ALLIANCE VARIABLE PRODUCTS SERIES FUND
ANNUAL REPORT
DECEMBER 31, 1997
The following Annual Report for the Alliance Variable Products Series Fund (the
"Fund") includes financial information for the nineteen Portfolios of the Fund
which were active as of December 31, 1997. Not all Portfolios of the Fund are
available through each insurance product offering investments in the Fund.
LETTER TO SHAREHOLDERS ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
February 17, 1998
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, 1997.
MARKET REVIEW
1997 was a record-breaking year. For the first time in the Dow's 101-year
history, the Dow Jones Industrial Average rose more than 20% for the third
consecutive year. Although 1997 returns fell short of the returns set in the
previous two years (33% in 1995 and 26% in 1996), the continued successful
performance of the U.S. economy provided a solid backdrop for the financial
markets.
Many factors contributed to the vibrant U.S. economy. Employment and
productivity gains were strong, and enhanced consumer confidence, coupled with
increases in real wages and low interest rates, provided support for consumer
spending. This nearly picture perfect economy was rounded out by record low
inflation rates, a strong dollar and a U.S. federal budget deficit forecast to
approach zero.
International equities, however, had another disappointing year. European
stocks generated satisfactory results, but the Pacific Basin markets witnessed
precipitous declines as most regional Asian economies were mired in severe
currency and banking crises.
In Europe, markets were buoyed by progress towards a common currency as several
countries--initially viewed as problematic candidates for
inclusion--successfully met the criteria for membership. Increased confidence
about effecting a European monetary union meant a decline in inter-country
spreads as interest rates converged and currency relationships stabilized.
Asia, on the other hand, encountered a series of currency crises that
necessitated intervention on the part of the International Monetary Fund (IMF)
and the industrialized nations. The developing economies of the Pacific Basin
had become vulnerable as the booms in uneconomic investments were financed with
funds borrowed in foreign currencies--notably the U.S. dollar. Their
vulnerability, and precariousness, were only exacerbated by the strength in the
U.S. dollar--the very currency that most economic officials elected to use as
an anchor for their currencies. Not surprisingly, international competitiveness
deteriorated and most racked up higher current account deficits, further adding
to the economies' vulnerability. Equity markets plummeted, falling some 70%-90%
in U.S. dollar terms, as economic growth prospects for the region abruptly
moved from above average growth to prospects for major economic contractions.
The turmoil in the Asian markets spread to other regions of the world.
Investors, wary of unsettled conditions in currency and financial markets in
other developing countries, sought to reduce their exposure to emerging
markets. Markets in Latin America and central Europe suffered from those
portfolio decisions. Extraordinary efforts on the part of global institutions
and major industrialized nations were required to restore some semblance of
stability in Asia and prevent this contagion from infecting other markets.
ECONOMIC AND MARKET OUTLOOK
World growth will be affected by the events in Asia. How large the effect will
be is a subject of ongoing debate and analysis. Although the effect on the U.S.
economy should be modest, the shift in the export-import balance with this
region will reduce the risk of re-igniting inflation. The Federal Reserve Board
now has room to reassess the growth prospects for the U.S. economy and delay
potential interest rate hikes. In fact, the risks of rekindling inflation and
effecting a significant economic slowdown appear more balanced than they have
for some time. While expectations for lower inflation are already incorporated
in lower bond yields, they provide important support for equity prices.
A worldwide rehabilitation process is now underway to repair the underpinnings
of the Asian financial and banking markets. Equally important to the major IMF
restructuring process are efforts to enact simulative fiscal measures designed
to return Japan--the largest economic player in the region--to an economic
growth path after seven years of recession. We expect both of these
requirements will be met to bring about economic and financial stability to the
region.
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, 1997. 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,
John D. Carifa
Chairman and President
A-1
CONSERVATIVE INVESTORS PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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INVESTMENT OBJECTIVE
The Conservative Investors 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
Fixed income markets got off to a slow start in the first quarter of the year.
The 25-basis point increase in the Federal Funds rate in March put investors in
a cautious mood as reports of continued economic strength heightened concerns
about further rate hikes. Investor expectations about inflation are the primary
determinant of the performance of the Portfolio's major asset class--bonds.
Subsequent releases of economic data indicated surprising advances in
productivity and an unexpected absence of upward price pressures. Sentiment
began to focus on the notion of a higher, non-inflationary growth path for the
economy and both bonds and stocks responded strongly to the upside. Just as
investors were getting comfortable with this "best of all worlds" environment,
the financial crisis in Asia erupted.
This turmoil in Asia's currency and capital markets began to affect the
performance of the developed world's markets. Expectations for economic growth
and profits had to be revised downward. While upward momentum in equity markets
was halted, fixed income markets continued their winning ways, reflecting
reduced fears about inflation that accompanied revised growth expectations.
Global institutions like the International Monetary Fund and major
industrialized nations responded to the region's liquidity and currency crises.
We believe these efforts will be successful in stabilizing conditions in the
region. However, it will take significant time to correct these deficiencies
and investor perceptions will remain skeptical as the countries strive to
recover above-average economic growth.
INVESTMENT RESULTS
For the fiscal year ended December 31, 1997, the Conservative Investors
Portfolio provided a total return of 11.22% at net asset value. The Portfolio
fell short of its 16.84% composite benchmark rate of return. This composite
represents 70% of the Lehman Brothers Government/Corporate Bond Index, which
returned 9.76%, and 30% of the S&P 500 Stock Index, which returned 33.35%. The
equity portion of the Portfolio was negatively affected by its exposure to
foreign stocks and the concentration of money flows into a limited number of
U.S. equities represented in the index. Indeed, 25 stocks in the S&P 500
generated a 34% return, while the remaining 475 issues underperformed the
index's 33.35% average return. For additional information on the Portfolio's
investment results, please turn to page A-21.
INVESTMENT OUTLOOK
We expect the U.S. economy to continue to perform satisfactorily even as the
rate of economic expansion slows. Our forecast reflects the combination of
shrinking export markets, a surge in imports and a strong dollar. Nonetheless,
inflation and interest rates should remain benign and provide support for both
bonds and equities. We also expect this period of when performance is
concentrated in only a handful of names to eventually reverse itself. Although
volatility will undoubtedly continue to characterize the "Asian Tiger" markets,
we believe conditions will improve. Part of our optimism is based on the
important role this region plays in Japan's export growth and its banking
system, as well as Japan's current and prospective efforts to address those
conditions.
PORTFOLIO STRATEGY
We will continue to pursue opportunities for total return consistent with the
Portfolio's objective as they arise.
A-2
GROWTH INVESTORS PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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INVESTMENT OBJECTIVE
The Growth Investors 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
For the third consecutive year, U.S. equities produced exceptional returns in
1997 and the S&P 500 Stock Index rose 33.35%. This performance, however, was
very volatile. During the first quarter of the year, stock and bond prices fell
following the Federal Reserve's 25-basis point increase in the Federal Funds
rate and heightened concerns about further rate hikes. However, investors began
to reassess that outlook. This was a result of subsequent economic data which
indicated surprising advances in productivity and corporate profits, continued
subdued inflation and unemployment rates at levels not witnessed in 20 years.
U.S. stock prices hit new highs and bonds began to generate positive rates of
return.
Just as investors were becoming increasingly comfortable with the notion of a
higher, non-inflationary growth path for the economy and superior rates of
profitability, turmoil in the Asian capital and currency markets began to
affect the capital markets in the developed world. Investors started to revise
downward their forecasts for global economic growth and profitability as
conditions in Asia deteriorated. Worldwide institutions like the International
Monetary Fund and major industrialized nations responded to the region's
liquidity and currency crises. We believe these efforts will be successful in
stabilizing conditions in the region. However, it will take significant time to
correct these deficiencies. Additionally, investor perceptions will remain
skeptical as the countries strive to recover above average economic growth.
