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ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
ANNUAL REPORT
DECEMBER 31, 1996
The following Annual Report for the Alliance Variable Products Series Fund,
Inc. (the "Fund") includes financial information for the seventeen Portfolios
of the Fund which were active as of December 31, 1996. Not all Portfolios of
the Fund are available through each insurance product offering investments in
the Fund.
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ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
LETTER TO SHAREHOLDERS
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January 31, 1997
Dear Investor:
We are pleased to provide you with investment results and overviews of market
activity which impacted investment performance for Alliance Variable Products
Series Fund during the fiscal year ended December 31, 1996.
We believe that the Alliance Variable Series Fund remains an excellent vehicle
for investors interested in building assets for the future on a tax-deferred
basis. Yet because each investor's needs are different, and diversifying among
asset classes is one of the best ways to manage investment risk, we continue to
add new portfolios to the Fund.
PORTFOLIO HIGHLIGHTS
As mentioned in our June report, the Quasar Portfolio, seeking growth of
capital through aggressive investment policies, was launched in August. The
Quasar Portfolio may invest in any type of security issued by any company in
any industry that we believe to offer possibilities for capital appreciation,
both inside and outside the U.S. Even though there are risks associated with an
aggressive strategy, as well as investing in foreign countries, we believe a
well-researched and professionally managed portfolio is a prudent way to
invest.
On January 9, 1997, a Real Estate Investment, or REIT, Portfolio was
introduced. This portfolio seeks long-term growth of capital and income by
investing principally in exchange-traded equity securities issued by companies
that are primarily engaged in, or related to, the real estate industry.
Unlike direct investments in real estate, investing in a portfolio of real
estate-related equities provides liquidity and geographic diversification. The
REIT portfolio is managed by Dan Pine who also manages other equity real estate
funds for Alliance Capital. One of the largest fee-based property managers in
the U.S., Koll, serves as a consultant in the portfolio management process.
Real estate returns don't always move in-step with other asset classes. That is
why investing in an equity real estate portfolio can provide investment
diversification. However, since the portfolio specializes in stocks of real
estate management companies, it may be affected by economic and market
conditions such as housing demand, tax and regulatory requirements as well as
real estate price levels.
MARKET REVIEW
For the second consecutive year, the U.S. economy turned in a terrific
performance, boosting domestic equities. Following 1995's 33.5% rise, the Dow
Jones Industrial Average posted a 26% gain for 1996. Bond markets did not fare
as well for the past year; the Lehman Brothers Aggregate Bond Index eked out a
3.63% return.
At the moment, the U.S. economy is growing at a slow but steady pace. Growth is
moderate, inflation is well-behaved, the unemployment rate has fallen as more
than two million new jobs were created, the federal budget deficit is at a
15-year low, and the dollar is stronger than it has been in some time. These
favorable developments are the direct result of several market factors,
including corporate restructurings, labor market flexibility and the right mix
of monetary and fiscal policy.
The past year also showed a strong performance for most foreign equity markets,
with the exception of Japan and, to a lesser extent, Switzerland. While Morgan
Stanley's Europe, Australia, and Far East Index gained only
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6.05% during 1996, this was largely due to double-digit declines in the
Japanese market. (Excluding Japan, the index rose 20.96% during 1996.) Growing
investor confidence in the prospects for recovery in Europe, lower interest
rates, and the continued strong performance of the U.S. market ,has led savers
worldwide to commit greater proportions of their savings to equities.
Despite sluggish domestic bond returns, non-U.S. bond markets continued their
strong performance. The J.P. Morgan Emerging Markets Bond Index and the Salomon
Brothers Non-Dollar Government Bond Index returned 5.45% and 4.08%,
respectively, for the year ended December 31, 1996.
ECONOMIC OUTLOOK
For 1997, we do not foresee any sustained equity decline (defined as
approaching or exceeding 10%). The fundamentals that have been behind our
persistent bullishness, including good corporate health, moderate economic
growth and inflation, U.S. technology leadership, and strong cash flows into
equities, remain in place. However, current price/earnings ratios by historical
norms indicate these strong fundamentals are now fairly priced. Finding good
values in the market may become more difficult.
It is still not clear whether the economies of the U.S., Japan, and Europe will
prove either a little weaker or a little stronger in 1997 than in 1996. Based
on lackluster consumer spending, we currently believe that marginal economic
weakening is not unlikely. With this in mind, our growth portfolios, while
still fully invested, are positioned somewhat conservatively with
greater-than-normal diversification.
Following the recent U.S. presidential election, the outlook for a balanced
U.S. budget has improved. Under the current Congress and President, we do not
foresee any major spending initiatives, and we do not believe there will be
significant rate changes by the Federal Reserve in the short-term.
In the fixed income arena, we believe that higher-yielding fixed income issues,
be they domestic corporate or asset-backed securities or emerging market or
non-dollar government debt, should continue to be the best performers. While we
continue to have a favorable outlook for emerging market debt, risk premiums in
this asset class have narrowed, and we expect the pace of price appreciation to
slow.
The following pages contain commentaries about investment activity for each of
the Fund's portfolios and a separate page with investment results through
December 31, 1996. We appreciate your investment in the portfolios of Alliance
Variable Products Series Fund and look forward to reporting further investment
progress in the coming period.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman and President
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CONSERVATIVE INVESTORS PORTFOLIO
INVESTMENT OBJECTIVE
The Portfolio seeks the highest total return without, in the view of the Fund's
Advisor, undue risk to principal by investing in a diversified mix of publicly
traded equity and fixed income securities.
MARKET REVIEW
U.S. fixed income securities, the predominant asset class in this Fund, turned
in a weak performance in 1996. The performance was disappointing especially in
contrast to 1995's return of 19% as measured by the Lehman Brothers Corporate
Bond Index and fell well short of the total rates of return reported by most
equity security classes. For the full year, the bond market, as measured by the
same index, recorded a total return of 2.9%. Bond returns were especially
bifurcated -- declining some 1.9% during the first six months and rallying 4.9%
in the final six months. The stock market, as represented by the S&P 500,
tacked on an impressive 22.95% return in 1996, while most other equity classes
enjoyed smaller double-digit rates of return. Indeed, the equity market's
strong performance was only briefly interrupted mid-year when economic data
seemed to be signaling a stronger-than-expected economy and investors became
anxious about a tightening in monetary policy.
INVESTMENT RESULTS
For the fiscal year ended December 31, 1996, the Conservative Investors
Portfolio provided a total return of 3.79%+. Its benchmark -- a composite of
the S&P 500 Stock Index (30%), which had a return of 22.95% and the Lehman
Brothers Government/Corporate Bond Index (70%), which posted a 2.9% return --
yielded an 8.92% return.
At the beginning of the year, the Portfolio's allocation to equities was a
conservative 12% and the fixed income portion was of a longer duration than the
fixed income benchmark. The Portfolio's allocation was designed to benefit from
our forecast for weakening profits and falling interest rates. The Fund's
performance relative to its benchmark suffered in the first quarter as stock
prices rose and bond prices fell. In the March and June quarters, equity
allocations were raised to 23% and 31% respectively. At the same time, the
duration of the fixed income Portfolio was shortened to match the benchmark.
These strategic shifts placed more emphasis on sector selection, overweighting
undervalued sectors and underweighting unattractive sectors.
For example, the Fund's position in mortgages was reduced as interest rates
began to decline and mortgage prepayment risk increased. Investments in
corporate bonds were raised during the fourth quarter as spreads relative to
those of the government widened because of heavy new issue activity. Such
changes were beneficial: the bond portion of the Portfolio outperformed its
benchmark during the second half of the year.
In the second half of the year, the Portfolio's total return, which
underperformed its benchmark, a composite of the S&P 500 Stock Index (30%) and
the Lehman Brothers Government/Corporate Bond Index (70%), was negatively
affected by the Portfolio's cash position which ended the year at 18.8%. For
additional information on the Portfolio's investment results, please turn to
page A-24.
INVESTMENT OUTLOOK
We expect economic growth will moderate from its fourth quarter bounce to
approximately a 2% rate during 1997. A return to trend rates of growth in
consumer spending and exports, coupled with slower rates of increases in
capital spending, should keep the economy on a moderate, but sustainable growth
path. These conditions should permit long-term interest rates to decline as
investor fears about a possible acceleration of inflation subside.
Looking forward, we are cautiously optimistic about equity prices. Although
valuation levels are approaching historically high levels, they are supportable
given our forecasts for benign inflation and moderate growth. Nonetheless, we
anticipate more modest equity returns than were enjoyed in recent years. We
also expect a closing in the performance of U.S. stocks over both fixed income
and international equity securities. Lastly, we envision that a broader range
of stocks will participate in the rising market in contrast to the concentrated
performance witnessed in 1996.
PORTFOLIO STRATEGY
We will continue to pursue opportunities for total return consistent with the
Portfolio's objective as they arise.
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+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
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GROWTH INVESTORS PORTFOLIO
INVESTMENT OBJECTIVE
The Portfolio seeks the highest total return consistent with what the Fund's
Advisor considers to be reasonable risk by investing in a diversified mix of
publicly traded equity and fixed income securities.
MARKET REVIEW
1996 was another successful year for domestic equities. The S&P 500 generated a
total return of approximately 22.95%, while most other indices managed to
produce smaller but still double-digit rates of return. Foreign and U.S. fixed
income securities, however, markedly underperformed U.S. equities. The market's
strong performance was interrupted only briefly in late June and early July
when economic data seemingly pointed to an accelerating economy and investors
became increasingly concerned about a tightening in monetary policy. As the
summer unfolded, indications of softer economic activity allowed the market to
resume its race toward successive new highs.
The second half of the year could, in many respects, be characterized as an
exaggeration of the trends evident during the first six months of the year.
Indeed, the differences in performance among the various capitalization
segments in the growth stocks sector were even more disparate than reported
during the January - June time period. The Wilshire Large Cap Growth Index (an
index comprised of the 750 equity securities that fit Wilshire Asset
Management's "growth stock" characteristics and are the largest 750 securities
in the Wilshire 5000 index) outperformed the Wilshire Small Cap Growth Index
(an index comprised of 251 equity securities that fit Wilshire Asset
Management's "growth stock" characteristics and fall between the 751 largest to
the 2,500 largest securities in the Wilshire 5000 index) by some 200 basis
points during the first half of the year and by more than 950 basis points in
the last half.
Foreign stock markets, as measured by MSCI EAFE Index (a widely accepted
measure of international performance) fell short of the S&P 500 by some 5.57%
in the January - June period. In the last six months of the year, the
underperformance gap widened to 10.22%. In our opinion, these unusually wide
gaps in performance reflect the fact that portfolio managers are increasingly
concentrating their investments in a smaller number of stocks. We believe this
trend is not sustainable.
Trends in the fixed income market were notable exceptions to heightened
divergence in performance among asset classes during the final six months of
the year. While the S&P 500 outpaced the Lehman Brothers Government/Corporate
Bond Index in the first half of the year by some 11.97%, the gap narrowed to
6.82% in the July - December time frame.
INVESTMENT RESULTS
For the fiscal year ended December 31, 1996, the Growth Investors Portfolio
provided a total return of 8.18%+ compared to its benchmark -- a composite of
the S&P 500 Stock Index (70%), which had a 22.95% return and the Lehman
Brothers Government/Corporate Bond Index (30%), which posted a 2.9% return.
This combination yielded a 16.94% return.
The Growth Investors Portfolio began the third quarter with equity exposure of
67%, bonds at 16% and a cash position of 17%. From June to December, the bond
portion of the Portfolio was increased from 16% to 19.8% and cash was lowered
from 17% to 5.2%. The total equity exposure was increased from 67% to 75% with
additions made to international equities. The outperformance of large domestic
stocks versus international and smaller cap stocks subtracted from the
performance of the Portfolio versus its benchmark. For additional information
on the Portfolio's investment results, please turn to page A-24.
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+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
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INVESTMENT OUTLOOK
What should investors expect after a two year run in U.S. stocks that generated
a 69% total rate of return for the S&P 500? We remain cautiously optimistic.
Although valuation levels are approaching historically high levels, our
forecasts for benign inflation and interest rates in combination with
moderately sustainable economic growth should provide important support for
valuation levels. The profit outlook is also positive as continued global
competition and attention to cost control should continue to result in modest
earnings growth.
This positive economic backdrop for capital markets, however, is offset to some
extent by the high level of investor expectations generated by this long
running bull market. Recent surveys have suggested that mutual fund holders do
not assign a significant probability to the chance of a market correction of
more than 10% over the next 10 years. Experience and history would suggest this
view is too optimistic.
As indicated earlier, we expect more moderate returns in equities over the next
few years than were enjoyed in recent years. That expectation is the admixture
of high levels of valuation and slower rates of growth in earnings.
Furthermore, we anticipate that the divergence among the rates of return in
various asset classes will narrow. Specifically, we expect the gap between
bonds and stocks will be much smaller than reported in 1996. We also anticipate
a broader range of stocks will participate in the rising market and that
international equities will outperform U.S. securities.
PORTFOLIO STRATEGY
We will continue to investigate investment opportunities that are consistent
with the Portfolio's objectives as they pertain to market activities.
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TOTAL RETURN PORTFOLIO
INVESTMENT OBJECTIVE
The Portfolio seeks to achieve a high return through a combination of current
income and capital appreciation and pursues that objective by investing in
common and preferred stocks, senior corporate debt securities and U.S.
Government and Agency obligations, bonds and senior debt securities.
MARKET REVIEW
Stocks continued to rise strongly in 1996 fueled by strong earnings and
declines in interest rates. Since the beginning of 1995, the S&P 500 Stock
Index has gone up 69%. Broad inflation measures were slightly higher at the end
of 1996 as consumer prices increased 3.3% year-over-year and producer prices
went up 2.8%. However, excluding the volatile food and energy sectors,
inflation remained very well-behaved with year-over-year consumer and producer
prices up only 2.6% and 0.6% respectively. Our current slow-growth environment
is expected, by most economists, to continue with minor fluctuations.
U.S. bond market returns were subdued in 1996. Stronger-than-expected job
growth and uncertainty about whether the Federal Reserve would raise interest
rates to slow economic growth kept bond market returns in negative territory
for most of the year. Towards the end of 1996, the bond market rallied, pushing
year-to-date returns into positive territory for the first time since January
as the fear of accelerating inflation diminished. However, continued concerns
about inflation kept bond yields trading in a narrow range and held price gains
down. For the year, interest rates were higher on all maturities and
shorter-duration securities outperformed longer-duration securities across all
major sectors of the market.
INVESTMENT RESULTS
For the twelve months ended December 31, 1996, the Portfolio achieved a total
return of 15.17%+ based on net asset value. The Portfolio did better than its
benchmark, a composite of the S&P 500 Stock Index (60%) and the Lehman Brothers
Government/Corporate Bond Index (40%) which had a total return of 14.93%. The
Portfolio's performance was largely due to its balanced stock selection. For
additional information on the Portfolio's investment results, please turn to
page A-24.
INVESTMENT OUTLOOK
We anticipate no major change, either positive or negative, that could affect
the U.S. economy. Our current slow-growth environment is expected, by most
economists, to continue with minor fluctuations. We expect the markets to
remain sensitive to the activities of the Federal Reserve Board and anticipate
an easier monetary policy by the Fed in 1997. Corporate earnings should also
increase by a moderate degree. A benign inflation environment combined with
moderate economic growth could drive the market to new highs.
Until clear signs of a slowing economy emerge, concerns about inflation will
keep U.S. interest rates within their recent ranges. Given some concern about
the economic outlook, further near-term weakness in bond prices and higher bond
yields cannot be ruled out. Such developments would only facilitate the
economic slowing we see later in 1997.
PORTFOLIO STRATEGY
As of December 31, 1996, the Portfolio maintained a 62.6% position in equities,
a 30.2% position in U.S. Government Obligation Bonds and a 7.2% position in
short-term investments. We are confident in the lesson history has taught us:
stocks outperform other types of investments over time. We intend to maintain
the Portfolio's current weightings since we believe stocks have the potential
for significant earnings growth over the next six to twelve months. As always,
we monitor carefully those developments in the economy and markets that could
affect the Portfolio's performance and will make adjustments necessary to seek
a high level of total return.
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+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
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GROWTH AND INCOME PORTFOLIO
INVESTMENT OBJECTIVE
The Portfolio seeks to balance the objectives of reasonable current income and
reasonable opportunities for appreciation through investments primarily in
dividend-paying common stocks of good quality. Whenever the economic outlook is
unfavorable for common stock, the Portfolio may invest in other types of
securities, such as bonds, convertible bonds and preferred stock.
MARKET REVIEW
The U.S. equity markets continued their heady climb in 1996, with the S&P 500
rising 22.95%. The S&P 500 is up 69% since the beginning of 1995. Growth
stocks, generally driven by investor cash flow and earnings momentum, led the
market. Value stocks, whose performance is based more on low valuation to
earnings, lagged.
INVESTMENT RESULTS
For the twelve months ended December 31, 1996, the Growth and Income Portfolio
provided a total return of 24.09%+. This performance led that of our
benchmarks, the S&P 500 Stock Index which had a return of 22.95% and the Lipper
Growth and Income Funds Average which had a 20.77% return. A fully invested
stock position contributed to these results, but the overwhelming influence on
Portfolio results was a bottom up focus on selecting the best stocks in each
broad segment (e.g. technology, financials) of the market. For additional
information on the Portfolio's investment results, please turn to page A-24.
INVESTMENT OUTLOOK
The growth spurt that the economy witnessed early in 1996 is beginning to slow,
and the current expansion dating from 1991 is advancing in age. Looking
forward, we expect the markets to remain sensitive to the activities of the
Federal Reserve Board. If the threat of inflation prompts the Federal Reserve
to undertake a prolonged period of monetary tightening, we believe that stocks
could react poorly, but we do not expect that the economy will overheat. A
benign inflation environment combined with moderate economic growth could drive
the market to new highs.
PORTFOLIO STRATEGY
While the short-term direction of the market continues to be difficult to
predict, the Portfolio remains fully invested in equities and equity-related
securities. We are confident in the lesson history has taught us: stocks
outperform other types of investments over time. We also believe that prudent
and well researched stock selection is the key to superior performance in any
market environment.
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+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
A-8
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GROWTH PORTFOLIO
INVESTMENT OBJECTIVE
The Growth Portfolio seeks long-term growth of capital by investing primarily
in equity securities of companies with a favorable outlook for earnings.
INVESTMENT RESULTS
The Growth Portfolio rewarded investors with a 28.49%+ total return for the
12-month period ended December 31, 1996. This compares favorably with returns
of 23.12% and 22.95%, respectively, for the Russell 1000 Growth Index and S&P
500 Index. Additional investment results appear on page A-24.
AREAS OF OPPORTUNITY
Throughout the year, your Portfolio maintained significant holdings in the
technology and financial services sectors. At the same time, the Portfolio has
been significantly underweighted in industrial commodities and capital goods.
While technology stocks were adversely affected during the summer correction,
they have since recovered and, in many cases, recorded new highs. We believe
computing and communications are still in the early stages of what will prove
to be significant and far-reaching change. The transition from analog to
digital technologies is moving beyond computers and is rapidly changing the
entire communications infrastructure. Our large holdings in Cisco Systems,
3Com, Intel and MFS Communications reflect our strong enthusiasm for the future
of the technology sector.
The financial services sector was also a strong performer during 1996,
benefiting from a favorable interest rate environment. Our interest in the
sector, however, is based on more than just the expectations of continued low
interest rates. Financial services represent a large and varied sector of the
economy with favorable long-term growth prospects. Our holdings in the industry
are well diversified and include banks, brokerage firms, and insurance and
credit card companies.
CURRENT OUTLOOK
Stock market returns have been running well above long-term average rates for
the last two years and it is only common sense to suggest that this cannot last
indefinitely. We do not yet see the kinds of economic or financial strains that
would provoke a bear market, but we believe returns will be more moderate in
the year ahead. Having said that, we see no reason to think that long-term
investment in the stock market will not bring its traditional rewards.
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+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
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INTERNATIONAL PORTFOLIO
INVESTMENT OBJECTIVE
The Portfolio primarily seeks to obtain a total return on its assets from
long-term growth of capital. It invests principally in marketable securities of
established companies incorporated outside the United States, in companies
participating in foreign economies with prospects for growth, and in foreign
government securities. As a secondary objective, the Portfolio will attempt to
increase its current income without assuming undue risk.
MARKET REVIEW
The MSCI EAFE Index returned 6.36% for the twelve month period ended December
31, 1996. Of the three regions in which the Fund's assets are concentrated,
namely Japan, Europe and the Pacific Ex-Japan, only Japan showed negative
returns for the year.
During the fourth quarter of 1996, Japan experienced another difficult period
to round off a disappointing year in terms of investment performance. Although
the economic outlook is improving for Japan, political entrenchment and poor
fiscal policy are contributing to a stalled recovery. The strong dollar, which
is good for Japanese earnings in many sectors, is further encouraging portfolio
investment outside of Japan. In the Pacific Ex-Japan region, every developed
market had a solid performance in the last quarter of 1996. Some of the Asian
emerging markets lagged, however, we continue to find many of our most
attractive stocks in this region. Markets in Denmark, Finland, the Netherlands,
Spain, Sweden and the United Kingdom were up over 10% in 1996.
INVESTMENT RESULTS
For the twelve month period ended December 31, 1996, the International
Portfolio achieved a total return of 7.25%+ on a net asset value basis. This
performance led our international benchmark, the MSCI EAFE Index, which had a
6.36% return. The U.S. market, measured most closely by the S&P 500 Stock
Index, had another banner year and posted a 22.95% return. The Portfolio's
strong performance was due to good stock selection, particularly in Europe and
Japan.
In Europe, our largest holdings are Novartis AG, Bayer and Barclays. All have
shown impressive gains and helped to enhance the Portfolio's performance. Bayer
was mentioned in the last report as a possible candidate for restructuring,
while Barclays reflects good prospects for the banking sector in the United
Kingdom.
Even though the Japanese market had a disappointing 1996, we underweighted the
financial sector and concentrated on other sectors such as technology. As a
result, we were able to achieve encouraging results in comparison to the index.
For additional information on the Portfolio's investment results, please turn
to page A-24.
INVESTMENT OUTLOOK
1996 was a mixed year for the developed international markets with Japan down
sharply and both Europe and Pacific Ex-Japan performing well. Looking toward
1997, we feel that interest rates should continue to trend down, inflation
should continue to be moderate and GDP growth in Europe and Japan should remain
low. As mentioned earlier, several factors are impeding recovery in Japan.
However, many stocks in the technology sector will benefit from the stronger
dollar, and we expect good growth from many of them. In Pacific Ex-Japan, we
feel that growth should pick up in many of the Asian countries in 1997, while
inflation should remain moderate. Some of the emerging Asian markets currently
appear to be undervalued, therefore we expect the best growth prospects here.
Continental Europe has been slow to pull out of its economic doldrums, but the
United Kingdom, has its recovery well underway. Presently, Europe is focusing
on European Monetary Union convergence. This continues to result in wide spread
restrictive fiscal policy and is strongly impeding growth in this region.
PORTFOLIO STRATEGY
The largest proportion of the Portfolio's holdings remains in Japan, although
the largest regional weighting is in Europe. We will continue to seek long-term
growth of capital and expect our research driven stock selection to drive the
Portfolio's performance.
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+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
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PREMIER GROWTH PORTFOLIO
INVESTMENT OBJECTIVE
The Portfolio seeks growth of capital by investing predominantly in the equity
securities of a limited number of large, carefully selected, high-quality U.S.
companies that, in our judgment, are likely to achieve superior earnings
growth. The Portfolio is not intended for investors whose principal objective
is assured income or preservation of capital.
MARKET REVIEW
We began the fiscal year with a generally favorable view of economic and
corporate developments and with a belief that the stock market could provide
another year of double digit returns. Our best hopes were achieved on both
fronts. The economy continued to exhibit strong growth without any major
inflation, and the position of U.S. companies was enhanced as a result. There
were further gains in earnings, cash flow, and balance sheets, while cost
cutting also continued to benefit profitability. Moreover, U.S. technology
leadership advanced at a strong pace in the last twelve months.
The question now facing investors is whether the market has fully reflected
these considerations. Quite frankly, none of us know the answer to this
question, as it has been a long time since we were operating in such a
favorable economic environment. Nevertheless, we have to acknowledge that with
the price earnings multiples of the major averages now at close to 18 times, we
are towards the upper end of historic levels. It seems reasonable, therefore,
that an investor should base the prospect for further stock gains mainly on a
continued advance in corporate earnings, dividends, and share repurchases
rather than on the expectation that the price earnings multiple will continue
to show the annual gains it has exhibited over the last few years.
INVESTMENT RESULTS
Premier Growth Portfolio provided a total return of 22.70%+ for the 12 months
ended December 31, 1996 compared to gains of 22.95% for the S&P 500 Stock Index
and 23.12% for the Russell 1000 Growth Stock Index. Throughout the period, the
Portfolio adhered to its policy of investing in large company stocks with
attractive growth potential. While our selections within that sector generally
performed well, results were hampered slightly by the decline in technology
stocks at the beginning of the year. For additional information on the
Portfolio's investment results, please turn to page A-24.
INVESTMENT OUTLOOK
Recently Alan Greenspan, the Chairman of the Federal Reserve, commented that
the market might be showing signs of "irrational exuberance." We think this is
a healthy warning and shows that the Federal Reserve will watch the
appreciation of financial assets in addition to traditional signs of inflation.
The best hope for the stock market over the next several years is that the
gains are steady and sure, rather than speculative, and ultimately ephemeral.
PORTFOLIO STRATEGY
The Portfolio's focus currently is on technology, consumer services and
financial growth stocks. Looking forward to 1997, it is probable that the
Portfolio will retain a major interest in these three sectors. Nevertheless, we
should expect that the market will broaden out to include companies that
evidence earnings growth in other areas. Probably the one key determinant of
performance in 1997 will be interest rates. If the long bond stays below 7%, as
we hope, the market and especially financial issues should do well. Above 7%,
however, the financial stocks could suffer, and hence it will be important to
watch consumer prices and wages most carefully.
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+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
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QUASAR PORTFOLIO
INVESTMENT OBJECTIVE
The Portfolio seeks growth of capital by pursuing aggressive investment
policies. While it invests primarily in the equity securities of
small-capitalization companies, it may invest in any type of security issued by
any company in any industry that we believe to offer possibilities for capital
appreciation. The Portfolio may also pursue investment opportunities outside of
the United States.
INVESTMENT RESULTS
The Quasar Portfolio was launched August 5, 1996, and assets were invested
gradually until the Portfolio reached a critical mass. Due to the small size of
the initial Portfolio relative to constant inflows of cash, the Portfolio
maintained an abnormally large cash position following its inception.
Therefore, from August 31, 1996 to December 31, 1996, the Quasar Portfolio was
up 6.19%+, while its benchmark, the Russell 2000 Index, was up 9.31%.
Additional investment results appear on page A-24.
REVIEW OF INVESTMENT STRATEGIES
Energy holdings currently account for more than 9% of net assets. Within the
energy sector, we continue to see rising daily rates for offshore drilling
rigs. At the same time, the worldwide shortage of offshore drilling rigs is
becoming increasingly apparent to the investment community. Following strong
performance in 1995, drilling companies were one of the best performing equity
sectors in 1996. We particularly like Parker Drilling and Rowan Companies. We
also believe the outlook for the U.S. refining business is positive and have
invested in Diamond Shamrock.
The Portfolio has also benefited from its positions in the lodging sector. We
have purchased holdings in three companies which offer business and leisure
travelers accommodations on an extended basis. While the average stay in these
facilities is six weeks, approximately a quarter of all guests stay at least
six months. Holdings servicing this new and rapidly expanding market are:
Extended Stay America, Suburban Lodges of America, and Studio Plus Hotels.
Footwear and apparel companies have continued to report strong earnings.
Holdings in Nine West Group and Timberland have added to the Portfolio's gains.
Trends favoring casual wear have likewise benefited our positions in Tommy
Hilfiger and Jones Apparel Group.
With oil at $25 per barrel, the airline industry has suffered and our exposure
in this area hurt performance during the last several months. Nevertheless, we
continue to own Continental Airlines, Alaska Air Group, and America West
Airlines. Airplanes are flying with record average passenger loads--71% for the
year-to-date period compared with 66% in 1995. Last year was the first time in
several years airlines were generally profitable, and we believe we are in the
second year of a positive, multi-year cycle for the industry. Airlines are
using their cash flow to pay down debt and restructure their balance sheets. As
demand outpaces capacity growth, pricing power is increasing. This contrasts
sharply with past cycles when airlines used profits to buy more planes and
increase capacity in order to maximize revenue growth, only to erode their
pricing power.
MARKET AND ENVIRONMENT OUTLOOK
Looking forward, our outlook for the U.S. economy and equities remains
positive. However, an increase in interest rates would put some pressure on
price/earnings ratios, which means that stocks with higher P/Es could become
vulnerable. As a result, we continue to focus on the underlying earnings of
each company, working to avoid the risk of unsustainable valuations.
We remain enthusiastic about the growth potential of small-cap stocks. After
underperforming large-cap stocks in 1994, 1995, and 1996, we believe that
small-cap stocks offer very attractive relative valuations. We are hopeful that
the relative value of small-cap issues will soon be recognized in the
marketplace.
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+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
A-12
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UTILITY INCOME PORTFOLIO
INVESTMENT OBJECTIVE
The Portfolio seeks current income and capital appreciation by investing
primarily in equity and fixed-income securities of companies in the utility
industry. Many of these companies have established a reputation for paying
regular dividends and for increasing their common-stock dividends over time.
INVESTMENT RESULTS
The Utility Income Portfolio's total return for the fiscal year ended December
31, 1996 was 7.88%+. This compares to a total return of 2.77% for the NYSE
Utility Index during the same period. Additional investment results appear on
page A-24.
MARKET REVIEW
Performance was enhanced in the first half of the fiscal year by underweighting
the electric utility sector and maintaining a large cash position in the face
of the bond market's retreat. During the second half of the fiscal year, this
cash was redeployed into stocks, mainly in the natural gas pipeline and
distribution sector.
Performance in the second half of the fiscal year was negatively affected by
the Portfolio's holdings in several communications technology stocks which
reported earnings below expectations. These positions have since been
eliminated. While our large position in AT&T also adversely impacted
performance, we are maintaining this holding based on its attractive valuation.
These detrimental influences were largely offset by the positive performance of
our natural gas holdings and our large positions in Teleport Communications and
MCI Communications.
INVESTMENT STRATEGY
Any reacceleration of economic growth will exert upward pressure on interest
rates, causing bond prices, as well as utility stock prices, to suffer. On the
other hand, if the economy slows enough to cause declines in corporate
earnings, utility stocks, with their inherent stability, may outperform the
broader market averages.
For now, we believe the economy is unlikely to pick up speed in the near term.
Therefore, we remain fully invested in the electric, gas, and telephone
utilities areas, and continue to reduce our exposure to the telecommunications
equipment sector, as well as to the more volatile foreign markets.
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+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
A-13
<PAGE>
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WORLDWIDE PRIVATIZATION PORTFOLIO
INVESTMENT OBJECTIVE
The Portfolio seeks long-term capital appreciation by investing principally in
equity securities issued by enterprises that are undergoing, or have undergone,
privatization. The balance of the Portfolio's assets will include equity
securities of companies that we believe to be beneficiaries of the
privatization process.
INVESTMENT RESULTS
The past year proved to be highly successful for privatization programs
worldwide. For the fiscal year, we estimate that around $90 billion was raised
from the markets in privatization transactions, a record amount following the
$73 billion raised in 1995 and $64 billion in 1994. Capitalizing on this
environment, your Portfolio outperformed the Morgan Stanley EAFE Index for the
fiscal year, returning 18.51%+, which compares to 6.36% for the index.
Additional performance information appears on page A-24.
MARKET REVIEW
The majority of transactions continues to emanate from Western Europe, which
again provided more than 50% of the total monetary volume of privatized initial
public offerings. Deal volume rose significantly in Latin America after a dull
year in 1995 and remained strong in Eastern Europe and Russia. Privatization
activity was slow only in Asia, reflecting the loss of enthusiasm for these
markets by global investors and deregulation delays by some governments.
The telecommunications industry remained the dominant industrial sector for
privatization, led by the massive privatization of Deutsche Telekom. We hope
this will prove the start of a substantial increase in the number of
transactions coming out of Germany.
Still, there was a noticeable broadening of the industry base for privatization
IPOs. Railways, energy and pharmaceuticals played an increasingly important
part in the overall spread of industry representation.
At the same time, the successful implementation of major privatization programs
in emerging markets such as Egypt and Croatia have provided tremendous returns
for investors and led to a structural shift in the way these economies operate.
INVESTMENT OUTLOOK
Looking forward, we anticipate a strong flow of new transactions in 1997, with
European issues continuing to dominate privatizations. We are confident that
privatizations will continue to offer one of the most attractive ways to gain
exposure to global investment opportunities and the themes of deregulation and
restructuring.
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+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
A-14
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TECHNOLOGY PORTFOLIO
INVESTMENT OBJECTIVE
The Portfolio is a diversified investment that seeks growth of capital and
invests for capital appreciation and, only incidentally, for income. Portfolio
assets are primarily invested in securities of companies expected to benefit
from technological advances and improvements.
INVESTMENT RESULTS
The returns of the technology sector did not match those of the overall U.S.
stock market during 1996. The Technology Portfolio returned 10.40%+ from
inception (January 25, 1996) through the end of 1996, while the Pacific Stock
Exchange High Tech Index gained 17.27% during this period.
This underperformance reflects two factors which we see as temporary in nature.
The first is that the very strong cash flows into the Portfolio as a result of
its start-up in early 1996 kept it less than fully invested during most of the
year. Secondly, the technology correction late in the year was focused in PCs
and networking, the two largest areas of investment for the Portfolio.
ECONOMIC CONDITIONS
The most notable characteristic of the U.S. economy today is the longevity of
the current economic upswing. In addition to helping to reelect President
Clinton, it has popularized the thought that the business cycle has been tamed
and that we are now destined for that promised land of steady growth and low
inflation, with almost everything in balance as far as the eye can see. Good
things don't last forever and neither will this propitious set of economic
circumstances.
However, several factors are at work which could extend this friendly
environment for a while longer. These include: more sophisticated information
technologies and more efficient manufacturing methods; better inventory
control; the growing importance of the service sector; growth in world trade
and investment; and some learning experience from past cycles on the part of
the business community as well as consumers. Most of these things are also
extending beyond the U.S., including that first driver which we are most
familiar with (information technologies) and expand on below.
TECHNOLOGY COMMENTARY
Perhaps we are too close to our subject, but our conviction that technology is
fundamentally transforming almost every aspect of corporate and social life has
never been greater. The author Jeremy Rifkin puts it well: "The global economy
is undergoing a fundamental transformation that will reshape civilization in
the twenty-first century. Sophisticated computers, telecommunications,
robotics, and other information age technologies are fast replacing human
beings in virtually every sector and industry. The hard reality that economists
and politicians are reluctant to acknowledge is that manufacturing and much of
the service sector are undergoing a transformation as profound as the one
experienced by the agricultural sector earlier in this century, when machines
boosted production and displaced millions of farmers."
The chairman of the Federal Reserve Board, Alan Greenspan, also understands
that something big is going on. "The advent of the transistor and the
integrated circuit and, as a consequence, the emergence of the modern computer,
telecommunication and satellite technologies have fundamentally changed the
structure of the American economy..."
Unfortunately, all this change will not occur smoothly. As Rifkin argues, the
opposite is a more likely scenario. What is different now, however, is that the
disruption and change which technology companies have always known is extending
to other industries. Many sectors of our economy--finance, manufacturing,
education, retailing and communications, to name a few--will be restructured.
Some companies will fail, certain jobs will be lost forever and income will be
redistributed. Nevertheless, the digital age is a locomotive with
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+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
A-15
<PAGE>
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gathering momentum. It is not stoppable. Fortunately, this also means that the
wind is at our backs in managing this portfolio. The inevitable changes which
lie ahead will present a steady source of new investment opportunities.
Although as portfolio managers we are constantly challenged by this change--the
number of corporations which cannot accommodate it will be increasing--we must
embrace change whenever it is prudent to do so. Experience has taught us that
resisting it is usually a losing proposition.
CURRENT OUTLOOK
Convergence is an overused term in the technology field, but it seems
appropriate at present. Several factors are coming together in a positive way,
including:
o availability of Microsoft's Win NT 4.0 operating system;
o declines in the price of Pentium-based computers and servers and computer
memory (DRAMs);
o completion of an inventory depletion cycle in semiconductors and
peripherals;
o upgrade of obsolete corporate PC's;
o buildup of corporate data networks and the rich applications which can take
advantage of them;
o growth in Internet use by consumers and Internet/Intranet use by
corporations.
These developments are translating themselves into more favorable fundamentals
at many of the companies in the Portfolio. Intel, for example, has twice
announced better-than-expected trends in its microprocessor business, while
Compaq Computer and Dell Computer have experienced similar growth. In
networking, Cisco Systems and 3Com both claim that the overall networking
business is growing in excess of 40% annually. Altera and Microchip Technology
are additional examples of companies seeing an acceleration in customer orders.
The third calendar quarter of 1996 saw fewer disappointments than in previous
reporting periods. At this point, 1997 also appears favorable for many
technology companies. What puzzles us is the growing popularity in the
investment community of a smaller number of technology firms. While we admit
that the strong have a tendency to get stronger, technology is also a universe
of diversity and impressive growth in many places. Further narrowing of
leadership, should it continue, will motivate us to look more diligently for
those companies which are improving their growth prospects but are not yet
enjoying the attention of most investors.
A-16
<PAGE>
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GLOBAL BOND PORTFOLIO
INVESTMENT OBJECTIVE
The Portfolio seeks to provide a high level of current income consistent with
what the Fund's Adviser and Sub-Adviser consider to be prudent investment risk
from a multi-currency portfolio of high-quality debt securities of varying
maturities.
INVESTMENT RESULTS
The Portfolio generated a return of 6.21%+ for 1996. This compared favorably
with the benchmark, Salomon Brothers World Government Bond Index, which
returned 3.63% over the same period. It also compared favorably with the return
available from investing in U.S. bonds alone. Additional investment results
appear on page A-24.
MARKET AND INVESTMENT STRATEGY REVIEW
The U.S. bond market, as measured by the Lehman Brothers Aggregate Bond Index,
posted a lackluster return of 3.63% in 1996 as capital losses due to rising
interest rates detracted from yields. However, investors in the Global Bond
Portfolio benefited from diversification into foreign markets. Returns in
European bond markets were particularly strong. Currency depreciation against
the U.S. dollar, while detracting from European bond returns, did not outweigh
them.
