will realize less than 30% of its gross income
from the sale or other disposition of securities held for less
than three months (see "Dividends, Distributions and Taxes") and
to hold its securities for six months or longer. However, it is
also the Portfolio's policy to sell any security whenever, in the
judgment of the Adviser, its appreciation possibilities have been
substantially realized or the business or market prospects for
such security have deteriorated, irrespective of the length of
time that such security has been held. The Adviser anticipates
that the Portfolio's annual rate of portfolio turnover will not
exceed 100%. A 100% annual turnover rate would occur if all the
securities in the Portfolio's portfolio were replaced once within
a period of one year. The turnover rate has a direct effect on
the transaction costs to be borne by the Portfolio, and as
portfolio turnover increases it is more likely that the Portfolio
will realize short-term capital gains. In order to continue to
8
<PAGE>
qualify as a regulated investment company for Federal tax
purposes, less than 30% of the annual gross income of the
Portfolio must be derived from the sale of securities held by the
Portfolio for less than three months. See "Dividends,
Distributions and Taxes."
INVESTMENT RESTRICTIONS
The following restrictions may not be changed without
approval of a majority of the outstanding voting securities of
the Portfolio, which means the vote of (i) 67% or more of the
shares represented at a meeting at which more than 50% of the
outstanding shares are represented or (ii) more than 50% of the
outstanding shares, whichever is less.
As a matter of fundamental policy, the Portfolio may
not:
(i) pledge, hypothecate, mortgage or otherwise
encumber its assets, except to secure permitted
borrowings;
(ii) make loans except through (a) the purchase of
debt obligations in accordance with its investment
objectives and policies; (b) the lending of portfolio
securities; or (c) the use of repurchase agreements;
(iii) participate on a joint or joint and several
basis in any securities trading account;
(iv) invest in companies for the purpose of
exercising control;
(v) issue any senior security within the meaning
of the 1940 Act;
(vi) make short sales of securities or maintain a
short position, unless at all times when a short
position is open not more than 25% of the Portfolio's
net assets (taken at market value) is held as collateral
for such sales at any one time;
(vii) (a) purchase or sell commodities or commodity
contracts including futures contracts; (b) invest in
interests in oil, gas, or other mineral exploration or
development programs; (c) purchase securities on margin,
except for such short-term credits as may be necessary
for the clearance of transactions; and (d) act as an
underwriter of securities, except that the Portfolio may
acquire restricted securities under circumstances in
which, if such securities were sold, the Portfolio might
9
<PAGE>
be deemed to be an underwriter for purposes of the
Securities Act.
_________________________________________________________________
MANAGEMENT OF THE FUND
_________________________________________________________________
DIRECTORS AND OFFICERS
The Directors and principal officers of the Fund, their
ages and their primary occupations during the past five years are
set forth below. Each such Director and officer is also a
trustee, director or officer of other registered investment
companies sponsored by the Adviser. Unless otherwise specified,
the address of each such persons is 1345 Avenue of the Americas,
New York, New York 10105.
DIRECTORS
JOHN D. CARIFA,1 51, Chairman of the Board, is the
President, Chief Operating Officer and a Director of Alliance
Capital Management Corporation ("ACMC"),2 the sole general
partner of the Adviser, with which he has been associated since
prior to 1991.
RUTH BLOCK, 65, was formerly Executive Vice President
and the Chief Insurance Officer of The Equitable Life Assurance
Society of the United States. She is a Director of Ecolab
Incorporated (specialty chemicals) and Amoco Corporation (oil and
gas). Her address is Box 4653, Stamford, Connecticut 06905.
DAVID H. DIEVLER, 66, was formerly Chairman and
President of the Fund and a Senior Vice President of ACMC, with
which he had been associated since prior to 1991 through 1994.
He is currently an independent consultant. His address is P.O.
Box 167, Spring Lake, New Jersey 07762.
JOHN H. DOBKIN, 54, has been the President of Historic
Hudson Valley (historic preservation) since prior to 1991.
Previously, he was Director of the National Academy of Design.
From 1987 to 1992, he was a Director of ACMC. His address is
Historic Hudson Valley, 150 White Plains Rd., Tarrytown, New York
10591.
____________________
1An "interested person" of the Fund, as defined in the 1940 Act.
2For purposes of this Statement of Additional Information, ACMC
refers to Alliance Capital Management Corporation, the sole
general partner of the Adviser, and to the predecessor general
partner of the Adviser of the same name.
10
<PAGE>
WILLIAM H. FOULK, JR., 63, is an investment adviser and
independent consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment adviser since
prior to 1991. His address is 2 Hekma Road, Greenwich,
Connecticut 06831.
DR. JAMES M. HESTER, 72, is President of the Harry Frank
Guggenheim Foundation and a Director of Union Carbide Corporation
with which he has been associated since prior to 1991. He was
formerly President of New York University, The New York Botanical
Garden and Rector of the United Nations University. His address
is 45 East 89th Street, New York, New York 10128.
CLIFFORD L. MICHEL, 56, is a partner in the law firm of
Cahill Gordon & Reindel, with which he has been associated since
prior to 1991. He is Chief Executive Officer of Wenonah
Development Company (investments) and a Director of Placer Dome,
Inc. (mining) and Faber-Castell Corporation (writing products).
His address is 80 Pine Street, New York, New York 10005.
ROBERT C. WHITE, 75, is a retired Trustee of St. Clair
Fixed Income Fund, St. Clair Tax-Free Fund and St. Clair Equity
Fund (registered investment companies) and a retired Director of
MEDSTAT Systems, Inc. (health care information). Formerly, he
was Assistant Treasurer of the Ford Motor Company and a Vice
President and the Chief Financial Officer of the Howard Hughes
Medical Institute. His address is 30835 River Crossing, Bingham
Farms, Michigan 48025.
OFFICERS
ALFRED L. HARRISON, SENIOR VICE PRESIDENT, 57, is a Vice
Chairman of ACMC, with which he has been associated with since
prior to 1991.
WAYNE D. LYSKI, SENIOR VICE PRESIDENT, 53, is an
Executive Vice President of ACMC, with which he has been
associated with since prior to 1991.
KATHLEEN A. CORBET, 35, Senior Vice President, has been
a Senior Vice President of ACMC since July 1993. Previously, she
held various responsibilities as head of Equitable Capital
Management Corporation's Fixed Income Management Department,
Private Placement Secondary Trading and Fund Management since
prior to 1991.
EDMUND P. BERGAN, Jr., 45, Secretary, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
and Alliance Fund Services, Inc. and is a Vice President and
Assistant General Counsel of ACMC with which he has been
associated since prior to 1991.
11
<PAGE>
MARK D. GERSTEN, TREASURER AND CHIEF FINANCIAL OFFICER,
45, is a Senior Vice President of Alliance Fund Services, Inc.
("AFS"), with which he has been associated since prior to 1991.
ANDREW GANGOLF, ASSISTANT SECRETARY, 41, has been a Vice
President and Assistant General Counsel of AFD since December
1994. Prior thereto he was a Vice President and Assistant
Secretary of Delaware Management Company, Inc. since October 1992
and a Vice President and Counsel to Equitable Life Assurance
Society of the United States since prior to 1991.
LAURA MAH, CONTROLLER, 39, has been a Vice President of
ACMC since July 1992. Previously she was associated with
Equitable Capital Management Corporation ("ECMC") since prior to
1991.
THOMAS R. MANLEY, ASSISTANT CONTROLLER, 43, has been an
Assistant Vice President of ACMC since July 1993. Previously he
was associated with ECMC since prior to 1991.
STEVEN YU, ASSISTANT CONTROLLER, 35, has been an
Assistant Vice President of ACMC since 1993. Previously he was
associated with ECMC since prior to 1991.