INVESTMENT RESULTS
For the fiscal year ended December 31, 1997, the Growth Investors Portfolio
provided a total return of 16.34% at net asset value. The Portfolio fell short
of its 26.27% composite benchmark rate of return. This composite represents 70%
of the S&P 500 Stock Index, which returned 33.35%, and 30% of the Lehman
Brothers Government/Corporate Bond Index, which returned 9.76%. That shortfall
largely reflected exposure to international equities and the concentrated
nature of money flows into a narrow spectrum of U.S. stocks. Indeed, 25 stocks
in the S&P 500 generated a 34% return, while the remaining 475 issues
underperformed the Index's 33.35% average return. For additional information on
the Portfolio's investment results, please turn to page A-21.
INVESTMENT OUTLOOK
We expect the U.S. economy to continue to perform satisfactorily even as the
rate of economic expansion slows. Our forecast reflects the combination of
shrinking export markets, a surge in imports and a strong dollar. Nonetheless,
inflation and interest rates should remain benign and provide support for
equity valuations. We also expect this period of when performance is
concentrated in only a handful of names to eventually reverse itself. Although
volatility will undoubtedly continue to characterize the "Asian Tiger" markets,
we believe conditions will improve. Part of our optimism is based on the
important role this region plays in Japan's export growth and its banking
system, as well as Japan's current and prospective efforts to address those
conditions.
PORTFOLIO STRATEGY
Our Portfolio selection continues to focus on company fundamentals, earnings
growth and relative valuation levels.
A-3
TOTAL RETURN PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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INVESTMENT OBJECTIVE
The Total Return 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
U.S. economic activity remained healthy during the second half of the year
buoyed by continued strength in the labor market and a strong rebound in
consumer spending. Despite U.S. economic growth above trend levels, the Federal
Reserve left interest rates unchanged. Improving inflation fundamentals and a
strong dollar, coupled with turmoil in Asia's financial markets, argued against
any Federal Reserve action.
The U.S. bond market rallied during the period, posting solid returns. Data
indicating a slowing U.S. economy, together with a favorable U.S. budget
deficit, fueled a rally in the U.S. Treasury market. In October, financial
market turmoil which started in Southeast Asia, created a ripple effect that
spread to other global markets and caused a spike in volatility. Increased
investor demand for "safe," liquid securities provided additional fuel for the
rally. U.S. bond yields reached their lowest levels since 1996 during the
fourth quarter as the financial crisis in Southeast Asia spread around the
world.
INVESTMENT RESULTS
The Total Return Portfolio posted a 10.30% return at net asset value (NAV) for
the six months ending December 31, 1997. This surpassed the 9.08% return of its
benchmark, which is a 60%/40% composite of the S&P 500 Stock Index and the
Lehman Brothers Government/Corporate Bond Index. For the 12 months ending
December 31, 1997, both the equity and fixed income segments of the Portfolio
modestly underperformed their benchmarks. The Portfolio's 12 month return at
NAV was 21.11% while its composite benchmark posted a 23.91% return. The equity
portion of the Portfolio trailed the index because a few expensive
high-multiple stocks, which our stock selection discipline leads us to avoid,
did unusually well during this time period. For additional information on the
Portfolio's investment results, please turn to page A-21.
INVESTMENT OUTLOOK
Our outlook for the U.S. remains optimistic. We expect domestic growth to slow
from its 1997 pace to a more sustainable 2.5% rate in 1998. We also expect that
the economic slowing in Southeast Asia will further temper U.S. growth in the
upcoming year as exports to that region curtail. Meanwhile, the recent decline
in interest rates should moderate the anticipated slowing and provide stimulus
to the economy to ensure continued growth. Outside the U.S., global growth
should be slower and inflation pressures should be reduced as Asia exports
cheaper goods to the world and imports less from abroad. In the emerging
markets, we expect volatility to remain heightened and liquidity to remain low.
PORTFOLIO STRATEGY
We will maintain our focus on securities which have the most attractive
valuations, while also maintaining a well diversified portfolio with a high
degree of sector and industry diversification.
A-4
GROWTH AND INCOME PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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INVESTMENT OBJECTIVE
The Growth and Income 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 stocks.
MARKET REVIEW
The S&P 500 Stock Index has risen 125% in the past three years, posting a
33.35% return in 1997 alone. Smaller stocks also performed well, however, not
as well as their large cap peers. Growth stocks, driven by investor cash flow
and earnings momentum, significantly outperformed value stocks whose
performance is based more on low valuations to earnings.
INVESTMENT RESULTS
The Growth and Income Portfolio posted a 12.60% return at net asset value (NAV)
for the six month period ended December 31, 1997, outperforming both the S&P
500 Stock Index and the Lipper Growth & Income Average which had returns of
10.58% and 9.22%, respectively. During the 12 month period ended December 31,
1997, the Portfolio returned 28.80% at NAV, outperforming its Lipper benchmark,
which posted a 26.04% return, but underperforming the S&P 500, which had a
33.35% return. This underperformance relative to the S&P 500 was due to the
Portfolio's conservative focus on low valuation, high-dividend paying
companies. For additional information on the Portfolio's investment results,
please turn to page A-21.
INVESTMENT OUTLOOK
Currently, we believe that the market is fairly valued. The economy is growing
above trend, and since the beginning of 1996, the labor and goods markets have
tightened more or less continuously. This situation will probably not last much
longer. Far Eastern economies may drag down global growth which may result in a
slowing of the U. S. economy. If this occurs, bonds may benefit more than
stocks. If, on the other hand, the economy remains strong, the Fed may be
forced to raise interest rates. This would affect both bonds and stocks.
PORTFOLIO STRATEGY
We continue to seek the stocks of companies with primarily secular growth
potential combined with reasonable valuation. Ultimately, we strive to maintain
a defensive dividend yield and price to earnings ratio, fully invested posture
and a high degree of sector and industry diversification.
A-5
GROWTH PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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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.
MARKET REVIEW
The first half of 1997 was marked by continued leadership by very large
capitalization growth stocks and, in March and April, a sharp correction which
was particularly severe in the technology sector and in the over the counter
market.
INVESTMENT RESULTS
Your Portfolio's total return was 30.02% at net asset value for the one year
period ended December 31, 1997. This compares with 33.35% for the overall U.S.
stock market, as represented by the S&P 500 Stock Index and with 30.49% for the
Russell 1000 Growth Index, which tracks large-cap U.S. stocks. The Portfolio
has always emphasized stocks of companies somewhat smaller than those that
dominate the S&P 500. This, coupled with our strong emphasis on the technology
sector, made for relative underperformance in the first few months of 1997. In
the last half of 1997, these same sectors came back strongly and the market
rally broadened out, affording a better environment for stocks below the top
tier in size and quality. For additional information on the Portfolio's
investment results, please turn to page A-21.
INVESTMENT OUTLOOK
The extraordinarily favorable combination of solid growth and low inflation has
led to another year of strong equity returns. The recent collapse of both stock
markets and currencies in several Asian countries delivered a brief shock to
the U. S. market, but it has quickly regained its footing and rebounded
strongly. Conditions appear favorable for continued stock market gains.
Nevertheless, we would caution that we have now experienced several years of
strong results and that common sense and experience suggest that future gains
will be more moderate. While there is no immediate evidence to suggest a
reversal of fortune, we note that the bull market has benefited greatly from a
secular decline in interest rates which is now 15 years old. That said, the
immediate outlook for both the U. S. economy and the stock market looks
favorable.
PORTFOLIO STRATEGY
Technology and financial services have been the major areas of emphasis in the
Portfolio for the last several years, and we continue to see above average
potential in these sectors. Within the technology sector, we have particularly
stressed networking and communications.
A-6
INTERNATIONAL PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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INVESTMENT OBJECTIVE
The International 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
European equities rose during 1997. The two best performing markets were
Switzerland and Italy. The economy in the United Kingdom appeared to slow
modestly under the weight of high short term interest rates and a strong
currency. Increased domestic activity in all Continental markets but Germany
appeared evident during the quarter.
As the quarter and year drew to a close, the Asian crisis, which has so broadly
affected the investment equation, appeared to receive some positive news from
both Korea and Japan. In the case of Korea, faster than expected receipt of
funds from the International Monetary Fund helped stem the slide of the won.
This helped buy time for the authorities to continue working on a plan to
restructure the economy. In Japan, government officials made several attempts
to restore confidence in the financial system and the economy. This was
accomplished through measures designed to provide funding for the capital
strapped financial institutions, to create additional fiscal spending and to
introduce a tax cut for corporations and individuals.