Unusually, the performance of bond markets diverged from what is normally the
lead set by the U.S. market. The U.S. bond market posted a relatively poor
performance as yields rose over the period in response to signs of a healthy
and growing economy. Meanwhile, European and Japanese bonds posted strong gains
as yields fell due to weaker-than-anticipated signs from their economies.
Of particular note was the compression of yield spreads between various
markets. Against the U.S., Canadian and Australian 10-year spreads, both
compressed in excess of 150 basis points. Against Germany, Italian and Spanish
10-year spreads, both Canadian and Australian spreads compressed in excess of
250 basis points. This resulted in superior performance from these markets in
local currency terms. The Portfolio benefited from maintaining relatively high
levels of exposure in these markets for most of the period.
Partially offsetting the solid local currency performance of the Japanese and
European bond markets was the weakness in their currencies against the U.S.
dollar. During the period, the Portfolio used forward foreign exchange
agreements to maintain relatively moderate overweight exposure to the U.S.
dollar.
INVESTMENT OUTLOOK
We feel the prospects for the Portfolio in 1997 are encouraging. The U.S. and
U.K. markets commence 1997 at attractive yield levels. We believe yields will
most likely offset any price falls. Additionally, the U.S. dollar looks set for
continued strong performance. While European and Japanese yields appear to have
minimal risk premium priced into them, based on currently available information
this does not appear unreasonable. Further reductions in short- and long-term
rates cannot be ruled out.
The rationale for diversifying from U.S. bonds to global bonds remains in
place. Investment risks are spread between the U.S. and U.K., where economic
strength may result in poor bond performance, and the bond markets of Europe
and Japan, where current economic weakness should facilitate superior bond
market returns during the near term.
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+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
A-17
<PAGE>
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GLOBAL DOLLAR PORTFOLIO
INVESTMENT OBJECTIVE
The Portfolio seeks a high level of current income through investing
substantially all of its assets in U.S. and non-U.S. fixed income securities
denominated only in U.S. dollars. As a secondary objective, the Portfolio seeks
capital appreciation. Substantially all of the Portfolio's assets will be
invested in high yield, high risk debt securities that are typically rated
below investment grade, or in unrated debt securities of comparable quality
that are considered to be predominantly speculative with regard to the issuer's
capacity to pay interest and repay principal.
MARKET REVIEW
Since our last report, the U.S. bond market rebounded modestly. After reporting
mostly negative returns during the first half of the year, the bond market
rallied at the end of 1996, pushing year-to-date returns into positive
territory for the first time since January. The market was reacting to reports
indicating a slowing economy and continued low inflation.
Outside the U.S., emerging market debt prices continued their strong
performance. In Mexico and Argentina, the continuation of economic reforms led
to lower inflation, improving current account deficits and growing investor
confidence, all factors which supported higher bond prices in these markets
over the past year. Mexico's recent announcement that they will prepay the
remaining $3.5 billion owed to the U.S. for the 1995 peso bailout further
underscores the government's commitment to sound economic policies and is
another positive step in their efforts to restore Mexico's credibility in
international capital markets.
In Russia, the transition to a market oriented economy continued over the past
year, although the pace of reforms was temporarily slowed as the country
focused on the elections. Reserves increased considerably and the current
account surplus continued to grow, pushing prices higher on Russian debt.
INVESTMENT RESULTS
For the fiscal year ended December 31, 1996, the Portfolio posted a return of
24.90%+ at net asset value. Its benchmark, the J.P. Morgan Emerging Markets
Bond Index, which is composed of dollar denominated sovereign emerging market
bonds, achieved a 34.16% return. The Portfolio modestly underperformed over the
most recent six months. This can be attributed to the broad diversification of
holdings in the Portfolio as compared to the index. Although this
diversification limits the Portfolio's ability to concentrate assets in those
securities experiencing the most significant price gains, it helps to moderate
the volatility of returns and reduce risk in the Portfolio. For additional
information on the Portfolio's investment results, please turn to page A-24.
INVESTMENT OUTLOOK
Our outlook for the U.S. economy assumes that while economic growth accelerated
at the end of 1996, it will moderate again during the first half of 1997. As
this occurs, current upward pressures on inflation should dissipate. Until
clear signs of a slowing economy emerge, concerns about inflation will keep
U.S. interest rates within their recent ranges. We continue to have a favorable
outlook for emerging market debt. However, as risk premiums for this asset
class have narrowed from their highs at the end of 1994, we expect the pace of
price appreciation of these securities to slow.
PORTFOLIO STRATEGY
Mexico, Russia, Venezuela, Argentina and the United States represent the top
five holdings of the Portfolio as of December 31, 1996. Since the last
reporting period, we reduced the Portfolio's holdings of Polish bonds after
these securities experienced considerable price appreciation following the
upgrade to investment grade of that country's debt.
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+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
A-18
<PAGE>
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NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO
INVESTMENT OBJECTIVE
The Portfolio seeks the highest level of current income, consistent with what
we believe to be prudent investment risk, from a portfolio of debt securities
issued or guaranteed by the governments of the United States, Canada, and
Mexico. The Portfolio expects to maintain at least 25% of its assets in U.S.
dollar-denominated securities and may invest up to 25% of its total assets in
debt securities issued by governmental entities in Argentina.
INVESTMENT RESULTS
The Alliance North American Government Income Portfolio's total return for the
12-month period ended December 31, 1996 was 18.70%+ which compares to 3.63% for
the Lehman Brothers Aggregate Index, and 4.06% for the Lehman Brothers
Intermediate-Term Government Bond Index. Most of the Portfolio's solid
performance over the past year can be attributed to the portfolio's non-U.S.
holdings. Bond markets in Canada, Mexico, and Argentina all posted strong
positive returns as the economies of these countries benefited from the
continuation of economic reforms in a favorable worldwide climate of moderate
economic growth and inflation. Additional investment results appear on A-24.
INVESTMENT STRATEGY
The North American Government Income Portfolio's investment strategy was
created in the belief that the economies of North America would become
increasingly integrated due to escalation in free trade. In turn, as the U.S.'s
trading partners implemented macroeconomic policies designed to help their
economies compete with the U.S., significant opportunities would arise for
investors to benefit from these changes. Although this process was temporarily
sidetracked as a result of the 1994 peso devaluation, convergence with the U.S.
economy has proceeded over the past two years and we are pleased to report that
your Portfolio has been well positioned to capitalize on the gains in these
markets as a result of this convergence.
MARKET REVIEW
Since our last report, the U.S. bond market has posted modest gains. The market
rallied during the second half of the year, pushing year-to-date returns into
positive territory for the first time since January 1996. Data released during
the period eased investor's concerns about accelerating economic growth,
pushing interest rates on all maturities downward. However, continued concerns
about inflation kept bond yields trading in a narrow range and held price gains
down.
Outside the U.S., emerging market debt prices continued to rise. In Mexico and
Argentina, the continued success of economic reforms has led to lower
inflation, improving current account deficits and growing investor confidence,
all factors which supported higher bond prices in these markets over the past
year.
In Canada, low growth and inflation rates, combined with drastic fiscal
tightening, have allowed the Bank of Canada to lower interest rates
significantly over the past year. As a result, the bond market posted strong
gains and short- and intermediate-term interest rates are currently 1% to 2%
below rates in the U.S.
OUTLOOK
United States Our outlook for the U.S. economy assumes that, while economic
growth may have temporarily accelerated during the fourth quarter of 1996, it
will moderate again during the second quarter of 1997. If this occurs, recent
upward pressures on inflation should dissipate. Until clear signs of a slowing
economy emerge, concerns about inflation will keep U.S. interest rates within
their recent ranges.
Canada We believe slow growth, low inflation and fiscal tightening will remain
hallmarks of the Canadian economy. Although employment levels have increased
lately, fundamental weakness in the labor market should
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+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
A-19
<PAGE>
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keep inflation in check. In addition, an ongoing current account surplus and
low domestic inflation should help Canadian bonds outperform the U.S. market
for the near future.
Argentina The strength of Argentina's economic recovery is accelerating with
fourth quarter growth likely to exceed 7%. The recovery is likely to further
expand in 1997 as a result of rising demand from middle-income consumers and
higher levels of exportation and investment. Inflation, at a steady trend of
around 0.5% per year, remains below that of the U.S. Although unemployment
remains high, we believe well-balanced economic policies are making it possible
for the economy to expand at a sustainable growth rate of 5% per year.
Mexico In Mexico, we see economic growth broadening and deepening, led by
strong export performance. The key to the continuation of economic growth will
be the sustainability of consumer demand, which we will continue to monitor
closely. We believe inflation rates will continue to fall but, ranging between
18% and 20%, will remain considerably higher than rates in the U.S. The peso is
likely to weaken somewhat, reflecting inflation differentials between Mexico
and the U.S.
A-20
<PAGE>
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U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
INVESTMENT OBJECTIVE
The U.S. Government/High Grade Securities Portfolio seeks high current income
consistent with preservation of capital by investing principally in obligations
issued or guaranteed by the U.S. Government and repurchase agreements
pertaining to U.S. Government securities and other high grade debt securities.
MARKET REVIEW
During 1996, U.S. bond market returns were subdued. Throughout most of the
year, returns were negative as the market reacted unfavorably to
stronger-than-expected job growth and uncertainty about whether the Federal
Reserve would raise rates to slow economic growth. Towards the end of 1996, the
bond market was able to move into positive territory as the fear of
accelerating inflation diminished. Across all major sectors of the bond market,
shorter-duration securities outperformed longer-duration securities for the
year as interest rates for all maturities increased.
The U.S. economy finished 1996 on a strong note. After moderating in the third
quarter, the economy picked up speed in the fourth quarter, led by a rebound in
consumer spending. The annualized gain in retail sales of merchandise jumped to
4.8% in the fourth quarter, up from only 0.9% in the third quarter. Exports
skyrocketed by an annualized 32.7% in October and November and unexpectedly
added to year-end growth. The production side of the economy also showed
strength. Industrial production grew at an annualized pace of 6.0% and payroll
growth increased to 217,000 new jobs per month, up from the third quarter's
average of 171,000 per month. In all, growth in aggregate output (GDP), which
dipped to 2.1% in the third quarter, accelerated to 4.7% during the final three
months of 1996.
Broad inflation measures were slightly higher at the end of 1996 as retail
prices increased 3.3% year-over-year and producer prices were up 2.8%. However,
excluding the volatile food and energy sectors, inflation remained very well
behaved with year-over-year retail and producer prices up only 2.6% and 0.6%
respectively.
INVESTMENT RESULTS
For the fiscal year ended December 31, 1996, the Portfolio returned 2.55%+ at
net asset value versus 2.9% for its benchmark (67% Lehman Brothers Government
Index and 33% Lehman Brothers Corporate Index). For additional information on
the Portfolio's investment results, please turn to page A-24.
INVESTMENT OUTLOOK
While U.S. economic growth accelerated at the end of 1996, it will probably
moderate again during the first half of 1997. Current upward pressures on
inflation should dissipate as a result. U.S. interest rates should stay within
their recent ranges, at least until clear signs of a slowing economy emerge.
PORTFOLIO STRATEGY
The Portfolio's performance improved against its benchmark as 1996 progressed.
In response to rising interest rates earlier in the year, we shortened the
Portfolio's duration to a more neutral stance. As interest rates settled into a
relatively narrow trading range during the second half of the year, we
increased the Portfolio's holdings of corporate and mortgage-backed securities.
In an environment of stable interest rates, yield oriented securities such as
corporate and mortgage-backed securities enhanced Portfolio returns.
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+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
A-21
<PAGE>
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MONEY MARKET PORTFOLIO
INVESTMENT OBJECTIVE
The Portfolio seeks safety of principal, maintenance of liquidity, and maximum
current income by investing in a broadly diversified portfolio of money market
securities. An investment in the Portfolio is neither insured nor guaranteed by
the U.S. Government
INVESTMENT RESULTS
For the fiscal year ended December 31, 1996, the Money Market Portfolio
returned 4.71%+ and paid a 7-day yield of 4.82%. During the same time period,
the total return for the Salomon Brothers 3-Month Treasury Bill Index was
5.25%.
MARKET AND STRATEGY REVIEW
Restraint was the key word for the Federal Reserve Policy in 1996. The Fed
spent most of the year watching the economy without committing to any movement
on interest rates. The last move by the Fed in January was also the only one
for 1996, lowering the target for overnight bank loans to 5 1/4%.
Inklings of potential Fed interest rate hikes throughout the third quarter
created periods of volatility for fixed income markets. This provided us with a
short-term yield curve that finally steepened, and we used this opportunity to
its fullest, extending maturities toward the end of 1996, as well as into March
1997, at what became above-market levels.
As for our end-of-the-year maturities, it is usually advantageous to have
excess cash in November and December to take advantage of year-end finance
pressures. We were able to put money into those areas and get paid with
attractive yields.
As of December 31, 1996, the Portfolio's average maturity was 34.66 days.
OUTLOOK
Our approach going into 1997 will remain neutral. This stance will allow the
Portfolio to maximize investment opportunity anywhere along the short-term
yield curve as it presents itself. Such flexibility keeps us poised to take
advantage of any potential market volatility.
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+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
A-22
<PAGE>
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SHORT-TERM MULTI-MARKET PORTFOLIO
INVESTMENT OBJECTIVE
The Portfolio seeks the highest level of current income, consistent with what
the Investment Manager believes to be prudent risk from a Portfolio of
high-quality debt securities denominated in U.S. dollars and selected foreign
currencies and having remaining maturities of not more than three years.
INVESTMENT RESULTS
Slow worldwide economic growth, combined with extremely low inflation, have
provided an attractive environment for global bond investments. The Portfolio's
total return for the fiscal year was 9.57%+, which compares favorably the
Merrill Lynch 1-3 Year Treasury Index's 4.98% return for the same period.
Additional investment results appear on page A-24.
MARKET ENVIRONMENT
The Japanese economy produced what proved to be an unsustainably large growth
rate of 12.2% in the first quarter of 1996. Growth has since slowed
precipitously, and the Japanese authorities have continued their policy of
leaving official interest rates at the extremely low level of 0.50%. These low
rates have created a large build-up of liquidity which has spilled over into
the global markets, improving investment returns in many different asset
classes.
The strong performance of both the Australian and Canadian markets has been
most impressive given the relatively poor performance of the U.S. Treasury
market. Official rates in Canada are currently more than 2.0% below rates in
the U.S. Given the high unemployment rates and large output gaps in these
markets, we believe inflation will remain controlled. Therefore, Australian and
Canadian securities should continue to outperform U.S. debt.
In Europe, the driving force behind excellent bond market returns has been the
quest for monetary union. This has brought about a period of severe fiscal
retrenchment in Europe, even though many European economies remain sluggish.
With fiscal policy so restrained, monetary policy, in the form of lower
interest rates, has been the only macroeconomic tool authorities have to
stimulate growth. This combination of tight fiscal policy and loose monetary
policy has led to stronger bond markets and weaker currencies. The U.S. dollar
has performed quite well against the core European currencies over the last six
months and we anticipate a continuation of this trend for the foreseeable
future.
INVESTMENT OUTLOOK
As European nations get closer and closer to forming a single currency, their
bond yields have begun to converge. We believe that monetary union will take
place over the next few years and that this convergence will continue. From
time-to-time, market volatility is likely to lead to short-term divergence in
European yield spreads, and we will look to opportunistically add to the
Portfolio's positions during these periods.
Overall, we think the non-dollar bond markets will continue to outperform the
U.S. Treasury market into 1997. Thus, the Portfolio currently has significant
exposure to the European bond markets. However, if the Clinton Administration
and Congress pass a credible balanced budget for the next several years, the
domestic fixed income market will be revived. If a balanced budget is passed,
the Portfolio's exposure to the U.S. market will be increased accordingly.
- -------------------------------------------------------------------------------
+ Cumulative total return, based on net asset value with any distributions
reinvested. Insurance company separate account or annuity contract charges,
which reduce the value to a contract owner, are not included.
A-23
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
INVESTMENT RESULTS
- -------------------------------------------------------------------------------
INVESTMENT RESULTS AS OF DECEMBER 31, 1996
Listed below are the Portfolios' average annual total returns for the one-year,
five-year (where applicable) and since-inception periods ended December 31,
1996.
ASSET ALLOCATION PORTFOLIOS
CONSERVATIVE INVESTORS PORTFOLIO
One Year 3.79%
Since Inception (10/94) 9.66%
GROWTH INVESTORS PORTFOLIO
One Year 8.18%
Since Inception (10/94) 12.19%
TOTAL RETURN PORTFOLIO
One Year 15.17%
Since Inception (12/92) 10.71%
COMMON STOCK/EQUITY SECURITIES
PORTFOLIOS
GROWTH AND INCOME PORTFOLIO
One Year 24.09%
Five Years 15.14%
Since Inception (1/91) 13.18%
GROWTH PORTFOLIO
One Year 28.49%
Since Inception (9/94) 30.04%
INTERNATIONAL PORTFOLIO
One Year 7.25%
Since Inception (12/92) 11.16%
PREMIER GROWTH PORTFOLIO
One Year 22.70%
Since Inception (6/92) 19.18%
QUASAR PORTFOLIO
Since Inception (8/96) 6.40%*
UTILITY INCOME PORTFOLIO
One Year 7.88%
Since Inception (5/94) 10.56%
WORLDWIDE PRIVATIZATION PORTFOLIO
One Year 18.51%
Since Inception (9/94) 13.21%
TECHNOLOGY PORTFOLIO
Since Inception (1/96) 10.40%*
INCOME-ORIENTED PORTFOLIOS
GLOBAL BOND PORTFOLIO
One Year 6.21%
Five Years 7.93%
Since Inception (7/91) 9.29%
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
One Year 24.90%
Since Inception (5/94) 16.73%
<PAGE>
NORTH AMERICAN GOVERNMENT
INCOME PORTFOLIO
One Year 18.70%
Since Inception (5/94) 9.70%
U.S. GOVERNMENT/HIGH-GRADE
SECURITIES PORTFOLIO
One Year 2.55%
Since Inception (9/92) 5.68%
SHORT-TERM INCOME PORTFOLIOS
MONEY MARKET PORTFOLIO
One Year 4.71%
Annualized 7-Day Yield 4.82%
SHORT-TERM MULTI-MARKET PORTFOLIO
One Year 9.57%
Five Years 3.29%
Since Inception (11/90) 3.90%
- -------------------------------------------------------------------------------
* Cumulative, unannualized total returns for the periods indicated.
Total returns are based on net asset value performance and reflect investment
of dividends and/or capital gains distributions in additional shares. These
figures do not reflect insurance company separate account or annuity contract
charges, which would reduce total return to a contract owner. Past performance
does not guarantee future results. Investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
The Money Market Portfolio yield is an annualized 7-day compound return as of
December 31, 1996.
A-24
<PAGE>
<TABLE>
<CAPTION>
COMPOSITE
70% LB GOVT
CONSERVATIVE LEHMAN BROS. CORP BOND IND
INVESTORS AGGREGATE 30% S&P 500
DATE PORTFOLIO BOND INDEX STOCK INDEX
- ---------- -------------- -------------- ---------------
<S> <C> <C> <C>
10/31/94* 10000 10000 10000
12/31/94 10070 10047 9967
12/31/95 11781 11903 12431
12/31/96 12228 12335 13616
</TABLE>
<TABLE>
<CAPTION>
COMPOSITE
30% LB
GROWTH AGGREGATE
INVESTORS S&P 500 70% S&P 500
DATE PORTFOLIO STOCK INDEX STOCK INDEX
- ---------- ----------- ------------- -------------
<S> <C> <C> <C>
10/31/94* 10000 10000 10000
12/31/94 9860 9779 9859
12/31/95 11879 13449 13019
12/31/96 12850 16535 15301
</TABLE>
<TABLE>
<CAPTION>
60% S&P 500
LIPPER STOCK INDEX
TOTAL RETURN BALANCED 40% LB GOV'T
DATE PORTFOLIO FUNDS AVERAGE CORP BOND IND
- ---------- -------------- --------------- ---------------
<S> <C> <C> <C>
12/31/92* 10000 10000 10000
12/31/93 10970 11125 11044
12/31/94 10557 10852 10975
12/31/95 13055 13626 14311
12/31/96 15036 15492 16570
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND LIPPER GROWTH
INCOME S&P 500 & INCOME FUND
DATE PORTFOLIO STOCK INDEX AVERAGE
- ---------- ------------ ------------- ---------------
<S> <C> <C> <C>
1/31/91* 10000 10000 10000
12/31/91 10340 12497 12312
12/31/92 11160 13447 13305
12/31/93 12465 14800 15103
12/31/94 12421 14994 14994
12/31/95 16862 20622 19623
12/31/96 20924 25354 23692
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROWTH PORTFOLIO RUSSEL 1000 S&P 500
---------------- ------------- ---------
<S> <C> <C> <C>
9/30/94* 10000 10000 10000
12/31/94 10509 9961 9998
12/31/95 14211 13723 13742
12/31/96 18259 16804 16889
</TABLE>
<TABLE>
<CAPTION>
LIPPER
INTERNATIONAL INTERNATIONAL
DATE PORTFOLIO MSCI EAFE FUNDS INDEX
- ---------- --------------- ----------- ---------------
<S> <C> <C> <C>
12/31/92* 10000 10000 10000
12/31/93 12160 13294 13637
12/31/94 12975 14366 13541
12/31/95 14254 16025 14968
12/31/96 15287 17045 16861
</TABLE>
<TABLE>
<CAPTION>
PREMIER RUSSELL 1000
GROWTH S&P 500 GROWTH STOCK
DATE PORTFOLIO STOCK INDEX INDEX
- ---------- ----------- ------------- --------------
<S> <C> <C> <C>
6/30/92* 10000 10000 10000
12/31/92 11380 10834 11167
12/31/93 12817 11924 11491
12/31/94 12438 12080 11796
12/31/95 18016 16614 16183
12/31/96 22106 20426 19925
</TABLE>
<TABLE>
<CAPTION>
UTILITY INCOME S&P
PORTFOLIO NYSE UTILITY 500
-------------- -------------- -------
<S> <C> <C> <C>
5/31/94* 10000 10000 10000
12/31/94 9960 9769 10412
12/31/95 12096 12451 14310
12/31/96 13049 12797 17587
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WORLDWIDE
PRIVATIZATION
PORTFOLIO MSCI EAFE
----------- -----------
<S> <C> <C>
9/30/94* 10000 10000
12/31/94 10100 9904
12/31/95 11198 11048
12/31/96 13271 11750
</TABLE>
<TABLE>
<CAPTION>
SALOMON BROS
WORLD
GLOBAL BOND GOVERNMENT
PORTFOLIO BOND INDEX
------------- ------------
<S> <C> <C>
7/31/91* 10000 10000
12/31/91 11078 11436
12/31/92 11617 12067
12/31/93 12913 13669
12/31/94 12247 13987
12/31/95 15276 16650
12/31/96 16224 17255
</TABLE>
<TABLE>
<CAPTION>
JP MORGAN
GLOBAL DOLLAR EMERGING
GOVERNMENT MARKETS BOND
DATE PORTFOLIO INDEX
- ---------- --------------- --------------
<S> <C> <C>
5/31/94* 10000 10000
12/31/94 9840 9340
12/31/95 12101 11913
12/31/96 15115 15982
</TABLE>
<TABLE>
<CAPTION>
NORTH LEHMAN BROS.
AMERICAN INTERMEDIATE
GOVERNMENT LEHMAN BROS. GOVERNMENT
INCOME PORTFOLIO AGGREGATE BOND
---------------- ----------- ------------
<S> <C> <C> <C>
5/31/94 10000 10000 10000
12/31/94 8652 10076 10068
12/31/95 10616 11937 11518
12/31/96 12601 12371 11987
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
US GOVERNMENT
HIGH GRADE LEHMAN 67% LB GOV'T
SECURITIES BROTHERS 33% LB CORP
DATE PORTFOLIO AGGREGATE BOND
- ---------- --------------- ----------- --------------
<S> <C> <C> <C>
9/30/92* 10000 10000 10000
12/31/92 9890 10026 10009
12/31/93 10800 11003 11125
12/31/94 10364 10682 10729
12/31/95 12360 12656 12835
12/31/96 12675 13115 13214
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM LIPPER SHORT MERRILL LYNCH
MULTI-MARKET WORLD MULTI-MARKET 1-3 YEAR
PORTFOLIO INCOME FUNDS AVG TREASURY INDEX
------------ -------------------- -----------------
<S> <C> <C> <C>
11/30/90* 10000 10000 10000
12/31/90 10040 10025 10121
12/31/91 10734 10833 11303
12/31/92 10824 10784 12015
12/31/93 11540 11409 12665
12/31/94 10789 11290 12737
12/31/95 11518 12150 14138
12/31/96 12621 12988 14842
</TABLE>
<TABLE>
<CAPTION>
PSE
TECHNOLOGY HIGH TECH
PORTFOLIO** INDEX
-------------- --------------
<S> <C> <C>
1/31/96* 10,000 10,000
3/96 9,850 9,740
5/96 10,380 10,823
7/96 9,580 9,295
9/96 10,750 10,584
12/31/96 11,040 11,727
</TABLE>
* Month end closest to Portfolio inception. Inception dates for the Portfolios
are: 10/28/94 Conservative Investors; 1/14/91 Growth and Income; 10/28/94
Growth Investors; 9/15/94 Growth; 12/28/92 Total Return; 12/28/92
International; 6/26/92 Premier Growth; 7/15/91 Global Bond; 5/10/94 Utility
Income; 5/2/94 Global Dollar Government; 9/23/94 Worldwide Privatization;
5/2/94 North American Government Income; 9/17/92 U.S. Government/High-
Grade Securities; 11/28/90 Short-Term Multi-Market; 1/25/96 Technology.
** Before the Technology Portfolio had a track record of less than one year on
December 31, 1996, performance information shown is on a monthly, rather than
annual, basis.
<PAGE>
- -------------------------------------------------------------------------------
THE BENCHMARKS
The charts shown in these pages illustrate the total value of an assumed
investment in an Alliance Variable Products Series Fund Portfolio (since
inception), with dividends and capital gains reinvested. Results should not be
considered representative of future gain or loss in capital value or dividend
income. The benchmarks described below represent unmanaged indices; the Lipper
averages include funds that have generally similar investment objectives to the
respective Alliance portfolio, though some funds included in the averages may
have somewhat different investment policies.
S&P 500 -- The Standard & Poor's 500-stock index includes 500 U.S. stocks and
is a common measure of the performance of the U.S. stock market.
RUSSELL 1000 -- The Russell 1000 Stock Index represents performance of 1000 of
the largest U.S. companies by market capitalization.
MSCI EAFE -- The Morgan Stanley Capital International EAFE Index measures the
overall performance of stock markets in 20 countries within Europe, Australia
and the Far East.
NYSE UTILITY -- The New York Stock Exchange Utility Index is comprised of all
utility issues traded on the Exchange.
LB AGGREGATE -- The Lehman Brothers Aggregate Index is composed of the Mortgage
Backed and Asset Backed Securities Indices, and the Government/ Corporate Bond
Index.
LB GOV'T/CORP. BOND -- The Lehman Brothers Government/Corporate Bond Index
represents a combination of the two indices.
LB GOV'T BOND -- The Lehman Brothers Government Index is composed of the
Treasury Bond and Agency Bond Indices, the 1-3 Year Government Index and the
20+ Year Treasury Index.
LB CORP. BOND -- The Lehman Brothers Corporate Bond Index includes all publicly
issued, fixed-rate, non-convertible investment grade corporate debt; the index
is composed of both U.S. and Brady Bonds.
LB INTERMEDIATE GOV'T BOND -- The Lehman Brothers Intermediate Government Bond
Index is composed of U.S. Government agency and Treasury securities with
maturities of one to ten years.
SB WORLD GOV'T BOND -- The Salomon Brothers World Government Bond Index
represents performance of government bond markets in 14 countries.
ML 1-3 YEAR TREASURY -- The Merrill Lynch 1-3 Year Treasury Index is composed
of U.S. Treasury securities with maturities between one and three years.
JPM EMBI -- The J.P. Morgan Emerging Market Bond Index is composed of
dollar-denominated restructured sovereign bonds; a large percentage of the
index is made up of Brady Bonds.
LIPPER GROWTH & INCOME FUNDS AVERAGE -- The Lipper Growth & Income Funds
Average reflects performance of 611 mutual funds.
LIPPER BALANCED FUNDS AVERAGE -- The Lipper Balanced Funds Average reflects
performance of 316 mutual funds.
LIPPER INTERNATIONAL FUNDS AVERAGE -- The Lipper International Funds Average
reflects performance of 389 mutual funds.
LIPPER SHORT WORLD MULTI-MARKET INCOME FUNDS AVERAGE -- The Lipper Short World
Multi-Market Income Funds Average reflects performance of 35 mutual funds.