The aggregate compensation paid by the Fund to each of
the Directors during its fiscal year ended December 31, 1995,
the aggregate compensation paid to each of the Directors during
calendar year 1995 by all of the registered investment companies
to which the Adviser provides investment advisory services
(collectively, the "Alliance Fund Complex") and the total number
of registered investment companies in the Alliance Fund Complex
with respect to which each of the Directors serves as a director
or trustee, are set forth below. Neither the Fund nor any other
Fund in the Alliance Fund Complex provides compensation in the
form of pension or retirement benefits to any of its directors
or trustees. Each of the Directors is a director or trustee of
one or more other registered investment companies in the
Alliance Fund Complex.
12
<PAGE>
Total Total Number
Compensation of Funds in the
from the Alliance Fund
Alliance Fund Complex, Including
Aggregate Complex, the Fund, as to which
Name of Director Compensation Including the the Director is a
of the Fund from the Fund Fund Director or Trustee
_______________ _____________ _____________ _____________________
John D. Carifa $-0- $-0- 49
Ruth Block $3,165 $ 159,000 36
David H. Dievler $3,300 $ 179,200 42
John H. Dobkin $3,165 $ 117,200 29
William H. Foulk, Jr. $3,300 $ 143,500 30
Dr. James M. Hester $3,165 $ 156,000 37
Clifford L. Michel $3,165 $ 131,500 36
Robert C. White $3,165 $ 133,200 36
___________________________
As of April 30, 1996, the Directors and officers of the Fund as a
group owned less than 1% of the shares of the Fund.
ADVISER
The Adviser is a leading international investment
manager supervising client accounts with assets as of June 30,
1996 of $168 billion (of which more than $55 billion represented
the assets of investment companies). The Adviser's clients are
primarily major corporate employee benefit funds, public employee
retirement systems, investment companies, foundations and
endowment funds and included, as of June 30, 1996, 33 of the
FORTUNE 100 Companies. As of that date, the Adviser and its
subsidiaries employed approximately 1,350 employees who operated
out of domestic offices and the overseas offices of subsidiaries
in Bombay, Istanbul, London, Sydney, Tokyo, Toronto, Bahrain,
Luxembourg and Singapore. The 51 registered investment companies
comprising more than 100 separate investment portfolios managed
by the Adviser currently have more than two million shareholders.
Alliance Capital Management Corporation, the sole
general partner of, and the owner of a 1% general partnership
interest in, the Adviser, is an indirect wholly-owned subsidiary
of The Equitable Life Assurance Society of the United States
("Equitable"), one of the largest life insurance companies in the
United States and a wholly-owned subsidiary of The Equitable
Companies Incorporated ("ECI"), a holding company controlled by
AXA, a French insurance holding company. As of June 30, 1996,
ACMC, Inc. and Equitable Capital Management Corporation, each a
wholly-owned direct or indirect subsidiary of Equitable, together
with Equitable, owned in the aggregate approximately 58% of the
13
<PAGE>
issued and outstanding units representing assignments of
beneficial ownership of limited partnership interests in the
Adviser ("Units"). As of June 30, 1996, approximately 32% and
10.0% of the Units were owned by the public and employees of the
Adviser and its subsidiaries, respectively, including employees
of the Adviser who serve as Directors of the Fund.
AXA and its subsidiaries own approximately 63.9% of the
issued and outstanding shares of capital stock of ECI. AXA is
the holding company for an international group of insurance and
related financial services companies. AXA's insurance operations
include activities in life insurance, property and casualty
insurance and reinsurance. The insurance operations are diverse
geographically, with activities in France, the United States,
Australia, the United Kingdom, Canada and other countries,
principally in Europe and the Asia Pacific area. AXA is also
engaged in asset management, investment banking, securities
trading, brokerage, real estate and other financial services
activities in the United States, Europe and the Asia Pacific
area. Based on information provided by AXA, as of March 31,
1996, 42.1% of the issued ordinary shares (representing 53.4% of
the voting power) of AXA were owned by Midi Participations, a
French holding company ("Midi"). The shares of Midi were, in
turn, owned 61.4% (representing 62.5% of the voting power) by
Finaxa, a French holding company, and 38.6% (representing 37.5%
of the voting power) by subsidiaries of Assicurazioni Generali
S.p.A., an Italian corporation (one of which, Belgica Insurance
Holding S.A., a Belgian corporation, owned 30.8%, representing
33.1% of the voting power). As of March 31, 1996, 61.1% of the
voting shares (representing 73.4% of the voting power) of Finaxa
were owned by five French mutual insurance companies (the
"Mutuelles AXA") (one of which, AXA Assurances I.A.R.D. Mutuelle,
owned 34.7% of the voting shares representing 40.4% of the voting
power), and 25.5% of the voting shares (representing 16% of the
voting power) of Finaxa were owned by Banque Paribas, a French
bank. Including the ordinary shares owned by Midi, as of
March 31, 1996, the Mutuelles AXA directly or indirectly owned
51% of the issued ordinary shares (representing 64.7% of the
voting power) of AXA. Acting as a group, the Mutuelles AXA
control AXA, Midi and Finaxa.
The Adviser provides investment advisory services and
order placement facilities for the Portfolio and pays all
compensation of Directors and officers of the Fund who are
affiliated persons of the Adviser. The Adviser or its affiliates
also furnish the Fund, without charge, management supervision and
assistance and office facilities and provide persons satisfactory
to the Fund's Board of Directors to serve as the Fund's officers.
The Portfolio pays the Adviser at an annual rate of [1.00%] of
the average daily value of its net assets.
14
<PAGE>
Certain other clients of the Adviser may have investment
objectives and policies similar to those of the Portfolio. The
Adviser may, from time to time, make recommendations which result
in the purchase or sale of the particular security by its other
clients simultaneously with the Portfolio. If transactions on
behalf of more than one client during the same period increase
the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price.
It is the policy of the Adviser to allocate advisory
recommendations and the placing of orders in a manner which is
deemed equitable by the Adviser to the accounts involved,
including the Portfolio. When two or more of the clients of the
Adviser (including the Portfolio) are purchasing or selling the
same security on a given day from the same broker or dealer, such
transactions may be averaged as to price.
As to the obtaining of services other than those
specifically provided to the Portfolio by the Adviser, the
Portfolio may employ its own personnel. For such services, it
also may utilize personnel employed by the Adviser or by other
subsidiaries of Equitable. In such event, the services will be
provided to the Portfolio at cost and the payments specifically
approved by the Fund's Board of Directors.
The Investment Advisory Agreement is terminable with
respect to the Portfolio without penalty on 60 days' written
notice by a vote of a majority of the outstanding voting
securities of such Portfolio or by a vote of a majority of the
Fund's Directors, or by the Adviser on 60 days' written notice,
and will automatically terminate in the event of its assignment.
The Advisory Agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence on the part of the
Adviser, or of reckless disregard of its obligations thereunder,
the Adviser shall not be liable for any action or failure to act
in accordance with its duties thereunder.
The Investment Advisory Agreement continues in effect
until each December 31, and thereafter for successive twelve
month periods computed from each January 1, provided that such
continuance is specifically approved at least annually by a vote
of a majority of the Fund's outstanding voting securities or by
the Fund's Board of Directors, including in either case approval
by a majority of the Directors who are not parties to the
Advisory Agreement or interested persons of such parties as
defined by the 1940 Act.
The Investment Advisory Agreement provides that the
Adviser will reimburse the Fund as to the Portfolio for its
expenses (exclusive of interest, taxes, brokerage, expenditures
pursuant to the Distribution Services Agreement and extraordinary
expenses to the extent permitted by applicable state securities
15
<PAGE>
laws and regulations) which in any year exceed the limits
prescribed by any state in which the Fund's shares are qualified
for sale. The Fund may not qualify its shares for sale in every
state.