With news of the Asian crisis turning for the better, albeit modestly,
investors pushed equity prices higher toward year-end, thus allowing many
markets in Europe and the U.S. to finish at or near the record highs achieved
during the summer.
INVESTMENT RESULTS
For the six months ended December 31, 1997, the International Portfolio posted
a -6.42% return at net asset value (NAV) while its benchmark, the MSCI EAFE
Index reported a -8.36% return. Both the Portfolio and its benchmark achieved
better returns during the 12 month period. The International Portfolio returned
3.33% at NAV and the index returned 2.06%. The poor performance of the
Portfolio and the index relative to the U.S. equity markets during the period
was a result of exposure to the Asian markets which experienced many problems
during the period. For additional information on the Portfolio's investment
results, please turn to page A-21.
INVESTMENT OUTLOOK
Exports, which have been driving economic growth in much of Europe, should
continue to do so in 1998, even with the Asian crisis providing a modestly
slower tempo. The outlook in Japan appears to be lackluster, with poor progress
on financial restructuring. The possibility of a significant new fiscal
stimulus package exists to bail out the banking system. However, the focus
seems to be on saving the system, rather than cleaning it up and strengthening
it for the medium term. The Japanese economy continues to be disinflationary
and slower profit growth is expected in the year ahead. Overall, the Asian
crisis appears to be slowly abating, although the repercussions are likely to
last for some time.
PORTFOLIO STRATEGY
We continue to look for companies involved in restructuring which may provide
good opportunities for unlocking shareholder value. Quality companies that are
well positioned in growth areas, both domestically and abroad, should still do
well. Therefore, we will continue to investigate these companies. Considering
the still uncertain outlook for the Asian region, we expect to lighten our
exposure to the Asian region.
A-7
PREMIER GROWTH PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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INVESTMENT OBJECTIVE
The Premier Growth Portfolio seeks growth of capital by employing aggressive
investment policies. The Portfolio invests 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
U.S. corporate profits in 1997 exceeded even the optimistic forecast we made at
the beginning of the year. Continuing improvements in manufacturing and
information technology, fewer trade barriers, lower shipping costs and better
supply chain and inventory management have muted swings in the business cycle.
As a result, inflation remains restrained and interest rates are stable. The
Asian crisis has strained the Asian markets; however, the worldwide effects of
the crisis appear to be minimal, so far. Although we do not know the full
dimensions of the Asian financial crisis, it ultimately offers hope of greater
transparency and structural reforms in an area of the world that is home to a
billion-plus new consumers.
INVESTMENT RESULTS
The Premier Growth Portfolio outperformed both of its benchmarks for the six
and 12 month periods ended December 31, 1997. The Portfolio achieved a total
return of 11.89% at net asset value (NAV) during the six month period while the
S&P 500 Stock Index returned 10.58% and the Russell 1000 Growth Stock Index
returned 9.15%. For the 12 month period, the Portfolio posted a 33.86% return
at NAV, while the S&P 500 returned 33.35% and the Russell posted a 30.49%
return. The Portfolio's outperformance was attributable to strong showings in
technology and financial issues. For additional information on the Portfolio's
investment results, please turn to page A-21.
INVESTMENT OUTLOOK
Today's market is not unduly overvalued. However, as portfolio managers select
investments, they should realize that there is less margin for error. Research
must be carefully evaluated to uncover those companies that continue to show
improvements in profitability and which are strategically positioned to
capitalize on new opportunities. We do not foresee any drastic changes to the
U.S. economy in the near-term. However, our bullishness remains cautious. We
believe our in-depth research capability will help us continue to focus on
quality companies with solid management and whose growth prospects should
provide solid returns.
PORTFOLIO STRATEGY
In selecting stocks for the Portfolio, we focus on premier U.S. companies with
world leadership positions. Presently, we are striving for roughly equal
weightings in more aggressive, high growth technology stocks on the one hand
and lower price to earnings multiple financial stocks on the other. Since we do
anticipate an increase in market volatility, we do not intend to deviate from
our basic trading strategy. This strategy allows us to take profits during
bouts of exuberance and capitalize on periods of price weakness where we are
confident of underlying fundamentals.
A-8
QUASAR PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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INVESTMENT OBJECTIVE
The Quasar 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 offers the possibility for capital
appreciation. The Portfolio may also pursue investment opportunities outside of
the United States.
INVESTMENT RESULTS
For the 12 months ended December 31, 1997, the Quasar Portfolio gained 18.60%
at net asset value while its benchmark, the Russell 2000 Index, was up 22.36%.
The Portfolio's underperformance relative to its benchmark was due to the fact
that some of the Portfolio's consumer retail and energy stocks did not perform
as well as they had over the prior two year period. For additional information
on the Portfolio's investment results, please turn to page A-21.
REVIEW OF INVESTMENT STRATEGY
During the period under review, some changes to the Portfolio were implemented.
First, within the energy sector, we have eliminated our holdings in offshore
drillers. However, we are still bullish about onshore drillers. We continue to
see a tightening in the demand/supply for oil tankers similar to the demand
crunch faced by drilling rig operators over the last two years. Therefore, we
purchased several holdings which we believe will benefit from this trend.
On the cyclical side, we continue to look for industries where demand is
growing much greater than supply and capacity is insufficient to meet demand.
As a result, companies can raise prices to meet this greater demand. We
continue to overweight the airline, hotel and rental car industries, believing
that they exhibit superior pricing power.
We have added to the Portfolio's health care holdings, focusing specifically on
biotechnology companies with products either approved by the Federal Drug
Administration or nearing the end of the approval process. We believe that
focusing on these companies should reduce or eliminate many of the risk hurdles
that these companies typically face.
A-9
REAL ESTATE INVESTMENT PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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INVESTMENT OBJECTIVE
The Real Estate Investment Portfolio seeks a total return on its assets from
long term growth of capital and income by investing in the equity securities of
companies involved in the real estate industry.
MARKET REVIEW
The commercial real estate markets in the United States are still showing
surprising strength. Broadly speaking, the pricing of commercial real estate,
as with any other commodity, is a function of supply and demand. Supply in this
case is the amount of new or vacant space. Demand is a function of economic and
demographic growth. The balance between supply and demand remains quite healthy
as new construction continues to lag behind demand growth. However,
construction is accelerating and economic growth is projected to slow. As a
result, although the real estate market is very strong, we will be watching it
very closely.
Publicly traded real estate companies control approximately 4% of the
income-producing real estate in this country. Although small, this market share
has grown dramatically in recent years. REITs, for example, have increased
their collective market capitalization from $50 billion to $95 billion in the
past 18 months. In any short period of time, the issuance of new REIT equity
can affect results as much as underlying fundamentals. A robust new issue
market hurt REIT returns in the first half of 1997. The market, as measured by
the NAREIT Equity Index, was up 5.70%, substantially below the 20.60% return
recorded by the S&P 500 Stock Index.
INVESTMENT RESULTS
Over the six month period ended December 31, 1997 the Real Estate Investment
Portfolio produced a total return of 15.78% at net asset value (NAV) compared
to the aforementioned 13.77% for the NAREIT benchmark. Since the Portfolio's
inception in January of 1997, it returned 23.40% at NAV while the NAREIT Index
returnd 18.93%. Throughout the period under review, the Portfolio was
overweighted in those property types and geographic markets which had the best
real estate dynamics. The strongest real estate markets in the United States
today are in California and the Northeast--especially for office and upscale
hotel properties. The weakest markets are luxury apartment properties in the
sunbelt. For additional information on the Portfolio's investment results,
please turn to page A-21.
INVESTMENT OUTLOOK
We see very little new construction of commercial real estate in any of the 65
geographic markets we track. Meanwhile, the economy continues to confound most
observers with its health. Therefore, we are enjoying an ideal operating
environment for the companies in which we invest. Growth is steady, capital is
plentiful and cheap, and correlation with the overall stock market and interest
rates remains low.