A-28
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
TEN LARGEST HOLDINGS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
PREMIER GROWTH PORTFOLIO
- -------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Intel Corp. (common stock and warrants) $ 7,021,194 7.3%
- -------------------------------------------------------------------------------
Philip Morris Cos., Inc. 6,216,900 6.5
- -------------------------------------------------------------------------------
Merck & Co., Inc. 3,138,300 3.3
- -------------------------------------------------------------------------------
Cisco Systems, Inc. 3,120,687 3.2
- -------------------------------------------------------------------------------
MBNA Corp. 3,004,600 3.1
- -------------------------------------------------------------------------------
Federal National Mortgage Association 2,998,625 3.1
- -------------------------------------------------------------------------------
Columbia/HCA Healthcare Corp. 2,938,075 3.0
- -------------------------------------------------------------------------------
Compaq Computer Corp. 2,836,350 2.9
- -------------------------------------------------------------------------------
Norwest Corp. 2,657,850 2.8
- -------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 2,534,650 2.6
- -------------------------------------------------------------------------------
$36,467,231 37.8%
- -------------------------------------------------------------------------------
GROWTH AND INCOME PORTFOLIO
- -------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
AT & T Corp. $ 6,107,400 4.8%
- -------------------------------------------------------------------------------
Merck & Co., Inc. 4,279,500 3.4
- -------------------------------------------------------------------------------
Campbell Soup Co. 4,012,500 3.2
- -------------------------------------------------------------------------------
Exxon Corp. 3,724,000 2.9
- -------------------------------------------------------------------------------
Philip Morris Cos., Inc. 3,294,281 2.6
- -------------------------------------------------------------------------------
RJR Nabisco Holdings Corp. 3,213,000 2.6
- -------------------------------------------------------------------------------
Mobil Corp. 3,141,825 2.5
- -------------------------------------------------------------------------------
First Union Corp. 2,560,400 2.0
- -------------------------------------------------------------------------------
Wells Fargo & Co. 2,319,850 1.8
- -------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 2,159,750 1.7
- -------------------------------------------------------------------------------
$34,812,506 27.5%
- -------------------------------------------------------------------------------
A-29
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
TEN LARGEST HOLDINGS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
TOTAL RETURN PORTFOLIO
- -------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
U.S. Treasury Notes $ 7,819,619 30.2%
- -------------------------------------------------------------------------------
AT & T Corp. 839,550 3.2
- -------------------------------------------------------------------------------
Merck & Co., Inc. 689,475 2.7
- -------------------------------------------------------------------------------
Campbell Soup Co. 529,650 2.1
- -------------------------------------------------------------------------------
Exxon Corp. 519,400 2.0
- -------------------------------------------------------------------------------
Philip Morris Cos., Inc. 484,288 1.9
- -------------------------------------------------------------------------------
Mobil Corp. 464,550 1.8
- -------------------------------------------------------------------------------
Nokia Corp. (ADR) 363,038 1.4
- -------------------------------------------------------------------------------
First Union Corp. 347,800 1.3
- -------------------------------------------------------------------------------
RJR Nabisco Holdings Corp. 323,000 1.2
- -------------------------------------------------------------------------------
$12,380,370 47.8%
- -------------------------------------------------------------------------------
INTERNATIONAL PORTFOLIO
- -------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
DDI Corp. $ 826,785 1.9%
- -------------------------------------------------------------------------------
Toyota Corp. 747,604 1.7
- -------------------------------------------------------------------------------
Rohm Co. 721,872 1.6
- -------------------------------------------------------------------------------
Novartis AG 718,538 1.6
- -------------------------------------------------------------------------------
Seven-Eleven Japan Co. Ltd. 608,859 1.4
- -------------------------------------------------------------------------------
TDK Corp. 521,544 1.2
- -------------------------------------------------------------------------------
Barclays Plc 502,221 1.1
- -------------------------------------------------------------------------------
Bayer AG 501,159 1.1
- -------------------------------------------------------------------------------
Total S.A. (Class B and ADR) 475,192 1.1
- -------------------------------------------------------------------------------
Akzo Nobel N.V. 453,820 1.0
- -------------------------------------------------------------------------------
$6,077,594 13.7%
- -------------------------------------------------------------------------------
A-30
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
TEN LARGEST HOLDINGS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UTILITY INCOME PORTFOLIO
- ---------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
AT & T Corp. $ 685,560 4.6%
- ---------------------------------------------------------------------------------------------
3Com Corp., 10.25%, 11/01/01 676,338 4.6
- ---------------------------------------------------------------------------------------------
AirTouch Communications, Inc. 588,250 4.0
- ---------------------------------------------------------------------------------------------
CMS Energy Corp. 578,350 3.9
- ---------------------------------------------------------------------------------------------
CINergy Corp. 557,362 3.7
- ---------------------------------------------------------------------------------------------
Allegheny Power Systems 540,675 3.6
- ---------------------------------------------------------------------------------------------
FPL Group, Inc. 487,600 3.3
- ---------------------------------------------------------------------------------------------
Frontier Corp. 475,125 3.2
- ---------------------------------------------------------------------------------------------
American Electric Power, Inc. 464,712 3.1
- ---------------------------------------------------------------------------------------------
Houston Industries, Inc. 463,812 3.1
- ---------------------------------------------------------------------------------------------
$5,517,784 37.1%
- ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
- ---------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
MFS Communications, Inc. (common and preferred stock) $ 7,784,481 5.6%
- ---------------------------------------------------------------------------------------------
Cisco Systems, Inc. 6,878,250 5.0
- ---------------------------------------------------------------------------------------------
Intel Corp. 6,677,812 4.8
- ---------------------------------------------------------------------------------------------
3Com Corp. (common stock and conv. bond) 5,630,319 4.1
- ---------------------------------------------------------------------------------------------
Ceridian Corp. 4,029,750 2.9
- ---------------------------------------------------------------------------------------------
CUC International, Inc. 3,608,812 2.6
- ---------------------------------------------------------------------------------------------
American International Group, Inc. 3,393,637 2.4
- ---------------------------------------------------------------------------------------------
Travelers Group, Inc. 3,251,845 2.3
- ---------------------------------------------------------------------------------------------
American Express Co. 3,164,000 2.3
- ---------------------------------------------------------------------------------------------
Merck & Co., Inc. 3,162,075 2.3
- ---------------------------------------------------------------------------------------------
$47,580,981 34.3%
- ---------------------------------------------------------------------------------------------
</TABLE>
A-31
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
TEN LARGEST HOLDINGS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WORLDWIDE PRIVATIZATION PORTFOLIO
- ------------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
British Energy Plc $ 557,786 3.0%
- ------------------------------------------------------------------------------------------------
Pharmacia & Upjohn, Inc. 519,088 2.8
- ------------------------------------------------------------------------------------------------
Korea Mobile Telecommunications Corp. (ADR) 468,122 2.5
- ------------------------------------------------------------------------------------------------
Deutsche Lufthansa AG 382,116 2.0
- ------------------------------------------------------------------------------------------------
RNGS Holdings Ltd., pfd. 360,161 1.9
- ------------------------------------------------------------------------------------------------
National Grid Group Plc 345,471 1.8
- ------------------------------------------------------------------------------------------------
CSL Ltd. 331,055 1.8
- ------------------------------------------------------------------------------------------------
Stagecoach Holdings Plc 325,859 1.7
- ------------------------------------------------------------------------------------------------
Telecomunicacoes Brasileras S.A. (ADR) 300,262 1.6
- ------------------------------------------------------------------------------------------------
Deutsche Telekom AG 296,917 1.6
- ------------------------------------------------------------------------------------------------
$3,886,837 20.7%
- ------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CONSERVATIVE INVESTORS PORTFOLIO
- ------------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Notes $ 6,235,847 28.7%
- ------------------------------------------------------------------------------------------------
Federal National Mortgage Association 1,391,433 6.4
- ------------------------------------------------------------------------------------------------
Federal Home Loan Bank, 7.00%, 9/01/11 483,142 2.2
- ------------------------------------------------------------------------------------------------
St. George Bank Ltd., 7.15%, 10/15/05 424,328 1.9
- ------------------------------------------------------------------------------------------------
Province of Quebec, 7.125%, 2/09/24 383,016 1.8
- ------------------------------------------------------------------------------------------------
Time Warner, Inc. (common stock and bond) 363,957 1.7
- ------------------------------------------------------------------------------------------------
Zions Institutional Capital Trust A, 8.536%, 12/15/26 360,626 1.7
- ------------------------------------------------------------------------------------------------
RAS Laffan Liquefied Natural Gas, 8.294%, 3/15/14 357,000 1.6
- ------------------------------------------------------------------------------------------------
Deutsche Bank Financial, Inc., 6.70%, 12/13/06 343,525 1.6
- ------------------------------------------------------------------------------------------------
John Hancock Mutual Life Insurance Co., 7.375%, 2/15/24 289,161 1.3
- ------------------------------------------------------------------------------------------------
$10,632,035 48.9%
- ------------------------------------------------------------------------------------------------
</TABLE>
A-32
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
TEN LARGEST HOLDINGS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH INVESTORS PORTFOLIO
- ----------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- ----------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Notes $1,077,033 10.1%
- ----------------------------------------------------------------------------------
Federal National Mortgage Association 287,532 2.7
- ----------------------------------------------------------------------------------
Baker Hughes, Inc. 151,800 1.4
- ----------------------------------------------------------------------------------
Cisco Systems, Inc. 143,297 1.3
- ----------------------------------------------------------------------------------
U.S. Industries, Inc. 137,500 1.3
- ----------------------------------------------------------------------------------
Time Warner, Inc. (common stock and bond) 121,289 1.1
- ----------------------------------------------------------------------------------
Philip Morris Cos., Inc. 118,256 1.1
- ----------------------------------------------------------------------------------
American Express Co. 113,000 1.1
- ----------------------------------------------------------------------------------
3Com Corp. 108,136 1.0
- ----------------------------------------------------------------------------------
BJ Services Co. 107,100 1.0
- ----------------------------------------------------------------------------------
$2,364,943 22.1%
- ----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
TECHNOLOGY PORTFOLIO
- ----------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- ----------------------------------------------------------------------------------
<S> <C> <C>
Cisco Systems, Inc. $1,069,950 3.8%
- ----------------------------------------------------------------------------------
Dell Computer Corp. 1,006,573 3.6
- ----------------------------------------------------------------------------------
3Com Corp. 982,387 3.5
- ----------------------------------------------------------------------------------
Compaq Computer Corp. 898,425 3.2
- ----------------------------------------------------------------------------------
Intel Corp. 874,662 3.1
- ----------------------------------------------------------------------------------
Oracle Corp. 873,353 3.1
- ----------------------------------------------------------------------------------
Sanmina Holdings Corp. 632,800 2.3
- ----------------------------------------------------------------------------------
First Data Corp. 627,800 2.3
- ----------------------------------------------------------------------------------
Seagate Technology, Inc. 624,100 2.2
- ----------------------------------------------------------------------------------
Netscape Communications Corp. 540,312 1.9
- ----------------------------------------------------------------------------------
$8,130,362 29.0%
- ----------------------------------------------------------------------------------
</TABLE>
A-33
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
TEN LARGEST HOLDINGS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
QUASAR PORTFOLIO
- -------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Nine West Group, Inc. $ 231,875 2.6%
- -------------------------------------------------------------------------------
OMI Corp. 193,375 2.2
- -------------------------------------------------------------------------------
Telephone & Data Systems, Inc. 188,500 2.1
- -------------------------------------------------------------------------------
Team Rental Group, Inc. 185,250 2.1
- -------------------------------------------------------------------------------
Rowan Cos., Inc. 174,212 2.0
- -------------------------------------------------------------------------------
Ultramar Diamond Shamrock Corp. 169,320 1.9
- -------------------------------------------------------------------------------
TeleSpectrum Worldwide, Inc. 162,225 1.8
- -------------------------------------------------------------------------------
Harman International Industries, Inc. 155,750 1.8
- -------------------------------------------------------------------------------
Valero Energy Corp. 151,713 1.7
- -------------------------------------------------------------------------------
Interstate Hotels Co. 151,137 1.7
- -------------------------------------------------------------------------------
$1,763,357 19.9%
- -------------------------------------------------------------------------------
A-34
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
INDUSTRY DIVERSIFICATION
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
- -----------------------------------------------------------------------------------
U.S. $ VALUE PERCENT OF NET ASSETS
- -----------------------------------------------------------------------------------
<S> <C> <C>
Basic Industries $3,581,941 8.1%
- -----------------------------------------------------------------------------------
Capital Goods 2,220,502 5.0
- -----------------------------------------------------------------------------------
Consumer Manufacturing 3,477,566 7.8
- -----------------------------------------------------------------------------------
Consumer Services 4,997,666 11.3
- -----------------------------------------------------------------------------------
Consumer Staples 4,088,068 9.2
- -----------------------------------------------------------------------------------
Energy 2,513,122 5.7
- -----------------------------------------------------------------------------------
Financial Services 6,772,695 15.3
- -----------------------------------------------------------------------------------
Healthcare 2,893,771 6.5
- -----------------------------------------------------------------------------------
Multi-Industry 2,697,131 6.1
- -----------------------------------------------------------------------------------
Technology 3,124,428 7.0
- -----------------------------------------------------------------------------------
Transportation 345,155 0.8
- -----------------------------------------------------------------------------------
Utilities 4,239,596 9.6
- -----------------------------------------------------------------------------------
Time Deposit 3,273,000 7.4
- -----------------------------------------------------------------------------------
Total Investments 44,224,641 99.8
- -----------------------------------------------------------------------------------
Cash and receivables, net of liabilities 99,455 0.2
- -----------------------------------------------------------------------------------
Net Assets $44,324,096 100.0%
- -----------------------------------------------------------------------------------
</TABLE>
A-35
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
INDUSTRY DIVERSIFICATION
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WORLDWIDE PRIVATIZATION PORTFOLIO
- -----------------------------------------------------------------------------------
U.S. $ VALUE PERCENT OF NET ASSETS
- -----------------------------------------------------------------------------------
<S> <C> <C>
Basic Industries $1,610,457 8.6%
- -----------------------------------------------------------------------------------
Capital Goods 456,060 2.4
- -----------------------------------------------------------------------------------
Consumer Manufacturing 286,532 1.5
- -----------------------------------------------------------------------------------
Consumer Services 1,574,437 8.4
- -----------------------------------------------------------------------------------
Consumer Staples 353,968 1.9
- -----------------------------------------------------------------------------------
Energy 1,368,258 7.3
- -----------------------------------------------------------------------------------
Financial Services 1,689,833 9.0
- -----------------------------------------------------------------------------------
Healthcare 397,794 2.1
- -----------------------------------------------------------------------------------
Multi-Industry 239,750 1.3
- -----------------------------------------------------------------------------------
Technology 587,073 3.1
- -----------------------------------------------------------------------------------
Transportation 526,241 2.8
- -----------------------------------------------------------------------------------
Utilities 6,604,015 35.1
- -----------------------------------------------------------------------------------
Time Deposit 2,652,000 14.1
- -----------------------------------------------------------------------------------
Total Investments 18,346,418 97.6
- -----------------------------------------------------------------------------------
Cash and receivables, net of liabilities 460,395 2.4
- -----------------------------------------------------------------------------------
Net Assets $18,806,813 100.0%
- -----------------------------------------------------------------------------------
</TABLE>
A-36
<PAGE>
PREMIER GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
COMMON STOCKS AND
OTHER INVESTMENTS--97.0%
BASIC INDUSTRIES--0.6%
CHEMICALS--0.6%
Dow Chemical Co........................... 6,800 $ 532,950
------------
CAPITAL GOODS--2.5%
ELECTRICAL EQUIPMENT--1.5%
General Electric Co....................... 15,100 1,493,012
------------
MACHINERY--1.0%
Case Corp................................. 9,600 523,200
Deere & Co................................ 9,900 402,188
------------
925,388
------------
2,418,400
------------
CONSUMER
MANUFACTURING--2.2%
AUTO & RELATED--2.2%
Chrysler Corp............................. 35,800 1,181,400
General Motors Corp....................... 17,700 986,775
------------
2,168,175
------------
CONSUMER SERVICES--19.8%
AIRLINES--5.9%
AMR Corp.*................................ 5,000 440,625
Delta Air Lines, Inc...................... 6,400 453,600
KLM Royal Dutch Airlines.................. 18,776 523,381
Northwest Airlines Corp. Cl.A*............ 46,060 1,802,097
UAL Corp.*................................ 40,400 2,525,000
------------
5,744,703
------------
BROADCASTING &
CABLE--4.1%
AirTouch Communications, Inc.*............ 77,500 1,956,875
Cox Communications, Inc. Cl.A*............ 40,100 927,312
Liberty Media Group Cl.A*................. 8,625 246,352
TCI Group Series A*....................... 63,500 829,469
------------
3,960,008
------------
ENTERTAINMENT &
LEISURE--2.5%
ITT Corp.*................................ 8,740 379,098
Walt Disney Co............................ 28,900 2,012,162
------------
2,391,260
------------
RESTAURANTS &
LODGING--2.4%
Marriot International, Inc................ 12,600 696,150
McDonald's Corp........................... 35,300 1,597,325
------------
2,293,475
------------
RETAILING--4.9%
Home Depot, Inc........................... 37,133 $ 1,861,292
Kohls Corp.*.............................. 22,700 890,975
Sears, Roebuck & Co....................... 28,200 1,300,725
Wal-Mart Stores, Inc...................... 30,600 699,975
------------
4,752,967
------------
19,142,413
------------
CONSUMER STAPLES--10.8%
COSMETICS--0.8%
Gillette Co............................... 9,800 761,950
------------
FOOD--3.5%
Campbell Soup Co.......................... 19,800 1,588,950
PepsiCo, Inc.............................. 62,600 1,831,050
------------
3,420,000
------------
TOBACCO--6.5%
Philip Morris Cos., Inc................... 55,200 6,216,900
------------
10,398,850
------------
<PAGE>
ENERGY--0.9%
DOMESTIC INTEGRATED--0.5%
Exxon Corp................................ 2,100 205,800
Texaco, Inc............................... 2,600 255,125
------------
460,925
------------
INTERNATIONAL--0.2%
British Petroleum Co. Plc................. 1,500 212,063
------------
OIL & GAS SERVICES--0.2%
Baker Hughes, Inc......................... 3,000 103,500
Schlumberger Ltd.......................... 1,400 139,825
------------
243,325
------------
916,313
------------
FINANCE--19.1%
BANKING & CREDIT--9.9%
Citicorp.................................. 9,100 937,300
First Bank System, Inc.................... 6,400 436,800
First Union Corp.......................... 7,700 569,800
Household International, Inc.............. 13,700 1,263,825
MBNA Corp................................. 72,400 3,004,600
NationsBank Corp.......................... 7,100 694,025
Norwest Corp.............................. 61,100 2,657,850
------------
9,564,200
------------
BROKERAGE & MONEY
MANAGEMENT--4.0%
Green Tree Financial Corp................. 6,800 262,650
Merrill Lynch & Co., Inc.................. 31,100 2,534,650
Morgan Stanley Group, Inc................. 18,400 1,051,100
------------
3,848,400
------------
B-1
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
PREMIER GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
INSURANCE--2.1%
American International Group, Inc......... 11,900 $ 1,288,175
General Reinsurance Corp.................. 3,400 536,350
Progressive Corp.......................... 3,000 202,125
------------
2,026,650
------------
MORTGAGE BANKING--3.1%
Federal National Mortgage Association..... 80,500 2,998,625
------------
18,437,875
------------
HEALTH CARE--13.4%
DRUGS--7.3%
Amgen, Inc.*.............................. 33,000 1,796,438
Merck & Co., Inc.......................... 39,600 3,138,300
Pfizer, Inc............................... 25,300 2,096,737
------------
7,031,475
------------
MEDICAL PRODUCTS--1.8%
Johnson & Johnson......................... 15,400 766,150
Medtronic, Inc............................ 13,500 918,000
------------
1,684,150
------------
MEDICAL SERVICES--4.3%
Columbia/HCA Healthcare Corp.............. 72,100 2,938,075
Oxford Health Plans, Inc.*................ 10,200 597,337
United Healthcare Corp.................... 14,400 648,000
------------
4,183,412
------------
12,899,037
------------
TECHNOLOGY--26.7%
AEROSPACE & DEFENSE--1.4%
Boeing Co................................. 12,600 1,340,325
------------
COMMUNICATIONS
EQUIPMENT--1.2%
Ericsson (L.M.) Telephone Co.............. 11,990 361,948
Lucent Technologies, Inc.................. 16,321 754,846
------------
1,116,794
------------
COMPUTER HARDWARE--6.3%
Compaq Computer Corp.*.................... 38,200 2,836,350
Dell Computer Corp.*...................... 19,800 1,053,113
Hewlett-Packard Co........................ 43,700 2,195,925
------------
6,085,388
------------
<PAGE>
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
COMPUTER SOFTWARE &
SERVICES--4.7%
Electronic Data Systems Corp. ............ 16,800 $ 726,600
First Data Corp........................... 21,200 773,800
Microsoft Corp.*.......................... 21,800 1,802,587
Netscape Communications Corp.*............ 12,000 682,500
Oracle Corp.*............................. 12,500 521,094
------------
4,506,581
------------
NETWORK SOFTWARE--5.4%
3Com Corp.*............................... 19,700 1,444,256
Ascend Communications, Inc.*.............. 5,100 316,838
Cascade Communications Corp.*............. 6,600 364,650
Cisco Systems, Inc.*...................... 49,000 3,120,687
------------
5,246,431
------------
SEMI-CONDUCTORS &
RELATED--7.7%
Applied Materials, Inc.*.................. 11,300 406,094
Intel Corp. ............................. 13,100 1,715,281
warrants, expiring 3/14/98*........... 57,400 5,305,913
------------
7,427,288
------------
25,722,807
------------
TRANSPORTATION--1.0%
RAILROADS--1.0%
Burlington Northern Santa Fe.............. 10,900 941,487
------------
Total Common Stocks and
Other Investments
(cost $76,134,815)..................... 93,578,307
------------
SHORT-TERM INVESTMENTS--2.6%
COMMERCIAL PAPER--2.6%
General Electric Capital Corp.
7.00%, 1/02/97
(amortized cost $2,477,518)............ $ 2,478 2,477,518
------------
TOTAL INVESTMENTS--99.6%
(cost $78,612,333)..................... 96,055,825
Other assets less liabilities--0.4%....... 378,483
------------
NET ASSETS--100.0%........................ $ 96,434,308
============
- -------------------------------------------------------------------------------
* Non-income producing security.
See Notes to Financial Statements.
B-2
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
GLOBAL BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
AUSTRALIA--4.3%
GOVERNMENT/AGENCY--4.3%
Queensland Treasury
8.00%, 5/14/03 (a)
(cost $718,722)................ AU$ 950 $ 782,008
------------
AUSTRIA--1.1%
GOVERNMENT/AGENCY--1.1%
Republic of Austria
5.00%, 1/22/01
(cost $212,726)................ JPY 20,000 196,442
------------
BELGIUM--4.1%
GOVERNMENT/AGENCY--4.1%
Kingdom of Belgium
6.25%, 10/06/03
(cost $767,222)................ DEM 1,100 745,224
------------
CANADA--4.4%
GOVERNMENT/AGENCY--4.4%
Government of Canada
7.50%, 12/01/03
(cost $784,533)................ CA$ 1,000 789,834
------------
FRANCE--9.3%
GOVERNMENT/AGENCY--9.3%
Government of France
7.00%, 4/25/06................. XEU 650 864,084
8.50%, 11/25/02................ FRF 3,600 816,305
------------
Total French Securities
(cost $1,676,496).............. 1,680,389
------------
GERMANY--1.2%
GOVERNMENT/AGENCY--1.2%
Federal Republic of Germany
8.25%, 9/20/01
(cost $220,144)................ DEM 300 223,206
------------
ITALY--4.6%
GOVERNMENT/AGENCY--4.6%
Republic of Italy
10.00%, 8/01/03
(cost $732,292)................ LIRA 1,100,000 830,257
------------
JAPAN--3.2%
GOVERNMENT/AGENCY--3.2%
Export Import Bank of Japan
4.375%, 10/01/03
(cost $617,937)................ JPY 60,000 585,442
------------
SPAIN--9.8%
GOVERNMENT/AGENCY--9.8%
Kingdom of Spain
5.75%, 3/23/02................. JPY 85,000 $ 873,413
7.90%, 2/28/02................. ESP 110,000 903,555
------------
Total Spanish Securities
(cost $1,781,334).............. 1,776,968
------------
SWEDEN--4.7%
GOVERNMENT/AGENCY--4.7%
Kingdom of Sweden
10.25%, 5/05/03
(cost $854,330)................ SEK 4,800 856,538
------------
UNITED KINGDOM--4.7%
GOVERNMENT/AGENCY--4.7%
U.K. Treasury
8.50%, 12/07/05
(cost $709,902)................ GBP 460 839,547
------------
UNITED STATES--30.3%
GOVERNMENT/AGENCY--30.3%
U.S. Treasury Notes
5.875%, 2/15/04................ US$ 950 924,910
6.25%, 2/15/03................. 1,700 1,697,875
6.375%, 8/15/02................ 1,900 1,912,464
7.50%, 5/15/02................. 900 951,606
------------
Total United States Securities
(cost $5,451,037).............. 5,486,855
------------
MULTI-NATIONAL--13.6%
Asian Development Bank
5.625%, 2/18/02................ JPY 85,000 866,991
Intermediate America
Development Bank
6.75%, 4/29/03................. DEM 1,100 760,593
International Bank for
Reconstruction & Development
4.50%, 3/20/03................. JPY 85,000 836,256
------------
Total Multi-National Securities
(cost $2,552,307).............. 2,463,840
------------
TOTAL INVESTMENTS--95.3%
(cost $17,078,982)............. 17,256,550
Other assets less liabilities--4.7% 860,540
------------
NET ASSETS--100.0%................. $ 18,117,090
============
- -------------------------------------------------------------------------------
(a) Security segregated to collateralize forward exchange currency contracts
with an aggregate market value of $782,008. See Notes to Financial
Statements.
B-3
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
GROWTH AND INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
COMMON AND
PREFERRED STOCKS--95.1%
BASIC INDUSTRIES--2.8%
CHEMICALS--0.8%
Dow Chemical Co........................... 13,100 $ 1,026,713
------------
CONTAINERS--1.3%
Crown Cork & Seal, Inc.
4.5% conv. pfd......................... 31,000 1,612,000
------------
PAPER & FOREST
PRODUCTS--0.7%
Louisiana-Pacific Corp. .................. 40,000 845,000
------------
3,483,713
------------
CAPITAL GOODS--3.9%
ELECTRICAL EQUIPMENT--1.6%
General Electric Co....................... 20,400 2,017,050
------------
MACHINERY--1.3%
Allied-Signal, Inc........................ 7,000 469,000
Cooper Industries, Inc.................... 27,000 1,137,375
------------
1,606,375
------------
POLLUTION CONTROL--1.0%
WMX Technologies, Inc..................... 38,300 1,249,537
------------
4,872,962
------------
CONSUMER
MANUFACTURING--1.5%
AUTO & RELATED--1.5%
Goodyear Tire & Rubber Co................. 37,450 1,923,994
------------
CONSUMER SERVICES--12.6%
BROADCASTING &
CABLE--4.7%
AirTouch Communications, Inc.*............ 54,000 1,363,500
Comcast Corp. Cl.A SPL.................... 74,900 1,334,156
Liberty Media Group Cl.A*................. 25,000 714,062
Lin Television Corp.*..................... 28,000 1,179,500
TCI Group Series A*....................... 30,000 391,875
TCI Satellite Entertainment, Inc.*........ 3,000 29,813
Vodafone Group PLC (ADR).................. 22,000 910,250
------------
5,923,156
------------
ENTERTAINMENT &
LEISURE--0.8%
Time Warner, Inc.......................... 28,000 1,050,000
------------
PRINTING & PUBLISHING--1.0%
New York Times Co. Cl.A................... 33,000 1,254,000
------------
RESTAURANTS &
LODGING--0.4%
Brinker International, Inc.*.............. 31,000 $ 496,000
------------
RETAILING--5.7%
AutoZone, Inc.*........................... 56,100 1,542,750
CompUSA, Inc.*............................ 27,500 567,187
Dayton Hudson Corp........................ 30,000 1,177,500
Federated Department Stores, Inc.*........ 25,000 853,125
OfficeMax, Inc.*.......................... 43,000 456,875
Price/Costco, Inc.*....................... 24,900 627,169
Reebok International Ltd.................. 25,000 1,050,000
Sears, Roebuck & Co....................... 22,000 1,014,750
------------
7,289,356
------------
16,012,512
------------
<PAGE>
CONSUMER STAPLES--15.9%
BEVERAGES--0.9%
Anheuser-Busch Cos., Inc.................. 29,000 1,160,000
------------
COSMETICS--0.5%
Gillette Co............................... 7,700 598,675
------------
FOOD--8.0%
American Brands, Inc...................... 22,000 1,091,750
Campbell Soup Co.......................... 50,000 4,012,500
General Mills, Inc........................ 19,000 1,204,125
Kroger Co.*............................... 12,400 576,600
Nabisco Holdings Corp. Cl.A............... 29,250 1,137,094
PepsiCo, Inc.............................. 71,900 2,103,075
------------
10,125,144
------------
HOUSEHOLD PRODUCTS--1.4%
Black & Decker Corp....................... 23,000 692,875
Sunbeam Corp.............................. 42,000 1,081,500
------------
1,774,375
------------
TOBACCO--5.1%
Philip Morris Cos., Inc................... 29,250 3,294,281
RJR Nabisco Holdings Corp................. 94,500 3,213,000
------------
6,507,281
------------
20,165,475
------------
ENERGY--8.3%
DOMESTIC INTEGRATED--6.9%
Amoco Corp................................ 16,200 1,304,100
Apache Corp............................... 16,500 583,687
Exxon Corp................................ 38,000 3,724,000
Mobil Corp................................ 25,700 3,141,825
------------
8,753,612
------------
B-4
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
GROWTH AND INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
OIL & GAS SERVICES--0.5%
Transocean Offshore, Inc.................. 10,400 $ 651,300
------------
PIPELINES--0.9%
Enron Corp................................ 24,800 1,069,500
------------
10,474,412
------------
FINANCE--14.6%
BANKING & CREDIT--6.7%
Chase Manhattan Corp...................... 12,000 1,071,000
First Chicago NBD Corp.................... 22,448 1,206,580
First Union Corp.......................... 34,600 2,560,400
J.P. Morgan & Co., Inc.................... 13,000 1,269,125
Wells Fargo & Co.......................... 8,600 2,319,850
------------
8,426,955
------------
BROKERAGE & MONEY
MANAGEMENT--1.7%
Merrill Lynch & Co., Inc.................. 26,500 2,159,750
------------
INSURANCE--5.7%
Allstate Corp............................. 25,250 1,193,062
General Reinsurance Corp.................. 11,500 1,814,125
ITT Hartford Group, Inc................... 28,800 1,944,000
PMI Group, Inc............................ 5,700 315,638
Travelers Group, Inc...................... 44,466 2,017,645
------------
7,284,470
------------
REAL ESTATE--0.5%
Starwood Lodging Trust.................... 12,000 661,500
------------
18,532,675
------------
HEALTH CARE--9.4%
BIOTECHNOLOGY--1.5%
Centocor, Inc.*........................... 53,400 1,912,388
------------
DRUGS--4.8%
Amgen, Inc.*.............................. 6,700 364,731
Bristol-Myers Squibb Co................... 13,500 1,468,125
Merck & Co., Inc.......................... 54,000 4,279,500
------------
6,112,356
------------
MEDICAL PRODUCTS--1.3%
Abbott Laboratories....................... 32,000 1,624,000
------------
MEDICAL SERVICES--1.8%
Columbia/HCA Healthcare Corp.............. 48,300 1,968,225
Value Health, Inc.*....................... 17,000 331,500
------------
2,299,725
------------
11,948,469
------------
MULTI INDUSTRY--1.8%
Tyco International Ltd.................... 19,100 $ 1,009,913
Whitman Corp.............................. 55,000 1,258,125
------------
2,268,038
------------
TECHNOLOGY--17.6%
COMMUNICATIONS
EQUIPMENT--3.5%
Nokia Corp. (ADR)......................... 36,800 2,120,600
Scientific-Atlanta, Inc................... 71,000 1,065,000
Teleport Communications Group, Inc.*...... 40,600 1,238,300
------------
4,423,900
------------
COMPUTER HARDWARE--2.2%
Compaq Computer Corp.*.................... 14,350 1,065,487
International Business Machines Corp...... 10,950 1,653,450
------------
2,718,937
------------
COMPUTER SOFTWARE &
SERVICES--0.9%
Electronic Data Systems Corp.............. 26,000 1,124,500
------------
OFFICE EQUIPMENT &
SERVICES--1.2%
Xerox Corp................................ 29,700 1,562,963
------------
SEMI-CONDUCTORS &
RELATED--4.2%
Atmel Corp.*.............................. 48,700 1,619,275
Intel Corp................................ 14,800 1,937,875
National Semiconductor Corp.*............. 74,373 1,812,842
------------
5,369,992
------------
TELECOMMUNICATIONS--5.6%
AT & T Corp............................... 140,400 6,107,400
MCI Communications Corp................... 32,000 1,046,000
------------
7,153,400
------------
22,353,692
------------
TRANSPORTATION--2.4%
RAILROADS--1.9%
Canadian Pacific, Ltd..................... 42,000 1,113,000
Union Pacific Corp........................ 21,000 1,262,625
------------
2,375,625
------------
TRUCKING--0.5%
Xtra Corp................................. 16,000 694,000
------------
3,069,625
------------
B-5
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
GROWTH AND INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
UTILITIES--4.3%
ELECTRIC & GAS--4.3%
Allegheny Power Systems, Inc.............. 17,000 $ 516,375
CINergy Corp.............................. 15,000 500,625
CMS Energy Corp........................... 16,000 538,000
FPL Group, Inc............................ 23,750 1,092,500
Houston Industries, Inc................... 15,100 341,638
NIPSCO Industries, Inc.................... 15,500 614,187
Pinnacle West Capital Corp................ 19,000 603,250
Texas Utilities Co........................ 30,000 1,222,500
------------
5,429,075
------------
Total Common and Preferred Stocks
(cost $107,803,328).................... 120,534,642
------------
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
SHORT-TERM INVESTMENTS--4.6%
COMMERCIAL PAPER--4.6%
American Express Co.
6.30%, 1/03/97......................... $ 2,925 $ 2,923,976
Prudential Funding
6.00%, 1/02/97......................... 2,906 2,905,516
------------
Total Short-Term Investments
(amortized cost $5,829,492)............ 5,829,492
------------
TOTAL INVESTMENTS--99.7%
(cost $113,632,820).................... 126,364,134
Other assets less liabilities--0.3%....... 365,271
------------
NET ASSETS--100.0%........................ $126,729,405
============
- -------------------------------------------------------------------------------
* Non-income producing security.
See Glossary of Terms on page B-43.
See Notes to Financial Statements.
B-6
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
SHORT-TERM MULTI-MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
AUSTRALIA--13.2%
GOVERNMENT/AGENCY--13.2%
Commonwealth of Australia
12.00%, 7/15/99 (a)
(cost $943,204)................ AU$ 1,050 $ 940,777
------------
CANADA--7.5%
GOVERNMENT/AGENCY--7.5%
Government of Canada
6.50%, 8/01/99 (a)
(cost $530,561)................ CA$ 700 534,229
------------
DENMARK--3.1%
GOVERNMENT/AGENCY--3.1%
Kingdom of Denmark
9.00%, 11/15/98
(cost $236,627)................ DKK 1,200 221,837
------------
FINLAND--3.5%
GOVERNMENT/AGENCY--3.5%
Republic of Finland
11.00%, 1/15/99 (a)
(cost $240,448)................ FIM 1,000 247,783
------------
GERMANY--3.0%
GOVERNMENT/AGENCY--3.0%
Federal Republic of Germany
5.75%, 5/28/99 (a)
(cost $211,220)................ DEM 315 214,203
------------
NORWAY--3.0%
GOVERNMENT/AGENCY--3.0%
Kingdom of Norway
9.00%, 1/31/99 (a)
(cost $210,999)................ NOK 1,250 210,904
------------
SPAIN--2.9%
GOVERNMENT/AGENCY--2.9%
Kingdom of Spain
7.40%, 7/30/99 (a)
(cost $205,144)................ ESP 26,000 $ 208,501
------------
SWEDEN--4.2%
GOVERNMENT/AGENCY--4.2%
Kingdom of Sweden
11.00%, 1/21/99 (a)
(cost $297,725)................ SEK 1,800 296,672
------------
UNITED KINGDOM--1.9%
GOVERNMENT/AGENCY--1.9%
Exchequer
12.25%, 3/26/99 (a)
(cost $126,353)................ GBP 70 133,004
------------
UNITED STATES--52.5%
GOVERNMENT/AGENCY--14.0%
U.S. Treasury Note
5.875%, 11/15/99 (a)........... US$ 1,000 996,090
------------
TIME DEPOSIT--38.5%
State Street Bank and Trust Co.
5.00%, 1/02/97................. 2,742 2,742,000
------------
Total United States Securities
(cost $3,740,217).............. 3,738,090
------------
MULTI-NATIONAL--2.6%
International Bank for
Reconstruction &
Development
11.50%, 10/09/97 (a)
(cost $186,176)................ CZK 5,000 184,193
------------
TOTAL INVESTMENTS--97.4%
(cost $6,928,674).............. 6,930,193
Other assets less liabilities--2.6% 182,111
------------
NET ASSETS--100.0%................. $ 7,112,304
============
- -------------------------------------------------------------------------------
(a) Securities segregated to collateralize forward exchange currency
contracts with an aggregate market value of $3,966,356. See Notes to
Financial Statements.
B-7
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
PREFERRED STOCKS--0.2%
FINANCE--0.2%
Banesto Holdings Ltd.
10.50% Conv. Series A (a)(b)
(cost $49,725)......................... 1,800 $ 54,000
------------
CORPORATE DEBT
OBLIGATIONS--33.7%
ASSET BACKED--3.2%
Chemical Master Credit Card Trust I
5.98%, 9/15/08......................... $ 1,000 947,810
------------
FINANCE--13.9%
First Union Capital
8.04%, 12/01/26 (a).................... 1,000 1,006,670
Ford Motor Credit Co.
6.125%, 1/09/06........................ 500 469,470
Goldman Sachs Group L.P.
7.25%, 10/01/05 (a).................... 500 506,038
John Hancock Mutual Life
Insurance Co.
7.375%, 2/15/24 (a).................... 1,000 963,870
Wachovia Corp.
6.375%, 4/15/03........................ 75 73,758
Zions Institutional Capital Trust A
8.536%, 12/15/26 (a)................... 1,000 1,030,360
------------
4,050,166
------------
INDUSTRIAL--1.6%
International Business Machines
Corp.
7.125%, 12/01/96....................... 500 476,230
------------
YANKEES--15.0%
RAS Laffan Liquefied Natural Gas
8.294%, 3/15/14 (a).................... 1,250 1,275,000
Reliance Industries, Ltd.
10.375%, 6/24/16 (a)................... 1,000 1,082,500
Republic of Columbia
8.70%, 2/15/16......................... 500 482,255
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
Sociedad Quimira y Minera
7.70%, 9/15/06 (a)..................... $ 1,000 $ 1,024,492
St. George Bank, Ltd.
7.15%, 10/15/05 (a).................... 500 499,210
------------
4,363,457
------------
Total Corporate Debt Obligations
(cost $9,802,780)...................... 9,837,663
------------
U.S. GOVERNMENT AND
AGENCY OBLIGATIONS--52.3%
U.S. TREASURY SECURITIES--31.9%
U.S. Treasury Bond
6.50%, 11/15/26........................ 160 157,026
U.S. Treasury Notes
5.00%, 1/31/98......................... 3,900 3,872,583
6.50%, 10/15/06........................ 650 653,555
7.125%, 9/30/99........................ 4,480 4,603,917
------------
9,287,081
------------
FEDERAL AGENCY -
MORTGAGES--12.9%
Federal National Mortgage
Association
7.00%, 4/01/26......................... 1,746 1,707,234
Government National Mortgage
Association
7.00%, 7/15/23......................... 81 79,304
7.50%, 4/15/26......................... 1,981 1,981,341
------------
3,767,879
------------
FEDERAL AGENCY--7.5%
AID - Israel
8.00%, 11/15/01........................ 200 213,248
Overseas Private Investment Corp.
6.08%, 8/15/04......................... 1,000 981,810
Student Loan Marketing
Association
6.05%, 9/14/00......................... 1,000 992,810
------------
2,187,868
------------
Total U.S. Government and
Agency Obligations
(cost $15,322,294)..................... 15,242,828
------------
B-8
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
SOVEREIGN DEBT
OBLIGATIONS--10.8%
AUSTRALIA--2.1%
Commonwealth of Australia
8.75%, 8/15/08 (b)............ AU$ 700 $ 611,088
------------
MEXICO--5.2%
United Mexican States
7.5625%, 8/06/01 (a)........... US$ 1,500 1,505,625
------------
POLAND--3.5%
Republic of Poland
4.00%, 10/27/14 (c)............ 1,200 1,018,500
------------
Total Sovereign Debt Obligations
(cost $3,004,460).............. 3,135,213
------------
SHORT-TERM INVESTMENTS--1.8%
TIME DEPOSIT--1.8%
State Street Bank and Trust Co.
5.00%, 1/02/97
(amortized cost $522,000).............. $ 522 $ 522,000
------------
TOTAL INVESTMENTS--98.8%
(cost $28,701,259)..................... 28,791,704
Other assets less liabilities--1.2%....... 358,200
------------
NET ASSETS--100.0%........................ $ 29,149,904
============
- -------------------------------------------------------------------------------
(a) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration normally applied to certain qualified buyers. At December 31,
1996, the aggregate market value of these securities amounted to $8,947,765
or 30.7% of net assets.
(b) Securities segregated to collateralize forward exchange currency contracts
with an aggregate market value of $665,088.
(c) Coupon will increase periodically based upon a predetermined schedule.
Stated interest rate in effect at December 31, 1996.
See Glossary of Terms on page B-43.
See Notes to Financial Statements.
B-9
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
COMMON AND
PREFERRED STOCKS--62.6%
BASIC INDUSTRIES--1.9%
CHEMICALS--0.9%
Dow Chemical Co........................... 1,500 $ 117,563
Morton International, Inc................. 2,900 118,175
------------
235,738
------------
CONTAINERS--0.5%
Crown Cork & Seal, Inc.
4.5% conv. pfd......................... 2,600 135,200
------------
PAPER & FOREST
PRODUCTS--0.5%
Louisiana-Pacific Corp.................... 6,000 126,750
------------
497,688
------------
CAPITAL GOODS--2.4%
ELECTRICAL EQUIPMENT--1.1%
General Electric Co....................... 2,800 276,850
------------
MACHINERY--0.9%
Allied-Signal, Inc........................ 3,400 227,800
------------
POLLUTION CONTROL--0.4%
WMX Technologies, Inc..................... 3,500 114,187
------------
618,837
------------
CONSUMER
MANUFACTURING--1.1%
AUTO & RELATED--1.1%
Goodyear Tire & Rubber Co................. 5,400 277,425
------------
CONSUMER SERVICES--7.7%
BROADCASTING &
CABLE--2.6%
AirTouch Communications, Inc.*............ 8,700 219,675
Comcast Corp. Cl.A SPL.................... 8,200 146,062
Liberty Media Group Cl.A*................. 5,100 145,669
Lin Television Corp.*..................... 4,000 168,500
------------
679,906
------------
ENTERTAINMENT &
LEISURE--1.0%
Carnival Corp. Cl.A....................... 1,700 56,100
ITT Corp.*................................ 1,200 52,050
Time Warner, Inc.......................... 3,900 146,250
------------
254,400
------------
PRINTING & PUBLISHING--0.6%
New York Times Co. Cl.A................... 3,900 148,200
------------
RESTAURANTS &
LODGING--0.6%
Brinker International, Inc.*.............. 4,300 $ 68,800
Wendy's International, Inc................ 4,300 88,150
------------
156,950
------------
RETAILING--2.9%
AutoZone, Inc.*........................... 8,100 222,750
Dayton Hudson Corp........................ 4,100 160,925
Federated Department Stores, Inc.*........ 3,300 112,613
Price/Costco, Inc.*....................... 4,400 110,825
Sears, Roebuck & Co....................... 3,100 142,987
------------
750,100
------------
1,989,556
------------
CONSUMER STAPLES--10.4%
BEVERAGES--0.6%
Anheuser-Busch Cos., Inc.................. 4,000 160,000
------------
COSMETICS--0.3%
Gillette Co............................... 1,000 77,750
------------
FOOD--5.4%
American Brands, Inc...................... 3,200 158,800
Campbell Soup Co.......................... 6,600 529,650
General Mills, Inc........................ 2,600 164,775
Kroger Co.*............................... 1,700 79,050
Nabisco Holdings Corp. Cl.A............... 4,100 159,387
PepsiCo, Inc.............................. 10,200 298,350
------------
1,390,012
------------
HOUSEHOLD PRODUCTS--1.0%
Black & Decker Corp....................... 3,400 102,425
Newell Co................................. 2,700 85,050
Sunbeam Corp.............................. 3,000 77,250
------------
264,725
------------
TOBACCO--3.1%
Philip Morris Cos., Inc................... 4,300 484,288
RJR Nabisco Holdings Corp................. 9,500 323,000
------------
807,288
------------
2,699,775
------------
ENERGY--5.0%
DOMESTIC INTEGRATED--3.8%
Exxon Corp................................ 5,300 519,400
Mobil Corp................................ 3,800 464,550
------------
983,950
------------
B-10
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
OIL & GAS SERVICES--0.6%
Apache Corp............................... 2,100 $ 74,287
Transocean Offshore, Inc.................. 1,400 87,675
------------
161,962
------------
PIPELINES--0.6%
Enron Corp................................ 3,400 146,625
------------
1,292,537
------------
FINANCE--9.7%
BANKING & CREDIT--3.8%
Chase Manhattan Corp...................... 1,740 155,295
First Chicago NBD Corp.................... 2,922 157,058
First Union Corp.......................... 4,700 347,800
J.P. Morgan & Co., Inc.................... 1,700 165,962
Wells Fargo & Co.......................... 600 161,850
------------
987,965
------------
BROKERAGE & MONEY
MANAGEMENT--1.1%
Merrill Lynch & Co., Inc.................. 2,500 203,750
Morgan Stanley Group, Inc................. 1,400 79,975
------------
283,725
------------
INSURANCE--4.0%
General Reinsurance Corp.................. 1,800 283,950
ITT Hartford Group, Inc................... 4,000 270,000
PMI Group, Inc............................ 3,400 188,275
Travelers Group, Inc...................... 6,266 284,320
------------
1,026,545
------------
REAL ESTATE--0.4%
Starwood Lodging Trust.................... 1,600 88,200
------------
OTHER--0.4%
Dean Witter, Discover & Co................ 1,700 112,625
------------
2,499,060
------------
HEALTH CARE--7.3%
BIOTECHNOLOGY--1.1%
Centocor, Inc.*........................... 8,100 290,081
------------
DRUGS--3.9%
Amgen, Inc.*.............................. 1,500 81,656
Bristol-Myers Squibb Co................... 2,300 250,125
Merck & Co., Inc.......................... 8,700 689,475
------------
1,021,256
------------
MEDICAL PRODUCTS--0.9%
Abbott Laboratories....................... 4,400 223,300
------------
MEDICAL SERVICES--1.4%
Columbia/HCA Healthcare Corp.............. 6,450 $ 262,838
United Healthcare Corp.................... 1,500 67,500
Value Health, Inc.*....................... 1,100 21,450
------------
351,788
------------
1,886,425
------------
MULTI INDUSTRY--1.9%
Tyco International Ltd.................... 3,300 174,488
U.S. Industries, Inc.*.................... 5,000 171,875
Whitman Corp.............................. 6,200 141,825
------------
488,188
------------
TECHNOLOGY--12.0%
COMMUNICATIONS
EQUIPMENT--1.9%
Nokia Corp. (ADR)......................... 6,300 363,038
Scientific-Atlanta, Inc................... 8,500 127,500
------------
490,538
------------
COMPUTER HARDWARE--2.6%
Compaq Computer Corp.*.................... 2,000 148,500
Intel Corp................................ 2,200 288,062
International Business Machines Corp...... 1,500 226,500
------------
663,062
------------
COMPUTER SOFTWARE &
SERVICES--0.6%
Electronic Data Systems Corp.............. 3,500 151,375
------------
OFFICE EQUIPMENT &
SERVICES--0.9%
Xerox Corp................................ 4,600 242,075
------------
SEMI-CONDUCTORS &
RELATED--1.6%
Atmel Corp.*.............................. 4,000 133,000
National Semiconductor Corp.*............. 12,000 292,500
------------
425,500
------------
TELECOMMUNICATIONS--4.4%
AT & T Corp............................... 19,300 839,550
MCI Communications Corp.*................. 9,000 294,187
------------
1,133,737
------------
3,106,287
------------
TRANSPORTATION--0.9%
RAILROADS--0.9%
Canadian Pacific, Ltd..................... 2,900 76,850
Union Pacific Corp........................ 2,800 168,350
------------
245,200
------------
B-11
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
UTILITIES--2.3%
ELECTRIC & GAS--2.3%
Allegheny Power Systems, Inc.............. 2,400 $ 72,900
CINergy Corp.............................. 2,000 66,750
FPL Group, Inc............................ 5,200 239,200
Houston Industries, Inc................... 2,600 58,825
Texas Utilities Co........................ 4,100 167,075
------------
604,750
------------
Total Common and Preferred Stocks
(cost $14,409,043)..................... 16,205,728
------------
U.S. GOVERNMENT
OBLIGATIONS--30.2%
U.S. Treasury Notes
4.75%, 8/31/98......................... $ 2,317 2,277,541
6.50%, 10/15/06........................ 2,000 2,010,940
7.25%, 8/15/04......................... 3,355 3,531,138
------------
Total U.S. Government Obligations
(cost $7,861,801)...................... 7,819,619
------------
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
SHORT-TERM INVESTMENTS--6.6%
TIME DEPOSIT--6.6%
State Street Bank and Trust Co.