The Adviser may act as an investment adviser to other
persons, firms or corporations, including investment companies,
and is investment adviser to the following registered investment
companies: ACM Institutional Reserves, Inc., AFD Exchange
Reserves, The Alliance Fund, Inc., Alliance All-Asia Investment
Fund, Inc., Alliance Balanced Shares, Inc., Alliance Bond Fund,
Inc., Alliance Capital Reserves, Alliance Developing Markets
Fund, Inc., Alliance Global Dollar Government Fund, Inc.,
Alliance Global Small Cap Fund, Inc., Alliance Global Strategic
Income Trust, Inc., Alliance Government Reserves, Alliance Growth
and Income Fund, Inc., Alliance Income Builder Fund, Inc.,
Alliance International Fund, Alliance Limited Maturity Government
Fund, Inc., Alliance Money Market Fund, Alliance Mortgage
Securities Income Fund, Inc., Alliance Multi-Market Strategy
Trust, Inc., Alliance Municipal Income Fund, Inc., Alliance
Municipal Income Fund II, Inc., Alliance Municipal Trust,
Alliance New Europe Fund, Inc., Alliance North American
Government Income Trust, Inc., Alliance Premier Growth Fund,
Inc., Alliance Quasar Fund, Inc., Alliance Real Estate Investment
Fund, Inc., Alliance/Regent Sector Opportunity Fund, Inc.,
Alliance Short-Term Multi-Market Trust, Inc., Alliance Technology
Fund, Inc., Alliance Utility Income Fund, Inc., Alliance World
Income Trust, Inc., Alliance Worldwide Privatization Fund, Inc.,
Fiduciary Management Associates, The Alliance Portfolios, and The
Hudson River Trust, all open-end investment companies; and to ACM
Government Income Fund, Inc., ACM Government Opportunity Fund,
Inc., ACM Government Securities Fund, Inc., ACM Government
Spectrum Fund, Inc., ACM Managed Dollar Income Fund, Inc., ACM
Managed Income Fund, Inc., ACM Municipal Securities Income Fund,
Inc., Alliance All-Market Advantage Fund, Inc., Alliance Global
Environment Fund, Inc., Alliance World Dollar Government Fund,
Inc., Alliance World Dollar Government Fund II, Inc., The Austria
Fund, Inc., The Global Privatization Fund, Inc., The Korean
Investment Fund, Inc., The Southern Africa Fund, Inc. and The
Spain Fund, Inc., all closed-end investment companies.
_________________________________________________________________
PURCHASE AND REDEMPTION OF SHARES
_________________________________________________________________
The following information supplements that set forth in
the Portfolio's Prospectus under the heading "Purchase and
Redemption of Shares."
16
<PAGE>
REDEMPTION OF SHARES
The value of a shareholder's shares on redemption or
repurchase may be more or less than the cost of such shares to
the shareholder, depending upon the market value of the
Portfolio's securities at the time of such redemption or
repurchase. Payment either in cash or in portfolio securities
received by a shareholder upon redemption or repurchase of his
shares, assuming the shares constitute capital assets in his
hands, will result in long-term or short-term capital gains (or
loss) depending upon the shareholder's holding period and basis
in respect of the shares redeemed.
_________________________________________________________________
NET ASSET VALUE
_________________________________________________________________
The net asset value of shares of the Portfolio on which
the subscription and redemption prices are based is computed in
accordance with the Articles of Incorporation and By-Laws of the
Fund at the next close of regular trading on the New York Stock
Exchange (the "Exchange") (currently 4:00 p.m. Eastern time)
following receipt of a purchase or redemption order by the Fund,
on each Fund business day on which such an order is received and
trading in the types of securities in which the Portfolio invests
might materially affect the value of the Portfolio's shares, by
dividing the value of the Portfolio's assets less its
liabilities, by the total number of shares then outstanding. For
this purpose, a Fund business day is any weekday exclusive of
days on which the Exchange is closed (most national holidays and
Good Friday).
Portfolio securities that are actively traded in the
over-the-counter market, including listed securities for which
the primary market is believed to be over-the-counter, are valued
at the mean between the most recently quoted bid and asked prices
provided by the principal market makers. Any security for which
the primary market is on an exchange is valued at the last sale
price on such exchange on the day of valuation or, if there was
no sale on such day, the last bid price quoted on such day.
Options will be valued at market value or fair market value if no
market exists. Securities and assets for which market quotations
are not readily available are valued at fair value as determined
in good faith by or under the direction of the Board of Directors
of the Fund. However, readily marketable fixed-income securities
may be valued on the basis of prices provided by a pricing
service when such prices are believed by the Adviser to reflect
the fair market value of such securities. The prices provided by
a pricing service take into account institutional size trading in
similar groups of securities and any developments related to
17
<PAGE>
specific securities. U.S. Government Securities and other debt
instruments having 60 days or less remaining until maturity are
stated at amortized cost if their original maturity was 60 days
or less, or by amortizing their fair value as of the 61st day
prior to maturity if their original term to maturity exceeded 60
days (unless in either case the Fund's Board of Directors
determines that this method does not represent fair value). All
assets of the Portfolio, including restricted and not readily
marketable securities, are valued in such manner as the Board of
Directors of the Fund in good faith deems appropriate to reflect
their fair market value.
_________________________________________________________________
PORTFOLIO TRANSACTIONS
_________________________________________________________________
Neither the Fund nor the Adviser has entered into
agreements or understandings with any brokers or dealers
regarding the placement of securities transactions because of
research or statistical services they provide. To the extent
that such persons or firms supply investment information to the
Adviser for use in rendering investment advice to the Fund, such
information may be supplied at no cost to the Adviser and,
therefore, may have the effect of reducing the expenses of the
Adviser in rendering advice to the Fund. While it is impossible
to place an actual dollar value on such investment information,
its receipt by the Adviser probably does not reduce the overall
expenses of the Adviser to any material extent.
The investment information provided to the Adviser is of
the types described in Section 28(e)(3) of the Securities
Exchange Act of 1934 and is designed to augment the Adviser's own
internal research and investment strategy capabilities. Research
and statistical services furnished by brokers through which the
Fund effects securities transactions are used by the Adviser in
carrying out its investment management responsibilities with
respect to all its client accounts but not all such services may
be utilized by the Adviser in connection with the Fund.
The Fund will deal in some instances in equity
securities which are not listed on a national stock exchange but
are traded in the over-the-counter market. Where transactions
are executed in the over-the-counter market, the Fund will seek
to deal with the primary market makers, but when necessary in
order to obtain the best price and execution, it will utilize the
services of others. In all cases, the Fund will attempt to
negotiate best execution.
The Fund may from time to time place orders for the
purchase or sale of securities (including listed call options)
18
<PAGE>
with Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
an affiliate of the Adviser, the Fund's distributor, and with
brokers which may have their transactions cleared or settled, or
both, by the Pershing Division of DLJ for which DLJ may receive a
portion of the brokerage commission. With respect to orders
placed with DLJ for execution on a national securities exchange,
commissions received must conform to Section 17(e)(2)(A) of the
1940 Act and Rule 17e-1 thereunder, which permit an affiliated
person of a registered investment company (such as the Fund), or
any affiliated person of such person, to receive a brokerage
commission from such registered investment company provided that
such commission is reasonable and fair compared to the
commissions received by other brokers in connection with
comparable transactions involving similar securities during a
comparable period of time.
_________________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES
_________________________________________________________________
The Portfolio intends to qualify to be taxed as a
"regulated investment company" under the Internal Revenue Code of
1986 (the "Code"). If so qualified, the Portfolio will not be
subject to federal income and excise taxes on its investment
company taxable income and net capital gains to the extent such
investment company taxable income and net capital gains are
distributed to the separate accounts of insurance companies which
hold its shares. Under current tax law, capital gains or
dividends from any Portfolio are not currently taxable when left
to accumulate within a variable annuity or variable life
insurance contract. Distributions of net investment income and
net short-term capital gains will be treated as ordinary income
and distributions of net long-term capital gains will be treated
as long-term capital gain in the hands of the insurance
companies.