PORTFOLIO STRATEGY
The Portfolio's focus is unlikely to shift dramatically in the near term. Due
to long construction lead times, we are confident that office and upscale hotel
properties will see little new competition over the next several years. As long
as the economy continues to expand (even moderately) and valuations do not
become untenable, companies that own these types of properties in strong
geographic markets will remain the backbone of our Portfolio and should enable
us to remain optimistic about prospects for 1998.
A-10
TECHNOLOGY PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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INVESTMENT OBJECTIVE
The Technology Portfolio is a diversified investment portfolio 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.
MARKET REVIEW
The swings of emotion which surround technology stocks can make the overall
stock market's volatility seem tame. The market's normal pendulum of fear
versus greed can look more like panic versus euphoria when it comes to the tech
sector and 1997 illustrated that point only too well. Although the secular
growth outlook of this industry remains very much intact, in our view,
confusion and doubt plagued these stocks repeatedly this year. While we have
seen this apprehension and the price corrections it leads to more than once,
examining negative psychology is always necessary to determine where it may
have merit. The main points of today's concerns, as well as our own views about
them, are highlighted below.
THE ASIAN FLU
Events in the Far East have become a daily drama. The timing and nature of a
final resolution to this region's economic difficulties are unclear and tech
stocks have suffered because of this. It is obvious that this part of the world
has been an important source of growth for many technology companies and this
driver has become more uncertain. The price correction we have witnessed in
technology stocks since October, however, takes some of this into account.
Some things which are not taken into account at present include: a) the fact
that technology products and systems are essential to these countries if their
dream of economic progress is to be realized; and b) the competitive position
of U.S. (and some selected European) technology companies is stronger now than
it has been in decades because of the turmoil in Asia. Thus, the opportunity
exists for market share gains.
EXCESS SEMICONDUCTOR CAPACITY
A rapid buildup in semiconductor manufacturing capacity in 1996 and early 1997
has created excess inventories and weak pricing in some components, especially
DRAMs. Some of this reflects an aggressive campaign by Korean producers to
capture market share. As Korea tends to its affairs, that part of the problem
should self-correct in 1998.
Other factors which will help this capacity issue by driving demand include a
new microprocessor generation from Intel next year, new operating systems from
Microsoft in 1998 (both Windows 98 and NT 5.0) and a host of new consumer
products, including DVD, digital photography and digital cellular. We believe
that excess semiconductor capacity is a temporary and industry specific issue
and that weaker component pricing does not reflect a slowdown in end markets.
INVESTMENT RESULTS
The Portfolio returned 6.47% at net asset value for the one year period ended
December 31, 1997. During the same time frame, the Pacific Stock Exchange High
Technology Index and the S&P 500 Stock Index returned 19.97% and 33.35%,
respectively. For additional information on the Portfolio's investment results,
please turn to page A-21.
We remain confident in the long term growth prospects for the technology
sector. This confidence was rewarded in the second and third quarters of
calendar year 1997 as we saw a strong recovery in the technology market.
Underperformance early in the year caused the Portfolio to significantly
underperform its benchmarks for the 12 month period. As we noted in our last
commentary, this underperformance was largely due to our investment commitment
to networking stocks and our unwillingness to sell these securities when short
term issues arose.
INVESTMENT OUTLOOK
The year 2000 will certainly be a challenging one for the technology industry.
Older computers need to be reprogrammed if they are to accurately process
information when the millennium arrives. The concern which technology investors
have about this unusual circumstance is that corporations may reduce their
ongoing technology budgets temporarily in 1998 or 1999 if they panic in their
preparation for this deadline. We do foresee an obvious solution for this
worry, and, in fact, do anticipate some disruptions over the next two years.
Still, two things make us feel more hopeful. First, the issue is neither new
nor unpublicized. Most corporations and governments are aware of the problem
and have been spending significant amounts of money for a long period of time
to get ready, especially in the U.S. A few will panic, but most should not.
Second, resolving this issue presents a choice--fix the old or replace it with
the new. The latter is obviously the better way to go and most corporations are
doing exactly that. This actually benefits technology vendors with up-to-date
solutions, and it is precisely this kind of company we have been focusing on in
the Portfolio.
A-11
UTILITY INCOME PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
INVESTMENT OBJECTIVE
The Utility Income Portfolio seeks current income and capital appreciation by
investing primarily in equity and fixed income securities of companies in the
utility industry.
MARKET REVIEW
Utility stocks, which generally pay greater-than-average rates of current
income, tend to trail the market when periods of strong earnings growth
translate into capital appreciation. This is what happened during most of the
fiscal year, as the S&P 500 left the NYSE Utilities Index in the dust. In
October, however, uncertainty arose over Asian economic growth, causing capital
flight to U.S. businesses and stocks that are more insulated from slowing
earnings growth. Hence, the NYSE Utilities Index rose strongly against the
broader market in October and November.
INVESTMENT RESULTS
For the one year period ended December 31, 1997, the total return for your
Portfolio at net asset value was 25.71%. This compares with returns of 17.43%
and 28.96%, respectively for the Dow Jones Electric Utility Index and the New
York Stock Exchange Utility Index during the same time frame. For the same one
year time period, the Lehman Brothers Long-Term Government Bond Index returned
15.12%. Our performance relative to the NYSE Index relates primarily to our
holdings in the electric sector. Electric utilities lagged other utilities in
the early part of the year, but surpassed them in the latter half. As we were
overweighted in electrics, our performance reflected that phenomenon. For
additional information on the Portfolio's investment results, please turn to
page A-21.
INVESTMENT OUTLOOK
The stock market is navigating between a very strong domestic economy in which
interest rates threaten to rise to head off inflation and a rapidly weakening
situation in Asia. Equities are priced as though these two forces will balance,
slowing the U.S. economy enough to keep interest rates low, but continuing to
allow for decent earnings growth. This would extend the nearly perfect economic
conditions of 1995, 1996 and the first half of 1997, which saw the S&P 500
increase by almost 120% since the end of 1994. If the balance tilts toward
economic strength and rising interest rates, we would expect utility stocks to
resume their underperformance relative to the broader market. If the economy
slows to a greater extent than currently envisioned, however, utilities may
continue to benefit from the same factors that have led to their recent
strength.
A-12
WORLDWIDE PRIVATIZATION PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
INVESTMENT OBJECTIVE
The 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
assets will include equity securities of companies that we believe to be
beneficiaries of the privatization process.
MARKET REVIEW
The Portfolio enjoyed a year which proved to be excellent for equity markets
(with the exception of Japan and, to a lesser extent, Switzerland) and for
privatization investors in particular. Growing investor confidence in the
prospects for recovery in Europe, lower interest rates, a revival of confidence
in Eastern Europe, the re-election of Boris Yeltsin in Russia, and the
continued strong performance of the U.S., have led to savers committing a
greater proportion of their assets to equities. This, in turn, has generated
greater enthusiasm for privatized initial public offerings (IPOs).
The past year proved to be highly successful for privatization programs
worldwide. For the fiscal year, we project that an estimated $150 billion was
raised from the markets in privatization transactions, a record amount
following the $90 billion raised in 1996.
The majority of transactions emanated 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, as well.
Privatization activity was slow in Asia, with the exception of China,
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 to be the start of a substantial increase in the number of
transactions coming out of Germany. 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 RESULTS
The environment for privatizations continues to be quite favorable. This being
the case, your Portfolio outperformed the Morgan Stanley EAFE Index for the one
year period under review, returning 10.75% at net asset value, which compares
with 2.06% for the index. For additional information on the Portfolio's
investment results, please turn to page A-21.
INVESTMENT OUTLOOK
As yet, there is little sign of any revival of inflation. Provided that cost
pressures remain subdued, we look forward to further progress in equity prices
during 1998.
Looking toward the new year, we would expect to see another substantial
increase in privatization equity issues with Brazil, Western Europe and Russia
leading the way. We are optimistic that international markets can record
another positive performance for the year. Our confidence is based upon an
expectation of some recovery in Western Europe and inflation remaining low on a
global basis. We anticipate that the flows into international mutual funds will
continue to provide liquidity support for world markets.
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.
A-13
GLOBAL BOND PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
INVESTMENT OBJECTIVE
The Global Bond Portfolio seeks to provide 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 of varying
maturities.