5.00%, 1/02/97
(amortized cost $1,706,000)............ $ 1,706 $ 1,706,000
------------
TOTAL INVESTMENTS--99.4%
(cost $23,976,844)..................... 25,731,347
Other assets less liabilities--0.6%....... 144,003
------------
NET ASSETS--100.0%......................... $ 25,875,350
============
- -------------------------------------------------------------------------------
* Non-income producing security.
See Glossary of Terms on page B-43.
See Notes to Financial Statements.
B-12
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
COMMON STOCKS AND
OTHER INVESTMENTS--92.0%
AUSTRALIA--1.5%
Coca Cola Amatil Ltd...................... 13,171 $ 140,808
Mayne Nickless Ltd........................ 12,000 82,028
Qantas Airways Ltd........................ 12,021 20,065
WMC, Ltd.................................. 23,168 146,032
Woolworths Ltd............................ 108,073 260,282
------------
649,215
------------
BELGIUM--0.7%
Delhaize-Le Lion S.A...................... 2,500 148,530
Kredietbank S.A........................... 500 163,896
------------
312,426
------------
BRAZIL--0.1%
Dixie Toga S.A. pfd....................... 18,600 14,141
Industries Klabin de Papel E Celulose
S.A. pfd............................... 16,000 14,782
------------
28,923
------------
DENMARK--1.2%
BG Bank A/S............................... 1,600 74,964
Den Danske Bank........................... 3,790 305,604
ISS International Service System Cl.B..... 5,440 143,138
------------
523,706
------------
FINLAND--1.5%
Kesko..................................... 4,900 69,133
Nokia AB Cl.A............................. 3,038 176,204
Orion-Yhtymne OY Series B................. 5,680 218,556
UPM-Kymmene Corp.*........................ 9,700 203,489
------------
667,382
------------
FRANCE--6.6%
Alcatel Alsthom........................... 1,300 104,431
Bouygues.................................. 2,214 229,572
Compagnie Generale des Eaux............... 1,639 203,118
GTM Entrepose S.A......................... 1,640 75,860
Legris Ind. S.A........................... 3,960 166,765
Pechiney S.A.............................. 3,730 156,288
Salomon S.A............................... 1,400 120,073
SGS-Thomson Microelectronics N.V.*........ 1,530 108,222
Simco S.A................................. 1,204 105,119
Societe Centrale des Assurances
Generales de France.................... 7,540 243,413
Societe des Immuebles..................... 1,297 76,493
Societe Francaise d'Invetissements
Immobiliers et de Gestion.............. 1,295 93,846
Societe Nacionale Elf Aquitaine........... 4,400 400,524
Total S.A. (ADR).......................... 1,270 $ 51,118
Total S.A. Cl.B........................... 5,214 424,074
Union du Credit Bail Immobilier........... 1,490 148,182
Union Immobilier de France................ 980 79,990
Usinor Sacilor............................ 8,900 129,508
------------
2,916,596
------------
GERMANY--5.8%
Bayer AG.................................. 12,280 501,159
Deutsche Lufthansa AG..................... 18,100 247,011
Deutsche Telekom AG*...................... 4,130 87,093
Henkel KGaA, pfd.......................... 5,634 283,018
Hornbach Holding AG pfd................... 2,400 171,562
KSB AG - Vorzug pfd....................... 960 148,479
Preussag AG............................... 800 181,180
Schmalbach Lubeca AG*..................... 1,000 245,646
Suedzucker AG............................. 321 156,662
Veba AG................................... 7,050 407,753
Volkswagen AG............................. 319 132,675
------------
2,562,238
------------
HONG KONG--1.7%
Asia Satellite Telecom Ltd.*.............. 3,000 6,962
Citic Pacific Ltd......................... 23,000 133,519
First Pacific Co. Ltd..................... 74,837 97,241
Guangshen Railway Co. Ltd. (ADR)*......... 3,000 61,875
Hong Kong and China Gas Co. Ltd. ......... 27,440 53,039
warrants, expiring 9/30/97* ........... 1,620 900
Hysan Development Co. Ltd. ............... 12,000 47,786
warrants, expiring 4/30/98* ........... 500 453
New World Development Co. Ltd............. 9,226 62,326
Swire Pacific Ltd. Cl.A................... 11,000 104,887
Television Broadcasts of
Hong Kong Ltd.......................... 32,000 127,843
Wharf (Holdings) Ltd...................... 15,000 74,859
------------
771,690
------------
INDIA--0.9%
Bajaj Auto Ltd. (GDR) (a)................. 5,800 192,850
Industrial Credit & Investment
Corp. of India Ltd. (GDR)* (a)......... 8,000 76,000
State Bank of India (GDR)* (a)............ 7,000 118,090
------------
386,940
------------
INDONESIA--1.3%
Indosat................................... 78,000 214,649
PT Hanjaya Mandala Sampoema
(Foreign).............................. 49,000 261,389
PT Telekomunikasi Indonesia .............. 41,000 70,734
B-13
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
PT Telekomunikasi Indonesia (ADR) ........ 1,000 $ 34,500
------------
581,272
------------
ITALY--1.9%
Ente Nazionale Idrocarburi S.p.A.......... 46,800 240,170
Instituto Nazionale delle Assicurazioni... 152,900 199,163
Magneti Marelli S.p.A..................... 48,200 59,892
Saipem S.p.A.............................. 19,950 91,794
Societa Italiana Per L'Eserreizio
delle Telecommunicazioni, P.A.......... 102,200 265,437
------------
856,456
------------
JAPAN--31.5%
Amano Corp................................ 15,000 160,608
Asahi Glass Co. Ltd....................... 30,000 282,359
Bank of Tokyo-Mitsubishi Bank............. 18,200 337,881
Canon, Inc................................ 16,000 353,683
Chiba Bank Ltd............................ 10,000 68,215
Dai Nippon Printing Co. Ltd............... 11,000 192,816
Daifuku Co. Ltd........................... 12,000 151,282
Daito Trust Construction Co. Ltd.......... 15,700 174,881
Daiwa Securities Co. Ltd.................. 6,000 53,363
DDI Corp.................................. 125 826,785
East Japan Railway Co..................... 40 179,950
Eisai Co.................................. 8,250 162,421
Fuji Photo Film Co. (ORD)................. 3,000 98,955
Furukawa Co. Ltd.......................... 25,000 84,190
Hirose Electric Co........................ 5,000 289,699
Honda Motor Co............................ 5,000 142,906
House Foods Industry...................... 5,000 80,736
Hoya Corp................................. 10,000 392,885
Ishikawajima-Harima Heavy Industries...... 17,000 75,598
Ito - Yokado Co. Ltd...................... 2,000 87,039
Japan Securities Finance.................. 17,000 198,169
Japan Tobacco, Inc........................ 22 149,124
Kamigumi Co. Ltd.......................... 12,000 78,750
Kandenko Co. Ltd.......................... 11,300 107,331
Kao Corp.................................. 21,000 244,798
Kirin Brewery Co. Ltd..................... 8,000 78,750
Kokuyo.................................... 7,000 172,869
Kuraray Co. Ltd........................... 20,000 184,785
Kyocera Corp.............................. 2,000 124,687
Maeda Road Construction Corp.............. 4,000 46,283
Matsushita Electric Industrial............ 24,000 391,676
Matsushita Electric Works................. 13,000 111,916
Mitsubishi Heavy Industries Ltd........... 23,000 182,713
Mitsubishi Materials Corp................. 12,000 48,493
Mitsubishi Oil Co......................... 22,000 131,647
Mitsui Marine & Fire Insurance
Co. Ltd................................ 24,000 $ 129,108
Mitsui Trust and Banking Co. Ltd.......... 44,000 343,839
National House Industrial Co.............. 11,000 146,274
NGK Insulators............................ 8,000 75,987
Nikko Securities Co. Ltd.................. 15,000 111,907
Nippon Express Co. Ltd.................... 18,000 123,409
Nippon Light Metal Co..................... 21,000 86,314
Nippon Steel Co........................... 46,000 135,843
Nisshin Steel Co. Ltd..................... 90,000 241,689
NKK Corp.*................................ 53,000 119,446
Nomura Securities Co. Ltd................. 16,000 240,394
Osaka Gas Co.............................. 42,000 114,964
Rohm Co................................... 11,000 721,872
Sankyo Co. Ltd............................ 2,000 56,644
Santen Pharmaceutical Co.................. 1,000 20,724
Seven-Eleven Japan Co. Ltd................ 10,400 608,859
Shimano, Inc.............................. 7,000 119,074
Shimizu Corp.............................. 15,000 112,037
Shiseido Co. Ltd.......................... 14,000 161,989
Sumitomo Electric Industries.............. 12,000 167,861
Sumitomo Marine & Fire Insurance Co....... 19,000 118,125
Sumitomo Realty & Development
Co. Ltd................................ 24,000 151,282
Sumitomo Rubber Industries................ 13,000 96,874
Taisho Pharmaceutical Co.................. 7,000 165,012
Takeda Chemical Industries................ 6,000 125,896
TDK Corp.................................. 8,000 521,544
Toagosei Co. Ltd.......................... 7,000 24,782
Tokai Bank................................ 17,000 177,619
Tokyo Electric Power Co................... 7,000 153,527
Tokyo Gas Cos. Ltd........................ 85,000 230,464
Tokyo Steel Manufacturing Co.............. 22,000 313,444
Toyo Kanetsu.............................. 13,000 45,126
Toyota Corp............................... 26,000 747,604
Ube Industries Ltd. ...................... 15,000 42,483
Ushio, Inc................................ 16,000 174,078
Yakult Honsha Co.......................... 10,000 103,618
Yamanouchi Pharmaceutical Co. Ltd......... 14,000 287,713
Yamatake-Honeywell........................ 7,000 113,030
Yamazaki Baking Co. Ltd................... 7,000 111,821
------------
13,990,519
------------
KOREA--0.7%
Korea Electric Power Corp. (ADR).......... 4,000 82,000
Korea Mobile Telecommunications
Corp. (ADR) (a)........................ 14,832 190,962
B-14
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
Pohang Iron & Steel Ltd. (ADR)............ 2,000 $ 40,500
------------
313,462
------------
MALAYSIA--1.0%
Ammb Holdings Bhd......................... 15,000 125,916
DCB Holdings Bhd
warrants, expiring 12/27/99*........... 2,750 4,138
Malakoff Bhd.............................. 17,000 83,469
Malayan Banking Bhd....................... 8,000 88,695
Resorts World Bhd......................... 37,000 168,481
------------
470,699
------------
NETHERLANDS--3.6%
Akzo Nobel N.V............................ 3,320 453,820
Apothekers Cooperative OPG................ 1,640 47,210
CSM N.V................................... 800 44,483
Fortis Amev N.V........................... 11,800 413,496
Internationale Nederlanden Groep N.V...... 11,639 419,314
Vendex International N.V.................. 5,150 220,437
------------
1,598,760
------------
NEW ZEALAND--0.6%
Fletcher Challenge Ltd.................... 26,424 44,274
Lion Nathan Ltd........................... 32,000 76,691
Telecom Corp. of New Zealand Ltd.......... 27,000 137,815
------------
258,780
------------
NORWAY--1.1%
Bergesen D.Y. ASA Cl.A.................... 11,700 283,280
Orkla ASA Cl.A............................ 1,540 106,362
Schibsted ASA............................. 3,740 68,204
Unitor ASA................................ 1,900 24,181
------------
482,027
------------
PHILIPPINES--0.2%
Manila Electric Co........................ 9,815 80,237
Philippine Commercial International
Bank................................... 1,000 13,118
------------
93,355
------------
PORTUGAL--0.1%
Telecel-Comunicacaoes Pessoais* (a)....... 550 35,118
------------
SINGAPORE--1.3%
Overseas Chinese Bank..................... 14,000 174,087
Overseas Union Banking Ltd. (Foreign)..... 20,000 154,363
Singapore Airlines Ltd.................... 2,000 18,152
Singapore Press Holdings Ltd. (Foreign)... 11,000 216,966
------------
563,568
------------
SPAIN--1.7%
Autopistas Concesionaria Espanola S.A..... 9,500 130,984
Banco Santander S.A....................... 2,070 $ 132,499
Repsol S.A................................ 6,300 241,664
Tabacalera S.A. Series A.................. 3,590 154,578
Viscofan Envolturas Celulosicas........... 6,430 94,104
------------
753,829
------------
SWEDEN--1.9%
Astra AB.................................. 5,500 271,778
Electrolux AB Series B.................... 1,590 92,324
Incentive AB Cl.B......................... 1,698 123,244
Sparbanken Sverige AB Cl.A (a)............ 4,300 73,769
Stora Kopparbergs Series B................ 19,705 268,709
------------
829,824
------------
SWITZERLAND--4.0%
Adecco S.A................................ 591 148,357
Baloise Holdings Ltd...................... 105 211,020
Nestle S.A................................ 326 349,990
Novartis AG*.............................. 627 718,538
Schindler Holdings AG..................... 90 97,833
Swissair AG*.............................. 189 152,923
Zurich Versicherungsgesellschaft.......... 334 92,826
------------
1,771,487
------------
TAIWAN--0.2%
Advanced Semiconductor Engineering
(GDR)* (a)............................. 8,100 77,355
------------
THAILAND--0.4%
Bangkok Bank Public Co. Ltd............... 4,000 38,681
Thai Farmers Bank Co...................... 24,625 153,630
------------
192,311
------------
UNITED KINGDOM--20.5%
Anglian Water Plc......................... 22,000 221,621
B.A.T. Industries Plc..................... 21,300 176,618
BAA Plc................................... 33,500 277,780
Barclays Plc.............................. 29,300 502,221
Bass Plc.................................. 14,580 205,324
BPB Plc................................... 17,600 115,786
British Aerospace Plc..................... 11,480 251,352
British Petroleum Co. Plc................. 36,600 438,924
British Sky Broadcast Group Plc........... 22,100 197,639
British Telecommunications Plc............ 37,400 253,092
BTR Plc................................... 73,500 358,874
Cadbury Schweppes Plc..................... 29,700 250,850
Compass Group Plc......................... 18,900 200,754
General Electric Co. Plc.................. 33,849 222,103
Glaxo Holdings Wellcome Plc............... 16,700 271,801
Grand Metropolitan Plc.................... 33,100 259,719
B-15
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
Hanson Plc................................ 99,100 $ 139,219
Hepworth Plc.............................. 17,100 73,826
Holliday Chemical Holdings Plc............ 48,600 101,788
Kingfisher Plc............................ 10,800 116,567
Ladbroke Group Plc........................ 61,300 243,646
National Grid Group Plc................... 92,400 308,686
National Westminster Bank Plc............. 18,350 215,660
Pearson Plc............................... 13,900 177,411
Rank Group Plc............................ 44,100 330,920
Reed International Plc.................... 17,600 331,074
Reuters Holdings Plc...................... 27,400 352,299
Rugby Group Plc........................... 88,000 141,717
Sainsbury (J.) Plc........................ 45,162 299,429
Sears Plc................................. 134,500 216,601
Shell Transport and Trading Co. Plc....... 10,950 189,848
Siebe Plc................................. 13,240 245,882
Smithkline Beecham Plc.................... 17,600 243,632
Tesco Plc................................. 8,500 51,550
TI Group Plc.............................. 34,700 344,206
Tomkins Plc............................... 47,500 219,719
United Assurance Group Plc................ 20,000 164,468
Vodafone Group Plc........................ 47,200 199,733
Wimpey (George) Plc....................... 91,500 195,948
------------
9,108,287
------------
Total Common Stocks and
Other Investments
(cost $39,371,024)..................... 40,796,225
------------
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
CONVERTIBLE BOND--0.4%
JAPAN--0.4%
Sumitomo Bank International
0.75%, 5/31/01 (a)
(cost $155,634)................ JPY 17,000 $ 155,416
------------
SHORT-TERM INVESTMENTS--7.4%
TIME DEPOSIT--7.4%
State Street Bank and Trust Co.
5.00%, 1/02/97
(amortized cost $3,273,000).... US$ 3,273 3,273,000
------------
TOTAL INVESTMENTS--99.8%
(cost $42,799,658)............. 44,224,641
Other assets less liabilities--0.2% 99,455
------------
NET ASSETS--100.0%................. $ 44,324,096
============
- -------------------------------------------------------------------------------
* Non-income producing security.
(a) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration normally applied to certain qualified buyers. At December
31, 1996, the aggregate market value of these securities amounted to
$919,560 or 2.1% of net assets.
See Glossary of Terms on page B-43.
See Notes to Financial Statements.
B-16
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
U.S. GOVERNMENT AND
AGENCY OBLIGATIONS--99.1%
Federal Farm Credit Bank
5.35%, 1/23/97......................... $ 3,000 $ 2,990,192
5.46%, 1/23/97......................... 3,000 2,989,990
5.48%, 1/29/97......................... 3,500 3,485,082
Federal Home Loan Bank
5.31%, 2/21/97......................... 5,500 5,458,626
5.48%, 1/24/97......................... 3,500 3,487,746
Federal Home Loan Mortgage Corp.
5.27%, 1/14/97......................... 800 798,478
5.37%, 1/22/97......................... 3,000 2,990,603
5.42%, 1/22/97......................... 2,873 2,863,917
Federal National Mortgage Assn.
5.24%, 1/17/97......................... 8,500 8,480,204
5.36%, 3/12/97......................... 3,000 2,968,733
5.37%, 1/07/97......................... 3,020 3,017,297
5.38%, 2/18/97......................... 6,000 5,956,960
5.38%, 2/24/97......................... 3,425 3,397,360
5.40%, 2/10/97......................... 3,390 3,369,660
Tennessee Valley Authority
5.24%, 2/26/97......................... 1,500 1,487,773
5.26%, 3/26/97......................... 2,500 2,469,317
5.27%, 2/25/97......................... 1,500 1,487,923
U.S. Treasury Bill
4.75%, 1/16/97......................... 6,500 6,487,135
------------
TOTAL INVESTMENTS--99.1%
(cost $64,186,996)..................... 64,186,996
Other assets less liabilities--0.9%........ 582,295
------------
NET ASSETS--100.0%......................... $ 64,769,291
============
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-17
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
SOVEREIGN DEBT
OBLIGATIONS--68.2%
COLLATERALIZED
BRADY BONDS--18.5%
ARGENTINA--5.1%
Republic of Argentina
5.25% Par Euro Bonds, 3/31/23 (a)
(cost $412,943)........................ $ 710 $ 448,187
------------
ECUADOR--3.6%
Republic of Ecuador
3.00%, 2/27/15......................... 370 227,604
Republic of Ecuador
6.50% Disc. (FRN), 2/28/25 (b)......... 130 90,025
------------
Total Ecuadorian Securities
(cost $229,475)........................ 317,629
------------
MEXICO--7.9%
United Mexican States
6.25%, 12/31/19
(cost $629,686)........................ 950 697,062
------------
NIGERIA--1.9%
Central Bank of Nigeria
6.25% Pars, 11/15/20 (a)
(cost $105,552)........................ 250 171,875
------------
Total Collateralized Brady Bonds
(cost $1,377,656)...................... 1,634,753
------------
LOAN PARTICIPATION &
ASSIGNMENT--14.6%
MOROCCO--3.8%
Kingdom of Morocco Restructuring &
Consolidation Loan Participation
7.375% (FRN), 1/01/09
(cost $321,174)........................ 400 330,250
------------
RUSSIA--10.8%
Vnesheconombank Loan Assignment
Zero Coupon, 9/14/04 *
(cost $883,533)........................ 1,200 957,750
------------
Total Loan Participation &
Assignment
(cost $1,204,707)...................... 1,288,000
------------
OTHER SOVEREIGN DEBT--35.1%
ARGENTINA--4.2%
Argentina Global
11.00%, 10/09/06
(cost $347,098)........................ $ 350 $ 368,375
------------
BRAZIL--5.3%
Republic of Brazil
6.5625% (FRN), 4/15/12
(cost $467,204)........................ 620 470,425
------------
BULGARIA--2.2%
Republic of Bulgaria
2.25% (FRN), 7/28/12
(cost $201,131)........................ 500 192,188
------------
CROATIA--2.2%
Republic of Croatia
6.6875% (FRN), 7/31/10
(cost $183,658)........................ 200 193,500
------------
MEXICO--2.0%
Mc-Cuernavaca Trust
9.25%, 7/25/01 (c)
(cost $176,570)........................ 203 179,853
------------
PANAMA--3.9%
Republic of Panama
3.50% IRB, 7/17/14 (c)
(cost $281,196)........................ 500 348,125
------------
PHILIPPINES--1.6%
Republic of Philippines
8.75%, 10/07/16 (c)
(cost $127,681)........................ 136 140,080
------------
POLAND--3.2%
Republic of Poland
4.00%, 10/27/14 (a)
(cost $223,776)........................ 330 280,088
------------
TRINIDAD & TOBAGO--0.6%
Republic of Trinidad & Tobago
11.75%, 10/03/04
(cost $49,730)......................... 50 56,000
------------
B-18
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
VENEZUELA--9.9%
Republic of Venezuela
6.50%, 12/18/07
(cost $867,337)........................ $ 1,000 $ 880,937
------------
Total Other Sovereign Debt
(cost $2,925,381)...................... 3,109,571
------------
Total Sovereign Debt Obligations
(cost $5,507,744)...................... 6,032,324
------------
CORPORATE DEBT
OBLIGATIONS--20.4%
FINANCIAL SERVICES--4.9%
App International Finance Company
B V Guaranteed Secured Note
11.75%, 10/01/05....................... 150 160,688
FSW International Finance Company
B V Guaranteed Secured Note
12.50%, 11/01/06 (c)................... 150 159,375
Home Holdings, Inc.
7.75%, 12/15/98........................ 200 89,000
8.625%, 12/15/03....................... 100 23,500
------------
Total Financial Services
(cost $579,998)........................ 432,563
------------
YANKEES--15.5%
AES China Generating Co., Ltd.
10.125%, 12/15/06...................... 500 518,750
Banco Nacional
7.25%, 2/02/04......................... $ 200 $ 176,750
Grupo Mexicano de Desarrollo
8.25%, 2/17/01......................... 240 146,100
Tevecap S.A.
12.625%, 11/26/04 (c).................. 300 307,875
Transportacion Maritima
Mexicana S.A.
9.25%, 5/15/03......................... 12 11,760
Zhuhai Highway Co.
11.50%, 7/01/08........................ 200 214,250
------------
Total Yankees
(cost $1,361,443)...................... 1,375,485
------------
Total Corporate Debt Obligations
(cost $1,941,441)...................... 1,808,048
------------
SHORT-TERM INVESTMENTS--8.0%
TIME DEPOSIT--8.0%
State Street Bank and Trust Co.
5.00%, 1/02/97
(amortized cost $703,000).............. 703 703,000
------------
TOTAL INVESTMENTS--96.6%
(cost $8,152,185)...................... 8,543,372
Other assets less liabilities--3.4%........ 304,034
------------
NET ASSETS--100.0%......................... $ 8,847,406
============
- -------------------------------------------------------------------------------
* Non-income producing security.
(a) Coupon will increase periodically based upon a predetermined schedule.
Stated interest rate in effect at December 31, 1996.
(b) Coupon will fluctuate based upon an interest rate index. Stated interest
rate in effect at December 31, 1996.
(c) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration normally applied to certain qualified buyers. At December 31,
1996, the aggregate market value of these securities amounted to
$1,135,308 or 12.8% of net assets.
See Glossary of Terms on page B-43.
See Notes to Financial Statements.
B-19
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
ARGENTINA--18.0%
GOVERNMENT OBLIGATIONS--18.0%
Republic of Argentina
Pensioner-Bocon Series I
3.41% (FRN), 4/01/01 (a)....... ARS 342 $ 295,304
3.41% (FRN), 4/01/07 (a)....... 3,779 2,659,735
Republic of Argentina
Pensioner-Bocon Series II
3.41% (FRN), 9/01/02 (a)....... 60 45,084
------------
Total Argentinian Securities
(cost $2,115,505).............. 3,000,123
------------
CANADA--15.3%
GOVERNMENT/AGENCY--15.3%
Government of Canada
6.50%, 6/01/04 (b)............. CA$ 850 633,555
8.00%, 6/01/23 (b)............. 500 406,594
Province of British Columbia
8.00%, 9/08/23 (b)............. 400 315,372
Province of Manitoba
7.75%, 12/22/25................ 450 348,557
Province of Ontario
8.25%, 12/01/05................ 275 223,727
Province of Quebec
7.75%, 3/30/06................. 325 253,250
Province of Saskatchewan
9.60%, 2/04/22................. 400 367,574
------------
Total Canadian Securities
(cost $2,367,769).............. 2,548,629
------------
MEXICO--16.3%
GOVERNMENT/AGENCY--16.3%
Mexican Treasury Bills
Zero Coupon, 1/23/97........... MXP 470 58,658
Zero Coupon, 3/06/97........... 3,778 457,758
Zero Coupon, 5/29/97........... 5,000 572,704
Zero Coupon, 6/05/97........... 14,390 1,640,661
------------
Total Mexican Securities
(amortized cost $2,753,629).... 2,729,781
------------
UNITED STATES--49.4%
U.S. TREASURY SECURITIES--26.0%
U.S. Treasury Notes
6.25%, 10/31/01................ US$ 1,300 $ 1,301,222
6.50%, 4/30/99................. 85 86,036
7.125%, 9/30/99................ 320 328,851
7.25%, 8/15/04................. 2,500 2,631,250
------------
4,347,359
------------
FEDERAL AGENCY -
MORTGAGES--1.1%
Government National
Mortgage Association
9.00%, 9/15/24................. 167 176,524
------------
FEDERAL AGENCY--3.9%
Federal Home Loan Bank
7.26%, 9/06/01................. 200 206,812
Federal Home Loan
Mortgage Corp.
6.13%, 8/19/99................. 150 150,000
Federal National Mortgage
Association
5.05%, 11/10/98................ 305 300,044
------------
656,856
------------
<PAGE>
TIME DEPOSIT--18.4%
State Street Bank and Trust Co.
5.00%, 1/02/97................. 3,062 3,062,000
------------
Total United States Securities
(cost $8,147,794).............. 8,242,739
------------
TOTAL INVESTMENTS--99.0%
(cost $15,384,697)............. 16,521,272
Other assets less liabilities--1.0% 174,378
------------
NET ASSETS--100.0%................. $ 16,695,650
============
- -------------------------------------------------------------------------------
(a) Coupon will fluctuate based upon an interest rate index. Stated interest
rate in effect at December 31, 1996.
(b) Securities segregated to collateralize forward exchange currency contracts
with an aggregate market value of $1,355,521.
See Glossary of Terms on page B-43.
See Notes to Financial Statements.
B-20
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
UTILITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
COMMON AND
PREFERRED STOCKS--89.7%
UNITED STATES INVESTMENTS--81.3%
CONSUMER SERVICES--10.5%
BROADCASTING &
CABLE--10.5%
AirTouch Communications, Inc.
4.25% conv. pfd........................ 13,000 $ 588,250
Cablevision Systems Corp. * .............. 20,000 410,000
Comcast Corp. Cl.A ...................... 18,000 320,625
TCI Group
$2.125 Series A conv. pfd.............. 6,200 242,187
------------
1,561,062
------------
ENERGY--0.8%
PIPELINES--0.8%
Enron Corp. ............................. 2,800 120,750
------------
TECHNOLOGY--15.5%
COMMUNICATIONS
EQUIPMENT--3.9%
Ericsson (L.M.) Telephone Co. ........... 5,600 169,050
Teleport Communications Group, Inc. *..... 13,600 414,800
------------
583,850
------------
TELECOMMUNICATIONS--11.6%
AT & T Corp. ............................ 15,760 685,560
Frontier Corp. ......................... 21,000 475,125
MCI Communications Corp. ................ 10,400 339,950
Telephone and Data Systems, Inc. ........ 6,000 217,500
------------
1,718,135
------------
2,301,985
------------
UTILITIES--54.5%
ELECTRIC & GAS--54.5%
AGL Resources, Inc. ...................... 6,100 128,863
Allegheny Power Systems, Inc. ............ 17,800 540,675
American Electric Power, Inc. ............ 11,300 464,712
Baltimore Gas & Electric Co. ............. 5,600 149,800
Brooklyn Union Gas Co. .................. 4,600 138,575
Carolina Power & Light Co. .............. 9,000 328,500
CINergy Corp. ........................... 16,700 557,362
CMS Energy Corp. ........................ 17,200 578,350
DPL, Inc. ............................... 14,000 343,000
DQE, Inc. ............................... 6,600 191,400
Edison International .................... 22,000 437,250
FPL Group, Inc. ......................... 10,600 487,600
Houston Industries, Inc. ................ 20,500 $ 463,812
Illinova Corp. .......................... 8,700 239,250
Ipalco Enterprises, Inc. ................ 10,500 286,125
MCN Corp. ............................... 4,600 132,825
New Jersey Resources Corp. .............. 4,400 128,700
Northwest Natural Gas Co. ............... 5,250 126,656
Pacific Enterprises ..................... 4,100 124,538
People's Energy Corp. ................... 3,600 121,950
Piedmont Natural Gas Co., Inc. .......... 5,100 119,213
Pinnacle West Capital Corp. ............. 12,500 396,875
Public Service Co. of New Mexico ........ 18,600 365,025
Questar Corp. ........................... 3,500 128,625
Southwest Gas Corp. ..................... 7,000 134,750
Texas Utilities Co. ..................... 8,400 342,300
Washington Gas Light Co. ................ 5,600 126,700
Wicor, Inc. ............................. 3,500 125,563
Williams Cos., Inc.
$3.5 conv. pfd. ...................... 4,700 387,750
------------
8,096,744
------------
Total United States Investments
(cost $11,446,118)..................... 12,080,541
------------
FOREIGN INVESTMENTS--8.4%
BRAZIL--1.9%
Light Participacoes, S.A. * .............. 600,000 145,511
Telecomunicacoes Brasileras
S.A. (ADR)............................. 1,800 137,700
------------
283,211
------------
CHILE--0.7%
Compania de Telecommunicaciones
de Chile S.A. (ADR).................... 1,100 111,237
------------
FINLAND--1.9%
Nokia Corp. (ADR)......................... 4,800 276,600
------------
HONG KONG--0.9%
Consolidated Electric Power Asia (ADR).... 58,800 137,982
------------
KOREA--0.8%
Korea Electric Power Corp. (ADR).......... 4,020 117,032
------------
MEXICO--1.4% Telefonos de Mexico S.A.
Series L (ADR)......................... 6,200 204,600
------------
B-21
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
UTILITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
PERU--0.8%
Telefonica del Peru S.A. (ADR)............ 62,000 $ 115,382
------------
Total Foreign Investments
(cost $984,113)........................ 1,246,044
------------
Total Common and Preferred Stocks
(cost $12,430,231)..................... 13,326,585
------------
CONVERTIBLE BONDS--5.4%
3Com Corp.
10.25%, 11/01/01 (a)................... 305 676,338
International Cabletel, Inc.
7.25%, 4/15/05 (a)..................... 115 123,481
------------
Total Convertible Bonds
(cost $596,950)........................ 799,819
------------
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
SHORT-TERM INVESTMENTS--3.3%
COMMERCIAL PAPER--3.3%
General Electric Capital Corp.
5.90%, 1/02/97
(amortized cost $499,918).............. $ 500 $ 499,918
------------
TOTAL INVESTMENTS--98.4%
(cost $13,527,099)..................... 14,626,322
Other assets less liabilities--1.6%........ 230,471
------------
NET ASSETS--100.0%......................... $ 14,856,793
============
- -------------------------------------------------------------------------------
* Non-income producing security.
(a) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration normally applied to certain qualified buyers. At December
31, 1996, the aggregate market value of these securities amounted to
$799,819 or 5.4% of net assets.
See Glossary of Terms on page B-43.
See Notes to Financial Statements.
B-22
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
COMMON AND
PREFERRED STOCKS--95.4%
BASIC INDUSTRIES--0.7%
CHEMICALS--0.5%
Grace (W.R.) & Co......................... 14,000 $ 724,500
------------
MINING & METALS--0.2%
Century Aluminum Co. ..................... 15,000 256,875
------------
981,375
------------
CAPITAL GOODS--0.6%
POLLUTION CONTROL--0.6%
WMX Technologies, Inc..................... 27,000 880,875
------------
CONSUMER SERVICES--14.7%
AIRLINES--2.0%
Continental Airlines, Inc.*............... 51,000 1,440,750
Delta Air Lines, Inc...................... 5,000 354,375
Northwest Airlines Corp. Cl.A*............ 13,200 516,450
UAL Corp.*................................ 7,000 437,500
------------
2,749,075
------------
BROADCASTING &
CABLE--3.3%
Argyle Television, Inc.*.................. 19,100 463,175
Comcast Corp. Cl.A........................ 51,000 908,438
Liberty Media Group Inc. Cl.A*............ 34,225 977,552
TCI Group Series A*....................... 159,300 2,080,856
TCI Satellite Entertainment, Inc.*........ 15,930 158,304
------------
4,588,325
------------
BUSINESS SERVICES--3.7%
ADT Ltd.*................................. 65,000 1,486,875
CUC International, Inc.*.................. 151,950 3,608,812
------------
5,095,687
------------
ENTERTAINMENT &
LEISURE--0.7%
ITT Corp.*................................ 24,200 1,049,675
------------
RESTAURANTS &
LODGING--0.4%
American General Hospitality Corp......... 21,000 498,750
------------
RETAILING--4.6%
AutoZone, Inc.*........................... 90,100 2,477,750
CompUSA, Inc.*............................ 85,900 1,771,687
Micro Warehouse, Inc.*.................... 21,700 252,263
Sears, Roebuck & Co....................... 13,000 599,625
Wal-Mart Stores, Inc...................... 57,000 1,303,875
------------
6,405,200
------------
20,386,712
------------
CONSUMER STAPLES--1.8%
TOBACCO--1.8%
Loews Corp................................ 25,800 $ 2,431,650
------------
ENERGY--2.9%
OIL & GAS SERVICES--2.9%
Gulf Canada Resources Ltd.*............... 359,000 2,647,625
Nabors Industries, Inc.*.................. 69,000 1,328,250
------------
3,975,875
------------
FINANCE--26.7%
BANKING & CREDIT--12.4%
American Express Co....................... 56,000 3,164,000
Chase Manhattan Corp...................... 30,320 2,706,060
First Chicago NBD Corp.................... 22,900 1,230,875
First Union Corp.......................... 33,000 2,442,000
Household International, Inc.............. 15,100 1,392,975
J.P. Morgan & Co., Inc.................... 1,900 185,487
MBNA Corp................................. 27,000 1,120,500
Mercury Finance Co........................ 211,000 2,584,750
NationsBank Corp.......................... 25,000 2,443,750
------------
17,270,397
------------
INSURANCE--8.1%
20th Century Industries, Inc.............. 58,000 978,750
Acceptance Insurance Co.*................. 114,000 2,251,500
American International Group, Inc......... 31,350 3,393,637
PMI Group, Inc............................ 3,300 182,738
Progressive Corp.......................... 16,600 1,118,425
Travelers Group, Inc...................... 71,666 3,251,845
------------
11,176,895
------------
REAL ESTATE--5.5%
Arden Realty Group, Inc................... 40,000 1,110,000
Castle & Cooke, Inc.*..................... 35,000 555,625
Humphrey Hospitality Trust, Inc........... 78,100 678,494
JP Realty, Inc............................ 38,000 983,250
Koger Equity, Inc......................... 100,000 1,875,000
Macerich Co............................... 52,500 1,371,562
Prentiss Properties Trust................. 29,000 725,000
Summit Properties, Inc.................... 15,000 331,875
------------
7,630,806
------------
OTHER--0.7%
Dean Witter, Discover & Co................ 15,300 1,013,625
------------
37,091,723
------------
B-23
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
HEALTH CARE--6.7%
BIOTECHNOLOGY--0.1%
Gensia, Inc. (a)*......................... 8,000 $ 147,016
------------
DRUGS--4.5%
Biogen, Inc.*............................. 21,000 811,125
Merck & Co., Inc.......................... 39,900 3,162,075
Pfizer, Inc............................... 20,000 1,657,500
Schering-Plough Corp...................... 9,000 582,750
------------
6,213,450
------------
MEDICAL PRODUCTS--0.3%
Boston Scientific Corp.*.................. 8,100 486,000
------------
MEDICAL SERVICES--1.8%
Medtronic, Inc............................ 20,600 1,400,800
Quest Medical, Inc.*...................... 38,000 299,250
Saint Jude Medical, Inc.*................. 17,900 762,988
------------
2,463,038
------------
9,309,504
------------
TECHNOLOGY--38.7%
COMMUNICATIONS
EQUIPMENT--4.1%
Anixter International, Inc.*.............. 30,000 483,750
EMC Corp.*................................ 70,000 2,318,750
Loral Space & Communications*............. 27,000 496,125
Millicom International Cellular, S.A.*.... 16,500 529,031
Teleport Communications Group, Inc.*...... 61,700 1,881,850
------------
5,709,506
------------
COMPUTER HARDWARE--0.8%
Compaq Computer Corp.*.................... 15,500 1,150,875
------------
COMPUTER PERIPHERALS--1.0%
Seagate Technology, Inc.*................. 36,000 1,422,000
------------
COMPUTER SOFTWARE &
SERVICES--10.1%
Cabletron Systems, Inc.*.................. 20,200 671,650
Ceridian Corp.*........................... 99,500 4,029,750
Electronic Data Systems Corp. ............ 40,000 1,730,000
Microsoft Corp.*.......................... 30,000 2,480,625
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
Oracle Corp.*............................. 1,800 $ 75,038
Sterling Commerce, Inc.*.................. 79,789 2,812,562
Sterling Software, Inc.*.................. 70,100 2,216,912
------------
14,016,537
------------
NETWORK SOFTWARE--8.4%
3Com Corp.*............................... 64,700 4,743,319
Cisco Systems, Inc.*...................... 108,000 6,878,250
------------
11,621,569
------------
SEMI-CONDUCTORS &
RELATED--5.2%
Cypress Semiconductor Corp.*.............. 40,000 565,000
Intel Corp................................ 51,000 6,677,812
------------
7,242,812
------------
TELECOMMUNICATIONS--9.1%
Colt Telecom Group Plc (ADR)*............. 85,000 1,646,875
Deutsche Telekom AG*...................... 41,800 851,675
Frontier Corp............................. 21,000 475,125
MFS Communications, Inc. * ............... 122,887 6,681,981
MFS Communications, Inc.