Section 817(h) of the Code requires that the investments
of a segregated asset account of an insurance company be
"adequately diversified", in accordance with Treasury Regulations
promulgated thereunder, in order for the holders of the variable
annuity contracts or variable life insurance policies underlying
the account to receive the tax-deferred or tax-free treatment
generally afforded holders of annuities or life insurance
policies under the Code. The Department of the Treasury has
issued Regulations under section 817(h) which, among other
things, provide the manner in which a segregated asset account
will treat investments in a regulated investment company for
purposes of the applicable diversification requirements. Under
the Regulations, if a regulated investment company satisfies
certain conditions, a segregated asset account owning shares of
19
<PAGE>
the regulated investment company will not be treated as a single
investment for these purposes, but rather the account will be
treated as owning its proportionate share of each of the assets
of the regulated investment company. The Portfolio plans to
satisfy these conditions at all times so that the shares of the
Portfolio owned by a segregated asset account of a life insurance
company will be subject to this treatment under the Code.
For information concerning the federal income tax
consequences for the holders of variable annuity contracts and
variable rate insurance policies, such holders should consult the
prospectus used in connection with the issuance of their
particular contracts or policies.
________________________________________________________________
GENERAL INFORMATION
________________________________________________________________
COMMON STOCK; VOTING RIGHTS
The Fund's shares have non-cumulative voting rights,
which means that the holders of more than 50% of the shares
voting for the election of Directors can elect 100% of the
Directors if they choose to do so, and in such election of
Directors will not be able to elect any person or persons to the
Board of Directors.
All shares of the Fund when duly issued will be fully
paid and nonassessable. The Board of Directors is authorized to
reclassify and issue any unissued shares to any number of
additional series without shareholder approval. Accordingly, the
Board of Directors in the future, for reasons such as the desire
to establish one or more additional portfolios with different
investment objectives, policies or restrictions, may create
additional series of shares. Any issuance of shares of such
additional series would be governed by the 1940 Act and the law
of the State of Maryland.
If shares of another series were issued in connection
with the creation of the new portfolio, each share of any of the
Fund's portfolios would normally be entitled to one vote for all
purposes. Generally, shares of each portfolio would vote as a
single series for the election of directors and on any other
matter that affected each portfolios in substantially the same
manner. As to matters affecting each portfolio differently, such
as approval of the Investment Advisory Agreement and changes in
investment policy, shares of each portfolio would vote as
separate series.
20
<PAGE>
Procedures for calling a shareholders' meeting for the
removal of Directors of the Fund, similar to those set forth in
Section 16(c) of the 1940 Act, are available to any shareholder
of the Fund. Meetings of shareholders may be called by 10% of the
Fund's outstanding shareholders.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110, acts as Custodian for the
securities and cash of the Fund but plays no part in deciding the
purchase or sale of portfolio securities.
PRINCIPAL UNDERWRITER
Alliance Fund Distributors, Inc., 1345 Avenue of the
Americas, New York, New York 10105, serves as the Fund's
Principal Underwriter, and as such may solicit orders from the
public to purchase shares of the Fund. Under the Distribution
Services Agreement between the Fund and the Principal
Underwriter, the Fund has agreed to indemnify the distributor, in
the absence of its willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations thereunder,
against certain civil liabilities, including liabilities under
the Securities Act.
COUNSEL
Legal matters in connection with the issuance of the
shares of the Fund offered hereby will be passed upon by Seward &
Kissel, One Battery Park Plaza, New York, New York 10004.
INDEPENDENT AUDITORS
Ernst & Young LLP, 787 Seventh Avenue, New York, New
York 10019, have been appointed as independent auditors for the
Fund.
SHAREHOLDER APPROVAL
The capitalized term "Shareholder Approval" as used in
this Statement of Additional Information means (1) the vote of
67% or more of the shares of the Portfolio represented at a
meeting at which more than 50% of the outstanding shares are
represented or (2) more than 50% of the outstanding shares of the
Portfolio, whichever is less.
21
<PAGE>
Total Return Quotations
From time to time the Portfolio advertises its "total
return." The Portfolio's "total return" is its average annual
compounded total return for recent one, five, and ten-year
periods (or the period since the Portfolio's inception). The
Portfolio's total return for such a period is computed by
finding, through the use of a formula prescribed by the
Securities and Exchange Commission, the average annual compounded
rate of return over the period that would equate an assumed
initial amount invested to the value of such investment at the
end of the period. For purposes of computing total return,
income dividends and capital gains distributions paid on shares
of the Portfolio are assumed to have been reinvested when paid.
The Portfolio's total return is not fixed and will
fluctuate in response to prevailing market conditions or as a
function of the type and quality of the securities in the
Portfolio's portfolio and its expenses. Total return information
is useful in reviewing the Portfolio's performance but such
information may not provide a basis for comparison with bank
deposits or other investments which pay a fixed yield for a
stated period of time. An investor's principal invested in the
Portfolio is not fixed and will fluctuate in response to
prevailing market conditions.
Advertisements quoting performance ratings of the
Portfolio as measured by financial publications or by independent
organizations such as Lipper Analytical Services, Inc. ("Lipper")
and advertisements presenting the historical record of payments
of income dividends by the Portfolio may also from time to time
be sent to investors or placed in newspapers and magazines such
as BARRONS, BUSINESS WEEK, CHANGING TIMES, FORBES, INVESTOR'S
DAILY, MONEY MAGAZINE, THE NEW YORK TIMES and THE WALL STREET
JOURNAL or other media on behalf of the Portfolio.
Additional Information
Any shareholder inquiries may be directed to the
shareholder's broker or to Alliance Fund Services, Inc. at the
address or telephone numbers shown on the front cover of this
Statement of Additional Information. This Statement of
Additional Information does not contain all the information set
forth in the Registration Statement filed by the Fund with the
Securities and Exchange Commission under the Securities Act of
1933. Copies of the Registration Statement may be obtained at a
reasonable charge from the Securities and Exchange Commission or
may be examined, without charge, at the offices of the Securities
and Exchange Commission in Washington, D.C.
22
00250292.AX8
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders and Board of Directors
Alliance Variable Products Series Fund, Inc.
We have audited the accompanying statements of assets and
liabilities, including the portfolios of investments, of Alliance
Variable Products Series Fund, Inc. (the "Fund"), (comprising,
respectively, the premier Growth, Global Bond, Growth and Income,
Short-Term Multi-Market, U.S. Government/High Grade Securities,
Total Return, International, Money Market, Global Dollar
Government, North American Government Income, Utility Income,
Growth, Worldwide Privatization, Conservative Investors and
Growth Investors Portfolios), as of December 31, 1995, and the
related statements of operations for the year then ended and the
statements of changes in net assets and the financial highlights
for each of the periods indicated therein. These financial
statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion
on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with
the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of each of the respective Portfolios
constituting Alliance Variable Products Series Fund, Inc. at
December 31, 1995, the results of their operations for the year
then ended and the changes in their net assets and the financial
highlights for each of the indicated periods, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
23
00250292.AX8
<PAGE>
February 5, 1996
24
00250292.AX8
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits.
(a) FINANCIAL STATEMENTS
Included in the Prospectus:
Financial Highlights
Included in the Statement of Additional Information for
the Premier Growth Portfolio, Global Bond Portfolio,
Growth and Income Portfolio, Short-Term Multi-Market
Portfolio, U.S. Government/High Grade Securities
Portfolio, Total Return Portfolio, International
Portfolio and the Money Market Portfolio:
Portfolio of Investments - December 31, 1995
Statement of Assets and Liabilities -
December 31, 1995
Statement of Operations, year ended December 31,
1995
Statement of Changes in Net Assets, years ended
December 31, 1995 and December 31, 1994
Notes to Financial Statements - December 31, 1995
Financial Highlights - for the years ended
December 31, 1995, December 31, 1994
December 31, 1993 and December 31, 1992
Report of Ernst & Young LLP, Independent Auditors
Included in the Statement of Additional Information for
the Global Dollar Government Portfolio, North American
Government Income Portfolio, Utility Income Portfolio,
Growth Portfolio, Worldwide Privatization Portfolio,
Conservative Investors Portfolio and Growth Investors
Portfolio:
Portfolio of Investments - December 31, 1995
Statement of Assets and Liabilities -
December 31, 1995
Statement of Operations, year ended December 31,
1995
Statement of Changes in Net Assets, year ended
December 31, 1995 and December 31, 1994
Notes to Financial Statements - December 31, 1995
Financial Highlights - for the year ended
December 31, 1995 and December 31, 1994
Report of Ernst & Young LLP, Independent Auditors
All other schedules are either omitted because they
are not required under the related instructions, they
are inapplicable or the required information is
C-1
<PAGE>
presented in the financial statements or notes which are
included in the Statement of Additional Information of
the Registration Statement.