MARKET REVIEW
Investment results for 1997 were dominated by the strength of the U.S. dollar,
which appreciated against both the Japanese yen and European currencies.
Despite these positive local currency returns, U.S. dollar strength subtracted
in excess of 15% from European bond market returns and 11% from Japanese bond
market returns. As a result, total returns in U.S. dollar terms from the global
strategy were subdued for the year. In local currency terms, all markets
included in the Salomon Brothers World Government Bond Index posted positive
returns.
The U.S. market shrugged off the underlying robust economic background and
focused instead on lower inflation and the potential dampening effects on
growth of the recent turmoil in Asia. Additionally, the U.S. market benefited
from the "flight-to-quality" mentality that drove yields towards record lows at
year-end. The U.S. portion of the index returned 9.64% for the year.
European returns were diverse but polarized around 6% to 7% for the "core"
European Monetary Union (EMU) countries (Germany, France, Austria, Netherlands,
Belgium) and 11% to 14% for "peripheral" (Spain and Italy) and "potential"
(United Kingdom and Sweden) EMU countries. The peripheral countries performed
well as the EMU project remained on course and looks set to follow a liberal
interpretation of the budget criteria, which will allow for inclusion of most
countries wishing to join.
INVESTMENT RESULTS
For the 12 month period ended December 31, 1997, the total return for the
Global Bond Portfolio was 0.67% at net asset value. The comparable Salomon
Brothers World Government Bond Index (unhedged in U.S. dollar terms) returned a
marginally lower 0.25% for the same period. The Portfolio marginally
outperformed the index due, in large part, to the hedging of some of the
foreign currency exposures. For additional information on the Portfolio's
investment results, please turn to page A-21.
INVESTMENT OUTLOOK
The bond markets appear to have become more comfortable with the idea that
strong economic growth and historically low levels of unemployment will not
necessarily translate into increasing price pressures.
We believe that European growth will be stimulated by the lower exchange rate
against the U.S. dollar and by the results of government efforts to meet the 3%
deficit target required for EMU membership.
The outlook for Japan remains more uncertain, although it appears that economic
deterioration will be met with corrective policy responses. With the supply of
Japanese government bonds set to rise in 1998, demand is also likely to rise.
This should limit any selloffs.
PORTFOLIO STRATEGY
As with 1997, the U.S. dollar will be key in driving returns in 1998. However,
the outlook for continued U.S. dollar strength is deteriorating and
diversification into foreign markets appears to be a prudent and potentially
profitable strategy during the year ahead.
A-14
GLOBAL DOLLAR GOVERNMENT PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
INVESTMENT OBJECTIVE
The 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. 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
The U.S. bond market rallied during the period, posting solid returns. Data
indicating a slowing U.S. economy, together with a favorable U.S. budget
deficit, fueled a rally in the U.S. Treasury market. In October, financial
market turmoil which started in Southeast Asia, created a ripple effect that
spread to other global markets and caused a spike in volatility. Increased
investor demand for "safe," liquid securities provided additional fuel for the
rally. U.S. bond yields reached their lowest levels since 1996 during the
fourth quarter as the financial crisis in Southeast Asia spread around the
world.
In most developed markets outside of the U.S., growth remained positive while
inflation troughed or declined. All developed bond markets posted solid returns
on a fully hedged basis. During the fourth quarter, the emerging market
economies were roiled by developments in Southeast Asia. Fast growth, fueled by
strong capital inflows and overvalued currencies, combined to produce large
external trade deficits, property and stock market bubbles, and overextended
financial systems. The sharp currency devaluations in these countries ignited
fears that other emerging market economies with managed currency regimes would
suffer similar consequences. All emerging market bond prices plummeted as the
lack of clear and prompt policy responses exacerbated the regional crisis in
Southeast Asia and caused investors to re-evaluate the risk premium associated
with all emerging markets. As a result, year-to-date strong bond market returns
for the emerging markets were eroded.
INVESTMENT RESULTS
For the six months ended December 31, 1997, the Portfolio returned 2.09% on a
net asset value (NAV) basis. Its benchmark, the J.P. Morgan Emerging Markets
Bond Index, which is composed of dollar denominated sovereign emerging market
bonds, achieved a return of 4.13%. Both the Portfolio and its benchmark
achieved better returns during the 12 month period. The Portfolio returned
13.23% at NAV, while its benchmark returned 16.17%. The underperformance of the
Portfolio can be attributed to sluggish performance of some of the Portfolio's
holdings in emerging market debt. In particular, your Portfolio's overweight
positions in Russian bonds, which were particularly hard hit by the effects of
the Southeast Asian financial crisis, negatively impacted the Portfolio's
performance. For additional information on the Portfolio's investment results,
please turn to page A-21.
INVESTMENT OUTLOOK
In 1998, we expect that global growth will be slower and inflation pressures
will be reduced as Asia exports cheaper goods to the world and imports less
from abroad. In the U.S., economic growth should be tempered by excess global
manufacturing capacity; lower commodity and import prices should restrain
inflation pressures. Recent declines in interest rates should provide an
offsetting stimulus. 1998 U.S. GDP growth is estimated to be 2.0% to 2.5%.
We expect volatility to remain elevated and liquidity to remain low in the
emerging markets. Although the direction of Asia's impact is clear, the full
extent of the crisis has yet to be determined. At this juncture, stabilizing
Korea is key and multinational efforts are clearly focused on this goal. The
U.S. Treasury market will continue to be perceived as a "safe haven" for
investors until clear policy responses are outlined and there is a commitment
to implementing them. As these policies are introduced, we believe the emerging
markets will stabilize and there will be significant investment opportunities.
A-15
HIGH YIELD PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
INVESTMENT OBJECTIVE
The High Yield Portfolio seeks the highest level of current income available
without assuming undue risk by investing principally in high yielding fixed
income securities. The Portfolio invests substantially all of its assets in
higher yielding, higher risk fixed income securities (commonly known as "junk
bonds") that are rated below investment grade and are considered to have
predominantly speculative characteristics.
MARKET REVIEW
The high yield market experienced its third consecutive year of strong
performance. Most high yield indices outperformed other fixed income indices by
2% to 3%. Record levels of new issuance and robust mutual fund inflows
dominated the market in 1997 for the second year in a row.
INVESTMENT RESULTS
The High Yield Portfolio commenced operations on October 27, 1997. From the
Portfolio's inception date to the reporting period ended December 31, 1997, the
Portfolio yielded a total return of 3.30% at net asset value. The Portfolio
outperformed its benchmark, the First Boston High Yield Index, which returned
1.63% during the same time frame. This outperformance was primarily due to a
greater emphasis on single B credits offering more relative value and yield
potential. For additional information on the Portfolio's investment results,
please turn to page A-21.
INVESTMENT OUTLOOK
We feel quite positive about the outlook for the overall economy as well as the
high yield market. Even with slightly lower growth levels anticipated for the
U.S., inflation remains low and interest rates remain relatively stable.
PORTFOLIO STRATEGY
We believe that credit selection will play a more significant role in high
yield investing going forward. In addition, steering clear of those credits
that will be most affected by the Asian crisis will also be an important tactic.
A-16
NORTH AMERICAN GOVERNMENT
INCOME PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
INVESTMENT OBJECTIVE
The North American Government Income 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, Mexico and Argentina. 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.
MARKET REVIEW
The U.S. bond market rallied with little interruption since our last
commentary, buoyed by tentative evidence of slowing domestic growth,
better-than-expected inflation news, the smallest federal budget deficit in
more than 20 years, and the diminishing likelihood of an interest rate increase.
Emerging market debt prices bounced back from their fall in October. However,
the Asian debt crisis has served to adjust downward expectation for global
growth and inflation. The crisis is fostering an allocation shift into the
relative safety of U.S. Government bonds. This has negatively impacted emerging
market debt prices. Despite the poor performance of emerging markets in
general, both Mexico and Argentina continue to remain among the best performing
markets.