8.00% conv. pfd........................ 12,000 1,102,500
Telephone and Data Systems, Inc........... 42,900 1,555,125
U.S. Cellular Corp.*...................... 8,000 223,000
------------
12,536,281
------------
53,699,580
------------
TRANSPORTATION--2.6%
RAILROADS--2.6%
Canadian Pacific, Ltd..................... 116,000 3,074,000
Union Pacific Corp........................ 8,853 532,287
------------
3,606,287
------------
Total Common and Preferred Stocks
(cost $112,565,228).................... 132,363,581
------------
CONVERTIBLE BONDS--1.0%
3Com Corp.
10.25%, 11/01/01 (a)................... $ 400 887,000
Altera Corp.
5.75%, 6/15/02 (a)..................... 335 517,575
------------
Total Convertible Bonds
(cost $985,802)........................ 1,404,575
------------
B-24
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
SHORT-TERM INVESTMENTS--4.3%
U.S. GOVERNMENT
OBLIGATIONS--4.3%
Federal Home Loan Mortgage Corp.
5.70%, 1/02/97
(amortized cost $5,899,066)............ $ 5,900 $ 5,899,066
------------
TOTAL INVESTMENTS--100.7%
(cost $119,450,096).................... $139,667,222
Other assets less liabilities--(0.7%)...... (979,331)
------------
NET ASSETS--100.0%......................... $138,687,891
============
- -------------------------------------------------------------------------------
* Non-income producing security.
(a) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration normally applied to certain qualified buyers. At December
31, 1996, the aggregate market value of these securities amounted to
$1,551,591 or 1.1% of net assets.
See Glossary of Terms on page B-43.
See Notes to Financial Statements.
B-25
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
WORLDWIDE PRIVATIZATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
COMMON STOCKS AND
OTHER INVESTMENTS--83.5%
ARGENTINA--0.8%
Central Costanera................... 25,000 $ 76,515
Dycasa Dragados S.A................. 10,000 37,008
Metrogas S.A. (ADR)................. 3,000 28,125
------------
141,648
------------
AUSTRALIA--3.1%
CSL Ltd............................. 70,000 331,055
Qantas Airways Ltd.................. 51,867 86,576
TAB Corp. Holdings Ltd.............. 35,000 166,918
------------
584,549
------------
AUSTRIA--4.2%
Austria Mikro Systeme
International AG ................ 1,460 112,717
Bohler-Uddeholm..................... 1,000 71,571
Creditanstalt-Bankverein............ 2,000 135,384
Flughafen Wien AG................... 2,600 132,539
V.A. Stahl AG....................... 2,900 103,161
V.A. Technologies AG................ 1,450 227,573
------------
782,945
------------
BELGIUM--0.3%
Credit Communal de Belgique S.A.*... 600 54,747
------------
BRAZIL--7.8%
Bardella S.A........................ 500 47,633
Celgon Centrais Eletricas Goias
S.A. Series B pfd.* ............. 1,205,000 66,112
Centrais Elet Sta Catali*........... 121,501 113,421
Companhia Energetica de Sao
(ADR)*........................... 5,000 57,500
Companhia Paulista de Forca e Luz*.. 1,550,000 183,476
preferred rights, expiring 1/15/97* 6,101 0
Iven S.A.*.......................... 200,000 96,045
Light Participacoes S.A.*........... 500,000 121,259
Light Servicos de Eletricid S.A..... 500,000 177,557
Sider Nacional Cia.................. 1,480,000 42,017
Siderurgica Riograndense S.A........ 3,437,727 57,566
Telecomunicacoes Brasileras
S.A. (ADR) ...................... 3,900 300,262
Telecomunicacoes de
Sao Paulo S.A.*.................. 450,000 97,271
Vale Rio Doce Cia................... 5,360 103,166
------------
1,463,285
------------
CANADA--2.2%
Alberta Energy Ltd.................. 5,000 119,769
Canadian National Railway Co........ 3,100 117,800
Petro-Canada........................ 11,900 167,728
------------
405,297
------------
CHILE--0.4%
Compania de Telecomunicaciones
de Chile S.A. (ADR) ............. 400 $ 40,450
Enersis S.A. Sponsored (ADR)........ 1,000 27,750
------------
68,200
------------
COLUMBIA--0.2%
Banco de Columbia (GDR)............. 5,000 36,875
------------
CZECH REPUBLIC--1.1%
Ceske Radiokomunikace*.............. 350 49,044
CEZ (GDR)*.......................... 1,000 35,997
Komercni Banka A.S. (GDR)*.......... 1,500 39,900
Podnik Vypocetni Techniky*.......... 250 43,203
Tabak A.S.*......................... 150 37,780
------------
205,924
------------
DENMARK--0.3%
Kobenhavn Lufthave.................. 600 61,112
------------
EGYPT--0.3%
Commercial International
Bank (GDR)*...................... 3,600 49,860
------------
FINLAND--1.4%
Merita Ltd. Series A*............... 25,000 77,717
OY Tamro AB......................... 10,000 66,739
Valmet Co........................... 7,000 123,261
------------
267,717
------------
FRANCE--3.1%
Renault S.A......................... 4,000 85,959
Seita............................... 1,500 62,735
Soc Nacionale Elf Aquitaine S.A..... 1,500 136,542
Societe Centrale des Assurances
Generales de France ............. 1,750 56,495
Usinor Sacilor...................... 16,700 243,009
------------
584,740
------------
GERMANY--4.8%
Bankgesellschaft Berlin AG.......... 550 10,008
Deutsche Lufthansa AG............... 28,000 382,116
Deutsche Telekom AG*................ 14,080 296,917
Viag AG............................. 57 21,669
Viag AG (VAR)....................... 500 196,257
------------
906,967
------------
GHANA--0.3%
Ashanti Goldfields Co. Ltd. (GDR) .. 5,000 61,875
------------
GREECE--0.7%
Hellenic Sugar Industrie S.A........ 6,000 55,693
Hellenic Telecommunication
Organization S.A. ............... 5,000 85,424
------------
141,117
------------
B-26
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
WORLDWIDE PRIVATIZATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
HONG KONG--0.3%
Guangshen Railway Co. Ltd.
(ADR)*........................... 2,500 $ 51,563
------------
HUNGARY--1.8%
Mol Magyar Olaj Es Gazipari
Right (GDR) (a) ................. 9,000 111,600
OTP Bank (GDR)...................... 4,000 71,000
Tiszai Vegyi Kombinat Rt (GDR)*..... 9,000 100,800
Zalakeramia AG...................... 1,300 55,071
------------
338,471
------------
INDIA--0.6%
Industrial Credit & Investment Corp.
of India Ltd. (GDR)* (a) ........ 3,000 28,500
State Bank of India (GDR)*.......... 2,000 33,740
Steel Authority India (GDR)......... 6,000 54,600
------------
116,840
------------
INDONESIA--2.0%
Indosat............................. 70,000 192,634
PT Telekomunikasi Indonesia......... 22,000 37,955
PT Telekomunikasi Indonesia
(ADR)............................ 3,000 103,500
Tambang Timah (GDR)................. 2,000 35,200
------------
369,289
------------
IRELAND--0.9%
Greencore Group..................... 15,000 96,085
Irish Life Plc (Dublin Listing)..... 17,558 81,378
------------
177,463
------------
ISRAEL--0.6%
Bank Hapoalim B.M.*................. 38,000 60,227
Tadiran Ltd. (ADR).................. 2,000 56,250
------------
116,477
------------
ITALY--3.6%
Ente Nazionale Idrocarburi S.p.A.... 40,000 205,273
IMI LNV............................. 16,000 137,113
Instituto Nazionale delle
Assicurazioni ................... 70,000 91,180
Telecom Italia Mobile*.............. 25,000 63,200
Telecom Italia Mobile di Risp....... 50,000 97,561
Telecom Italia Mobile di Risp S.p.A. 55,000 78,494
------------
672,821
------------
JAPAN--2.3%
DDI Corp............................ 30 198,429
East Japan Railway Co............... 30 134,962
Japan Tobacco, Inc.................. 15 101,675
------------
435,066
------------
KOREA--2.9%
Korea Electric Power Corp. (ADR).... 4,000 $ 82,000
Korea Mobile Telecommunications
Corp. (ADR)* (a) ................ 36,359 468,122
------------
550,122
------------
MALAYSIA--0.4%
Petronas Gas Bhd.................... 20,000 83,152
------------
MEXICO--2.1%
ALFA S.A. de C.V.*.................. 25,000 116,552
Grupo Financiero Bancomer
S.A. de C.V. Series B Npv* ...... 200,000 80,030
Grupo Financiero Bancomer
S.A. de C.V. Series L Npv* ...... 1,315 443
Grupo Financiero Banorte*........... 55,000 54,497
Telefonos de Mexico S.A.
Series L (ADR) * ................ 4,500 148,500
------------
400,022
------------
NETHERLANDS--3.4%
Akzo Nobel N.V...................... 2,000 273,385
European Vinyls Corp.
International N.V. .............. 3,200 101,570
KLM Royal Dutch Airlines N.V........ 3,992 112,373
Koninkluke PTT Nederland N.V........ 4,000 152,679
------------
640,007
------------
NEW ZEALAND--2.2%
Telecom Corp. of New Zealand Ltd.... 18,000 91,877
Tranz Rail Holdings Ltd.*........... 36,500 221,916
Trustpower Ltd...................... 60,400 106,751
------------
420,544
------------
NORWAY--1.6%
Christiana Bank OG Kreditkasse...... 30,000 94,054
Den Norske Bank..................... 25,000 94,675
Norsk Hydro ASA..................... 2,000 107,091
------------
295,820
------------
PAKISTAN--0.4%
Hub Power Co. (GDR)*................ 2,000 38,500
Pakistan Telecom C (GDR)*........... 500 30,000
------------
68,500
------------
PERU--1.0%
Cementos Norte Pacasmay Series C.... 33,316 44,779
Cementos Norte Pacasmay Series I.... 20,000 28,183
Telefonica del Peru S.A............. 62,000 115,382
------------
188,344
------------
PHILIPPINES--2.5%
First Philippines Holdings Corp..... 59,000 134,601
B-27
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
WORLDWIDE PRIVATIZATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
International Container
Terminal Svc.* .................. 150,000 $ 78,422
Manila Electric Co.................. 32,000 261,597
------------
474,620
------------
POLAND--0.7%
Banka Przenyslowo Handlowy.......... 1,000 64,518
Elektrim S.A........................ 8,000 72,540
------------
137,058
------------
PORTUGAL--0.5%
Portugal Telecom S.A................ 3,000 85,521
------------
RUSSIA--2.5%
Gazprom (ADR)* (a).................. 6,000 106,500
RNGS Holdings Ltd., pfd.*........... 1,000 360,161
------------
466,661
------------
SOUTH AFRICA--0.5%
Iscor Ltd........................... 121,621 86,826
------------
SPAIN--2.8%
Argentaria S.A...................... 2,000 89,505
Emp Nac Electricid.................. 2,000 142,345
Empresa Nacional de Celulosas S.A... 7,000 83,844
Gas Natural SDG S.A................. 400 93,048
Repsol S.A.......................... 3,200 122,750
------------
531,492
------------
SWEDEN--0.5%
Sparbanken Sverige AB Cl.A (a)...... 5,000 85,778
------------
THAILAND--1.0%
Electricity Generating Public
of Thailand ..................... 10,000 27,294
Industrial Finance of Thailand...... 10,000 26,710
Industrial Finance of Thailand
(Foreign) ....................... 50,000 135,499
------------
189,503
------------
TURKEY--0.9%
Eregli Demirve Celik
Fabrikalari T.A.S. .............. 500,000 59,935
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
Petkim Petrokimya Holdings A.S...... 75,000 $ 30,083
Tupras Turkiye Petrol
Rafinerileri A.S.* .............. 150,000 37,344
Usas Ucak Servisi A.S............... 25,000 50,715
------------
178,077
------------
UNITED KINGDOM--11.4%
Anglian Water Plc................... 20,700 208,525
British Energy Plc.................. 223,000 557,786
East Midlands Electricity Plc....... 3,000 34,024
National Grid Group Plc............. 103,411 345,471
National Power Plc.................. 17,000 142,128
Northern Ireland Electricity Plc.... 17,000 110,091
Powergen Plc........................ 18,244 178,783
RJB Mining Plc...................... 6,000 43,871
Scottish Hydro Electric Plc......... 14,000 78,431
Stagecoach Holdings Plc............. 27,172 325,859
Wessex Water Plc.................... 17,333 110,466
------------
2,135,435
------------
UNITED STATES--3.1%
Central European Media
Enterprises Ltd.* ............... 2,000 63,000
Pharmacia & Upjohn, Inc............. 13,100 519,088
------------
582,088
------------
Total Common Stocks and
Other Investments
(cost $14,365,779)............... 15,694,418
------------
SHORT-TERM INVESTMENTS--14.1%
TIME DEPOSIT--14.1%
State Street Bank and Trust Co.
5.00%, 1/02/97
(amortized cost $2,652,000)...... $ 2,652 2,652,000
------------
TOTAL INVESTMENTS--97.6%
(cost $17,017,779)............... 18,346,418
Other assets less liabilities--2.4%. 460,395
------------
NET ASSETS--100.0%.................. $ 18,806,813
============
- -------------------------------------------------------------------------------
* Non-income producing security.
(a) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration normally applied to certain qualified buyers. At December
31, 1996, the aggregate market value of these securities amounted to
$800,500 or 4.3% of net assets.
See Glossary of Terms on page B-43.
See Notes to Financial Statements.
B-28
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
COMMON STOCKS AND
OTHER INVESTMENTS--29.7%
BASIC INDUSTRIES--1.0%
CHEMICALS--0.6%
Akzo Nobel N.V............................ 300 $ 41,008
Bayer AG.................................. 700 28,568
Cytec Industries, Inc.*................... 250 10,156
Freeport McMoran, Inc..................... 900 28,912
Monsanto Co............................... 800 31,100
Olin Corp................................. 100 3,763
------------
143,507
------------
CONTAINERS--0.2%
Crown Cork & Seal, Inc.
4.5% conv. pfd........................ 800 43,500
------------
METALS & MINING--0.2%
Reynolds Metals Co........................ 625 35,234
------------
PAPER & FOREST
PRODUCTS--0.0%
Louisiana-Pacific Corp. .................. 300 6,338
------------
228,579
------------
CAPITAL GOODS--2.2%
ELECTRICAL EQUIPMENT--1.0%
General Electric Co....................... 1,000 98,875
Hitachi Ltd............................... 5,000 46,628
Matsushita Electric Industrial Co., Ltd... 2,000 32,640
Sharp Corp................................ 1,000 14,248
Sumitomo Electric Industries.............. 1,000 13,988
------------
206,379
------------
ENGINEERING &
CONSTRUCTION--0.3%
American Standard Cos., Inc.*............. 600 22,950
Bouygues.................................. 4 415
Martin Marietta Materials, Inc............ 200 4,650
Matsushita Electric Works................. 1,000 8,609
National House Industrial Co.............. 1,000 13,297
Uralita S.A............................... 600 4,691
------------
54,612
------------
MACHINERY--0.4%
Allied-Signal, Inc........................ 1,200 80,400
Coltec Industries, Inc.*.................. 600 11,325
------------
91,725
------------
POLLUTION CONTROL--0.5%
Republic Industries, Inc.*................ 350 10,916
USA Waste Services, Inc.*................. 1,800 $ 57,375
WMX Technologies, Inc. ................... 1,500 48,937
------------
117,228
------------
469,944
------------
CONSUMER
MANUFACTURING--0.5%
AUTO & RELATED--0.2%
Bajaj Auto Ltd. (GDR) (a)................. 200 6,650
Magneti Marelli S.p.A. ................... 11,700 14,538
Toyota Corp............................... 1,000 28,754
------------
49,942
------------
OTHER--0.3%
Fuji Photo Film........................... 1,000 32,985
Shimano, Inc.............................. 1,000 17,011
------------
49,996
------------
99,938
------------
CONSUMER SERVICES--4.0%
AIRLINES--0.2%
Deutsche Lufthansa AG..................... 1,200 16,376
Northwest Airlines Corp. Cl.A*............ 700 27,388
------------
43,764
------------
APPAREL--0.1%
Cone Mills Corp.*......................... 1,500 11,812
------------
BROADCASTING &
CABLE--0.6%
Cablevision Systems Corp. Cl.A*........... 700 21,437
Indonesian Satellite Corp. (ADR).......... 500 13,688
Liberty Media Group, Inc. Cl.A*........... 200 5,713
Reuters Holdings Plc...................... 2,000 25,715
Societe Television Francaise.............. 330 31,547
Viacom, Inc. Cl.B*........................ 1,005 35,049
------------
133,149
------------
ENTERTAINMENT &
LEISURE--0.6%
Carnival Corp. Cl.A....................... 100 3,300
ITT Corp.*................................ 400 17,350
Resorts World Bhd......................... 3,000 13,661
Time Warner, Inc.......................... 600 22,500
Walt Disney Co............................ 1,170 81,461
------------
138,272
------------
PRINTING & PUBLISHING--0.2%
New York Times Co. Cl.A................... 1,300 49,400
------------
B-29
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
RESTAURANTS &
LODGING--0.5%
Brinker International, Inc.*.............. 2,050 $ 32,800
Host Marriott Corp.*...................... 2,000 32,000
La Quinta Inns, Inc....................... 1,800 34,425
------------
99,225
------------
RETAILING--1.8%
AutoZone, Inc.*........................... 3,100 85,250
CompUSA, Inc.*............................ 2,800 57,750
Dayton Hudson Corp........................ 1,200 47,100
Federated Department Stores, Inc.*........ 1,000 34,125
Fingerhut Cos., Inc....................... 1,400 17,150
Hornbach Holding AG pfd................... 400 28,594
PT Ramayana Lestari Sentosa*.............. 500 1,079
Reebok International Ltd.................. 1,975 82,950
Sears Plc................................. 16,000 25,767
Woolworths Ltd............................ 8,000 19,267
------------
399,032
------------
874,654
------------
CONSUMER STAPLES--3.7%
BEVERAGES--0.4%
Cadbury Schweppes Plc..................... 3,000 25,338
Grand Metropolitan Plc.................... 3,500 27,463
Kirin Brewery Co., Ltd.................... 4,000 39,375
------------
92,176
------------
COSMETICS--0.6%
Colgate-Palmolive Co...................... 625 57,656
Gillette Co............................... 695 54,036
Shiseido Co., Ltd......................... 2,000 23,142
------------
134,834
------------
FOOD--1.0%
Campbell Soup Co.......................... 700 56,175
Coca-Cola Co.............................. 1,100 57,888
Ezaki Glico Co............................ 2,000 17,270
Nabisco Holdings Corp. Cl.A............... 1,325 51,509
Nestle S.A................................ 26 27,913
------------
210,755
------------
HOUSEHOLD PRODUCTS--0.5%
First Brands Corp......................... 750 21,281
Sunbeam Corp.............................. 3,700 95,275
------------
116,556
------------
RETAIL - FOOD--0.2%
Tesco Plc................................. 7,400 44,879
------------
TOBACCO--1.0%
B.A.T. Industries Plc..................... 3,000 $ 24,876
Loews Corp................................ 200 18,850
Philip Morris Cos., Inc................... 1,290 145,286
PT Hanjaya Mandala Sampoerna ............. 3,000 16,004
------------
205,016
------------
804,216
------------
ENERGY--2.8%
DOMESTIC INTEGRATED--0.5%
Exxon Corp................................ 1,100 107,800
------------
OIL & GAS SERVICES--2.3%
Apache Corp............................... 1,100 38,912
Baker Hughes, Inc......................... 1,600 55,200
BJ Services Co.*.......................... 1,600 81,600
Halliburton Co............................ 350 21,088
Louisiana Land & Exploration Co........... 700 37,538
Nabors Industries, Inc.*.................. 2,200 42,350
Noble Drilling Corp.*..................... 800 15,900
Schlumberger Ltd.......................... 650 64,919
Total S.A. Cl.B........................... 206 16,755
Transocean Offshore, Inc.................. 900 56,362
Union Pacific Corp........................ 800 48,100
Union Pacific Resources Group, Inc........ 677 19,802
------------
498,526
------------
606,326
------------
FINANCE--4.6%
BANKING & CREDIT--1.8%
American Express Co....................... 1,600 90,400
Bangkok Bank Public Co., Ltd.............. 700 6,769
Bank of Tokyo - Mitsubishi, Ltd........... 1,000 18,565
Beneficial Corp........................... 250 15,844
BG Bank A/S............................... 300 14,056
Compagnie de Suez S.A.*................... 200 8,504
Dao Heng Bank Group Ltd................... 3,000 14,390
Deutsche Bank AG.......................... 700 32,707
First Union Corp.......................... 1,300 96,200
MBNA Corp................................. 1,900 78,850
Sakura Bank Ltd........................... 2,000 14,299
Sparbanken Sverige AB A Shares ........... 500 8,578
------------
399,162
------------
BROKERAGE & MONEY
MANAGEMENT--0.5%
Merrill Lynch & Co., Inc.................. 800 65,200
Nomura Securities Co., Ltd................ 2,000 30,049
------------
95,249
------------
B-30
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
INSURANCE--1.6%
General Accident Plc...................... 2,000 $ 26,178
Internationale Nederlanden Groep N.V.*.... 1,062 38,260
Istituto Nazionale delle Assicurazioni.... 16,000 20,841
ITT Hartford Group, Inc................... 100 6,750
MGIC Investment Corp...................... 300 22,800
Penncorp Financial Group, Inc............. 1,100 39,600
PMI Group, Inc............................ 100 5,538
TIG Holdings, Inc......................... 1,000 33,875
Tokio Marine and Fire Co., Ltd.*.......... 2,000 18,824
Travelers Group, Inc...................... 2,700 122,512
United Assurance Group Plc*............... 1,300 10,690
Scrip*................................. 3,900 0
Zurich Versicherungsgesellschaft.......... 30 8,338
------------
354,206
------------
REAL ESTATE--0.1%
Daito Trust Construction.................. 2,400 26,733
------------
OTHER--0.6%
Associates First Capital Corp.*........... 1,000 44,125
Dean Witter, Discover & Co................ 1,300 86,125
------------
130,250
------------
1,005,600
------------
HEALTH CARE--3.7%
BIOTECHNOLOGY--0.3%
Centocor, Inc.*........................... 1,643 58,840
------------
DRUGS--2.2%
Amgen, Inc.*.............................. 800 43,550
Biogen, Inc.*............................. 1,501 57,976
GelTex Pharmaceuticals, Inc.*............. 200 4,800
Merck & Co., Inc.......................... 1,100 87,175
Novartis AG *............................. 21 24,432
Orion-Yhtymne OY Cl.B..................... 200 7,696
Pfizer, Inc............................... 1,000 82,875
Smithkline Beecham Plc.................... 2,330 48,501
Taisho Pharmaceutical Co.................. 1,000 23,573
UniChem Plc............................... 5,000 21,029
Warner-Lambert Co......................... 400 30,000
Yamanouchi Pharmaceutical................. 2,000 41,102
------------
472,709
------------
MEDICAL PRODUCTS--0.3%
Fresenius Medical Care AG*................ 250 21,396
Medtronic, Inc............................ 760 51,680
------------
73,076
------------
MEDICAL SERVICES--0.9%
Columbia/HCA Healthcare Corp.............. 2,000 $ 81,500
Oxford Health Plans, Inc.*................ 900 52,706
Pacificare Health Systems, Inc.*.......... 300 25,538
Steris Corp.*............................. 868 37,812
------------
197,556
------------
802,181
------------
MULTI INDUSTRY--0.6%
Berjaya Sports Toto Bhd................... 2,000 9,978
BTR Plc................................... 3,598 17,568
Compagnie Generale des Eaux............... 203 25,157
Swire Pacific Ltd. Cl.A................... 1,000 9,535
U.S. Industries, Inc.*.................... 1,700 58,438
------------
120,676
------------
TECHNOLOGY--5.6%
AEROSPACE & DEFENSE--0.3%
Boeing Co................................. 400 42,550
United Technologies Corp.................. 400 26,400
------------
68,950
------------
COMMUNICATIONS
EQUIPMENT--0.3%
Nokia Corp. (ADR)......................... 400 23,050
Scientific-Atlanta, Inc................... 1,500 22,500
Vanguard Cellular Systems, Inc.*.......... 1,000 15,625
------------
61,175
------------
COMPUTER HARDWARE--0.2%
Compaq Computer Corp.*.................... 600 44,550
------------
COMPUTER PERIPHERALS--0.1%
Seagate Technology, Inc.*................. 700 27,650
------------
COMPUTER SOFTWARE &
SERVICES--1.8%
Ceridian Corp.*........................... 1,000 40,500
Electronic Data Systems Corp. ............ 550 23,787
First Data Corp........................... 1,000 36,500
Informix Corp.*........................... 3,400 69,487
Intergraph Corp.*......................... 1,500 15,563
Microsoft Corp.*.......................... 600 49,612
Netscape Communications Corp.*............ 600 34,125
Oracle Corp.*............................. 1,712 71,369
Sterling Commerce, Inc.*.................. 477 16,814
Sterling Software, Inc.*.................. 300 9,488
Storage Technology Corp.*................. 200 9,525
The Learning Co., Inc.*................... 500 7,188
------------
383,958
------------
B-31
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
NETWORK SOFTWARE--1.1%
3Com Corp.*............................... 1,600 $ 117,300
Cisco Systems, Inc.*...................... 1,900 121,006
------------
238,306
------------
OFFICE EQUIPMENT &
SERVICES--0.2%
Canon, Inc................................ 2,000 44,210
------------
SEMI-CONDUCTORS &
RELATED--0.8%
Altera Corp.*............................. 1,050 76,322
Intel Corp................................ 500 65,469
National Semiconductor Corp.*............. 500 12,187
Teradyne, Inc.*........................... 500 12,188
Texas Instruments, Inc.................... 100 6,375
------------
172,541
------------
TELECOMMUNICATIONS--0.8%
Asia Satellite Telecom Ltd.*.............. 8,000 18,566
British Telecommunications Plc............ 3,000 20,302
Deutsche Telekom AG*...................... 1,000 20,375
Frontier Corp............................. 600 13,575
Korea Mobile Telecommunications
Corp. (ADR) (a)........................ 2,575 33,153
MFS Communications, Inc.*................. 400 21,750
Telecom Corp. of New Zealand Ltd.......... 3,000 15,313
Telephone and Data Systems, Inc........... 700 25,375
WorldCom, Inc.* (a)....................... 400 10,425
------------
178,834
------------
1,220,174
------------
TRANSPORTATION--0.5%
RAILROADS--0.5%
Burlington Northern Santa Fe.............. 400 34,550
Canadian Pacific, Ltd..................... 2,700 71,550
------------
106,100
------------
TRUCKING--0.0%
Nippon Express Co., Ltd................... 2,000 13,712
------------
119,812
------------
UTILITIES--0.5%
ELECTRIC & GAS--0.5%
CINergy Corp.............................. 500 16,688
FPL Group, Inc............................ 800 36,800
Hong Kong and China Gas Co., Ltd.
warrants, expiring 9/30/97 *........... 500 278
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
Tokyo Electric Power Co................... 1,000 $ 21,932
Veba AG................................... 400 23,135
------------
98,833
------------
Total Common Stocks and
Other Investments
(cost $5,798,773)...................... 6,450,933
------------
CORPORATE BONDS--11.5%
Bear Stearns Cos., Inc.
6.75%, 5/01/01......................... $ 200 200,474
Chase Manhattan Corp.
6.25%, 1/15/06......................... 200 189,418
Deutsche Bank Financial, Inc.
6.70%, 12/13/06........................ 350 343,525
John Hancock Mutual Life
Insurance Co.
7.375%, 2/15/24 (a).................... 300 289,161
RAS Laffan Liquefied Natural Gas
8.294%, 9/15/14 (a).................... 350 357,000
St. George Bank Ltd.
7.15%, 10/15/05 (a).................... 425 424,328
Time Warner, Inc.
9.15%, 2/01/23......................... 315 341,457
Zions Institutional Capital Trust A
8.536%, 12/15/26 (a)................... 350 360,626
------------
Total Corporate Bonds
(cost $2,475,064)...................... 2,505,989
------------
U.S. GOVERNMENT
OBLIGATIONS--38.2%
Federal Home Loan Bank
7.00%, 9/01/11......................... 483 483,142
Federal National Mortgage Association
6.00%, 4/01/11......................... 483 464,685
6.50%, 6/01/11......................... 338 332,198
7.00%, 5/01/26......................... 608 594,550
U.S. Treasury Bond
6.50%, 11/15/26........................ 190 186,468
U.S. Treasury Notes
5.75%, 10/31/00........................ 1,440 1,420,877
5.75%, 8/15/03......................... 895 868,150
6.25%, 10/31/01........................ 610 610,573
6.375%, 5/15/99........................ 2,795 2,819,009
6.50%, 8/15/05......................... 145 145,929
7.75%, 12/31/99........................ 355 371,309
------------
B-32
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
Total U.S. Government Obligations
(cost $8,281,724)...................... $ 8,296,890
------------
YANKEE--1.8%
Province of Quebec
7.125%, 2/09/24
(cost $358,282)........................ $ 400 383,016
------------
SHORT-TERM INVESTMENTS--17.9%
U.S. GOVERNMENT
OBLIGATIONS--17.9%
Federal Home Loan Mortgage Corp.
5.70%, 1/02/97
(amortized cost $3,899,383)............ 3,900 3,899,383
------------
TOTAL INVESTMENTS--99.1%
(cost $20,813,226)..................... $ 21,536,211
Other assets less liabilities--0.9%........ 192,982
------------
NET ASSETS--100.0%......................... $ 21,729,193
============
DISTRIBUTION OF INVESTMENTS BY GLOBAL REGION
AS A PERCENT OF TOTAL INVESTMENTS
Canada.................................... 2.1%
Japan..................................... 2.5
New Zealand and Australia................. 0.2
Scandinavia............................... 0.2
Southeast Asia............................ 0.4
United Kingdom............................ 1.4
United States**........................... 90.9
Other European Countries.................. 2.3
--------
100.0%
========
** Includes Short-Term Investments of 18.1%.
- -------------------------------------------------------------------------------
* Non-income producing security.
(a) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration normally applied to certain qualified buyers. At December
31, 1996, the aggregate market value of these securities amounted to
$1,481,343 or 6.8% of net assets.
See Glossary of Terms on page B-43.
See Notes to Financial Statements.
B-33
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
COMMON STOCKS AND
OTHER INVESTMENTS--75.0%
BASIC INDUSTRIES--3.3%
CHEMICALS--2.6%
Akzo Nobel N.V........................... 400 $ 54,677
Bayer AG.................................. 1,100 44,892
Cytec Industries, Inc.*................... 800 32,500
Freeport McMoran, Inc..................... 1,500 48,187
Monsanto Co............................... 2,000 77,750
Olin Corp................................. 500 18,813
------------
276,819
------------
CONTAINERS--0.4%
Crown Cork & Seal, Inc.