(b) EXHIBITS:
(1)(a) Articles of Incorporation of the Registrant -
Incorporated herein by reference to Exhibit 1 to
Registration Statement on Form N-1A, filed on
November 20, 1987.
(b) Articles Supplementary to the Articles of
Incorporation of the Registrant - Incorporated
herein by reference to Exhibit 1 to Registration
Statement on Form N-1A, filed on November 20,
1987.
(c) Form of Articles Supplementary to the Articles of
Incorporation of the Registrant - Incorporated by
reference to Exhibit 1(c) to Post-Effective
Amendment No. 5 to Registration Statement on Form
N-1A, filed on May 1, 1991.
(d) Articles Supplementary to the Articles of
Incorporation of the Registrant - Incorporated by
reference to Exhibit 1(d) to Post-Effective
Amendment No. 13 to Registration Statement on
Form N-1A, filed on May 1, 1995.
(e) Articles of Amendment to the Articles of
Incorporation of the Registrant - Incorporated by
reference to Exhibit 1(e) to Post-Effective
Amendment No. 13 to Registration Statement on
Form N-1A, filed on May 1, 1995.
(f) Articles Supplementary to the Articles of
Incorporation adding Technology Portfolio -
Incorporated by reference to Exhibit 1(f) to
Post-Effective Amendment No. 15 to Registration
Statement on Form N-1A, filed on April 30, 1996.
(g) Articles Supplementary to the Articles of
Incorporation increasing the authorized aggregate
number of shares of capital stock.
(h) Articles Supplementary to the Articles of
Incorporation adding Quasar Portfolio -
Incorporated by reference to Exhibit 1(h) to
Post-Effective Amendment No. 17 to Registration
Statement No. 17 on Form N-1A, filed July 22,
1996.
C-2
<PAGE>
(2)(a) By-Laws of the Registrant - Incorporated by
reference to Exhibit 2(a) to Post-Effective
Amendment No. 15 to Registration Statement on
Form N-1A, filed on April 30, 1996.
(b) Revised By-Laws of the Registrant - Incorporated
by reference to Exhibit 2(b) to Post-Effective
Amendment No. 4 of Registration Statement on Form
N-1A, filed on April 30, 1991.
(3) Not applicable.
(4)(a) Specimen form of Share Certificate for Money
Market Portfolio, Growth Portfolio, Growth and
Income Portfolio, Managed Income Portfolio, High
Yield Portfolio, Total Return Portfolio and
International Portfolio - Incorporated by
reference to Exhibit 4 to Registration Statement
on Form N-1A, filed on November 20, 1987.
(b) Specimen form of Share Certificate for U.S.
Government/High Grade Securities Portfolio,
Short-Term Multi-Market Portfolio - Incorporated
by reference to Exhibit 4(b) to Post-Effective
Amendment No. 4 of Registration Statement on Form
N-1A, filed on April 30, 1991
(c) Specimen form of Share Certificate for Global
Bond Portfolio - Incorporated by reference to
Exhibit 4(c) to Post-Effective Amendment No. 5 of
Registration Statement on Form N-1A, filed on
May 1, 1991.
(d) Specimen form of Share Certificate for Technology
Portfolio - Incorporated by reference to Exhibit
4(d) to Post-Effective Amendment No. 15 of
Registration Statement on Form N-1A, filed
April 30, 1996.
(5)(a) Advisory Agreement between the Registrant and
Alliance Capital Management L.P.- Incorporated by
reference to Exhibit 5(a) to Post-Effective
Amendment No. 13 to Registration Statement on
Form N-1A, filed May 1, 1995.
(b) Sub-Advisory Agreement between Alliance Capital
Management L.P. and Law, Dempsey & Company
Limited, relating to the Global Bond Portfolio -
Incorporated by reference to Exhibit (5)(b) to
Post-Effective Amendment No. 7 of the
C-3
<PAGE>
Registration Statement on Form N-1A filed on
February 26, 1993.
(6) Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc. -
Incorporated by reference to Exhibit (6) to Post-
Effective Amendment No. 7 of the Registration
Statement on Form N-1A filed on February 26,
1993.
(7) Not applicable.
(8)(a) Amended Custodian Contract between the Registrant
and State Street Bank and Trust Company -
Incorporated by reference to Exhibit 8(a) to
Post-Effective Amendment No. 4 of Registration
Statement on Form N-1A, filed on April 30, 1991.
(9) Not applicable
(10) Not applicable.
(11) Consent of Independent Auditors - filed herewith.
(12) Not applicable
(13) Not applicable
(14) Not applicable
(15) Not applicable
(16)(a) Schedule for computation of Yield and Total
Return Performance Quotation - Incorporated by
reference to Exhibit 16 to Post-Effective
Amendment No. 4 of Registration Statement on Form
N-1A, filed on April 30, 1991.
(b) Schedule for computation of Yield Quotation for
the Money market Portfolio - Incorporated by
reference to Exhibit 16(b) to Post-Effective
Amendment No. 13 of Registration Statement on
Form N-1A, filed May 1, 1995.
OTHER EXHIBIT:
Powers of Attorney of David H. Dievler, John D.
Carifa, William H. Foulk, Jr. and Robert C. White-
Incorporated by reference to Other Exhibit to Post-
Effective Amendment No. 4 of Registration Statement on
Form N-1A, filed on April 30, 1991.
C-4
<PAGE>
Power of Attorney of John H. Dobkin - Incorporated by
reference to Other Exhibit to Post Effective Amendment
No. 7 filed on February 26, 1993.
ITEM 25. Persons Controlled by or under Common Control
with Registrant.
None.
ITEM 26. Number of Holders of Securities.
NUMBER OF RECORD HOLDERS
TITLE OF CLASS September 30, 1996
Common Stock:
Short-Term Multi-Market Portfolio 13
Growth and Income Portfolio 8
Global Bond Portfolio 5
Money Market Portfolio 4
Premier Growth Portfolio 5
U.S. Government/High Grade Portfolio 5
High Yield Portfolio 0
International Portfolio 5
Total Return Portfolio 4
North American Government Income Portfolio 4
Global Dollar Government Portfolio 4
Utility Income Portfolio 5
Conservative Investors Portfolio 5
Growth Investors Portfolio 5
Worldwide Privatization Portfolio 4
Growth Portfolio 6
Technology Portfolio 4
ITEM 27. Indemnification.
It is the Registrant's policy to indemnify its
directors and officers, employees and other agents to
the maximum extent permitted by Section 2-418 of the
General Corporation Law of the State of Maryland and
as set forth in Article EIGHTH of Registrant's
Articles of Incorporation, filed as Exhibit 1,
Article VII of the Registrant's By-Laws filed as
Exhibit 2 and Section 9 of the Distribution Services
Agreement filed as Exhibit 6(a), all as set forth
below. Registrant's Articles of Incorporation and
Article VII, Section 1 through Section 6 of the
Registrant's By-Laws, as set forth below. The
Adviser's liability for any loss suffered by the
Registrant or its shareholders is set forth in Section
4 of the Advisory Agreement filed as Exhibit 5(a) in
response to Item 24, as set forth below.
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Section 2-418 of the Maryland General Corporation Law reads
as follows:
"2-418 INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS.--(a) In this section the
following words have the meaning indicated.
(1) "Directors" means any person who is or
was a director of a corporation and any person
who, while a director of a corporation, is or
was serving at the request of the corporation as
a director, officer, partner, trustee, employee,
or agent of another foreign or domestic
corporation, partnership, joint venture, trust,
other enterprise, or employee benefit plan.