INVESTMENT RESULTS
We are pleased to report that the North American Government Income Portfolio
posted a 9.62% return at net asset value over the most recent one year period
ended December 31, 1997. This compares with 9.65% for the Lehman Brothers
Aggregate Bond Index and 7.72% for the Lehman Brothers Intermediate-Term
Government Bond Index, which measures performance of bonds in the 1-10 year
maturity range. For additional information on the Portfolio's investment
results, please turn to page A-21.
INVESTMENT OUTLOOK
Our outlook for U.S. financial markets assumes that the U.S. economy will move
onto a slower and more sustainable growth path during the next six to 12
months. The recent decline in interest rates will support continued economic
expansion, but the dollar's past strength and weaker demand in export markets
will be a drag on growth.
Although the Mexican peso fell victim to the currency crisis plaguing Southeast
Asia, economic fundamentals remain strong. We continue to believe that Mexico
will grow 5%-6% annually through the year 2000.
The economy in Canada continues to expand, fueled by consumer spending and
business investment. The GDP remains strong and the Bank of Canada has
increased interest rates to guard against the threat of inflation. We expect
the Bank of Canada to continue to raise interest rates to better reflect
underlying fundamentals.
Despite excellent fundamentals, we believe that Argentina will continue to be
hit by the spillover from Asia and Brazil. However, Argentina is likely to
escape the emerging market turmoil with marginal deterioration of its growth
outlook. Longer term, we remain very positive on Argentina's economic prospects.
A-17
SHORT-TERM MULTI-MARKET PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
INVESTMENT OBJECTIVE
The Short-Term Multi-Market Portfolio seeks the highest level of current income
consistent with what we believe 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.
MARKET REVIEW
The U.S. bond market rallied during the period, posting solid returns. Data
indicating a slowing U.S. economy, together with a favorable U.S. budget
deficit, fueled a rally in the U.S. Treasury market. In October, financial
market turmoil which started in Southeast Asia, created a ripple effect that
spread to other global markets and caused a spike in volatility. Increased
investor demand for "safe," liquid securities provided additional fuel for the
rally. U.S. bond yields reached their lowest levels since 1996 during the
fourth quarter as the financial crisis in Southeast Asia spread around the
world.
Outside the U.S., the Bank of Canada raised interest rates by 50-basis points
in December due to continued weakness in the Canadian dollar. In Australia,
recent data indicate that the economy expanded during the second half of 1997
at its fastest pace in more than two years. As expected, the Reserve Bank of
New Zealand eased monetary conditions at their December board meeting.
European bonds rallied with long term yields setting record lows as the
deepening Asian financial crisis spurred demand for high quality fixed income
securities. In Italy, the Bank of Italy finally satisfied the market's long
anticipated easing of official interest rates by cutting rates 75-basis points.
In Germany, concerns that slow export demand is hindering economic expansion
were allayed when industrial production figures showed that demand increased.
Unemployment levels remain at record highs and inflation remained stable
throughout core Europe.
INVESTMENT RESULTS
The Portfolio's total return for the six months ended December 31, 1997 was
2.72% at net asset value (NAV), compared to the Merrill Lynch 1-3 Year Treasury
Index's return of 3.67% for the same period. Both the Portfolio and its
benchmark had better returns over the 12 month period, posting 4.59% and 6.66%
returns, respectively. Your Portfolio's performance over the past year trailed
that of its benchmark due to the generally falling interest rate environment
during the year and your Portfolio's underweight position in the U.S. market.
For additional information on the Portfolio's investment results, please turn
to page A-21.
INVESTMENT OUTLOOK
In 1998, we expect that global growth will be slower and inflation pressures
will be reduced as Asia exports cheaper goods to the world and imports less
from abroad. We believe that among the major economic blocs, the greatest
impact will be felt in Japan where weaker domestic demand will only be
partially offset by a widening trade surplus. Economic activity in Australia
and New Zealand should also be dramatically lower because of their substantial
trading relationships with Asia.
The impact on Europe and the U.S. should be more moderate as reduced exports
are offset by recent declines in interest rates. In Europe, we believe the
primary theme will continue to be European Monetary Union and the convergence
of interest rates across the continent. With secularly high unemployment, low
inflation and weak domestic demand, short term rates should converge around
4.0%. This rate is lower than previously expected and should enable Italy and
Spain to trim rates further. In the U.S., we expect economic growth will be
tempered by excess global manufacturing capacity; lower commodity and import
prices will restrain inflation pressures. Recent declines in interest rates
will provide an offsetting stimulus. 1998 U.S. Gross Domestic Product growth is
estimated to be 2.0% to 2.5%.
Although the direction of Asia's impact is clear, the full extent of the crisis
has yet to be determined. At this juncture, stabilizing Korea is key and
multinational efforts are clearly focused on this goal. However, we believe
that liquidity will remain low, volatility will remain high, and the U.S.
Treasury market will continue to be perceived as a "safe haven" for investors
until clear policy responses are outlined and there is a commitment to
implementing them. At that time, fundamentals should again dominate the pricing
of credit sensitive debt.
A-18
U.S. GOVERNMENT/HIGH GRADE
SECURITIES PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
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 and other high grade debt securities.
MARKET REVIEW
U.S. economic activity remained healthy during the second half of the year
buoyed by continued strength in the labor market and a strong rebound in
consumer spending. GDP growth accelerated in the fourth quarter to 4.3%, up
from 3.1% for the third quarter. 1997 GDP growth was 3.8%. The labor market
remained strong. Non-farm payrolls grew by 358,000 a month during the fourth
quarter, the highest three month average since March-May 1994. The unemployment
rate dropped to 4.7% in December and hovered near 20-year lows throughout most
of the period. Despite these record employment levels, inflation continued to
abate with consumer prices advancing 1.7% and producer prices declining 1.2%
year over year through December. This yearly decline in producer prices was the
largest since 1986.
Despite U.S. economic growth above trend levels, the Federal Reserve left
interest rates unchanged. Improving inflation fundamentals and a strong dollar,
coupled with turmoil in Asia's financial markets, argued against any Federal
Reserve action.
The U.S. bond market rallied during the period posting solid returns. Data
indicating a slowing U.S. economy, together with a favorable U.S. budget
deficit, fueled a rally in the U.S. Treasury market. In October, financial
market turmoil which started in Southeast Asia, created a ripple effect that
spread to other global markets and caused a spike in volatility. Increased
investor demand for "safe," liquid securities provided additional fuel for the
rally. U.S. bond yields reached their lowest levels since 1996 during the
fourth quarter as the financial crisis in Southeast Asia spread around the
world. Among the investment grade sectors, corporates were the best performing,
followed by government, mortgage and asset-backed securities.
INVESTMENT RESULTS
For the six months ended December 31, 1997, the Portfolio returned 5.58% on a
net asset value (NAV) basis versus 6.24% for its benchmark (a composite of 67%
Lehman Brothers Government Bond Index and 33% Lehman Brothers Corporate Bond
Index). For the 12 month period, the Portfolio posted an 8.68% return at NAV,
while its benchmark posted a 9.18% return. The Portfolio modestly
underperformed its benchmark during the period due to a conservative
positioning in light of increased interest rate volatility and sluggish
performance of the Portfolio's holdings of corporate bonds. As events unfolded
in Southeast Asia, many investors reduced their appetite for all types of
credit risk, including domestic corporate bonds. This risk aversion produced
wider yield spreads in the credit oriented markets and hampered returns in the
Portfolio. For additional information on the Portfolio's investment results,
please turn to page A-21.
INVESTMENT OUTLOOK
We expect domestic growth to slow from its 1997 pace to a more sustainable 2.5%
rate in 1998. The impact of the financial crisis in Southeast Asia should be
moderate as reduced exports are offset by recent declines in interest rates.
Economic growth should be tempered by excess global manufacturing capacity;
lower commodity and import prices will restrain inflation pressures. Recent
declines in interest rates should provide an offsetting stimulus.
Although the direction of Asia's impact is clear, the full extent of the crisis
has yet to be determined. At this juncture, stabilizing Korea is key and
multinational efforts are clearly focused on this goal. However, we believe
that liquidity will remain low, volatility will remain high, and the U.S.
Treasury market will continue to be perceived as a "safe haven" for investors
until clear policy responses are outlined and there is a commitment to
implementing them. The Federal Reserve is unlikely to raise interest rates in
the near term.