4.5% conv. pfd......................... 800 43,500
------------
METALS & MINING--0.3%
Reynolds Metals Co........................ 535 30,161
------------
350,480
------------
CAPITAL GOODS--5.7%
ELECTRICAL EQUIPMENT--1.9%
General Electric Co....................... 900 88,988
Hitachi Ltd............................... 6,000 55,954
Matsushita Electrical Industrial Co., Ltd. 2,000 32,640
Sharp Corp................................ 1,000 14,247
Sumitomo Electric Industries.............. 1,000 13,988
------------
205,817
------------
ENGINEERING &
CONSTRUCTION--1.0%
American Standard Cos., Inc.*............. 1,600 61,200
Bouygues.................................. 8 829
Martin Marietta Materials, Inc............ 500 11,625
Matsushita Electric Works................. 1,000 8,609
National House Industrial Co.............. 2,000 26,595
Uralita S.A............................... 600 4,691
------------
113,549
------------
MACHINERY--1.1%
Allied-Signal, Inc........................ 1,200 80,400
Coltec Industries, Inc.*.................. 2,000 37,750
------------
118,150
------------
POLLUTION CONTROL--1.7%
Republic Industries, Inc.*................ 850 26,509
USA Waste Services, Inc.*................. 1,700 54,188
WMX Technologies, Inc..................... 3,000 97,875
------------
178,572
------------
616,088
------------
CONSUMER
MANUFACTURING--1.2%
AUTO & RELATED--0.7%
Bajaj Auto Ltd. (GDR)* (a)................ 300 $ 9,975
Magneti Marelli S.p.A. ................... 9,700 12,053
Toyota Corp............................... 2,000 57,508
------------
79,536
------------
OTHER--0.5%
Fuji Photo Film........................... 1,000 32,985
Shimano, Inc.............................. 1,000 17,011
------------
49,996
------------
129,532
------------
CONSUMER SERVICES--10.0%
AIRLINES--1.0%
Delta Air Lines, Inc...................... 700 49,612
Deutsche Lufthansa AG..................... 1,800 24,565
Northwest Airlines Corp. Cl.A*............ 700 27,388
------------
101,565
------------
APPAREL--0.2%
Cone Mills Corp.*......................... 3,000 23,625
------------
BROADCASTING &
CABLE--1.7%
Cablevision Systems Corp. Cl.A*........... 1,250 38,281
Indonesian Satellite Corp. (ADR) ......... 1,000 27,375
Liberty Media Group Cl.A*................. 200 5,713
Reuters Holdings Plc...................... 3,000 38,573
Societe Television Francaise.............. 300 28,679
TCI Group Series A*....................... 1,000 13,062
Viacom, Inc. Cl.B*........................ 1,014 35,363
------------
187,046
------------
ENTERTAINMENT &
LEISURE--1.9%
Carnival Corp. Cl.A....................... 100 3,300
ITT Corp.*................................ 1,100 47,712
Resorts World Bhd......................... 6,000 27,321
Time Warner, Inc.......................... 1,500 56,250
Walt Disney Co............................ 966 67,258
------------
201,841
------------
PRINTING & PUBLISHING--0.4%
New York Times Co. Cl.A................... 1,000 38,000
------------
RESTAURANTS &
LODGING--1.1%
Brinker International, Inc.*.............. 2,000 32,000
Host Marriott Corp.*...................... 3,700 59,200
B-34
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
La Quinta Inns, Inc....................... 1,600 $ 30,600
------------
121,800
------------
RETAILING--3.7%
AutoZone, Inc.*........................... 3,100 85,250
CompUSA, Inc.*............................ 2,800 57,750
Dayton Hudson Corp........................ 900 35,325
Federated Department Stores, Inc.*........ 900 30,713
Fingerhut Cos., Inc....................... 3,000 36,750
Hornbach Holding AG pfd................... 550 39,316
PT Ramayana Lestari Sentosa*.............. 500 1,080
Reebok International Ltd.................. 1,670 70,140
Sears Plc................................. 14,600 23,512
Woolworths Ltd............................ 8,000 19,267
------------
399,103
------------
1,072,980
------------
CONSUMER STAPLES--7.4%
BEVERAGES--0.8%
Cadbury Schweppes Plc..................... 3,000 25,338
Grand Metropolitan Plc.................... 3,500 27,463
Kirin Brewery Co., Ltd.................... 3,000 29,531
------------
82,332
------------
COSMETICS--1.3%
Colgate-Palmolive Co...................... 560 51,660
Gillette Co............................... 645 50,149
Shiseido Co., Ltd......................... 3,000 34,712
------------
136,521
------------
FOOD--2.3%
Campbell Soup Co.......................... 790 63,398
Coca-Cola Co.............................. 1,200 63,150
Ezaki Glico Co............................ 4,000 34,539
Nabisco Holdings Corp. Cl.A............... 1,045 40,624
Nestle S.A................................ 40 42,944
------------
244,655
------------
HOUSEHOLD PRODUCTS--0.8%
Sunbeam Corp.............................. 3,500 90,125
------------
RETAIL - FOOD--0.3%
Tesco Plc................................. 5,600 33,962
------------
TOBACCO--1.9%
B.A.T. Industries Plc..................... 3,200 26,534
Loews Corp................................ 500 47,125
Philip Morris Cos., Inc................... 1,050 118,256
PT Hanjaya Mandala Sampoerna ............. 3,000 16,004
------------
207,919
------------
795,514
------------
ENERGY--8.4%
DOMESTIC INTEGRATED--0.8%
Exxon Corp................................ 900 $ 88,200
------------
INTERNATIONAL--0.1%
Tatneft (ADR)* (a)........................ 100 4,600
------------
OIL & GAS SERVICES--7.5%
Apache Corp............................... 2,500 88,437
Baker Hughes, Inc......................... 4,400 151,800
BJ Services Co.*.......................... 2,100 107,100
Halliburton Co............................ 700 42,175
Louisiana Land & Exploration Co........... 1,500 80,437
Nabors Industries, Inc.*.................. 2,900 55,825
Noble Drilling Corp.*..................... 3,000 59,625
Schlumberger Ltd.......................... 800 79,900
Total S.A. Cl.B........................... 508 41,318
Transocean Offshore, Inc.................. 1,350 84,544
Union Pacific Resources Group, Inc........ 508 14,859
------------
806,020
------------
898,820
------------
FINANCE--11.7%
BANKING & CREDIT--4.0%
American Express Co....................... 2,000 113,000
Bangkok Bank Public Co., Ltd.............. 1,000 9,670
Bank of Tokyo - Mitsubishi, Ltd........... 1,000 18,565
BG Bank A/S............................... 300 14,056
Compagnie de Suez S.A.*................... 400 17,007
Dao Heng Bank Group Ltd................... 3,000 14,390
Deutsche Bank AG.......................... 300 14,017
First Union Corp.......................... 1,300 96,200
MBNA Corp................................. 1,800 74,700
Overseas Chinese Bank..................... 1,100 13,678
Sakura Bank Ltd........................... 3,000 21,449
Sparbanken Sverige AB A Shares............ 1,000 17,156
------------
423,888
------------
BROKERAGE & MONEY
MANAGEMENT--0.9%
Merrill Lynch & Co., Inc.................. 700 57,050
Nomura Securities Co., Ltd................ 3,000 45,074
------------
102,124
------------
INSURANCE--4.9%
General Accident Plc...................... 2,000 26,178
Internationale Nederlanden Groep N.V.*.... 1,510 54,400
Istituto Nazionale delle Assicurazioni.... 14,000 18,236
B-35
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
Life Re Corp.............................. 1,500 $ 57,937
MGIC Investment Corp...................... 950 72,200
Penncorp Financial Group, Inc............. 1,100 39,600
PMI Group, Inc............................ 100 5,538
TIG Holdings, Inc......................... 2,000 67,750
Tokio Marine and Fire Co. Ltd.*........... 3,000 28,236
Travelers Group, Inc...................... 2,333 105,860
United Assurance Group Plc*............... 3,000 24,670
Scrip*................................. 9,000 0
Zurich Versicherungsgesellschaft.......... 80 22,234
------------
522,839
------------
REAL ESTATE--0.5%
Beneficial Corp........................... 500 31,688
Daito Trust Construction.................. 2,400 26,733
------------
58,421
------------
OTHER--1.4%
Associates First Capital Corp.*........... 1,500 66,187
Dean Witter, Discover & Co................ 1,200 79,500
------------
145,687
------------
1,252,959
------------
HEALTH CARE--7.7%
BIOTECHNOLOGY--0.4%
Centocor, Inc.*........................... 1,330 47,631
------------
DRUGS--5.1%
Amgen, Inc.*.............................. 690 37,562
Biogen, Inc.*............................. 1,980 76,477
GelTex Pharmaceuticals, Inc.*............. 200 4,800
Merck & Co., Inc. ........................ 1,080 85,590
Novartis AG*.............................. 21 24,432
Orion-Yhtymne OY Cl.B..................... 500 19,239
Pfizer, Inc............................... 900 74,588
Smithkline Beecham Plc.................... 2,019 27,948
Taisho Pharmaceutical Co.................. 2,000 47,146
UniChem Plc............................... 1,500 6,309
Warner-Lambert Co......................... 1,300 97,500
Yamanouchi Pharmaceutical................. 2,000 41,102
------------
542,693
------------
MEDICAL PRODUCTS--0.7%
Fresenius Medical Care AG*................ 250 21,396
Medtronic, Inc............................ 750 51,000
------------
72,396
------------
MEDICAL SERVICES--1.5%
Columbia/HCA Healthcare Corp.............. 1,800 73,350
Oxford Health Plans, Inc.*................ 600 $ 35,138
Pacificare Health Systems, Inc.*.......... 200 17,025
Steris Corp.*............................. 790 34,414
------------
159,927
------------
822,647
------------
MULTI INDUSTRY--2.1%
Berjaya Sports Toto Bhd................... 3,000 14,967
BTR Plc................................... 4,346 21,220
Compagnie Generale des Eaux............... 254 31,478
Hutchison Whampoa Ltd..................... 1,000 7,855
Swire Pacific Ltd. Cl.A................... 1,000 9,535
U.S. Industries, Inc.*.................... 4,000 137,500
------------
222,555
------------
TECHNOLOGY--15.3%
AEROSPACE & DEFENSE--0.8%
Boeing Co................................. 550 58,506
United Technologies Corp.................. 400 26,400
------------
84,906
------------
COMMUNICATIONS
EQUIPMENT--1.6%
Nokia Corp. (ADR)......................... 1,500 86,437
Scientific-Atlanta, Inc................... 2,600 39,000
Vanguard Cellular Systems, Inc.*.......... 3,000 46,875
------------
172,312
------------
COMPUTER HARDWARE--0.5%
Compaq Computer Corp.*.................... 630 46,778
------------
COMPUTER PERIPHERALS--0.6%
Seagate Technology, Inc.*................. 1,700 67,150
------------
COMPUTER SOFTWARE &
SERVICES--4.8%
Ceridian Corp.*........................... 2,500 101,250
Electronic Data Systems Corp. ............ 550 23,787
First Data Corp........................... 850 31,025
Informix Corp.*........................... 5,150 105,253
Intergraph Corp.*......................... 2,000 20,750
Microsoft Corp.*.......................... 500 41,344
Netscape Communications Corp.*............ 600 34,125
Oracle Corp.*............................. 2,062 85,960
Sterling Commerce, Inc.*.................. 716 25,239
Sterling Software, Inc.*.................. 450 14,231
Storage Technology Corp.*................. 500 23,812
The Learning Co., Inc.*................... 250 3,594
------------
510,370
------------
B-36
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
NETWORK SOFTWARE--2.4%
3Com Corp.*............................... 1,475 $ 108,136
Cisco Systems, Inc.*...................... 2,250 143,297
------------
251,433
------------
OFFICE EQUIPMENT &
SERVICES--0.6%
Canon, Inc................................ 3,000 66,316
------------
SEMI-CONDUCTORS &
RELATED--1.6%
Altera Corp.*............................. 1,000 72,687
Intel Corp................................ 400 52,375
National Semiconductor Corp.*............. 1,000 24,375
Teradyne, Inc.*........................... 500 12,188
Texas Instruments, Inc.................... 200 12,750
------------
174,375
------------
TELECOMMUNICATIONS--2.4%
Asia Satellite Telecom Ltd.*.............. 6,000 13,925
British Telecommunications Plc............ 3,600 24,362
Deutsche Telekom AG*...................... 2,000 40,750
DSC Communications Corp.*................. 1,500 26,906
Frontier Corp............................. 1,200 27,150
Korea Mobile Telecommunications
Corp. (ADR) (a)........................ 2,060 26,522
MFS Communications, Inc.*................. 1,000 54,375
Telecom Corp. of New Zealand Ltd.......... 3,000 15,313
WorldCom, Inc.* (a)....................... 1,200 31,275
------------
260,578
------------
1,634,218
------------
TRANSPORTATION--1.3%
RAILROADS--1.1%
Burlington Northern Santa Fe.............. 400 34,550
Canadian Pacific Ltd...................... 2,000 53,000
Union Pacific Corp........................ 600 36,075
------------
123,625
------------
TRUCKING--0.2%
Nippon Express Co., Ltd................... 3,000 20,568
------------
144,193
------------
UTILITIES--0.9%
ELECTRIC & GAS--0.9%
CINergy Corp.............................. 300 10,013
FPL Group, Inc............................ 600 27,600
Hong Kong & China Gas Co., Ltd.
warrants, expiring 9/30/97 *........... 600 $ 334
Tokyo Electric Power Co................... 1,000 21,932
Veba AG................................... 600 34,702
------------
94,581
------------
Total Common Stocks and
Other Investments
(cost $7,313,939)...................... 8,034,567
------------
CORPORATE BONDS--6.3%
Alaska Steel Corp.
9.125%, 12/15/06 (a)................... $ 50 51,500
Auburn Hills Trust
12.00%, 5/01/20 ....................... 50 75,797
Calenergy, Inc.
9.50%, 9/15/06......................... 35 36,138
Chase Manhattan Corp.
6.25%, 1/15/06......................... 100 94,709
Deutsche Bank Financial, Inc.
6.70%, 12/13/06........................ 75 73,612
RAS Laffan Liquefied Natural Gas
8.294%, 9/15/14 (a).................... 95 96,900
Reliance Industries Ltd.
10.50%, 8/06/46 (a).................... 50 51,753
Republic of Poland
4.00%, 10/27/14 (b).................... 75 63,656
Time Warner, Inc.
9.15%, 2/01/23......................... 60 65,039
USX Corp.
9.125%, 1/15/13........................ 60 68,496
------------
Total Corporate Bonds
(cost $667,479)........................ 677,600
------------
U.S. GOVERNMENT
OBLIGATIONS--13.5%
Federal Home Loan Bank
7.00%, 9/01/11......................... 82 82,134
Federal National Mortgage Association
6.00%, 4/01/11......................... 97 92,937
6.50%, 12/01/10........................ 65 63,800
7.00%, 12/01/11........................ 50 49,936
7.00%, 5/01/26......................... 83 80,859
B-37
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
U.S. Treasury Notes
5.75%, 8/15/03......................... $ 445 $ 431,650
6.25%, 10/31/01........................ 15 15,014
6.375%, 5/15/99........................ 625 630,369
------------
Total U.S. Government Obligations
(cost $1,436,392)...................... 1,446,699
------------
SHORT-TERM INVESTMENTS--4.7%
U.S. GOVERNMENT
OBLIGATIONS--4.7%
Federal Home Loan Mortgage Corp.
5.70%, 1/02/97
(amortized cost $499,921).............. 500 499,921
------------
TOTAL INVESTMENTS--99.5%
(cost $9,917,731)...................... $ 10,658,787
Other assets less liabilities--0.5%........ 50,549
------------
NET ASSETS--100.0%......................... $ 10,709,336
============
DISTRIBUTION OF INVESTMENTS BY GLOBAL REGION
AS A PERCENT OF TOTAL INVESTMENTS
Canada.................................... 0.5%
Japan..................................... 6.5
New Zealand and Australia................. 0.3
Scandinavia............................... 1.3
Southeast Asia............................ 1.6
United Kingdom............................ 2.9
United States**........................... 80.6
Other European Countries.................. 6.3
--------
100.0%
========
** Includes Short-Term Investments of 4.7%.
- -------------------------------------------------------------------------------
* Non-income producing security.
(a) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration normally applied to certain qualified buyers. At December
31, 1996, the aggregate market value of these securities amounted to
$272,525 or 2.5% of net assets.
(b) Coupon will increase periodically based upon a predetermined schedule.
Stated interest rate in effect at December 31, 1996.
See Glossary of Terms on page B-43.
See Notes to Financial Statements.
B-38
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
TECHNOLOGY PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
COMMON STOCKS--70.8%
BUSINESS SERVICES--1.0%
Abacus Direct Corp.*...................... 400 $ 7,550
CUC International, Inc.*.................. 9,500 225,625
Ingram Micro, Inc. Cl.A*.................. 2,400 55,200
------------
288,375
------------
COMMUNICATIONS
EQUIPMENT--7.3%
DSP Communications, Inc.*................. 13,200 254,925
Ericsson (L.M.) Telephone Co. (ADR)....... 14,700 443,756
Gandalf Technologies, Inc.*............... 2,600 9,019
General Instrument Corp.*................. 5,000 108,125
Glenayre Technologies, Inc.*.............. 17,000 366,563
Nokia Corp. (ADR)*........................ 6,500 374,562
PairGain Technologies, Inc.*.............. 8,000 243,500
Picturetel Corp.*......................... 2,500 64,688
Scientific-Atlanta, Inc.*................. 12,400 186,000
------------
2,051,138
------------
COMPUTER HARDWARE--7.4%
Compaq Computer Corp.*.................... 12,100 898,425
Dell Computer Corp.*...................... 18,925 1,006,573
Sun Microsystems, Inc.*................... 7,000 179,813
------------
2,084,811
------------
COMPUTER PERIPHERALS--3.8%
Seagate Technology, Inc.*................. 15,800 624,100
Storm Technology, Inc.*................... 600 2,925
Stormedia, Inc.*.......................... 3,900 63,131
Western Digital Corp.*.................... 6,700 381,063
------------
1,071,219
------------
COMPUTER SOFTWARE &
SERVICES--21.1%
Affiliated Computer Services, Inc.*....... 6,400 188,000
Applix, Inc.*............................. 6,800 147,475
Computer Sciences Corp.*.................. 2,800 229,950
DST Systems, Inc.*........................ 4,000 125,500
Electronic Data Systems Corp. ............ 11,000 475,750
Farallon Communications, Inc. ............ 14,000 88,375
First Data Corp........................... 17,200 627,800
Forte Software, Inc.*..................... 4,600 150,363
Gartner Group, Inc. Cl.A*................. 8,400 327,075
HBO & Co.................................. 4,500 267,187
I2 Technologies, Inc.*.................... 2,000 77,250
Informix Corp.*........................... 22,400 457,800
Integrated Systems, Inc. Cl.A*............ 5,400 $ 139,050
Macromedia, Inc.*......................... 5,000 90,625
Maxis, Inc.*.............................. 200 2,425
Microsoft Corp.*.......................... 3,000 248,063
Netscape Communications Corp.*............ 9,500 540,312
Object Design, Inc.*...................... 3,900 45,094
Oracle Corp.*............................. 20,950 873,353
Pegasystems, Inc.*........................ 3,000 90,375
Puma Technology, Inc.*.................... 1,000 17,000
Rational Software Corp.*.................. 11,000 435,187
Renaissance Solutions, Inc.*.............. 5,200 235,950
Software 2000, Inc.*...................... 7,000 57,313
Spectrum Holobyte, Inc.*.................. 800 6,050
------------
5,943,322
------------
NETWORK SOFTWARE--13.5%
3Com Corp.*............................... 13,400 982,387
Ascend Communications, Inc.*.............. 8,400 521,850
Cabletron Systems, Inc.*.................. 11,400 379,050
Cascade Communications Corp.*............. 6,900 381,225
Cisco Systems, Inc.*...................... 16,800 1,069,950
Fore Systems, Inc.*....................... 10,500 345,844
Shiva Corp.*.............................. 3,000 104,250
------------
3,784,556
------------
SEMI-CONDUCTORS &
RELATED--11.9%
Altera Corp.*............................. 7,000 508,812
Applied Materials, Inc.*.................. 9,200 330,625
Atmel Corp.*.............................. 15,000 498,750
Intel Corp. .............................. 6,680 874,662
Lam Research Corp.*....................... 7,000 196,875
LSI Logic Corp.*.......................... 8,700 232,725
Microchip Technology, Inc.*............... 8,700 442,613
Teradyne, Inc.*........................... 10,400 253,500
------------
3,338,562
------------
TELECOMMUNICATIONS--0.8%
MFS Communications, Inc.*................. 4,000 217,500
------------
OTHER--4.0%
Sanmina Corp.*............................ 11,200 632,800
Solectron Corp.*.......................... 9,000 480,375
------------
1,113,175
------------
Total Common Stocks
(cost $17,832,864)..................... 19,892,658
------------
B-39
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
TECHNOLOGY PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
SHORT-TERM INVESTMENTS--28.1%
COMMERCIAL PAPER--15.3%
American Express Credit Corp.
5.75%, 1/06/97......................... $ 1,300 $ 1,298,962
Ford Motor Credit Corp.
6.00%, 1/07/97......................... 1,215 1,213,785
Merrill Lynch & Co., Inc.
5.65%, 1/10/97......................... 775 773,905
Prudential Funding
5.60%, 1/08/97 ....................... 1,000 998,911
------------
4,285,563
------------
U.S. GOVERNMENT
OBLIGATIONS--12.8%
Federal Home Loan Bank
5.42%, 1/16/97......................... 1,600 1,596,387
Federal National Mortgage Association
5.50%, 1/08/97......................... 2,000 1,997,861
------------
3,594,248
------------
Total Short-Term Investments
(amortized cost $7,879,811)............ 7,879,811
------------
TOTAL INVESTMENTS--98.9%
(cost $25,712,675)..................... $ 27,772,469
Other assets less liabilities--1.1%........ 310,962
------------
NET ASSETS--100.0%......................... $ 28,083,431
============
- -------------------------------------------------------------------------------
* Non-income producing security.
See Glossary of Terms on page B-43.
See Notes to Financial Statements.
B-40
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
QUASAR PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
COMMON STOCKS AND
OTHER INVESTMENTS--82.6%
BASIC INDUSTRIES--9.3%
CHEMICALS--3.7%
Crompton & Knowles Corp................... 6,500 $ 125,125
Cytec Industries, Inc.*................... 3,200 130,000
International Specialty Products, Inc..... 6,000 73,500
------------
328,625
------------
METALS & MINING--4.8%
AK Steel Holding Corp. ................... 2,700 106,988
Century Aluminum Co. ..................... 6,200 106,175
Steel Dynamics, Inc.*..................... 6,200 117,412
Titanium Metals Corp.*.................... 2,500 81,875
Uranium Resources, Inc.*.................. 1,200 9,300
------------
421,750
------------
PAPER & FOREST
PRODUCTS--0.8%
Buckeye Cellulose Corp.*.................. 2,700 71,887
------------
822,262
------------
CAPITAL GOODS--4.2%
ENGINEERING &
CONSTRUCTION--0.4%
EMCOR Group, Inc.*........................ 2,700 35,437
------------
POLLUTION CONTROL--2.4%
American Disposal Services, Inc.*......... 2,700 48,938
Culligan Water Technologies, Inc.......... 1,600 64,800
United Waste Systems, Inc.*............... 2,900 99,506
------------
213,244
------------
OTHER--1.4%
Hexcel Corp.*............................. 7,600 123,500
------------
372,181
------------
CONSUMER
MANUFACTURING--3.7%
AUTO & RELATED--0.4%
Miller Industries, Inc.*.................. 1,950 39,000
------------
TEXTILE PRODUCTS--3.3%
Mohawk Industries, Inc. .................. 6,600 146,850
Polymer Group, Inc.*...................... 5,600 77,700
Unifi, Inc................................ 2,100 67,463
------------
292,013
------------
331,013
------------
CONSUMER SERVICES--23.3%
ADVERTISING--3.7%
HA-LO Industries, Inc.*................... 3,375 $ 93,024
Outdoor Systems, Inc.*.................... 2,550 72,356
TeleSpectrum Worldwide, Inc.*............. 10,300 162,225
------------
327,605
------------
AIRLINES--3.1%
Alaska Air Group, Inc.*................... 3,500 73,500
America West Airlines, Inc.*.............. 6,000 95,250
Continental Airlines, Inc.*............... 3,700 104,525
------------
273,275
------------
APPAREL--2.5%
Jones Apparel Group, Inc.*................ 2,100 78,487
Timberland Co.*........................... 1,200 45,600
Tommy Hilfiger Corp.*..................... 2,000 96,000
------------
220,087
------------
BROADCASTING &
CABLE--2.0%
Evergreen Media Corp.*.................... 4,900 121,887
ICG Communications, Inc.*................. 3,300 58,163
------------
180,050
------------
RESTAURANTS &
LODGING--4.2%
Extended Stay America, Inc.*.............. 2,800 56,350
Interstate Hotels Co.*.................... 5,350 151,137
Studio Plus Hotels, Inc.*................. 5,900 93,663
Suburban Lodges of America, Inc.*......... 4,400 69,025
------------
370,175
------------
RETAILING--6.8%
Industrie Natuzzi S.p.A. (ADR)*........... 4,400 101,200
Marker International*..................... 1,600 8,900
Nine West Group, Inc.*.................... 5,000 231,875
Team Rental Group, Inc.*.................. 11,400 185,250
Ugly Duckling Corp.*...................... 4,000 77,500
------------
604,725
------------
MISCELLANEOUS--1.0%
Superior Services, Inc.*.................. 4,300 87,075
------------
2,062,992
------------
ENERGY--9.1%
OIL & GAS SERVICES--7.4%
Costilla Energy, Inc...................... 7,200 96,750
KCS Energy, Inc........................... 1,800 64,350
Parker Drilling Co........................ 15,700 151,113
B-41
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
QUASAR PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES U.S. $ VALUE
------ ------------
Rowan Cos., Inc.*......................... 7,700 $ 174,212
Ultramar Diamond Shamrock Corp............ 5,354 169,320
------------
655,745
------------
PIPELINES--1.7%
Valero Energy Corp........................ 5,300 151,713
------------
807,458
------------
FINANCE--4.6%
BANKING & CREDIT--2.2%
Aames Financial Corp...................... 2,300 82,513
Oxford Resources Corp.*................... 3,500 107,406
------------
189,919
------------
INSURANCE--0.4%
ReliaStar Financial Corp.................. 600 34,650
------------
REAL ESTATE--1.0%
Taubman Centers, Inc...................... 7,000 90,125
------------
OTHER--1.0%
International Alliance Services,
Inc.*.................................. 400 4,800
International Alliance Services,
Inc.*+................................. 9,700 87,300
------------
92,100
------------
406,794
------------
HEALTH CARE--5.0%
BIOTECHNOLOGY--1.3%
Centocor, Inc.*........................... 3,200 114,600
------------
DRUGS--2.1%
Algos Pharmaceutical Corp.*............... 200 2,237
GelTex Pharmaceuticals, Inc.*............. 5,600 134,400
MedImmune, Inc.*.......................... 2,700 46,575
------------
183,212
------------
MEDICAL SERVICES--1.6%
National Surgery Centers, Inc.*........... 3,700 139,675
------------
437,487
------------
TECHNOLOGY--19.9%
COMMUNICATIONS
EQUIPMENT--2.8%
DSP Communications, Inc.*................. 3,150 60,834
Millicom International Cellular, S.A.*.... 2,900 92,981
Premisys Communications, Inc.*............ 1,400 47,250
TCSI Corp.*............................... 700 $ 4,419
Westell Technologies, Inc. Cl.A*.......... 1,800 40,950
------------
246,434
------------
COMPUTER PERIPHERALS--3.5%
HMT Technology Corp.*..................... 4,900 74,113
Lexmark International Group, Inc.*........ 2,200 60,775
Read-Rite Corp.*.......................... 3,800 95,475
Xircom, Inc.*............................. 3,400 74,375
------------
304,738
------------
COMPUTER SOFTWARE &
SERVICES--5.5%
Applix, Inc.*............................. 2,700 58,556
Comverse Technology, Inc.*................ 3,100 117,219
Credit Management Solutions, Inc.*........ 3,200 45,200
DST Systems, Inc.*........................ 1,200 37,650
Exabyte Corp.*............................ 4,000 53,750
Infinity Financial Technology, Inc.*...... 900 15,300
Structural Dynamics Research Corp.*....... 3,500 69,344
Systemsoft Corp.*......................... 2,200 32,450
Uniphase Corp.*........................... 1,100 57,887
------------
487,356
------------
ELECTRONICS--4.0%
BMC Industries, Inc....................... 2,100 66,150
Cable Design Technologies Corp.*.......... 2,100 64,969
Harman International Industries, Inc...... 2,800 155,750
Kent Electronics Corp.*................... 2,600 66,950
------------
353,819
------------
NETWORK SOFTWARE--1.3%
IDT Corp.*................................ 4,000 44,250
Network General Corp.*.................... 2,400 72,450
------------
116,700
------------
TELECOMMUNICATIONS--2.8%
Telephone and Data Systems, Inc........... 5,200 188,500
U.S. Cellular Corp.*...................... 2,200 61,325
------------
249,825
------------
1,758,872
------------
TRANSPORTATION--3.5%
RAILROADS--0.4%
Genesee & Wyoming, Inc. Cl.A*............. 900 30,375
------------
SHIPPING--2.2%
OMI Corp.*................................ 22,100 193,375
------------
B-42
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
QUASAR PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONT'D)
- -------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
--------- ------------
TRUCKING--0.9%
Xtra Corp................................. 1,900 $ 82,413
------------
306,163
------------
Total Common Stocks and
Other Investments
(cost $7,157,081)...................... 7,305,222
------------
SHORT-TERM INVESTMENTS--13.6%
U.S. GOVERNMENT
OBLIGATIONS--13.6%
Federal Home Loan Mortgage Corp.
5.70%, 1/02/97
(amortized cost $1,199,810)............ $ 1,200 1,199,810
------------
TOTAL INVESTMENTS--96.2%
(cost $8,356,891)...................... $ 8,505,032
Other assets less liabilities--3.8%....... 336,785
------------
NET ASSETS--100.0%........................ $ 8,841,817
============
- -------------------------------------------------------------------------------
* Non-income producing security.
+ Illiquid security. The security has been valued at fair value in
accordance with the procedures described in Note A. This security was
acquired on December 26, 1996 at a cost of $87,300.
See Notes to Financial Statements.
GLOSSARY OF TERMS
ADR - American Depository Receipts
FRN - Floating Rate Note
GDR - Global Depository Receipts
IDU - Interest Due on Unpaid Bond
IRB - Industrial Revenue Bond
ORD - Ordinary
pfd. - Preferred Stock
B-43
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PREMIER GLOBAL GROWTH AND SHORT-TERM
GROWTH BOND INCOME MULTI-MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
ASSETS --------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Investments in securities, at value (cost $78,612,333,
$17,078,982, $113,632,820 and $6,928,674,
respectively).............................................. $ 96,055,825 $ 17,256,550 $ 126,364,134 $ 6,930,193
Cash, at value (cost $3,737, $516,443, $61,147
and $547, respectively).................................... 3,737 516,698 61,147 547
Receivable for capital stock sold............................. 333,094 -0- 200,930 -0-
Dividends receivable.......................................... 154,586 -0- 307,462 -0-
Deferred organization expenses................................ 2,657 -0- -0- -0-
Interest receivable........................................... -0- 410,081 -0- 158,906
Unrealized appreciation of forward exchange
currency contracts......................................... -0- 22,695 -0- 56,830
-------------- ------------- -------------- --------------
Total assets.................................................. 96,549,899 18,206,024 126,933,673 7,146,476
-------------- ------------- -------------- --------------
LIABILITIES
Investment advisory fee payable............................... 60,698 9,930 65,165 1,778
Payable for capital stock redeemed............................ 19 54,712 64,721 15,350
Accrued expenses.............................................. 54,874 24,292 74,382 17,044
-------------- ------------- -------------- --------------
Total liabilities............................................. 115,591 88,934 204,268 34,172
-------------- ------------- -------------- --------------
NET ASSETS....................................................... $ 96,434,308 $ 18,117,090 $ 126,729,405 $ 7,112,304
============== ============= ============== ==============
COMPOSITION OF NET ASSETS
Capital stock, at par......................................... $ 6,144 $ 1,543 $ 7,727 $ 663
Additional paid-in capital.................................... 79,608,642 16,799,530 103,571,697 7,805,104
Undistributed net investment income........................... 323,427 920,567 1,269,248 346,901
Accumulated net realized gain (loss) on investments,
options and foreign currency transactions.................. (947,397) 199,223 9,149,428 (1,097,934)
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities........ 17,443,492 196,227 12,731,305 57,570
-------------- ------------- -------------- --------------
$ 96,434,308 $ 18,117,090 $ 126,729,405 $ 7,112,304
============== ============= ============== ==============
Shares of capital stock outstanding........................... 6,143,896 1,542,961 7,727,283 662,827
============== ============= ============== ==============
Net asset value per share..................................... $ 15.70 $ 11.74 $ 16.40 $ 10.73
========= ======== ========= =========
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-44
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT/
HIGH GRADE TOTAL MONEY
SECURITIES RETURN INTERNATIONAL MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------- ------------- --------------
ASSETS
<S> <C> <C> <C> <C>
Investments in securities, at value (cost $28,701,259,
$23,976,844, $42,799,658 and $64,186,996,
respectively)............................................ $ 28,791,704 $ 25,731,347 $ 44,224,641 $ 64,186,996
Cash, at value (cost $185, $587, $153,392
and $253,962, respectively).............................. 185 587 152,129 253,962
Interest receivable......................................... 386,158 157,364 549 -0-
Unrealized appreciation of forward exchange
currency contracts....................................... 12,334 -0- -0- -0-
Deferred organization expenses.............................. 3,464 4,826 4,941 4,969
Receivable for capital stock sold........................... 3,007 12,407 15,932 610,012
Dividends receivable........................................ 1,181 36,993 76,124 -0-
Receivable for investment securities sold................... -0- 11,145 25,229 -0-
-------------- ------------- ------------- --------------
Total assets................................................ 29,198,033 25,954,669 44,499,545 65,055,939
-------------- ------------- ------------- --------------
LIABILITIES
Investment advisory fee payable............................. 14,705 13,462 27,019 26,042
Payable for capital stock redeemed.......................... 5,292 15,084 2,408 196,380
Payable for investment securities purchased................. -0- -0- 65,866 -0-
Accrued expenses............................................ 28,132 50,773 80,156 64,226
-------------- ------------- ------------- --------------
Total liabilities........................................... 48,129 79,319 175,449 286,648
-------------- ------------- ------------- --------------
NET ASSETS..................................................... $ 29,149,904 $ 25,875,350 $ 44,324,096 $ 64,769,291
============== ============= ============= ==============
COMPOSITION OF NET ASSETS
Capital stock, at par....................................... $ 2,531 $ 1,769 $ 2,977 $ 64,769
Additional paid-in capital.................................. 27,619,078 22,618,278 41,658,294 64,703,819
Undistributed net investment income......................... 1,370,536 481,043 462,109 1,046
Accumulated net realized gain (loss) on investments
and foreign currency transactions........................ 54,933 1,019,757 776,481 (343)
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities...... 102,826 1,754,503 1,424,235 -0-
-------------- ------------- ------------- --------------
$ 29,149,904 $ 25,875,350 $ 44,324,096 $ 64,769,291
============== -============ ============= ==============
Shares of capital stock outstanding......................... 2,531,426 1,768,899 2,976,776 64,769,391
============== ============= ============= ==============
Net asset value per share................................... $ 11.52 $ 14.63 $ 14.89 $ 1.00
========= ======== ========= =========
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-45
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH AMERICAN
GLOBAL DOLLAR GOVERNMENT UTILITY
GOVERNMENT INCOME INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value (cost $8,152,185,
$15,384,697 and $13,527,099, respectively).......... $ 8,543,372 $ 16,521,272 $ 14,626,322
Cash, at value (cost $964, $13,242 and $106,107,
respectively)....................................... 964 13,223 106,107
Receivable for investment securities sold.............. 918,435 -0- 75,137
Interest receivable.................................... 117,739 144,517 6,970
Deferred organization expenses......................... 7,792 10,058 7,196
Receivable for capital stock sold...................... 5,137 11,729 13,749
Unrealized appreciation of forward exchange
currency contracts.................................. -0- 20,647 -0-
Dividends receivable................................... -0- -0- 51,568
-------------- -------------- --------------
Total assets........................................... 9,593,439 16,721,446 14,887,049
-------------- -------------- --------------
LIABILITIES
Payable for investment securities purchased............ 727,562 -0- -0-
Investment advisory fee payable........................ 1,812 5,852 5,648
Payable for capital stock redeemed..................... 879 133 669
Accrued expenses....................................... 15,780 19,811 23,939
-------------- -------------- --------------
Total liabilities...................................... 746,033 25,796 30,256
-------------- -------------- --------------
NET ASSETS................................................ $ 8,847,406 $ 16,695,650 $ 14,856,793
============== ============== ==============
COMPOSITION OF NET ASSETS
Capital stock, at par.................................. $ 618 $ 1,349 $ 1,170
Additional paid-in capital............................. 7,231,488 14,461,883 13,513,780
Undistributed net investment income.................... 482,953 1,077,786 289,028
Accumulated net realized gain (loss) on investments,
options and foreign currency transactions........... 741,160 (2,290) (46,408)
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities. 391,187 1,156,922 1,099,223
-------------- -------------- --------------
$ 8,847,406 $ 16,695,650 $ 14,856,793
============== ============== ==============
Shares of capital stock outstanding.................... 617,736 1,349,031 1,170,361
============== ============== ==============
Net asset value per share.............................. $ 14.32 $ 12.38 $ 12.69
========= ========= =========
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-46
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WORLDWIDE CONSERVATIVE
GROWTH PRIVATIZATION INVESTORS
PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value (cost $119,450,096,
$17,017,779 and $20,813,226, respectively)............... $ 139,667,222 $ 18,346,418 $ 21,536,211
Cash, at value (cost $197,953, $387,664 and $18,644,
respectively)............................................ 197,953 392,376 18,644
Receivable for capital stock sold........................... 316,940 25,787 59,684
Dividends receivable........................................ 108,708 48,137 8,278
Interest receivable......................................... 7,689 368 128,056
Deferred organization expenses.............................. 5,402 5,446 5,638
Receivable for investment securities sold................... -0- 13,519 9,295
Receivable from investment adviser.......................... -0- 2,734 -0-
-------------- -------------- --------------
Total assets................................................ 140,303,914 18,834,785 21,765,806
-------------- -------------- --------------
LIABILITIES
Payable for investment securities purchased................. 1,447,797 -0- 2,988
Investment advisory fee payable............................. 85,331 -0- 5,151
Payable for capital stock redeemed.......................... 1,055 73 400
Accrued expenses............................................ 81,840 27,899 28,074
-------------- -------------- --------------
Total liabilities........................................... 1,616,023 27,972 36,613
-------------- -------------- --------------
NET ASSETS..................................................... $ 138,687,891 $ 18,806,813 $ 21,729,193
============== ============== ==============
COMPOSITION OF NET ASSETS
Capital stock, at par....................................... $ 7,740 $ 1,433 $ 1,800
Additional paid-in capital.................................. 111,715,564 16,748,156 20,449,061
Undistributed net investment income......................... 262,537 308,447 607,910
Accumulated net realized gain (loss) on investments
and foreign currency transactions........................ 6,484,948 415,378 (52,673)
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities...... 20,217,102 1,333,399 723,095
-------------- -------------- --------------
$ 138,687,891 $ 18,806,813 $ 21,729,193
============== ============== ==============
Shares of capital stock outstanding......................... 7,739,999 1,432,879 1,800,117
============== ============== ==============
Net asset value per share................................... $ 17.92 $ 13.13 $ 12.07
========= ========= =========
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-47
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH
INVESTORS TECHNOLOGY QUASAR
PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value (cost $9,917,731,
$25,712,675 and $8,356,891, respectively)............... $ 10,658,787 $ 27,772,469 $ 8,505,032
Cash, at value (cost $3,321, $138,541 and $192,214,
respectively)........................................... 3,321 138,541 192,214
Interest receivable........................................ 30,107 -0- -0-
Receivable for capital stock sold.......................... 21,815 177,379 162,383
Receivable for investment securities sold.................. 10,320 7,868 12,051
Dividends receivable....................................... 8,473 459 1,628
Deferred organization expenses............................. 5,638 17,475 23,983
Receivable from investment adviser......................... 69 -0- 7,830
-------------- -------------- --------------
Total assets............................................... 10,738,530 28,114,191 8,905,121
-------------- -------------- --------------
LIABILITIES
Payable for investment securities purchased................ 2,987 -0- 48,421
Payable for capital stock redeemed......................... 641 1,687 121
Investment advisory fee payable............................ -0- 8,620 -0-
Accrued expenses........................................... 25,566 20,453 14,762
-------------- -------------- --------------
Total liabilities.......................................... 29,194 30,760 63,304
-------------- -------------- --------------
NET ASSETS.................................................... $ 10,709,336 $ 28,083,431 $ 8,841,817
============== ============== ==============
COMPOSITION OF NET ASSETS
Capital stock, at par...................................... $ 840 $ 2,543 $ 831
Additional paid-in capital................................. 9,614,233 26,233,295 8,656,353
Undistributed net investment income........................ 177,700 142,959 11,162
Accumulated net realized gain (loss) on investments
and foreign currency transactions....................... 175,410 (355,160) 25,330
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities..... 741,153 2,059,794 148,141
-------------- -------------- --------------
$ 10,709,336 $ 28,083,431 $ 8,841,817
============== ============== ==============
Shares of capital stock outstanding........................ 840,388 2,543,479 830,749
============== ============== ==============
Net asset value per share.................................. $ 12.74 $ 11.04 $ 10.64
========= ========= =========
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-48
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PREMIER GLOBAL GROWTH AND SHORT-TERM
GROWTH BOND INCOME MULTI-MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign tax withheld of $5,630, $-0-,
$6,610 and $-0-, respectively)........................... $ 799,656 $ -0- $ 1,662,492 $ -0-
Interest.................................................... 117,231 1,004,520 278,686 356,592
-------------- ------------- ------------- --------------
Total investment income..................................... 916,887 1,004,520 1,941,178 356,592
-------------- ------------- ------------- --------------
EXPENSES
Investment advisory fee..................................... 624,414 97,431 506,294 28,116
Custodian................................................... 61,136 59,597 57,228 58,371
Audit and legal............................................. 48,619 6,941 64,854 5,972
Printing.................................................... 21,755 1,408 32,031 12,803
Amortization of organization expenses....................... 5,512 2,136 658 -0-
Transfer agency............................................. 1,170 1,284 1,242 1,201
Directors fees.............................................. 525 1,396 1,325 575
Miscellaneous............................................... 5,061 1,685 1,834 -0-
-------------- ------------- ------------- --------------
Total expenses.............................................. 768,192 171,878 665,466 107,038
Less: expense reimbursement................................. (174,999) (30,455) (1,981) (58,473)
-------------- ------------- ------------- --------------
Net expenses................................................ 593,193 141,423 663,485 48,565
-------------- ------------- ------------- --------------
Net investment income....................................... 323,694 863,097 1,277,693 308,027
-------------- ------------- ------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on investment transactions......... (442,478) 269,212 9,399,724 12,232
Net realized gain on foreign currency transactions.......... -0- 7,112 536 36,126
Net change in unrealized appreciation (depreciation)
of investments........................................... 14,126,172 (129,817) 8,264,456 4,612
Net change in unrealized appreciation (depreciation) of
foreign currency denominated assets and liabilities...... -0- 3,920 (506) 102,656
-------------- ------------- ------------- --------------
Net gain on investments..................................... 13,683,694 150,427 17,664,210 155,626
-------------- ------------- ------------- --------------
NET INCREASE IN NET ASSETS FROM OPERATIONS..................... $ 14,007,388 $ 1,013,524 $ 18,941,903 $ 463,653
============== ============= ============= ==============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-49
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT/
HIGH GRADE TOTAL MONEY
SECURITIES RETURN INTERNATIONAL MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest.................................................... $ 1,644,239 $ 440,995 $ 156,513 $ 2,685,518
Dividends (net of foreign tax withheld of $-0-, $113,
$91,426 and $-0-, respectively).......................... 4,725 204,786 529,146 -0-
-------------- ------------- ------------- --------------
Total investment income..................................... 1,648,964 645,781 685,659 2,685,518
-------------- ------------- ------------- --------------
EXPENSES
Investment advisory fee..................................... 145,707 108,845 305,459 251,755
Custodian................................................... 57,707 59,387 234,630 45,667
Audit and legal............................................. 13,371 10,445 20,222 29,336
Printing.................................................... 10,360 7,657 12,906 13,127
Amortization of organization expenses....................... 4,886 4,886 5,007 5,007
Transfer agency............................................. 1,219 1,217 1,282 1,290
Directors fees.............................................. 1,022 1,397 375 375
Miscellaneous............................................... 2,753 1,994 3,177 3,229
-------------- ------------- ------------- --------------
Total expenses.............................................. 237,025 195,828 583,058 349,786
Less: expense reimbursement................................. (13,684) (30,782) (292,872) (1,152)
-------------- ------------- ------------- --------------
Net expenses................................................ 223,341 165,046 290,186 348,634
-------------- ------------- ------------- --------------
Net investment income....................................... 1,425,623 480,735 395,473 2,336,884
-------------- ------------- ------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on investment transactions......... 48,507 1,019,837 841,241 (343)
Net realized gain (loss) on foreign currency transactions... (53,678) -0- 65,399 -0-
Net change in unrealized appreciation (depreciation)
of investments........................................... (503,717) 1,338,504 694,273 -0-
Net change in unrealized appreciation (depreciation)
of foreign currency denominated assets and liabilities... 25,755 -0- (10,027) -0-
-------------- ------------- ------------- --------------
Net gain (loss) on investments.............................. (483,133) 2,358,341 1,590,886 (343)
-------------- ------------- ------------- --------------
NET INCREASE IN NET ASSETS FROM OPERATIONS..................... $ 942,490 $ 2,839,076 $ 1,986,359 $ 2,336,541
============== ============= ============= ==============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-50
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH AMERICAN
GLOBAL DOLLAR GOVERNMENT UTILITY
GOVERNMENT INCOME INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest.................................................... $ 535,472 $ 1,350,439 $ 68,250
Dividends (net of foreign tax withheld of $-0-, $-0-
and $2,608, respectively)................................ -0- -0- 329,669
-------------- -------------- --------------
Total investment income..................................... 535,472 1,350,439 397,919
-------------- -------------- --------------
EXPENSES
Investment advisory fee..................................... 42,385 73,221 83,839
Custodian................................................... 52,552 59,618 57,709
Printing.................................................... 8,699 13,329 15,004
Amortization of organization expenses....................... 3,352 4,326 3,067
Audit and legal............................................. 1,621 4,725 6,072
Transfer agency............................................. 1,281 1,323 1,218
Directors fees.............................................. 575 375 1,375
Miscellaneous............................................... 721 2,055 320
-------------- -------------- --------------
Total expenses.............................................. 111,186 158,972 168,604
Less: expense reimbursement................................. (57,498) (51,957) (62,408)
-------------- -------------- --------------
Net expenses................................................ 53,688 107,015 106,196
-------------- -------------- --------------
Net investment income....................................... 481,784 1,243,424 291,723
-------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on investment transactions......... 745,244 821 (29,624)
Net realized loss on foreign currency transactions.......... -0- (166,651) (1,398)
Net change in unrealized appreciation of investments........ 126,646 818,764 796,030
Net change in unrealized appreciation of foreign
currency denominated assets and liabilities.............. -0- 22,444 -0-
-------------- -------------- --------------
Net gain on investments..................................... 871,890 675,378 765,008
-------------- -------------- --------------
NET INCREASE IN NET ASSETS FROM OPERATIONS..................... $ 1,353,674 $ 1,918,802 $ 1,056,731
============== ============== ==============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-51
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WORLDWIDE CONSERVATIVE
GROWTH PRIVATIZATION INVESTORS
PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign tax withheld of $3,860,
$37,193 and $3,771, respectively)......................... $ 843,192 $ 280,347 $ 63,935
Interest..................................................... 289,632 89,157 695,363
-------------- -------------- --------------
Total investment income...................................... 1,132,824 369,504 759,298
-------------- -------------- --------------
EXPENSES
Investment advisory fee...................................... 664,973 115,208 116,656
Audit and legal.............................................. 69,493 7,199 9,834
Custodian.................................................... 65,511 83,679 81,801
Printing..................................................... 23,273 1,872 2,987
Amortization of organization expenses........................ 2,006 2,006 2,006
Directors fees............................................... 1,400 1,375 575
Transfer agency.............................................. 426 1,328 1,941
Miscellaneous................................................ 1,685 831 1,842
-------------- -------------- --------------
Total expenses............................................... 828,767 213,498 217,642
Less: expense reimbursement.................................. (8,160) (104,050) (69,878)
-------------- -------------- --------------
Net expenses................................................. 820,607 109,448 147,764
-------------- -------------- --------------
Net investment income........................................ 312,217 260,056 611,534
-------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on investment transactions.......... 6,453,535 526,159 (51,567)
Net realized gain (loss) on foreign currency transactions.... 944 (18,329) (4,003)
Net change in unrealized appreciation of investments......... 16,515,830 1,112,767 466,136
Net change in unrealized appreciation (depreciation)
of foreign currency denominated assets and liabilities.... (153) 4,812 110
-------------- -------------- --------------
Net gain on investments...................................... 22,970,156 1,625,409 410,676
-------------- -------------- --------------
NET INCREASE IN NET ASSETS FROM OPERATIONS...................... $ 23,282,373 $ 1,885,465 $ 1,022,210
============== ============== ==============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-52
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH
INVESTORS TECHNOLOGY QUASAR
PORTFOLIO PORTFOLIO(A) PORTFOLIO(B)
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest................................................. $ 183,154 $ 252,088 $ 19,631
Dividends (net of foreign tax withheld of $4,626,
$31 and $-0-, respectively)........................... 78,863 7,327 2,906
-------------- -------------- --------------
Total investment income.................................. 262,017 259,415 22,537
-------------- -------------- --------------
EXPENSES
Investment advisory fee.................................. 66,395 122,595 11,973
Custodian................................................ 84,355 52,187 34,848
Printing................................................. 3,936 2,949 244
Audit and legal.......................................... 2,895 13,685 2,134
Amortization of organization expenses.................... 2,006 4,025 2,115
Transfer agency.......................................... 1,366 1,109 441
Directors fees........................................... 1,352 1,375 643
Miscellaneous............................................ 1,861 918 792
-------------- -------------- --------------
Total expenses........................................... 164,166 198,843 53,190
Less: expense reimbursement.............................. (80,065) (82,377) (41,815)
-------------- -------------- --------------
Net expenses............................................. 84,101 116,466 11,375
-------------- -------------- --------------
Net investment income.................................... 177,916 142,949 11,162
-------------- -------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on investment transactions...... 175,910 (355,160) 25,330
Net realized loss on foreign currency transactions....... (570) -0- -0-
Net change in unrealized appreciation of investments..... 507,571 2,059,794 148,141
Net change in unrealized appreciation of foreign
currency denominated assets and liabilities........... 97 -0- -0-
-------------- -------------- --------------
Net gain on investments.................................. 683,008 1,704,634 173,471
-------------- -------------- --------------
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 860,924 $ 1,847,583 $ 184,633
============== ============== ==============
</TABLE>
- -------------------------------------------------------------------------------
(a) Commencement of operations, January 11, 1996.