(2) "Corporation" includes any domestic or
foreign predecessor entity of a corporation in a
merger, consolidation, or other transaction in
which the predecessor's existence ceased upon
consummation of the transaction.
(3) "Expenses" include attorney's fees.
(4) "Official capacity" means the
following:
(i) When used with respect to a
director, the office of director in the
corporation; and
(ii) When used with respect to a person
other than a director as contemplated in
subsection (i), the elective or appointive
office in the corporation held by the officer,
or the employment or agency relationship
undertaken by the employee or agent in behalf of
the corporation.
(iii) "Official capacity" does not
include service for any other foreign or
domestic corporation or any partnership, joint
venture, trust, other enterprise, or employee
benefit plan.
(5) "Party" includes a person who was, is,
or is threatened to be made a named defendant or
respondent in a proceeding.
(6) "Proceeding" means any threatened,
pending or completed action, suit or proceeding,
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whether civil, criminal, administrative, or
investigative.
(b)(1) A corporation may indemnify any
director made a party to any proceeding by
reason of service in that capacity unless it is
established that:
(i) The act or omission of the
director was material to the matter giving rise
to the proceeding; and
1. Was committed in bad faith;
or
2. Was the result of active and
deliberate dishonesty; or
(ii) The director actually received an
improper personal benefit in money, property, or
services; or
(iii) In the case of any criminal
proceeding, the director had reasonable cause to
believe that the act or omission was unlawful.
(2) (i) Indemnification may be against
judgments, penalties, fines, settlements, and
reasonable expenses actually incurred by the
director in connection with the proceeding.
(ii) However, if the proceeding was one
by or in the right of the corporation,
indemnification may not be made in respect of
any proceeding in which the director shall have
been adjudged to be liable to the corporation.
(3) (i) The termination of any proceeding
by judgment, order or settlement does not create
a presumption that the director did not meet the
requisite standard of conduct set forth in this
subsection.
(ii) The termination of any proceeding
by conviction, or a plea of nolo contendere or
its equivalent, or an entry of an order of
probation prior to judgment, creates a
rebuttable presumption that the director did not
meet that standard of conduct.
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(c) A director may not be indemnified
under subsection (b) of this section in respect
of any proceeding charging improper personal
benefit to the director, whether or not
involving action in the director's official
capacity, in which the director was adjudged to
be liable on the basis that personal benefit was
improperly received.
(d) Unless limited by the charter:
(1) A director who has been
successful, on the merits or otherwise, in the
defense of any proceeding referred to in
subsection (b) of this section shall be
indemnified against reasonable expenses incurred
by the director in connection with the
proceeding.
(2) A court of appropriate
jurisdiction upon application of a director and
such notice as the court shall require, may
order indemnification in the following
circumstances:
(i) If it determines a director is
entitled to reimbursement under paragraph (1) of
this subsection, the court shall order
indemnification, in which case the director
shall be entitled to recover the expenses of
securing such reimbursement; or
(ii) If it determines that the director
is fairly and reasonably entitled to
indemnification in view of all the relevant
circumstances, whether or not the director has
met the standards of conduct set forth in
subsection (b) of this section or has been
adjudged liable under the circumstances
described in subsection (c) of this section, the
court may order such indemnification as the
court shall deem proper. However,
indemnification with respect to any proceeding
by or in the right of the corporation or in
which liability shall have been adjudged in the
circumstances described in subsection (c) shall
be limited to expenses.
(3) A court of appropriate
jurisdiction may be the same court in which the
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proceeding involving the director's liability
took place.
(e) (1) Indemnification under subsection
(b) of this section may not be made by the
corporation unless authorized for a specific
proceeding after a determination has been made
that indemnification of the director is
permissible in the circumstances because the
director has met the standard of conduct set
forth in subsection (b) of this section.
(2) Such determination shall be made:
(i) By the board of directors by a
majority vote of a quorum consisting of
directors not, at the time, parties to the
proceeding, or, if such a quorum cannot be
obtained, then by a majority vote of a committee
of the board consisting solely of two or more
directors not, at the time, parties to such
proceeding and who were duly designated to act
in the matter by a majority vote of the full
board in which the designated directors who are
parties may participate;
(ii) By special legal counsel selected
by the board or a committee of the board by vote
as set forth in subparagraph (i) of this
paragraph, or, if the requisite quorum of the
full board cannot be obtained therefor and the
committee cannot be established, by a majority
vote of the full board in which directors who
are parties may participate; or
(iii) By the stockholders.
(3) Authorization of indemnification and
determination as to reasonableness of expenses
shall be made in the same manner as the
determination that indemnification is
permissible. However, if the determination that
indemnification is permissible is made by
special legal counsel, authorization of
indemnification and determination as to
reasonableness of expenses shall be made in the
manner specified in subparagraph (ii) of
paragraph (2) of this subsection for selection
of such counsel.
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(4) Shares held by directors who are
parties to the proceeding may not be voted on
the subject matter under this subsection.
(f) (1) Reasonable expenses incurred by a
director who is a party to a proceeding may be
paid or reimbursed by the corporation in advance
of the final disposition of the proceeding, upon
receipt by the corporation of:
(i) A written affirmation by the
director of the director's good faith belief
that the standard of conduct necessary for
indemnification by the corporation as authorized
in this section has been met; and
(ii) A written undertaking by or on
behalf of the director to repay the amount if it
shall ultimately be determined that the standard
of conduct has not been met.
(2) The undertaking required by
subparagraph (ii) of paragraph (1) of this
subsection shall be an unlimited general
obligation of the director but need not be
secured and may be accepted without reference to
financial ability to make the repayment.
(3) Payments under this subsection
shall be made as provided by the charter,
bylaws, or contract or as specified in
subsection (e) of this section.
(g) The indemnification and advancement of
expenses provided or authorized by this section
may not be deemed exclusive of any other rights,
by indemnification or otherwise, to which a
director may be entitled under the charter, the
bylaws, a resolution of stockholders or
directors, an agreement or otherwise, both as to
action in an official capacity and as to action
in another capacity while holding such office.
(h) This section does not limit the
corporation's power to pay or reimburse expenses
incurred by a director in connection with an
appearance as a witness in a proceeding at a
time when the director has not been made a named
defendant or respondent in the proceeding.
(i) For purposes of this section:
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(1) The corporation shall be deemed to
have requested a director to serve an employee
benefit plan where the performance of the
director's duties to the corporation also
imposes duties on, or otherwise involves
services by, the director to the plan or
participants or beneficiaries of the plan:
(2) Excise taxes assessed on a
director with respect to an employee benefit
plan pursuant to applicable law shall be deemed
fines; and
(3) Action taken or omitted by the
director with respect to an employee benefit
plan in the performance of the director's duties
for a purpose reasonably believed by the
director to be in the interest of the
participants and beneficiaries of the plan shall
be deemed to be for a purpose which is not
opposed to the best interests of the
corporation.
(j) Unless limited by the charter:
(1) An officer of the corporation
shall be indemnified as and to the extent
provided in subsection (d) of this section for a
director and shall be entitled, to the same
extent as a director, to seek indemnification
pursuant to the provisions of subsection (d);
(2) A corporation may indemnify and
advance expenses to an officer, employee, or
agent of the corporation to the same extent that
it may indemnify directors under this section;
and
(3) A corporation, in addition, may
indemnify and advance expenses to an officer,
employee, or agent who is not a director to such
further extent, consistent with law, as may be
provided by its charter, bylaws, general or
specific action of its board of directors or
contract.
(k) (1) A corporation may purchase and
maintain insurance on behalf of any person who
is or was a director, officer, employee, or
agent of the corporation, or who, while a
director, officer, employee, or agent of the
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corporation, is or was serving at the request,
of the corporation as a director, officer,
partner, trustee, employee, or agent of another
foreign or domestic corporation, partnership,
joint venture, trust, other enterprise, or
employee benefit plan against any liability
asserted against and incurred by such person in
any such capacity or arising out of such
person's position, whether or not the
corporation would have the power to indemnify
against liability under the provisions of this
section.