A-19
MONEY MARKET PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
INVESTMENT OBJECTIVE
The 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. An investment in the Portfolio is neither insured nor
guaranteed by the U.S. Government.
INVESTMENT RESULTS
For the twelve months ended December 31, 1997, the Money Market Portfolio
returned 5.11% at net asset value. During the same period, the total return for
the Salomon Brothers 3-Month Treasury Bill Index was 5.23%. For additional
information on the Portfolio's investment results, please turn to page A-21.
INVESTMENT OUTLOOK
The Fed's monetary policy will likely remain neutral through the first half of
1998. Circumstances, such as our continued tight labor market, indicate that
our economy is still in a strong enough position to absorb any damage that will
be done by the Asian crisis. The Fed should not have any reason to seriously
consider interest rate hikes or cuts. In the meantime, with the Portfolio not
having any major maturities for the next several weeks, we are in a position to
patiently look for any developments which could influence the short term
markets.
PORTFOLIO STRATEGY
Due to technical factors in the fourth quarter of 1997, we laid out a very
distinct strategy in timing yield curve movements. Early in the fourth quarter,
while the yield curve was only modestly steep, we geared investments toward
late November and mid-December maturity placements. This plan enabled us to
take advantage of a steepening yield curve later in the quarter. As funds
matured in November and December, we capitalized on the general need of the
issuer's year-end financing requirements by extending our maturities while
leaving enough cash in the account for year-end liquidity purposes. As we enter
the first quarter of a new year, the yield curve has flattened out, yet the
Portfolio is in position to enjoy higher yields without a tremendous need for
investing until later on in the quarter.
A-20
INVESTMENT RESULTS ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
INVESTMENT RESULTS AS OF DECEMBER 31, 1997
Listed below are the Portfolios' average annual total returns for the one-year,
five-year (where applicable) and since-inception periods ended December 31,
1997.
ASSET ALLOCATION PORTFOLIOS
CONSERVATIVE INVESTORS PORTFOLIO
One Year 11.22%
Since Inception (10/94) 10.15%
GROWTH INVESTORS PORTFOLIO
One Year 16.34%
Since Inception (10/94) 13.48%
TOTAL RETURN PORTFOLIO
One Year 21.11%
Five Years 12.74%
Since Inception (12/92) 12.71%
COMMON STOCK/EQUITY SECURITIES PORTFOLIOS
GROWTH AND INCOME PORTFOLIO
One Year 28.80%
Five Years 19.28%
Since Inception (1/91) 15.30%
GROWTH PORTFOLIO
One Year 30.02%
Since Inception (9/94) 30.03%
INTERNATIONAL PORTFOLIO
One Year 3.33%
Five Years 9.57%
Since Inception (12/92) 9.55%
PREMIER GROWTH PORTFOLIO
One Year 33.86%
Five Years 21.06%
Since Inception (6/92) 21.72%
QUASAR PORTFOLIO
One Year 18.60%
Since Inception (8/96) 17.94%
REAL ESTATE INVESTMENT PORTFOLIO
Since Inception (1/97) 23.40%*
TECHNOLOGY PORTFOLIO
One Year 6.47%
Since Inception (1/96) 8.55%
UTILITY INCOME PORTFOLIO
One Year 25.71%
Since Inception (5/94) 14.52%
WORLDWIDE PRIVATIZATION PORTFOLIO
One Year 10.75%
Since Inception (9/94) 12.50%
INCOME-ORIENTED PORTFOLIOS
GLOBAL BOND PORTFOLIO
One Year 0.67%
Five Years 7.05%
Since Inception (7/91) 7.91%
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
One Year 13.23%
Since Inception (5/94) 15.77%
HIGH YIELD PORTFOLIO
Since Inception (10/97) 3.30%*
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO
One Year 9.62%
Since Inception (5/94) 9.68%
SHORT-TERM MULTI-MARKET PORTFOLIO
One Year 4.59%
Five Years 4.05%
Since Inception (11/90) 3.99%
U.S. GOVERNMENT/HIGH-GRADE SECURITIES PORTFOLIO
One Year 8.68%
Five Years 6.85%
Since Inception (9/92) 6.24%
SHORT-TERM INCOME PORTFOLIOS
MONEY MARKET PORTFOLIO
One Year 5.11%
Annualized 7-Day Yield 5.30%
(*) 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, 1997.
A-21
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
ALLIANCE VARIABLE PRODUCTS SERIES FUND
GROWTH OF A $10,000 INVESTMENT
CONSERVATIVE INVESTORS PORTFOLIO
10/31/94* TO 12/31/97
30%S&P 500/70% LBAGGREGATE:$16,134
CONSERVATIVE INVESTORS PORTFOLIO: $13,599
LEHMAN BROS. AGGREGATE BOND INDEX: $13,526
$17,000
$16,000
$15,000
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
10/31/94 12/94 12/95 12/96 12/31/97
GROWTH AND INCOME PORTFOLIO
1/31/91* TO 12/31/97
S&P 500:$33,811
LIPPER GROWTH AND INCOME FUNDS AVERAGE: $28,928
GROWTH AND INCOME PORTFOLIO: $26,949
$34,000
$30,000
$26,000
$22,000
$18,000
$14,000
$10,000
1/31/91 12/92 12/94 12/96 12/31/97
GROWTH INVESTORS PORTFOLIO
10/31/94* TO 12/31/97
S&P 500: $22,050
70%S&P 500/30% LBAGGREGATE:$19,544
GROWTH INVESTORS PORTFOLIO: $14,950
$24,000
$22,000
$20,000
$18,000
$16,000
$14,000
$12,000
$10,000
$8,000
10/31/94 12/94 12/95 12/96 12/31/97
GROWTH PORTFOLIO
9/30/94* TO 12/31/97
GROWTH PORTFOLIO: $23,740
S&P 500:$22,544
RUSSELL 1000: $22,324
$24,000
$22,000
$20,000
$18,000
$16,000
$14,000
$12,000
$10,000
$8,000
9/30/94 12/94 12/95 12/96 12/31/97
TOTAL RETURN PORTFOLIO
12/31/92* TO 12/31/97
60% S&P 500/40% LBGOV'T/CORP BOND INDEX: $20,857
LIPPER BALANCEDFUNDS AVERAGE:$18,634
TOTAL RETURN PORTFOLIO: $18,210
$22,000
$20,000
$18,000
$16,000
$14,000
$12,000
$10,000
12/31/92 12/93 12/94 12/95 12/96 12/31/97
INTERNATIONAL PORTFOLIO
12/31/92* TO 12/31/97
LIPPER INTERNATIONAL FUNDS AVERAGE:$17,846
MSCIEAFE:$17,396
INTERNATIONAL PORTFOLIO: $15,796
$18,000
$16,000
$14,000
$12,000
$10,000
12/31/92 12/93 12/94 12/95 12/96 12/31/97
22
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
ALLIANCE VARIABLE PRODUCTS SERIES FUND
GROWTH OF A $10,000 INVESTMENT
PREMIER GROWTH PORTFOLIO
6/30/92* TO 12/31/97
PREMIER GROWTH PORTFOLIO: $29,590
S&P 500:$27,239
RUSSELL 1000 INDEX: $27,238
$30,000
$25,000
$20,000
$15,000
$10,000
6/30/92 12/93 12/94 12/95 12/96 12/31/97
GLOBAL BOND PORTFOLIO
7/31/91* TO 12/31/97
SBWORLD GOV'T BOND INDEX: $17,297
GLOBAL BOND PORTFOLIO: $16,333
$18,000
$17,000
$16,000
$15,000
$14,000
$13,000
$12,000
$11,000
$10,000
7/31/91 12/91 12/93 12/95 12/31/97
UTILITY INCOME PORTFOLIO
5/31/94* TO 12/31/97
S&P 500:$23,067
NYSEUTILITY INDEX: $16,206
UTILITY INCOME PORTFOLIO: $15,958
$24,000
$21,000
$18,000
$15,000
$12,000
$10,000
$9,000
5/31/94 12/94 12/95 12/96 12/31/97
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
5/31/94* TO 12/31/97
JPMORGAN EMERGING MARKETS BOND INDEX: $18,563
GLOBAL DOLLAR GOVERNMENT PORTFOLIO: $17,063