(b) Commencement of operations, August 5, 1996.
See Notes to Financial Statements.
B-53
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PREMIER GROWTH PORTFOLIO GLOBAL BOND PORTFOLIO
-------------------------------- ------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income............................... $ 323,694 $ 313,463 $ 863,097 $ 565,830
Net realized gain (loss) on investment
transactions..................................... (442,478) 16,824,672 269,212 445,890
Net realized gain on foreign currency
transactions..................................... -0- -0- 7,112 466,026
Net change in unrealized appreciation (depreciation)
of investments and foreign currency denominated
assets and liabilities........................... 14,126,172 3,054,025 (125,897) 446,385
------------- -------------- -------------- --------------
Net increase in net assets from operations.......... 14,007,388 20,192,160 1,013,524 1,924,131
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................... (316,135) (97,581) (1,035,617) (72,090)
Net realized gain on investments.................... (17,322,907) (273,977) (309,324) -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease)............................. 70,787,668 (28,211,402) 6,895,530 2,402,867
------------- -------------- -------------- --------------
Total increase (decrease)........................... 67,156,014 (8,390,800) 6,564,113 4,254,908
NET ASSETS
Beginning of period................................. 29,278,294 37,669,094 11,552,977 7,298,069
------------- -------------- -------------- --------------
End of period (including undistributed net
investment income of $320,208, $312,649,
$862,361 and $1,034,881, respectively)........... $ 96,434,308 $ 29,278,294 $ 18,117,090 $ 11,552,977
============= ============== ============== ==============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-54
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO SHORT-TERM MULTI-MARKET PORTFOLIO
------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income............................... $ 1,277,693 $ 1,133,993 $ 308,027 $ 1,307,834
Net realized gain (loss) on investment
transactions..................................... 9,399,724 11,527,647 12,232 (910,867)
Net realized gain (loss) on foreign currency
transactions..................................... 536 18,489 36,126 (964,669)
Net change in unrealized appreciation of investments
and foreign currency denominated assets and
liabilities...................................... 8,263,950 4,605,887 107,268 1,423,840
------------- -------------- -------------- --------------
Net increase in net assets from operations.......... 18,941,903 17,286,016 463,653 856,138
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................... (1,128,565) (531,525) (369,515) -0-
Net realized gain on investments.................... (11,815,383) (551,658) -0- -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease)............................. 78,738,622 (15,911,876) 3,866,088 (18,624,919)
------------- -------------- -------------- --------------
Total increase (decrease)........................... 84,736,577 290,957 3,960,226 (17,768,781)
NET ASSETS
Beginning of period................................. 41,992,828 41,701,871 3,152,078 20,920,859
------------- -------------- -------------- --------------
End of period (including undistributed net
investment income of $1,279,177, $1,130,049,
$307,934 and $369,422, respectively)............. $ 126,729,405 $ 41,992,828 $ 7,112,304 $ 3,152,078
============= ============== ============== ==============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-55
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT/
HIGH GRADE SECURITIES PORTFOLIO TOTAL RETURN PORTFOLIO
--------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income............................... $ 1,425,623 $ 600,099 $ 480,735 $ 88,070
Net realized gain on investment
transactions..................................... 48,507 319,393 1,019,837 49,542
Net realized gain (loss) on foreign currency
transactions..................................... (53,678) 29,033 -0- -0-
Net change in unrealized appreciation (depreciation)
of investments and foreign currency denominated
assets and liabilities........................... (477,962) 777,806 1,338,504 424,620
------------- -------------- -------------- --------------
Net increase in net assets from operations.......... 942,490 1,726,331 2,839,076 562,232
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................... (621,506) (149,971) (88,093) (10,089)
Net realized gain on investments.................... (289,591) -0- (44,705) -0-
CAPITAL STOCK TRANSACTIONS
Net increase........................................ 12,171,992 10,268,875 14,926,631 6,940,398
------------- -------------- -------------- --------------
Total increase...................................... 12,203,385 11,845,235 17,632,909 7,492,541
NET ASSETS
Beginning of period................................. 16,946,519 5,101,284 8,242,441 749,900
------------- -------------- -------------- --------------
End of period (including undistributed net
investment income of $1,424,586, $620,469,
$480,563 and $87,921, respectively).............. $ 29,149,904 $ 16,946,519 $ 25,875,350 $ 8,242,441
============= ============== ============== ==============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-56
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO MONEY MARKET PORTFOLIO
-------------------------------- --------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income............................... $ 395,473 $ 148,832 $ 2,336,884 $ 798,013
Net realized gain (loss) on investment
transactions..................................... 841,241 60,209 (343) 726
Net realized gain on foreign currency
transactions..................................... 65,399 136,755 -0- -0-
Net change in unrealized appreciation of investments
and foreign currency denominated assets and
liabilities...................................... 684,246 823,228 -0- -0-
------------- -------------- -------------- --------------
Net increase in net assets from operations.......... 1,986,359 1,169,024 2,336,541 798,739
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................... (155,834) (23,594) (2,336,884) (798,013)
Net realized gain on investments.................... (244,881) (29,314) -0- -0-
CAPITAL STOCK TRANSACTIONS
Net increase........................................ 26,196,817 8,149,131 36,677,326 21,193,287
------------- -------------- -------------- --------------
Total increase...................................... 27,782,461 9,265,247 36,676,983 21,194,013
NET ASSETS
Beginning of period................................. 16,541,635 7,276,388 28,092,308 6,898,295
------------- -------------- -------------- --------------
End of period (including undistributed net
investment income of $394,436, $154,797,
$803 and $803, respectively)..................... $ 44,324,096 $ 16,541,635 $ 64,769,291 $ 28,092,308
============= ============== ============== ==============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-57
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL DOLLAR NORTH AMERICAN
GOVERNMENT PORTFOLIO GOVERNMENT INCOME PORTFOLIO
-------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income............................... $ 481,784 $ 190,779 $ 1,243,424 $ 628,992
Net realized gain on investment
transactions..................................... 745,244 13,908 821 21,305
Net realized loss on foreign currency
transactions..................................... -0- -0- (166,651) (582,809)
Net change in unrealized appreciation of investments
and foreign currency denominated assets and
liabilities...................................... 126,646 317,262 841,208 1,031,464
------------- -------------- -------------- --------------
Net increase in net assets from operations.......... 1,353,674 521,949 1,918,802 1,098,952
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................... (191,319) (28,002) (49,608) (144,624)
Net realized gain on investments.................... (13,292) -0- (3,969) -0-
CAPITAL STOCK TRANSACTIONS
Net increase........................................ 3,920,248 2,137,822 7,552,498 2,475,517
------------- -------------- -------------- --------------
Total increase...................................... 5,069,311 2,631,769 9,417,723 3,429,845
NET ASSETS
Beginning of period................................. 3,778,095 1,146,326 7,277,927 3,848,082
------------- -------------- -------------- --------------
End of period (including undistributed net
investment income of $479,024, $188,559,
$1,241,756 and $47,940, respectively)............ $ 8,847,406 $ 3,778,095 $ 16,695,650 $ 7,277,927
============= ============== ============== ==============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-58
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UTILITY INCOME PORTFOLIO GROWTH PORTFOLIO
----------------------------------- ------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income............................... $ 291,723 $ 81,490 $ 312,217 $ 271,351
Net realized gain (loss) on investment
transactions..................................... (29,624) 146,191 6,453,535 1,503,347
Net realized gain (loss) on foreign currency
transactions..................................... (1,398) 2,026 944 (8,006)
Net change in unrealized appreciation of investments
and foreign currency denominated assets and
liabilities...................................... 796,030 336,155 16,515,677 3,495,519
------------- -------------- -------------- --------------
Net increase in net assets from operations.......... 1,056,731 565,862 23,282,373 5,262,211
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................... (81,842) (19,130) (230,200) (10,913)
Net realized gain on investments.................... (155,981) -0- (1,507,259) -0-
CAPITAL STOCK TRANSACTIONS
Net increase........................................ 7,787,344 4,449,560 71,923,266 34,476,649
------------- -------------- -------------- --------------
Total increase...................................... 8,606,252 4,996,292 93,468,180 39,727,947
NET ASSETS
Beginning of period................................. 6,250,541 1,254,249 45,219,711 5,491,764
------------- -------------- -------------- --------------
End of period (including undistributed net
investment income of $291,209, $81,328,
$348,559 and $266,542, respectively)............. $ 14,856,793 $ 6,250,541 $ 138,687,891 $ 45,219,711
============= ============== ============== ==============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-59
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WORLDWIDE PRIVATIZATION PORTFOLIO CONSERVATIVE INVESTORS PORTFOLIO
--------------------------------- --------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income............................... $ 260,056 $ 95,371 $ 611,534 $ 127,493
Net realized gain (loss) on investment
transactions..................................... 526,159 (45,435) (51,567) 55,975
Net realized loss on foreign currency
transactions..................................... (18,329) (3,414) (4,003) -0-
Net change in unrealized appreciation of
investments and foreign currency denominated
assets and liabilities........................... 1,117,579 215,820 466,246 255,556
------------- -------------- -------------- --------------
Net increase in net assets from operations.......... 1,885,465 262,342 1,022,210 439,024
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................... (90,574) (7,193) (127,029) (3,619)
Net realized gain on investments.................... -0- -0- (56,297) -0-
CAPITAL STOCK TRANSACTIONS
Net increase........................................ 11,065,148 4,564,563 13,470,589 6,283,423
------------- -------------- -------------- --------------
Total increase...................................... 12,860,039 4,819,712 14,309,473 6,718,828
NET ASSETS
Beginning of period................................. 5,946,774 1,127,062 7,419,720 700,892
------------- -------------- -------------- --------------
End of period (including undistributed net
investment income of $259,759, $90,277,
$611,841 and $127,336, respectively)............. $ 18,806,813 $ 5,946,774 $ 21,729,193 $ 7,419,720
============= ============== ============== ==============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
B-60
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH INVESTORS PORTFOLIO TECHNOLOGY PORTFOLIO QUASAR PORTFOLIO
-------------------------------- -------------------- ----------------
YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996(a) 1996(b)
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income............................... $ 177,916 $ 55,823 $ 142,949 $ 11,162
Net realized gain (loss) on investment
transactions..................................... 175,910 16,967 (355,160) 25,330
Net realized loss on foreign currency
transactions..................................... (570) -0- -0- -0-
Net change in unrealized appreciation of
investments and foreign currency denominated
assets and liabilities........................... 507,668 237,378 2,059,794 148,141
------------- -------------- -------------- --------------
Net increase in net assets from operations.......... 860,924 310,168 1,847,583 184,633
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................... (55,626) (903) -0- -0-
Net realized gain on investments.................... (16,764) -0- -0- -0-
CAPITAL STOCK TRANSACTIONS
Net increase........................................ 4,942,686 4,348,053 26,235,848 8,657,184
------------- -------------- -------------- --------------
Total increase...................................... 5,731,220 4,657,318 28,083,431 8,841,817
NET ASSETS
Beginning of period................................. 4,978,116 320,798 -0- -0-
------------- -------------- -------------- --------------
End of period (including undistributed net
investment income of $178,277, $55,987,
$142,949 and $11,162, respectively).............. $ 10,709,336 $ 4,978,116 $ 28,083,431 $ 8,841,817
============= ============== ============== ==============
</TABLE>
- -------------------------------------------------------------------------------
(a) Commencement of operations, January 11, 1996.
(b) Commencement of operations, August 5, 1996.
See Notes to Financial Statements.
B-61
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
NOTE A -SIGNIFICANT ACCOUNTING POLICIES
Alliance Variable Products Series Fund, Inc. (the "Fund"), was incorporated in
the State of Maryland on November 17, 1987 as an open-end series investment
company. The Fund had no operations prior to November 28, 1990. The Fund offers
seventeen separately managed pools of assets which have differing investment
objectives and policies. The Fund currently issues shares of 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, Money Market Portfolio, Global
Dollar Government Portfolio, North American Government Income Portfolio,
Utility Income Portfolio, Growth Portfolio, Worldwide Privatization Portfolio,
Conservative Investors Portfolio, Growth Investors Portfolio, Technology
Portfolio and Quasar Portfolio (the "Portfolios"). The investment objectives of
each Portfolio are as follows:
PREMIER GROWTH PORTFOLIO-seeks growth of capital employing aggressive
investment policies. Since investments will be made based upon their potential
for capital appreciation, current income will be incidental to the objective of
capital growth. The Portfolio is not intended for investors whose principal
objective is assured income or preservation of capital.
GLOBAL BOND PORTFOLIO-seeks a high level of return from a combination of
current income and capital appreciation by investing in a globally diversified
portfolio of high quality debt securities denominated in the U.S. Dollar and a
range of foreign currencies.
GROWTH AND INCOME PORTFOLIO-seeks reasonable current income and opportunities
for appreciation through investments primarily in dividend-paying common stocks
of good quality.
SHORT-TERM MULTI-MARKET PORTFOLIO-seeks the highest level of current income,
consistent with what the Fund's Adviser considers to be prudent investment
risk, that is available from a portfolio of high-quality debt securities having
remaining maturities of not more than three years.
U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO-seeks a high level of current
income consistent with preservation of capital by investing principally in a
portfolio of U.S. Government securities and other high grade debt securities.
TOTAL RETURN PORTFOLIO-seeks to achieve a high return through a combination of
current income and capital appreciation by investing in a diversified portfolio
of common and preferred stocks, senior corporate debt securities, and U.S.
Government and agency obligations, bonds and senior debt securities.
INTERNATIONAL PORTFOLIO-seeks to obtain a total return on its assets from
long-term growth of capital principally through a broad portfolio of marketable
securities of established non-United States companies, companies participating
in foreign economies with prospects for growth, and foreign government
securities.
MONEY MARKET PORTFOLIO-seeks safety of principal, maintenance of liquidity and
maximum current income by investing in a broadly diversified portfolio of money
market securities.
GLOBAL DOLLAR GOVERNMENT PORTFOLIO-seeks a high level of current income through
investing substantially all of its assets in U.S. and non-U.S. fixed income
securities denominated only in U.S. Dollars. As a secondary objective, the
Portfolio seeks capital appreciation.
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO-seeks the highest level of current
income, consistent with what the Fund's Adviser considers to be prudent
investment risk, that is available from a portfolio of debt securities issued
or guaranteed by the governments of the United States, Canada and Mexico, their
political subdivisions (including Canadian Provinces but excluding the States
of the United States), agencies, instrumentalities or
B-62
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
- -------------------------------------------------------------------------------
authorities. The Portfolio seeks high current yields by investing in government
securities denominated in local currency and U.S. Dollars. Normally, the
Portfolio expects to maintain at least 25% of its assets in securities
denominated in the U.S. Dollar.
UTILITY INCOME PORTFOLIO-seeks current income and capital appreciation by
investing primarily in the equity and fixed-income securities of companies in
the "utilities industry." The Portfolio's investment objective and policies are
designed to take advantage of the characteristics and historical performance of
securities of utilities companies.
GROWTH PORTFOLIO-seeks long-term growth of capital by investing primarily in
common stocks and other equity securities.
WORLDWIDE PRIVATIZATION PORTFOLIO-seeks long-term capital appreciation by
investing principally in equity securities issued by enterprises that are
undergoing, or have undergone, privatization. The balance of the Portfolio's
investment portfolio will include equity securities of companies that are
believed by the Fund's Adviser to be beneficiaries of the privatization
process.
CONSERVATIVE INVESTORS PORTFOLIO-seeks the highest total return without, in the
view of the Fund's Adviser, undue risk to principal by investing in a
diversified mix of publicly traded equity and fixed-income securities.
GROWTH INVESTORS PORTFOLIO-seeks the highest total return consistent with what
the Fund's Adviser considers to be reasonable risk by investing in a
diversified mix of publicly traded equity and fixed-income securities.
TECHNOLOGY PORTFOLIO-seeks growth of capital through investment in companies
expected to benefit from advances in technology. The Portfolio invests
principally in a diversified portfolio of securities of companies which use
technology extensively in the development of new or improved products or
processes.
QUASAR PORTFOLIO-seeks growth of capital by pursuing aggressive investment
policies. The Portfolio invests principally in a diversified portfolio of
equity securities of any company and industry and in any type of security which
is believed to offer possibilities for capital appreciation.
The Fund offers and sells its shares only to separate accounts of certain life
insurance companies, for the purpose of funding variable annuity contracts and
variable life insurance policies. Sales are made without a sales charge, at
each Portfolio's net asset value per share.
The following is a summary of significant accounting policies followed by the
Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange are 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. Listed securities not
traded and securities traded in the over-the-counter market, including listed
debt securities whose primary market is believed to be over-the-counter, are
valued at the mean between the most recent quoted bid and asked prices provided
by the principal market makers. Publicly traded sovereign debt obligations are
typically traded internationally on the over-the-counter market. Readily
marketable sovereign debt obligations and 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 value of such securities. Options
are valued at market value or fair value using methods determined by the Board
of Directors. Securities for which market quotations are not readily available
are valued in good faith at fair value using methods determined by the Board of
Directors. Securities which mature in 60 days or less are valued at amortized
cost, which approximates market value, unless this method does not represent
fair value.
2. OPTION WRITING
When a Portfolio writes an option, an amount equal to the premium received by
the Portfolio is recorded as a liability and is subsequently adjusted to the
current market value of the option written. Premiums received from writing
options which expire unexercised are recorded by the Portfolio on the
expiration date as
B-63
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
- -------------------------------------------------------------------------------
realized gains. The difference between the premium and the amount paid on
effecting a closing purchase transaction, including brokerage commissions, is
also recorded as a realized gain, or if the premium is less than the amount
paid for the closing purchase transaction, as a realized loss. If a call option
is exercised, the premium is added to the proceeds from the sale of the
underlying security or currency in determining whether the Portfolio has
realized a gain or loss. If a put option is exercised, the premium reduces the
cost basis of the security or currency purchased by the Portfolio. In writing
an option, the Portfolio bears the market risk of unfavorable changes in the
price of the security or currency underlying the written option. Exercise of an
option written by the Portfolio could result in the Portfolio selling or buying
a security or currency at a price different from the current market value.
3. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked prices of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated at the rates
of exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at rates of exchange prevailing when accrued.
The Portfolios isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuations arising
from changes in market prices of securities held.
Net foreign exchange gains (losses) of $7,112, $536, $36,126, $(53,678),
$65,399, $(166,651), $(1,398), $944, $(18,329), $(4,003) and $(570) for the
Global Bond Portfolio, Growth and Income Portfolio, Short-Term Multi-Market
Portfolio, U.S. Government/ High Grade Securities Portfolio, International
Portfolio, North American Government Income Portfolio, Utility Income
Portfolio, Growth Portfolio, Worldwide Privatization Portfolio, Conservative
Investors Portfolio and Growth Investors Portfolio, respectively, represent
foreign exchange gains and losses from sales and maturities of securities,
holding of foreign currencies, options on foreign currencies, exchange gains or
losses realized between the trade and settlement dates on security
transactions, and the difference between the amounts of interest and dividends
recorded on the Portfolio's books and the U.S. dollar equivalent of the amounts
actually received or paid.
Net currency gains and losses from valuing foreign currency denominated assets
and liabilities at period end exchange rates are reflected as a component of
net change in unrealized appreciation (depreciation) on investments and foreign
currency denominated assets and liabilities.
4. ORGANIZATION EXPENSES
Organization expenses of each Portfolio have been deferred and are being
amortized on a straight-line basis as follows: Premier Growth Portfolio $27,506
through June 1997; U.S. Government/High Grade Securities Portfolio $24,384
through September 1997; Total Return Portfolio $24,384 through December 1997;
International Portfolio $24,983 through December 1997; Money Market Portfolio
$24,983 through December 1997; Global Dollar Government Portfolio $16,723
through April 1999; North American Government Income Portfolio $21,570 through
April 1999; Utility Income Portfolio $15,299 through April 1999; Growth
Portfolio $10,000 through September 1999; Worldwide Privatization Portfolio
$10,000 through September 1999; Conservative Investors Portfolio $10,000
through October 1999, Growth Investors Portfolio $10,000 through October 1999,
Technology Portfolio $21,500 through January 2001 and Quasar Portfolio $26,098
through August 2001.
5. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
6. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Interest income is accrued daily. Dividend income is recorded on the
ex-dividend date. Security transactions
B-64
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
- -------------------------------------------------------------------------------
are accounted for on the date securities are purchased or sold. Security gains
and losses are determined on the identified cost basis. The Fund accretes
discounts as adjustments to interest income.
7. DIVIDENDS AND DISTRIBUTIONS
Each Portfolio declares and distributes dividends and
distributions from net investment income and net realized gains, respectively,
if any, at least annually, except for dividends on the Money Market Portfolio,
which are declared daily and paid monthly. Income dividends and capital gain
distributions are determined in accordance with income tax regulations.
- -------------------------------------------------------------------------------
NOTE B - ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, each Portfolio pays
Alliance Capital Management L.P., (the "Adviser"), an investment advisory fee,
based on average net assets at the following annual rates: Premier Growth
Portfolio, 1%; Global Bond Portfolio, .65 of 1%; Growth and Income Portfolio,
.625 of 1%; Short-Term Multi-Market Portfolio, .55 of 1%; U.S. Government/High
Grade Securities Portfolio, .60 of 1%; Total Return Portfolio, .625 of 1%;
International Portfolio, 1%; Money Market Portfolio, .50 of 1%; Global Dollar
Government Portfolio, .75 of 1%; North American Government Income Portfolio,
.65 of 1%; Utility Income Portfolio, .75 of 1%; Growth Portfolio, .75 of 1%;
Worldwide Privatization Portfolio, 1%; Conservative Investors Portfolio, .75 of
1%; Growth Investors Portfolio, .75 of 1%; Technology Portfolio, 1%; and Quasar
Portfolio, 1%. Such fee is accrued daily and paid monthly. For the Global Bond
Portfolio, the adviser has retained, under a sub-advisory agreement, a
sub-adviser, AIGAM International Ltd., an affiliate of American International
Group, Inc.
The Adviser voluntarily agreed to reimburse each Portfolio based on their
respective average net assets for expenses exceeding .95% for the year ended
December 31, 1996. Expense reimbursements, if any, are accrued daily and paid
monthly. For the year ended December 31, 1996, such reimbursements amounted to
$174,999, $30,455, $1,981, $58,473, $13,684, $30,782, $292,872, $1,152,
$57,498, $51,957, $62,408, $8,160, $104,050, $69,878, $80,065, $82,377 and
$41,815 for the Premier Growth Portfolio, the Global Bond Portfolio, the Growth
and Income Portfolio, the Short-Term Multi-Market Portfolio, the U.S.
Government/High Grade Securities Portfolio, the Total Return Portfolio, the
International Portfolio, the Money Market Portfolio, the Global Dollar
Government Portfolio, the North American Government Income Portfolio, the
Utility Income Portfolio, the Growth Portfolio, the Worldwide Privatization
Portfolio, the Conservative Investors Portfolio, the Growth Investors
Portfolio, the Technology Portfolio and the Quasar Portfolio, respectively.
Each Portfolio compensates Alliance Fund Services, Inc. (a wholly-owned
subsidiary of the Adviser) for providing personnel and facilities to perform
transfer agency services for the Fund. Such compensation amounted to $1,108 for
the Premier Growth Portfolio, the Global Bond Portfolio, the Short-Term
Multi-Market Portfolio, the U.S. Government/High Grade Securities Portfolio,
the Total Return Portfolio, the International Portfolio, the Money Market
Portfolio, the Global Dollar Government Portfolio, the North American
Government Income Portfolio, the Utility Income Portfolio, the Growth
Portfolio, the Worldwide Privatization Portfolio, the Conservative Investors
Portfolio and the Growth Investors Portfolio, and $101, $1,020, and $265 for
the Growth and Income Portfolio, the Technology Portfolio and the Quasar
Portfolio, respectively, for the year ended December 31, 1996.
Brokerage commissions paid for the year ended December 31, 1996 on securities
transactions amounted to $90,253, $255,607, $260,435, $30,275, $31,907,
$287,449, $41,894, $23,162, $28,063, $10,847, and $12,207 on the Premier Growth
Portfolio, the Growth and Income Portfolio, the International Portfolio, the
Total Return Portfolio, the Utility Income Portfolio, the Growth Portfolio, the
Worldwide Privatization Portfolio, the Conservative Investors Portfolio, the
Growth Investors Portfolio, the Technology Portfolio and the Quasar Portfolio,
respectively, none of which was paid to affiliated brokers.
B-65
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
- -------------------------------------------------------------------------------
NOTE C - INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
for the year ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-------------------------------------- ---------------------------------------
STOCKS AND U.S. GOVERNMENT STOCKS AND U.S. GOVERNMENT
PORTFOLIO DEBT OBLIGATIONS AND AGENCIES DEBT OBLIGATIONS AND AGENCIES
- --------- ---------------- ------------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Premier Growth............................. $ 76,932,252 $ -0- $ 19,077,087 $ -0-
Global Bond................................ 25,876,347 7,715,539 20,670,020 6,754,344
Growth and Income.......................... 133,846,257 -0- 66,379,710 -0-
Short-Term Multi-Market.................... 4,747,143 2,039,274 3,047,376 1,037,629
U.S. Government/High Grade Securities...... 16,155,861 27,672,220 5,046,720 26,705,429
Total Return............................... 17,569,661 5,695,297 8,681,654 -0-
International.............................. 40,701,269 -0- 16,619,578 -0-
Global Dollar Government................... 12,122,336 -0- 7,869,900 648,543
North American Government Income........... 1,974,847 2,359,969 303,083 -0-
Utility Income............................. 15,284,351 -0- 7,657,155 -0-
Growth..................................... 149,805,845 -0- 82,877,908 -0-
Worldwide Privatization.................... 14,801,255 -0- 4,696,728 -0-
Conservative Investors..................... 14,133,067 24,060,882 7,000,131 18,243,847
Growth Investors........................... 12,867,010 4,887,959 7,028,712 4,533,491
Technology ................................ 20,274,849 -0- 2,086,825 -0-
Quasar..................................... 8,269,072 -0- 1,137,358 -0-
</TABLE>
At December 31, 1996, the cost of investments for federal income tax purposes
and the tax basis gross unrealized appreciation, depreciation and net
unrealized appreciation (depreciation) were as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED NET
-------------------------------------- UNREALIZED
PORTFOLIO COST APPRECIATION DEPRECIATION APPRECIATION
- --------- ---------------- --------------- ----------------- ------------
<S> <C> <C> <C> <C>
Premier Growth................................ $ 78,845,258 $ 18,701,940 $ (1,491,373) 17,210,567
Global Bond................................... 17,098,659 373,397 (215,506) 157,891
Growth and Income............................. 113,631,858 14,293,546 (1,561,270) 12,732,276
Short-Term Multi-Market....................... 6,928,674 23,994 (22,475) 1,519
U.S. Government/High Grade Securities......... 28,720,906 293,399 (222,601) 70,798
Total Return.................................. 23,976,844 2,025,711 (271,208) 1,754,503
International................................. 42,921,329 3,781,471 (2,478,159) 1,303,312
Global Dollar Government...................... 8,157,659 576,712 (190,999) 385,713
North American Government Income.............. 15,384,697 1,181,185 (44,610) 1,136,575
Utility Income................................ 13,527,111 1,322,090 (222,879) 1,099,211
Growth........................................ 119,523,357 23,865,413 (3,721,548) 20,143,865
Worldwide Privatization....................... 17,044,295 1,914,087 (611,964) 1,302,123
Conservative Investors........................ 20,833,450 977,550 (274,789) 702,761
Growth Investors.............................. 9,945,041 1,087,158 (373,412) 713,746
Technology ................................... 25,712,675 3,257,456 (1,197,662) 2,059,794
Quasar........................................ 8,360,595 347,940 (203,503) 144,437
</TABLE>
B-66
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
- -------------------------------------------------------------------------------
At December 31, 1996, for federal income tax purposes, the Premier Growth,
Money Market, North American Government Income, Utility Income, Conservative
Investors and Technology Portfolios had net capital loss carryforwards of
$714,471, $343, $2,290, $46,396, $33,656 and $355,160 which expire in 2004,
respec-tively. Short-Term Multi-Market had net capital loss carryforward of
$1,097,934 (of which $5,518 expires in 2001, $150,822 expires in 2002, and
$941,594 expires in 2003).