(2) A corporation may provide similar
protection, including a trust fund, letter of
credit, or surety bond, not inconsistent with
this section.
(3) The insurance or similar
protection may be provided by a subsidiary or an
affiliate of the corporation.
(l) Any indemnification of, or advance of
expenses to, a director in accordance with this
section, if arising out of a proceeding by or in
the right of the corporation, shall be reported
in writing to the stockholders with the notice
of the next stockholders' meeting or prior to
the meeting."
Article EIGHTH of the Registrant's Articles of
Incorporation reads as follows:
"EIGHTH: To the maximum permitted by the General
Corporation Law of the State of Maryland as from time
to time amended, the Corporation shall indemnify its
currently acting and its former directors and officers
and those persons who, at the request of the
Corporation, serve or have served another Corporation,
partnership, joint venture, trust or other enterprise
in one or more of such Corporations.
The Advisory Agreement between the Registrant and
Alliance Capital Management L.P. provides that
Alliance Capital Management L.P. will not be liable
under such agreements for any mistake of judgment or
in any event whatsoever except for lack of good faith
and that nothing therein shall be deemed to protect,
or purport to protect, Alliance Capital Management
L.P. against any liability to Registrant or its
security holders to which it would otherwise be
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subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties
thereunder, or by reason of reckless disregard of its
obligations or duties thereunder.
The Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc.
provides that the Registrant will indemnify, defend
and hold Alliance Fund Distributors, Inc., and any
person who controls it within the meaning of Section
15 of the Investment Company Act of 1940, free and
harmless from and against any and all claims, demands,
liabilities and expenses which Alliance Fund
Distributors, Inc. or any controlling person may incur
arising out of or based upon any alleged untrue
statement of a material fact contained in Registrant's
Registration Statement or Prospectus or Statement of
Additional Information or arising out of, or based
upon any alleged omission to state a material fact
required to be stated in either thereof or necessary
to make the statements in any thereof not misleading,
provided that nothing therein shall be so construed as
to protect Alliance Fund Distributors against any
liability to Registrant or its security holders to
which it would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in
the performance of its duties, or be reason of
reckless disregard of its obligations or duties
thereunder. The foregoing summaries are qualified by
the entire text of Registrant's Articles of
Incorporation, the Advisory Agreement between the
Registrant and Alliance Capital Management L.P. and
the Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933, as amended (the
"Securities Act") may be permitted to directors,
officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that, in the opinion
of the Securities and Exchange Commission, such
indemnification is against public policy as expressed
in the Securities Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of
the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such
director, officer or controlling person in connection
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with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of
whether such indemnification by it is against public
policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
In accordance with Release No. IC-11330 (September 2,
1980), the Registrant will indemnify its directors,
officers, investment manager and principal
underwriters only if (1) a final decision on the
merits was issued by the court or other body before
whom the proceeding was brought that the person to be
indemnified (the "indemnitee") was not liable by
reason or willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties
involved in the conduct of his office ("disabling
conduct") or (2) a reasonable determination is made,
based upon a review of the facts, that the indemnitee
was not liable by reason of disabling conduct, by
(a) the vote of a majority of a quorum of the
directors who are neither "interested persons" of the
Registrant as defined in section 2(a)(19) of the
Investment Company Act of 1940 nor parties to the
proceeding ("disinterested, non-party directors"), or
(b) an independent legal counsel in a written opinion.
The Registrant will advance attorneys fees or other
expenses incurred by its directors, officers,
investment adviser or principal underwriters in
defending a proceeding, upon the undertaking by or on
behalf of the indemnitee to repay the advance unless
it is ultimately determined that he is entitled to
indemnification and, as a condition to the advance,
(1) the indemnitee shall provide a security for his
undertaking, (2) the Registrant shall be insured
against losses arising by reason of any lawful
advances, or (3) a majority of a quorum of
disinterested, non-party directors of the Registrant,
or an independent legal counsel in a written opinion,
shall determine, based on a review of readily
available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the
indemnitee ultimately will be found entitled to
indemnification.
ARTICLE VII, Section 1 through Section 6 of the
Registrant's By-laws reads as follows:
"Section 1. INDEMNIFICATION OF DIRECTORS AND
OFFICERS. The Corporation shall indemnify its
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directors to the fullest extent that indemnification
of directors is permitted by the Maryland General
Corporation Law. The Corporation shall indemnify its
officers to the same extent as its directors and to
such further extent as is consistent with law. The
Corporation shall indemnify its directors and officers
who while serving as directors or officers also serve
at the request of the Corporation as a director,
officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint
venture, trust, other enterprise or employee benefit
plan to the fullest extent consistent with law. The
indemnification and other rights provided by this
Article shall continue as to a person who has ceased
to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of
such a person. This Article shall not protect any
such person against any liability to the Corporation
or any stockholder thereof to which such person would
otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office
("disabling conduct").
"Section 2. ADVANCES. Any current or former director
or officer of the Corporation seeking indemnification
within the scope of this Article shall be entitled to
advances from the Corporation for payment of the
reasonable expenses incurred by him in connection with
the matter as to which he is seeking indemnification
in the manner and to the fullest extent permissible
under the Maryland General Corporation Law. The
person seeking indemnification shall provide to the
Corporation a written affirmation of his good faith
belief that the standard of conduct necessary for
indemnification by the Corporation has been met and a
written undertaking to repay any such advance if it
should ultimately be determined that the standard of
conduct has not been met. In addition, at least one
of the following additional conditions shall be met:
(a) the person seeking indemnification shall provide a
security in form and amount acceptable to the
Corporation for his undertaking; (b) the Corporation
is insured against losses arising by reason of the
advance; or (c) a majority of a quorum of directors of
the Corporation who are neither "interested persons"
as defined in Section 2(a)(19) of the Investment
Company Act of 1940, as amended, nor parties to the
proceeding ("disinterested non-party directors"), or
independent legal counsel, in a written opinion, shall
have determined, based on a review of facts readily
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available to the Corporation at the time the advance
is proposed to be made, that there is reason to
believe that the person seeking indemnification will
ultimately be found to be entitled to indemnification.
"Section 3. PROCEDURE. At the request of any person
claiming indemnification under this Article, the Board
of Directors shall determine, or cause to be
determined, in a manner consistent with the Maryland
General Corporation Law, whether the standards
required by this Article have been met.
Indemnification shall be made only following: (a) a
final decision on the merits by a court or other body
before whom the proceeding was brought that the person
to be indemnified was not liable by reason of
disabling conduct or (b) in the absence of such a
decision, a reasonable determination, based upon a
review of the facts, that the person to be indemnified
was not liable by reason of disabling conduct by
(i) the vote of a majority of a quorum of
disinterested non-party directors or (ii) an
independent legal counsel in a written opinion.
"Section 4. INDEMNIFICATION OF EMPLOYEES AND AGENTS.
Employees and agents who are not officers or directors
of the Corporation may be indemnified, and reasonable
expenses may be advanced to such employees or agents,
as may be provided by action of the Board of Directors
or by contract, subject to any limitations imposed by
the Investment Company Act of 1940.
"Section 5. OTHER RIGHTS. The Board of Directors may
make further provision consistent with law for
indemnification and advance of expenses to directors,
officers, employees and agents by resolution,
agreement or otherwise. The indemnification provided
by this Article shall not be deemed exclusive of any
other right, with respect to indemnification or
otherwise, to which those seeking indemnification may
be entitled under any insurance or other agreement or
resolution of stockholders or disinterested directors
or otherwise. The rights provided to any person by
this Article shall be enforceable against the
Corporation by such person who shall be presumed to
have relied upon it in serving or continuing to serve
as a director, officer, employee, or agent as provided
above.
"Section 6. AMENDMENTS. References in this Article
are to the Maryland General Corporation Law and to the
Investment Company Act of 1940 as from time to time
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amended. No amendment of these By-laws shall effect
any right of any person under this Article based on
any event, omission or proceeding prior to the
amendment."