The Global Bond, Short-Term Multi-Market, U.S. Government/High Grade Securities
and North American Government Income Portfolios enter into forward exchange
currency contracts in order to hedge their exposure to changes in foreign
currency exchange rates on their foreign portfolio holdings. A forward contract
is a commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. The Portfolios may enter into contracts to deliver or
receive foreign currency it will receive from or require for its normal
investment activities. It may also use contracts in a manner intended to
protect foreign currency-denominated securities from declines in value due to
unfavorable exchange rate movements. The gain or loss arising from the
difference between the original contract and the closing of such contract is
included in realized gains or losses from foreign currency transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the
Portfolio. The Fund's custodian will place and maintain cash not available for
investment or government securities in a separate account of the Fund having a
value equal to the aggregate amount of the Fund's commitments under forward
exchange currency contracts entered into with respect to position hedges. Risks
may arise from the potential inability of a counterparty to meet the terms of a
contract and from unanticipated movements in the value of a foreign currency
relative to the U.S. dollar. At December 31, 1996, the outstanding forward
exchange currency contracts were as follows:
GLOBAL BOND PORTFOLIO:
<TABLE>
<CAPTION>
CONTRACT VALUE ON U.S.$
AMOUNT ORIGINATION CURRENT UNREALIZED
FOREIGN CURRENCY SALE CONTRACTS (000) DATE VALUE APPRECIATION
- ------------------------------- -------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Australian Dollars, expiring 1/06/97............................. 900 $ 738,000 $ 715,305 $ 22,695
============
</TABLE>
SHORT-TERM MULTI-MARKET PORTFOLIO:
- ---------------------------------
<TABLE>
<CAPTION>
CONTRACT VALUE ON U.S.$ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
FOREIGN CURRENCY BUY CONTRACTS (000) DATE VALUE (DEPRECIATION)
- ------------------------------ ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks, expiring 2/04/97................................. 586 $ 380,025 $ 381,645 $ 1,620
Spanish Pesetas, expiring 3/27/97................................ 22,000 167,647 169,126 1,479
Swiss Francs, expiring 1/06/97................................... 744 568,837 556,263 (12,574)
FOREIGN CURRENCY SALE CONTRACTS
Australian Dollars, expiring 1/09/97............................. 907 725,421 720,623 4,798
Canadian Dollars, expiring 1/21/97............................... 375 276,460 274,151 2,309
Deutsche Marks, expiring 1/27/97-2/04/97......................... 1,723 1,123,340 1,121,941 1,399
Finnish Markka, expiring 1/17/97................................. 1,178 257,994 256,441 1,553
French Francs, expiring 3/27/97.................................. 882 168,852 170,807 (1,955)
New Zealand Dollars, expiring 1/21/97............................ 200 140,070 141,206 (1,136)
Norwegian Krone, expiring 2/04/97................................ 1,400 218,473 217,662 811
Spanish Pesetas, expiring 1/27/97................................ 25,000 198,098 192,432 5,666
Swedish Krona, expiring 1/27/97.................................. 2,059 311,903 302,329 9,574
Swiss Francs, expiring 1/06/97................................... 744 599,549 556,263 43,286
-----------
$ 56,830
===========
</TABLE>
B-67
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
- -------------------------------------------------------------------------------
U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO:
<TABLE>
<CAPTION>
CONTRACT VALUE ON U.S.$
AMOUNT ORIGINATION CURRENT UNREALIZED
FOREIGN CURRENCY SALE CONTRACTS (000) DATE VALUE APPRECIATION
- ------------------------------- ----------- --------------- -------------- ------------
<S> <C> <C> <C> <C>
Australian Dollars, expiring 2/25/97.............. 767 $ 621,914 $ 609,580 $ 12,334
===========
</TABLE>
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO:
<TABLE>
<CAPTION>
CONTRACT VALUE ON U.S.$
AMOUNT ORIGINATION CURRENT UNREALIZED
FOREIGN CURRENCY SALE CONTRACTS (000) DATE VALUE APPRECIATION
- ------------------------------- ----------- --------------- -------------- ------------
<S> <C> <C> <C> <C>
Canadian Dollars, expiring 1/31/97-3/12/97........ 1,600 $ 1,192,270 $ 1,171,623 $ 20,647
===========
</TABLE>
- -------------------------------------------------------------------------------
NOTE D - CAPITAL STOCK
There are 900,000,000 shares of capital stock, $.001 par value per share of the
Fund authorized. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
PREMIER GROWTH PORTFOLIO
---------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------ -----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold............................................ 3,544,816 2,743,464 $ 57,846,653 $ 42,977,782
Shares issued in reinvestment of dividends
and distributions................................... 1,261,734 24,754 17,639,042 371,559
Shares redeemed........................................ (307,428) (4,167,864) (4,698,027) (71,560,743)
--------------- --------------- --------------- ---------------
Net increase (decrease)................................ 4,499,122 (1,399,646) $ 70,787,668 $ (28,211,402)
=============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
GLOBAL BOND PORTFOLIO
---------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------ ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold............................................ 542,902 232,590 $ 6,400,878 $ 2,666,899
Shares issued in reinvestment of dividends
and distributions................................... 122,714 6,352 1,344,941 72,090
Shares redeemed........................................ (73,483) (31,126) (850,289) (336,122)
--------------- --------------- --------------- ---------------
Net increase........................................... 592,133 207,816 $ 6,895,530 $ 2,402,867
=============== =============== =============== ===============
</TABLE>
B-68
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO
---------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------ ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold......................................... 4,431,728 2,176,403 $ 69,859,324 $ 31,126,890
Shares issued in reinvestment of dividends
and distributions................................ 897,017 79,180 12,943,948 1,083,182
Shares redeemed..................................... (260,259) (3,114,447) (4,064,650) (48,121,948)
--------------- --------------- --------------- ---------------
Net increase (decrease)............................. 5,068,486 (858,864) $ 78,738,622 $ (15,911,876)
=============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM MULTI-MARKET PORTFOLIO
---------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------ ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold........................................ 664,791 485,653 $ 7,076,379 $ 4,901,077
Shares issued in reinvestment of dividends
and distributions............................... 36,156 -0- 369,515 -0-
Shares redeemed.................................... (336,158) (2,299,084) (3,579,806) (23,525,996)
--------------- --------------- --------------- ---------------
Net increase (decrease)............................ 364,789 (1,813,431) $ 3,866,088 $ (18,624,919)
=============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
---------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------ ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold........................................ 1,420,578 1,256,331 $ 16,046,280 $ 13,737,462
Shares issued in reinvestment of dividends
and distributions............................... 84,596 13,708 911,097 149,970
Shares redeemed.................................... (426,894) (330,322) (4,785,385) (3,618,557)
--------------- --------------- --------------- ---------------
Net increase....................................... 1,078,280 939,717 $ 12,171,992 $ 10,268,875
=============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN PORTFOLIO
---------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------ ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold........................................ 1,193,848 610,625 $ 15,859,123 $ 7,402,831
Shares issued in reinvestment of dividends
and distributions............................... 10,076 866 132,799 10,089
Shares redeemed.................................... (78,997) (39,552) (1,065,291) (472,522)
--------------- --------------- --------------- ---------------
Net increase....................................... 1,124,927 571,939 $ 14,926,631 $ 6,940,398
=============== =============== =============== ===============
</TABLE>
B-69
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
---------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------ ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold........................................ 2,116,357 761,751 $ 30,825,850 $ 10,153,923
Shares issued in reinvestment of dividends
and distributions............................... 27,149 4,039 400,715 52,908
Shares redeemed.................................... (342,716) (154,693) (5,029,748) (2,057,700)
--------------- --------------- --------------- ---------------
Net increase....................................... 1,800,790 611,097 $ 26,196,817 $ 8,149,131
=============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
---------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------ ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold........................................ 178,619,585 72,470,594 $ 178,619,585 $ 72,470,594
Shares issued in reinvestment of dividends......... 2,336,582 799,144 2,336,582 799,144
Shares redeemed.................................... (144,278,841) (52,076,451) (144,278,841) (52,076,451)
--------------- --------------- ---------------- ---------------
Net increase....................................... 36,677,326 21,193,287 $ 36,677,326 $ 21,193,287
=============== =============== ================ ===============
</TABLE>
<TABLE>
<CAPTION>
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
---------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------ ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold........................................ 373,824 234,218 $ 4,866,573 $ 2,508,397
Shares issued in reinvestment of dividends
and distributions............................... 17,037 2,647 204,610 28,002
Shares redeemed.................................... (89,291) (37,201) (1,150,935) (398,577)
--------------- --------------- --------------- ---------------
Net increase....................................... 301,570 199,664 $ 3,920,248 $ 2,137,822
=============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO
---------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------ ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold........................................ 933,567 528,380 $ 10,739,062 $ 4,987,369
Shares issued in reinvestment of dividends
and distributions............................... 4,805 15,806 53,576 144,624
Shares redeemed.................................... (283,721) (287,428) (3,240,140) (2,656,476)
--------------- --------------- --------------- ---------------
Net increase....................................... 654,651 256,758 $ 7,552,498 $ 2,475,517
=============== =============== =============== ===============
</TABLE>
B-70
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UTILITY INCOME PORTFOLIO
---------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------ ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold........................................ 776,031 443,081 $ 9,308,720 $ 4,987,939
Shares issued in reinvestment of dividends
and distributions............................... 20,206 1,762 237,823 19,131
Shares redeemed.................................... (146,278) (50,420) (1,759,199) (557,510)
--------------- --------------- --------------- ---------------
Net increase....................................... 649,959 394,423 $ 7,787,344 $ 4,449,560
=============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
---------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------ ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold........................................ 4,744,489 2,718,920 $ 74,657,741 $ 35,309,744
Shares issued in reinvestment of dividends
and distributions............................... 111,233 874 1,737,459 10,912
Shares redeemed.................................... (292,788) (64,342) (4,471,934) (844,007)
--------------- --------------- --------------- ---------------
Net increase....................................... 4,562,934 2,655,452 $ 71,923,266 $ 34,476,649
=============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
WORLDWIDE PRIVATIZATION PORTFOLIO
---------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------ ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold........................................ 977,499 430,445 $ 12,011,656 $ 4,671,434
Shares issued in reinvestment of dividends
and distributions............................... 7,424 662 90,574 7,193
Shares redeemed.................................... (84,263) (10,458) (1,037,082) (114,064)
--------------- --------------- --------------- ---------------
Net increase....................................... 900,660 420,649 $ 11,065,148 $ 4,564,563
=============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
CONSERVATIVE INVESTORS PORTFOLIO
---------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------ ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold........................................ 1,387,334 600,037 $ 15,999,200 $ 6,706,928
Shares issued in reinvestment of dividends
and distributions............................... 16,196 328 183,326 3,620
Shares redeemed.................................... (234,084) (39,275) (2,711,937) (427,125)
--------------- --------------- --------------- ---------------
Net increase....................................... 1,169,446 561,090 $ 13,470,589 $ 6,283,423
=============== =============== =============== ===============
</TABLE>
B-71
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONT'D)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH INVESTORS PORTFOLIO
---------------------------------------------------------------------------
SHARES AMOUNT
------------------------------------ ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold........................................ 646,812 407,129 $ 7,777,769 $ 4,571,141
Shares issued in reinvestment of dividends
and distributions............................... 6,038 83 72,389 903
Shares redeemed.................................... (231,754) (20,469) (2,907,472) (223,991)
--------------- --------------- --------------- ---------------
Net increase....................................... 421,096 386,743 $ 4,942,686 $ 4,348,053
=============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
TECHNOLOGY PORTFOLIO QUASAR PORTFOLIO
------------------------------------ ----------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- -------------- ---------------
JANUARY 11, 1996(A) AUGUST 5, 1996(A)
TO DECEMBER 31, 1996 TO DECEMBER 31, 1996
------------------------------------ ----------------------------------
<S> <C> <C> <C> <C>
Shares sold........................................ 2,807,022 $ 29,063,181 832,347 $ 8,673,741
Shares redeemed.................................... (263,543) (2,827,333) (1,598) (16,557)
--------------- --------------- --------------- ---------------
Net increase....................................... 2,543,479 $ 26,235,848 830,749 $ 8,657,184
=============== =============== =============== ===============
</TABLE>
(a) Commencement of operations.
- -------------------------------------------------------------------------------
NOTE E - RECLASSIFICATION OF COMPONENTS OF NET ASSETS
As a result of permanent differences between accounting and tax regulations in
the treatment of foreign currency transactions, short-term gains and tax
returns of capital distributions, the portfolios made the following
reclassifications during the year ended December 31, 1996:
<TABLE>
<CAPTION>
UNDISTRIBUTED
(OVERDISTRIBUTED) ACCUMULATED
PAID-IN NET INVESTMENT NET REALIZED
PORTFOLIO CAPITAL INCOME GAIN (LOSS)
- --------- --------------- ----------------- ------------
<S> <C> <C> <C>
Premier Growth.......................................... $ -0- $ 3,219 $ (3,219)
Global Bond............................................. (489) 58,206 (57,717)
Growth and Income....................................... (658) (9,929) 10,587
Short-Term Multi-Market................................. -0- 38,967 (38,967)
U.S. Government/High Grade Securities................... -0- (54,050) 54,050
Total Return............................................ -0- 480 (480)
International........................................... -0- 67,673 (67,673)
Money Market............................................ -0- 243 (243)
Global Dollar Government................................ -0- 3,929 (3,929)
North American Government Income........................ -0- (163,970) 163,970
Utility Income.......................................... -0- (2,181) 2,181
Growth.................................................. -0- (86,022) 86,022
Worldwide Privatization................................. -0- 48,688 (48,688)
Conservative Investors.................................. -0- (3,931) 3,931
Growth Investors........................................ -0- (577) 577
Technology ............................................. (10) 10 -0-
</TABLE>
Net investment income, net realized gains and net assets were not affected by
the reclassifications.
B-72
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PREMIER GROWTH PORTFOLIO
------------------------------------------------------------------
YEAR ENDED DECEMBER 31, JUNE 26, 1992(A)
------------------------------------------------ TO
1996 1995 1994 1993 DECEMBER 31, 1992
------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................... $ 17.80 $ 12.37 $ 12.79 $ 11.38 $ 10.00
-------- --------- --------- --------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)................................... .08 (c) .09 (c) .03 (c) -0- .06 (c)
Net realized and unrealized gain (loss) on investments...... 3.29 5.44 (.41) 1.43 1.32
-------- --------- --------- --------- --------
Net increase (decrease) in net asset value from operations.. 3.37 5.53 (.38) 1.43 1.38
-------- --------- --------- --------- --------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income........................ (.10) (.03) (.01) (.01) -0-
Distributions from net realized gains....................... (5.37) (.07) (.03) (.01) -0-
-------- --------- --------- --------- --------
Total dividends and distributions........................... (5.47) (.10) (.04) (.02) -0-
-------- --------- --------- --------- --------
Net asset value, end of period.............................. $ 15.70 $ 17.80 $ 12.37 $ 12.79 $ 11.38
======== ========= ========= ========= ========
TOTAL RETURN
Total investment return based on net asset value (d)........ 22.70% 44.85% (2.96)% 12.63% 13.80%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................... $96,434 $29,278 $37,669 $13,659 $3,760
Ratio to average net assets of:
Expenses, net of waivers and reimbursements............... .95% .95% .95% 1.18% .95%(e)
Expenses, before waivers and reimbursements............... 1.23% 1.19% 1.40% 2.05% 4.20%(e)
Net investment income..................................... .52% .55% .42% .22% .96%(e)
Portfolio turnover rate..................................... 32% 97% 38% 42% 14%
Average commission rate paid (f)............................ $.0609 -0- -0- -0- -0-
</TABLE>
<TABLE>
<CAPTION>
GLOBAL BOND PORTFOLIO
------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................... $ 12.15 $ 9.82 $ 11.33 $ 11.24 $ 11.10
-------- --------- --------- --------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)................................... .67 (c) .69 (c) .57 (c) .77 (c) .64
Net realized and unrealized gain (loss) on investments
and foreign currency transactions......................... .01 1.73 (1.16) .43 (.13)
-------- --------- --------- --------- --------
Net increase (decrease) in net asset value from operations.. .68 2.42 (.59) 1.20 .51
-------- --------- --------- --------- --------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income........................ (.84) (.09) (.62) (.85) (.28)
Distributions from net realized gains....................... (.25) -0- (.30) (.26) (.09)
-------- --------- --------- --------- --------
Total dividends and distributions........................... (1.09) (.09) (.92) (1.11) (.37)
-------- --------- --------- --------- --------
Net asset value, end of period.............................. $ 11.74 $ 12.15 $ 9.82 $ 11.33 $ 11.24
======== ========= ========= ========= ========
TOTAL RETURN
Total investment return based on net asset value (d)........ 6.21% 24.73% (5.16)% 11.15% 4.87%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................... $18,117 $11,553 $7,298 $6,748 $5,876
Ratio to average net assets of:
Expenses, net of waivers and reimbursements............... .94% .95% .95% 1.50% 1.50%
Expenses, before waivers and reimbursements............... 1.15% 1.77% 2.05% 1.50% 1.97%
Net investment income..................................... 5.76% 6.22% 6.01% 4.85% 5.85%
Portfolio turnover rate..................................... 191% 262% 102% 125% 78%
</TABLE>
- -------------------------------------------------------------------------------
See footnote summary on page B-81.
B-73
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO
--------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................... $ 15.79 $ 11.85 $ 12.18 $ 10.99 $ 10.35
-------- --------- --------- --------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)................................... .24 (c) .27 (c) .10 (c) .01 (c) .10 (c)
Net realized and unrealized gain (loss) on investments...... 3.18 3.94 (.16) 1.27 .71
-------- --------- --------- --------- --------
Net increase (decrease) in net asset value from operations.. 3.42 4.21 (.06) 1.28 .81
-------- --------- --------- --------- --------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income........................ (.25) (.13) (.10) (.06) (.17)
Distributions from net realized gains....................... (2.56) (.14) (.17) (.03) -0-
-------- --------- --------- --------- --------
Total dividends and distributions........................... (2.81) (.27) (.27) (.09) (.17)
-------- --------- --------- --------- --------
Net asset value, end of period.............................. $ 16.40 $ 15.79 $ 11.85 $ 12.18 $ 10.99
======== ========= ========= ========= ========
TOTAL RETURN
Total investment return based on net asset value (d)........ 24.09% 35.76% (.35)% 11.69% 7.92%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................... $126,729 $41,993 $41,702 $22,756 $7,803
Ratio to average net assets of:
Expenses, net of waivers and reimbursements............... .82% .79% .90% 1.18% .99%
Expenses, before waivers and reimbursements............... .82% .79% .91% 1.28% 2.09%
Net investment income..................................... 1.58% 1.95% 1.71% 1.76% 2.42%
Portfolio turnover rate..................................... 87% 150% 95% 69% 49%
Average commission rate paid (f)............................ $.0602 -0- -0- -0- -0-
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM MULTI-MARKET PORTFOLIO
--------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................... $ 10.58 $ 9.91 $ 11.07 $ 10.77 $ 10.68
-------- --------- --------- --------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)................................... .64 (c) .82 (c) .47 (c) .28 (c) .63 (c)
Net realized and unrealized gain (loss) on investments
and foreign currency transactions......................... .33 (.15) (1.16) .43 (.54)
-------- --------- --------- --------- --------
Net increase (decrease) in net asset value from operations.. .97 .67 (.69) .71 .09
-------- --------- --------- --------- --------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income........................ (.82) -0- (.46) (.41) -0-
Return of capital........................................... -0- -0- (.01) -0- -0-
-------- --------- --------- --------- --------
Total dividends and distributions........................... (.82) -0- (.47) (.41) -0-
-------- --------- --------- --------- --------
Net asset value, end of period.............................. $ 10.73 $ 10.58 $ 9.91 $ 11.07 $ 10.77
======== ========= ========= ========= ========
TOTAL RETURN
Total investment return based on net asset value (d)........ 9.57% 6.76% (6.51)% 6.62% .84%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................... $7,112 $3,152 $20,921 $23,560 $14,841
Ratio to average net assets of:
Expenses, net of waivers and reimbursements............... .95% .95% .94% 1.17% .99%
Expenses, before waivers and reimbursements............... 2.09% 1.30% .99% 1.24% 1.66%
Net investment income..................................... 6.03% 8.22% 6.52% 6.39% 7.18%
Portfolio turnover rate..................................... 159% 379% 134% 210% 153%
</TABLE>
- -------------------------------------------------------------------------------
See footnote summary on page B-81.
B-74
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31, SEPTEMBER 17, 1992(A)
---------------------------------------------- TO
1996 1995 1994 1993 DECEMBER 31, 1992
-------- -------- -------- -------- ---------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period...........................$ 11.66 $ 9.94 $ 10.72 $ 9.89 $ 10.00
-------- --------- --------- --------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)................................... .66 (c) .65 (c) .28 (c) .43 (c) .14 (c)
Net realized and unrealized gain (loss) on investments...... (.39) 1.25 (.71) .48 (.25)
-------- --------- --------- --------- --------
Net increase (decrease) in net asset value from operations.. .27 1.90 (.43) .91 (.11)
-------- --------- --------- --------- --------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income........................ (.28) (.18) (.21) (.08) -0-
Distributions from net realized gains....................... (.13) -0- (.14) -0- -0-
-------- --------- --------- --------- --------
Total dividends and distributions........................... (.41) (.18) (.35) (.08) -0-
-------- --------- --------- --------- --------
Net asset value, end of period..............................$ 11.52 $ 11.66 $ 9.94 $ 10.72 $ 9.89
======== ========= ========= ========= ========
TOTAL RETURN
Total investment return based on net asset value (d)........ 2.55% 19.26% (4.03)% 9.20% (1.10)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................... $29,150 $16,947 $5,101 $1,350 $785
Ratio to average net assets of:
Expenses, net of waivers and reimbursements............... .92% .95% .95% 1.16% .95% (e)
Expenses, before waivers and reimbursements............... .98% 1.58% 3.73% 5.42% 11.56% (e)
Net investment income..................................... 5.87% 5.96% 5.64% 4.59% 4.82% (e)
Portfolio turnover rate..................................... 137% 68% 32% 177% 13%
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN PORTFOLIO
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31, DECEMBER 28, 1992(A)
---------------------------------------------- TO
1996 1995 1994 1993 DECEMBER 31, 1992
-------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................... $ 12.80 $ 10.41 $ 10.97 $ 10.01 $ 10.00
-------- --------- --------- --------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)................................... .27 (c) .36 (c) .15 (c) .15 (c) .01
Net realized and unrealized gain (loss) on investments...... 1.66 2.10 (.56) .81 -0-
-------- --------- --------- --------- --------
Net increase (decrease) in net asset value from operations.. 1.93 2.46 (.41) .96 .01
-------- --------- --------- --------- --------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income........................ (.07) (.07) (.09) -0- -0-
Distributions from net realized gains....................... (.03) -0- (.06) -0- -0-
-------- --------- --------- --------- --------
Total dividends and distributions........................... (.10) (.07) (.15) -0- -0-
-------- --------- --------- --------- --------
Net asset value, end of period.............................. $ 14.63 $ 12.80 $ 10.41 $ 10.97 $ 10.01
======== ========= ========= ========= ========
TOTAL RETURN
Total investment return based on net asset value (d)........ 15.17% 23.67% (3.77)% 9.59% .10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................... 25,875 $8,242 $750 $360 $95
Ratio to average net assets of:
Expenses, net of waivers and reimbursements............... .95% .95% .95% 1.20% 0%
Expenses, before waivers and reimbursements............... 1.12% 4.49% 19.49% 25.96% 0%
Net investment income..................................... 2.76% 3.16% 2.29% 1.45% 2.21%(e)
Portfolio turnover rate..................................... 57% 30% 83% 25% 0%
Average commission rate paid (f)............................ $.0593 -0- -0- -0- -0-
</TABLE>
- -------------------------------------------------------------------------------
See footnote summary on page B-81.
B-75
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, DECEMBER 28, 1992(A)
--------------------------------------------------- TO
1996 1995 1994 1993 DECEMBER 31, 1992
-------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......................$ 14.07 $ 12.88 $ 12.16 $ 10.00 $ 10.00
-------- --------- --------- --------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b).............................. .19 (c) .18 (c) .10 (c) .03 (c) -0-
Net realized and unrealized gain on investments and
foreign currency transactions........................ .83 1.08 .72 (g) 2.13 -0-
-------- --------- ---------- --------- --------
Net increase in net asset value from operations........ 1.02 1.26 .82 2.16 -0-
-------- --------- --------- --------- --------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income................... (.08) (.03) (.02) -0- -0-
Distributions from net realized gains.................. (.12) (.04) (.08) -0- -0-
-------- --------- --------- --------- --------
Total dividends and distributions...................... (.20) (.07) (.10) -0- -0-
-------- --------- --------- --------- --------
Net asset value, end of period.........................$ 14.89 $ 14.07 $ 12.88 $ 12.16 $ 10.00
======== ========= ========= ========= ========
TOTAL RETURN
Total investment return based on net asset value (d)... 7.25% 9.86% 6.70% 21.60% 0%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted).............. $44,324 $16,542 $7,276 $688 $79
Ratio to average net assets of:
Expenses, net of waivers and reimbursements.......... .95% .95% .95% 1.20% 0%
Expenses, before waivers and reimbursements.......... 1.91% 2.99% 7.26% 39.28% 0%
Net investment income................................ 1.29% 1.41% .90% .26% 2.07% (e)
Portfolio turnover rate................................ 60% 87% 95% 85% 0%
Average commission rate paid (f)....................... $.0431 -0- -0- -0- -0-
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, DECEMBER 28, 1992(A)
--------------------------------------------------- TO
1996 1995 1994 1993 DECEMBER 31, 1992
-------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- --------- --------- --------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)............................. .05 .05 .03 .22 -0-
Net realized and unrealized gain on investments....... -0- -0- -0- -0- -0-
------- --------- --------- --------- --------
Net increase in net asset value from operations....... .05 .05 .03 .22 -0-
------- --------- --------- --------- --------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income.................. (.05) (.05) (.03) (.22) -0-
Distributions from net realized gains................. -0- -0- -0- -0- -0-
------- --------- --------- --------- --------
Total dividends and distributions..................... (.05) (.05) (.03) (.22) -0-
------- --------- --------- --------- --------
Net asset value, end of period........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ========= ========= ========= ========
TOTAL RETURN
Total investment return based on net asset value (d).. 4.71% 4.97% 3.27% 2.25% .02%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)............. $64,769 $28,092 $6,899 $102 $30
Ratio to average net assets of:
Expenses, net of waivers and reimbursements......... .69% .95% .95% 1.16% 0%
Expenses, before waivers and reimbursements......... .69% 1.07% 4.46% 68.14% 0%
Net investment income............................... 4.64% 4.85% 3.98% 2.15% 3.05%(e)
Portfolio turnover rate............................... 0% 0% 0% 0% 0%
</TABLE>
- -------------------------------------------------------------------------------
See footnote summary on page B-81.
B-76
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
-----------------------------------------------------
YEAR ENDED DECEMBER 31, MAY 2, 1994(A)
------------------------------ TO
1996 1995 DECEMBER 31, 1994
--------- ---------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period................................... $ 11.95 $ 9.84 $ 10.00
--------- ---------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)........................................... 1.10 (c) .92 (c) .36 (c)
Net realized and unrealized gain (loss) on
investments and foreign currency transactions..................... 1.78 1.32 (.52)
--------- ---------- ---------
Net increase (decrease) in net asset value from operations.......... 2.88 2.24 (.16)
--------- ---------- ---------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income................................ (.48) (.13) -0-
Distributions from net realized gains............................... (.03) -0- -0-
--------- ---------- ---------
Total dividends and distributions................................... (.51) (.13) -0-
--------- ---------- ---------
Net asset value, end of period...................................... $ 14.32 $ 11.95 $ 9.84
========= ========== =========
TOTAL RETURN
Total investment return based on net asset value (d)................ 24.90% 22.98% (1.60)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)........................... $8,847 $3,778 $1,146
Ratio to average net assets of:
Expenses, net of waivers and reimbursements....................... .95% .95% .95% (e)
Expenses, before waivers and reimbursements....................... 1.97% 4.82% 15.00% (e)
Net investment income............................................. 8.53% 8.65% 6.02% (e)
Portfolio turnover rate............................................. 155% 13% 9%
</TABLE>
<TABLE>
<CAPTION>
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO
-----------------------------------------------------
YEAR ENDED DECEMBER 31, MAY 3, 1994(A)
------------------------------ TO
1996 1995 DECEMBER 31, 1994
--------- ---------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period................................... $ 10.48 $ 8.79 $ 10.00
--------- ---------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)........................................... 1.26 (c) 1.13 (c) .50 (c)
Net realized and unrealized gain (loss) on
investments and foreign currency transactions..................... .69 .83 (1.71)
--------- ---------- ---------
Net increase (decrease) in net asset value from operations.......... 1.95 1.96 (1.21)
--------- ---------- ---------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income................................ (.05) (.27) -0-
Distributions from net realized gains............................... (.00) -0- -0-
--------- ---------- ---------
Total dividends and distributions................................... (.05) (.27) -0-
--------- ---------- ---------
Net asset value, end of period...................................... $ 12.38 $ 10.48 $ 8.79
========= ========== =========
TOTAL RETURN
Total investment return based on net asset value (d)................ 18.70% 22.71% (12.10)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)........................... $16,696 $7,278 $3,848
Ratio to average net assets of:
Expenses, net of waivers and reimbursements....................... .95% .95% .95% (e)
Expenses, before waivers and reimbursements....................... 1.41% 2.57% 4.43% (e)
Net investment income............................................. 11.04% 12.24% 8.49% (e)
Portfolio turnover rate............................................. 4% 35% 15%
</TABLE>
- -------------------------------------------------------------------------------
See footnote summary on page B-81.
B-77
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UTILITY INCOME PORTFOLIO
-------------------------------------------------------
YEAR ENDED DECEMBER 31, MAY 10, 1994(a)
----------------------------- TO
1996 1995 DECEMBER 31, 1994
--------- ---------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period.............................. $ 12.01 $ 9.96 $ 10.00
--------- ---------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)...................................... .31 (c) .30 (c) .28 (c)
Net realized and unrealized gain (loss) on investments......... .62 1.83 (.32)
--------- ---------- ---------
Net increase (decrease) in net asset value from operations..... .93 2.13 (.04)
--------- ---------- ---------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income........................... (.09) (.08) -0-
Distributions from net realized gains.......................... (.16) -0- -0-
--------- ---------- ---------
Total dividends and distributions.............................. (.25) (.08) -0-
--------- ---------- ---------
Net asset value, end of period................................. $ 12.69 $ 12.01 $ 9.96
========= ========== =========
TOTAL RETURN
Total investment return based on net asset value (d)........... 7.88% 21.45% (.40)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)...................... $14,857 $6,251 $1,254
Ratio to average net assets of:
Expenses, net of waivers and reimbursements.................. .95% .95% .95% (e)
Expenses, before waivers and reimbursements.................. 1.51% 3.79% 15.98% (e)
Net investment income........................................ 2.61% 2.73% 4.62% (e)
Portfolio turnover rate........................................ 75% 138% 31%
Average commission rate paid (f)............................... $.0579 -0- -0-
</TABLE>
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
---------------------------------------------------------
YEAR ENDED DECEMBER 31, SEPTEMBER 15, 1994(a)
------------------------------ TO
1996 1995 DECEMBER 31, 1994
--------- ---------- ----------------------
<S> <C> <C> <C>
Net asset value, beginning of period.............................. $ 14.23 $ 10.53 $ 10.00
--------- ---------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)...................................... .06 (c) .17 (c) .03 (c)
Net realized and unrealized gain on investments................ 3.95 3.54 .50
--------- ---------- ---------
Net increase in net asset value from operations................ 4.01 3.71 .53
--------- ---------- ---------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income........................... (.04) (.01) -0-
Distributions from net realized gains.......................... (.28) -0- -0-
--------- ---------- ---------
Total dividends and distributions.............................. (.32) (.01) -0-
--------- ---------- ---------
Net asset value, end of period................................. $ 17.92 $ 14.23 $ 10.53
========= ========== =========
TOTAL RETURN
Total investment return based on net asset value (d)........... 28.49% 35.23% 5.30%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)...................... $138,688 $45,220 $5,492
Ratio to average net assets of:
Expenses, net of waivers and reimbursements.................. .93% .95% .95% (e)
Expenses, before waivers and reimbursements.................. .93% 1.27% 4.19% (e)
Net investment income........................................ .35% 1.31% 1.17% (e)
Portfolio turnover rate........................................ 98% 86% 25%
Average commission rate paid (f)............................... $.0578 -0- -0-
</TABLE>
- -------------------------------------------------------------------------------
See footnote summary on page B-81.
B-78
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WORLDWIDE PRIVATIZATION PORTFOLIO
--------------------------------------------------------
YEAR ENDED DECEMBER 31, SEPTEMBER 23, 1994(a)
------------------------------ TO
1996 1995 DECEMBER 31, 1994
--------- ---------- ---------------------
<S> <C> <C> <C>
Net asset value, beginning of period................................... $ 11.17 $ 10.10 $ 10.00
--------- ---------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)........................................... .28 (c) .32 (c) .10 (c)
Net realized and unrealized gain on investments..................... 1.78 .78 -0-
--------- ---------- ---------
Net increase in net asset value from operations..................... 2.06 1.10 .10
--------- ---------- ---------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income................................ (.10) (.03) -0-
Distributions from net realized gains............................... -0- -0- -0-
--------- ---------- ---------
Total dividends and distributions................................... (.10) (.03) -0-
--------- ---------- ---------
Net asset value, end of period...................................... $ 13.13 $ 11.17 $ 10.10
========= ========== =========
TOTAL RETURN
Total investment return based on net asset value (d)................ 18.51% 10.87% 1.00%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)........................... $18,807 $5,947 $1,127
Ratio to average net assets of:
Expenses, net of waivers and reimbursements....................... .95% .95% .95% (e)
Expenses, before waivers and reimbursements....................... 1.85% 4.17% 18.47% (e)
Net investment income............................................. 2.26% 2.96% 4.27% (e)
Portfolio turnover rate............................................. 47% 23% 0%
Average commission rate paid (f).................................... $.0148 -0- -0-
</TABLE>
<TABLE>
<CAPTION>
CONSERVATIVE INVESTORS PORTFOLIO
--------------------------------------------------------
YEAR ENDED DECEMBER 31, OCTOBER 28, 1994(a)
------------------------------- TO
1996 1995 DECEMBER 31, 1994
--------- ---------- -------------------
<S> <C> <C> <C>
Net asset value, beginning of period................................... $ 11.76 $ 10.07 $ 10.00
--------- ---------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)........................................... .45 (c) .51 (c) .06 (c)
Net realized and unrealized gain (loss) on investments.............. (.01) (g) 1.20 .01
--------- ---------- ---------
Net increase in net asset value from operations..................... .44 1.71 .07
--------- ---------- ---------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income................................ (.09) (.02) -0-
Distributions from net realized gains............................... (.04) -0- -0-
--------- ---------- ---------
Total dividends and distributions................................... (.13) (.02) -0-
--------- ---------- ---------
Net asset value, end of period...................................... $ 12.07 $ 11.76 $ 10.07
========= ========== =========
TOTAL RETURN
Total investment return based on net asset value (d)................ 3.79% 16.99% 0.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)........................... $21,729 $7,420 $701
Ratio to average net assets of:
Expenses, net of waivers and reimbursements....................... .95% .95% .95% (e)
Expenses, before waivers and reimbursements....................... 1.40% 4.25% 20.35% (e)
Net investment income............................................. 3.93% 4.65% 3.55% (e)
Portfolio turnover rate............................................. 211% 61% 2%
Average commission rate paid (f).................................... $.0578 -0- -0-
</TABLE>
- -------------------------------------------------------------------------------
See footnote summary on page B-81.
B-79
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH INVESTORS PORTFOLIO
-------------------------------------------------------
YEAR ENDED DECEMBER 31, OCTOBER 28, 1994(A)
------------------------------ TO
1996 1995 DECEMBER 31, 1994
--------- ---------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period............................. $ 11.87 $ 9.86 $ 10.00
--------- ---------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)..................................... .24 (c) .35 (c) .04 (c)
Net realized and unrealized gain (loss) on investments........ .72 1.67 (.18)
--------- ---------- ---------
Net increase (decrease) in net asset value from operations.... .96 2.02 (.14)
--------- ---------- ---------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income.......................... (.07) (.01) -0-
Distributions from net realized gains......................... (.02) -0- -0-
--------- ---------- ---------
Total dividends and distributions............................. (.09) (.01) -0-
--------- ---------- ---------
Net asset value, end of period................................ $ 12.74 $ 11.87 $ 9.86
========= ========== =========
TOTAL RETURN
Total investment return based on net asset value (d).......... 8.18% 20.48% (1.40)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)..................... $10,709 $4,978 $321
Ratio to average net assets of:
Expenses, net of waivers and reimbursements................. .95% .95% .95% (e)
Expenses, before waivers and reimbursements................. 1.85% 6.17% 41.62% (e)
Net investment income....................................... 2.01% 3.21% 2.29% (e)
Portfolio turnover rate....................................... 160% 50% 3%
Average commission rate paid (f).............................. $.0562 -0- -0-
</TABLE>
<TABLE>
<CAPTION>
TECHNOLOGY PORTFOLIO QUASAR PORTFOLIO
JANUARY 11, 1996(A) AUGUST 5, 1996(A)
TO DECEMBER 31, 1996 TO DECEMBER 31, 1996
-------------------- --------------------
<S> <C> <C>
Net asset value, beginning of period............................. $ 10.00 $ 10.00
--------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b)..................................... .11 (c) .04 (c)
Net realized and unrealized gain on investments............... .93 .60
--------- ---------
Net increase in net asset value from operations............... 1.04 .64
--------- ---------
Net asset value, end of period................................ $ 11.04 $ 10.64
========= =========
TOTAL RETURN
Total investment return based on net asset value (d).......... 10.40% 6.40%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)..................... $28,083 $8,842
Ratio to average net assets of:
Expenses, net of waivers and reimbursements................. .95% (e) .95% (e)
Expenses, before waivers and reimbursements................. 1.62% (e) 4.44% (e)
Net investment income......................................... 1.17% (e) .93% (e)
Portfolio turnover rate....................................... 22% 40%
Average commission rate paid (f).............................. $.0553 $.0511
</TABLE>
- -------------------------------------------------------------------------
See footnote summary on page B-81.
B-80
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
- -------------------------------------------------------------------------------
FOOTNOTE SUMMARY:
(a) Commencement of operations.
(b) Net of expenses reimbursed or waived by the investment adviser.
(c) Based on average shares outstanding.
(d) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Total investment return
calculated for a period of less than one year is not annualized.
(e) Annualized.
(f) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which commissions are charged.
(g) The amount shown in this caption for a share outstanding throughout the
period may not accord with the change in realized and unrealized gains and
losses in the portfolio securities for the period because of timing of
sales and repurchases of portfolio shares in relation to fluctuating
market values for the portfolio.
B-81
<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, 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, Growth Investors, Technology and Quasar
Portfolios), as of December 31, 1996, 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, 1996, by correspondence with the custodian and brokers
or other appropriate auditing procedures where replies from brokers were not
received. 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, 1996, 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
New York, New York
February 7, 1997
- -------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
The following Portfolios of the Fund hereby designate the respective amounts
per share as long-term capital gain distributions during the taxable year ended
December 31, 1996:
<TABLE>
<CAPTION>
PER SHARE
---------
<S> <C>
Premier Growth $ 2.48
Global Bond $ .06
Growth and Income $ 1.14
U.S. Government/High Grade Securities $ .02
Total Return $ .01
International $ .05
Global Dollar $ .01
Utility $ .01
Growth $ .03
Conservative Investors $ .00
Growth Investors $ .01
</TABLE>
B-82
<PAGE>
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
- -------------------------------------------------------------------------------
BOARD OF DIRECTORS
JOHN D. CARIFA, Chairman and President
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
DONALD J. ROBINSON (1)
OFFICERS
KATHLEEN A. CORBET, Senior Vice President
ALFRED L. HARRISON, Senior Vice President
ALAN LEVI, Senior Vice President
WAYNE D. LYSKI, Senior Vice President
DEBRA G. ACKERMAN, Vice President
GREGORY ALLISON, Vice President
STEVEN BEINHACKER, Vice President
MARK H. BREEDON, Vice President
PAUL J. DENOON, Vice President
ROBERT G. HEISTERBERG, Vice President
DOUGLAS J. PEEBLES, Vice President
PAMELA F. RICHARDSON, Vice President
PAUL RISSMAN, Vice President
TYLER J. SMITH, Vice President
EDMUND P. BERGAN, JR., Secretary
MARK D. GERSTEN, Treasurer & Chief Financial Officer
LAURA MAH, Controller
CUSTODIAN
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, MA 02110
DISTRIBUTOR
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-free 1-(800) 221-5672
- -------------------------------------------------------------------------------
(1) Member of the Audit Committee.
B-83
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<INVESTMENTS-AT-COST> 6,928,674
<INVESTMENTS-AT-VALUE> 6,930,193
<RECEIVABLES> 158,906
<ASSETS-OTHER> 547
<OTHER-ITEMS-ASSETS> 56,830
<TOTAL-ASSETS> 7,146,476
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<TOTAL-LIABILITIES> 34,172
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<INTEREST-INCOME> 356,592
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<EXPENSES-NET> 48,565
<NET-INVESTMENT-INCOME> 308,027
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<APPREC-INCREASE-CURRENT> 107,268
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<PAGE>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
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<TABLE> <S> <C>
<PAGE>
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</TABLE>