The Registrant participates in a joint directors and
officers liability insurance policy issued by the ICI
Mutual Insurance Company. Coverage under this policy
has been extended to directors, trustees and officers
of the investment companies managed by Alliance
Capital Management L.P. Under this policy, outside
trustees and directors are covered up to the limits
specified for any claim against them for acts
committed in their capacities as trustee or director.
A pro rata share of the premium for this coverage is
charged to each investment company and to the Adviser.
ITEM 28. Business and Other Connections of Adviser.
The descriptions of Alliance Capital Management L.P.
under the caption "Management of the Fund" in the
Prospectus and in the Statement of Additional
Information constituting Parts A and B, respectively,
of this Registration Statement are incorporated by
reference herein.
The information as to the directors and executive
officers of Alliance Capital Management Corporation,
the general partner of Alliance Capital Management
L.P., set forth in Alliance Capital Management L.P.'s
Form ADV filed with the Securities and Exchange
Commission on April 21, 1988 (File No. 801-32361) and
amended through the date hereof, is incorporated by
reference herein.
ITEM 29. Principal Underwriters.
(a) Alliance Fund Distributors, Inc., the Registrant's
Principal Underwriter in connection with the sale of
shares of the Registrant, also acts as Principal
Underwriter or Distributor for the following
investment companies:
ACM Institutional Reserves, Inc.
AFD Exchange Reserves
The Alliance Fund, Inc.
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Developing Markets Fund, Inc.
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Alliance Global Fund
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Limited Maturity Government Fund, Inc.
Alliance Money Market Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
Alliance Municipal Income Fund, Inc. II
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust,
Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
Fiduciary Management Associates
The Alliance Portfolios
(b) The following are the Directors and Officers of
Alliance Fund Distributors, Inc., the principal place
of business of which is 1345 Avenue of the Americas,
New York, New York, 10105.
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
Michael J. Laughlin Chairman
Robert L. Errico President
Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel
and Secretary
Daniel J. Dart Senior Vice President
Byron M. Davis Senior Vice President
Richard A. Davies Senior Vice President
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Kimberly A. Gardener Senior Vice President
Geoffrey L. Hyde Senior Vice President
Barbara J. Krumseik Senior Vice President
Stephen R. Laut Senior Vice President
Daniel D. McGingley Senior Vice President
Dusty W. Paschall Senior Vice President
Antonios G. Poleonadkis Senior Vice President
Gregory K. Shannahan Senior Vice President
Joseph F. Sumanski Senior Vice President
Peter J. Szabo Senior Vice President
Nicholas K. Willett Senior Vice President
Richard A. Winge Senior Vice President
Warren W. Babcock, III Vice President
Benji A. Baer Vice President
Kenneth F. Barkoff Vice President
William P. Beanblossom Vice President
Jack C. Bixler Vice President
Casimir F. Bolanowski Vice President
Kevin T. Cannon Vice President
William W. Collins, Jr. Vice President
Richard W. Dabney Vice President
John F. Dolan Vice President
Mark J. Dunbar Vice President
Sohaila S. Farsheed Vice President
Linda A. Finnerty Vice President
William C. Fisher Vice President
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Robert M. Frank Vice President
Gerard J. Friscia Vice President & Controller
Andrew L. Gangolf Vice President
Mark D. Gersten Vice President Treasurer, CFO and
Assistant Secretary
Joseph W. Gibson Vice President
Herbert H. Goldman Vice President
James E. Gunter Vice President
Alan Halfenger Vice President
Daniel M. Hazard Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Robert H. Joseph, Jr. Vice President & Treasurer
Richard D. Keppler Vice President
Sheila F. Lamb Vice President
Donna M. Lamback Vice President
Thomas Leavitt, III Vice President
James M. Liptrot Vice President
James P. Luisi Vice President
Christopher J. MacDonald Vice President
Michael F. Mahoney Vice President
Maura A. McGrath Vice President
Matthew P. Mintzer Vice President
Joanna D. Murray Vice President
Nicole Nolan-Koester Vice President
Daniel J. Phillips Vice President
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Robert T. Pigozzi Vice President
James J. Posch Vice President
Robert E. Powers Vice President
Domenick Pugliese Vice President
Bruce W. Reitz Vice President
Dennis A. Sanford Vice President
Raymond S. Sclafani Vice President
Richard J. Sidell Vice President
J. William Stratt, Jr. Vice President
Richard E. Tambourine Vice President
Joseph T. Tocylosky Vice President
Neil S. Wood Vice President
Emilie D. Wrapp Vice President
Maria L. Carreras Assistant Vice President
Sarah A. Chodara Assistant Vice President
John W. Cronin Assistant Vice President
Leon M. Fern Assistant Vice President
William B. Hanigan Assistant Vice President
Vicky M. Hayes Assistant Vice President
John C. Hershock Assistant Vice President
James J. Hill Assistant Vice President
Thomas K. Intoccia Assistant Vice President
Edward W. Kelly Assistant Vice President
Patrick Look Assistant Vice President
Shawn P. McClain Assistant Vice President
Thomas F. Monnerat Assistant Vice President
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Jeanette M. Nardella Assistant Vice President
Carol H. Rappa Assistant Vice President
Lisa Robinson-Cronin Assistant Vice President
Karen C. Satterberg Assistant Vice President
Robert M. Smith Assistant Vice President
Joseph T. Tocyloski Assistant Vice President
Wesley S. Williams Assistant Vice President
Mark R. Manley Assistant Vice President
(c) Not Applicable.
ITEM 30. Location of Accounts and Records.
The accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940
and the Rules thereunder are maintained as follows: journals,
ledgers, securities records and other original records are
maintained principally at the offices of Alliance Fund Services,
Inc., 500 Plaza Drive, Secaucus, New Jersey 07094, and at the
offices of State Street Bank and Trust Company, the Registrant's
Custodian, 225 Franklin Street, Boston, Massachusetts 02110. All
other records so required to be maintained are maintained at the
offices of Alliance Capital Management L.P., 1345 Avenue of the
Americas, New York, New York 10105.
ITEM 31. Management Services.
Not Applicable.
ITEM 32. Undertakings.
(b) Registrant undertakes to file a Post-Effective
Amendment, using financial statements pertaining to the Real
Estate Investment Portfolio, which need not be certified, within
four to six months from the effective date of the amendment to
its Securities Act of 1933 Registration Statement.
(c) The Registrant undertakes to furnish each person to
whom a prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders upon request and without
charge.
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SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York
and State of New York, on the 15th day of October, 1996.
ALLIANCE VARIABLE PRODUCTS
SERIES FUND, INC.
by /s/ John D. Carifa
_____________________
John D. Carifa
Chairman and President
Pursuant to the requirements of the Securities Act of
1933, as amended, this Amendment to the Registration Statement
has been signed below by the following persons in the capacities
and on the date indicated:
SIGNATURE TITLE DATE
1. Principal Executive Officer
by /s/ John D. Carifa Chairman and October 15, 1996
__________________
John D. Carifa
2. Principal Financial and
Accounting Officer
by /s/ Mark D. Gersten Treasurer and October 15, 1996
___________________ Chief Financial
Mark D. Gersten Officer
C-23
<PAGE>
3. A majority of the Directors
David H. Dievler
John D. Carifa
William H. Foulk, Jr.
John H. Dobkin
Robert C. White
by /s/ Edmund P. Bergan, Jr. October 15, 1996
____________________________
(Attorney-in-fact)
Edmund P. Bergan, Jr.
C-24
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO.
(11) Consent of Independent Auditors
C-25
00250292.AX8
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"General Information - Independent Auditors" and to the
incorporation by reference of our report dated February 5, 1996,
in this Registration Statement (Form N-1A 33-18647 and 811-5398)
of Alliance Variable Products Series Fund, Inc.
ERNST & YOUNG LLP
New York, New York
October 15, 1996
00250232.AI0