$19,000
$18,000
$17,000
$16,000
$15,000
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
5/31/94 12/94 12/95 12/96 12/31/97
WORLDWIDE PRIVATIZATION PORTFOLIO
9/30/94* TO 12/31/97
WORLDWIDE PRIVATIZATION PORTFOLIO: $14,697
MSCIEAFE INDEX: $11,994
$15,000
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
9/30/94 12/94 12/95 12/96 12/31/97
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO
5/31/94* TO 12/31/97
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO: $13,814
LEHMAN BROS. AGGREGATE BOND INDEX: $13,567
LEHMAN BROS. INTERMEDIATE GOV'T BOND INDEX: $12,913
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
$8,000
5/31/94 12/94 12/95 12/96 12/31/97
A-23
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
ALLIANCE VARIABLE PRODUCTS SERIES FUND
GROWTH OF A $10,000 INVESTMENT
U.S. GOVERNMENT/HIGH-GRADE SECURITIES PORTFOLIO
9/30/92* TO 12/31/97
LEHMAN BROS. AGGREGATE BOND INDEX: $14,383
67% LB GOV'T BOND INDEX/33% LBCORP. BOND INDEX: $14,317
U.S. GOV'T/HIGH GRADE SECURITIES PORTFOLIO: $13,776
$15,000
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
9/30/92 12/92 12/94 12/96 12/31/97
SHORT-TERM MULTI-MARKET PORTFOLIO
11/30/90* TO 12/31/97
MERRILL LYNCH 1-3 YEAR TREASURY INDEX: $15,640
LIPPER SHORT WORLD MULTI-MARKET INCOME FUNDS AVERAGE: $13,216
SHORT-TERM MULTI-MARKET PORTFOLIO: $13,201
$16,000
$15,000
$14,000
$13,000
$12,000
$11,000
$10,000
11/30/90 12/91 12/93 12/95 12/31/97
TECHNOLOGY PORTFOLIO**
1/31/96* TO 12/31/97
PSEHIGH-TECH INDEX: $14,069
TECHNOLOGY PORTFOLIO: $11,684
$15,000
$14,000
$13,000
$12,000
$11,000
$10,000
1/31/96 6/96 12/96 6/97 12/31/97
QUASAR PORTFOLIO**
8/31/96* TO 12/31/97
RUSSELL 2000 INDEX: $13,376
QUASAR PORTFOLIO: $12,594
$14,000
$13,000
$12,000
$11,000
$10,000
8/31/96 12/96 6/97 12/31/97
REAL ESTATE INVESTMENT PORTFOLIO***
1/31/97* TO 12/31/97
S&P 500: $12,551
REAL ESTATE INVESTMENT PORTFOLIO: $12,293
NAREITINDEX: $11,893
$13,000
$12,000
$11,000
$10,000
$9,000
1/31/97 6/97 12/31/97
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THESE CHARTS ILLUSTRATE THE TOTAL VALUE OF AN ASSUMED $10,000 INVESTMENT IN
EACH PORTFOLIO AS COMPARED TO THE PERFORMANCE OF AN APPROPRIATE BROAD-BASED
INDEX FOR THE TIME FRAMES INDICATED FOR EACH PORTFOLIO. PERFORMANCE RESULTS FOR
EACH PORTFOLIO REPRESENT THE PORTFOLIO'S TOTAL RETURN AT NET ASSET VALUE.
* 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 TRUST; 9/17/92 U.S.
GOVERNMENT/HIGH-GRADE SECURITIES; 11/28/90 SHORT-TERM MULTI-MARKET; 1/25/96
TECHNOLOGY; 8/5/96 QUASAR; 1/9/97 REAL ESTATE INVESTMENT.
** DUE TO A SHORT TRACK RECORD ON DECEMBER 31, 1997, PERFORMANCE INFORMATION
SHOWN IS ON A SEMI-ANNUAL, RATHER THAN ANNUAL, BASIS.
*** DUE TO A TRACK RECORD OF LESS THAN ONE YEAR ON DECEMBER 31, 1997,
PERFORMANCE INFORMATION SHOWN IS ON A MONTHLY, RATHER THAN ANNUAL, BASIS.
A-24
THE BENCHMARKS ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
The benchmarks described below represent unmanaged indices; the Lipper averages
include funds that have generally similar investment objectives to the
respective Alliance portfolio, although 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 Growth Index represents performance of 1000 of
the largest U.S. companies by market capitalization.
RUSSELL 2000--The Russell 2000 Index consists of 2000 small- and mid-cap
companies. The average market capitalization is approximately $500 million.
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.
DJ UTILITY--The Dow Jones Utility Average is a price weighted average which
consists of 15 actively traded stocks representing a cross-section of
corporations involved in various phases of the utility industry.
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 Bond 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 Bond 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 10 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 93 mutual funds.
LIPPER BALANCED FUNDS AVERAGE--The Lipper Balanced Funds Average reflects
performance of 109 mutual funds.
LIPPER INTERNATIONAL FUNDS AVERAGE--The Lipper International Funds Average
reflects performance of 112 mutual funds.
LIPPER SHORT WORLD MULTI-MARKET INCOME FUNDS AVERAGE--The Lipper Short World
Multi-Market Income Funds Average reflects performance of 10 mutual funds.
NAREIT INDEX--The NAREIT Index represents returns for the National Association
of Real Estate Investment Trust Equity Index.
PSE HIGH TECHNOLOGY--The Pacific Stock Exchange High Technology Index is
comprised of technology stocks traded on the Pacific Stock Exchange.
THE FIRST BOSTON HIGH YIELD INDEX--The First Boston High Yield Index is an
unmanaged, trader priced portfolio constructed to mirror the high yield debt
market.
A-25
TEN LARGEST HOLDINGS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PREMIER GROWTH PORTFOLIO
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Philip Morris Cos., Inc. $ 27,817,344 5.9%
MBNA Corp. 20,892,697 4.4
Home Depot, Inc. 20,261,772 4.3
Nokia Corp. (ADR) 19,922,000 4.2
Merck & Co., Inc. 18,508,750 3.9
Tyco International, Ltd. 18,106,113 3.8
COMPAQ Computer Corp. 17,806,031 3.8
Dell Computer Corp. 17,049,941 3.6
Cisco Systems, Inc. 15,164,256 3.2
Intel Corp. (Common and warrants,
expiring 3/14/98) 14,532,306 3.1
$190,061,210 40.2%
GROWTH AND INCOME PORTFOLIO
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Chase Manhattan Corp. $ 8,716,200 3.5%
RJR Nabisco Holdings Corp. 8,422,500 3.4
Texaco, Inc. 8,188,875 3.3
Morgan Stanley, Dean Witter,
Discover and Co. 6,752,075 2.7
Philip Morris Cos., Inc. 6,332,422 2.5
First Union Corp. 6,088,500 2.4
Merck & Co., Inc. 5,992,500 2.4
Campbell Soup Co. 5,975,250 2.4
American Home Products Corp. 5,638,050 2.3
First Data Corp. 5,586,750 2.2
$ 67,693,122 27.1%
TOTAL RETURN PORTFOLIO
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
U.S. Treasury Notes $ 15,248,539 35.5%
Chase Manhattan Corp. 897,900 2.1
Texaco, Inc. 875,437 2.1
RJR Nabisco Holdings Corp. 873,750 2.0
Philip Morris Cos., Inc. 743,125 1.7
Morgan Stanley, Dean Witter,
Discover and Co. 733,741 1.7
Campbell Soup Co. 639,375 1.5
Merck & Co., Inc. 637,500 1.5
First Union Corp. 630,375 1.5
American Home Products Corp. 604,350 1.4
$ 21,884,092 51.0%
A-26
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
INTERNATIONAL PORTFOLIO
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Nokia AB OY Corp. Series A pfd. $ 2,037,608 3.4%
Ciba Specialty Chemicals AG 2,022,696 3.3
Nestle, SA 1,893,578 3.1
Novartis AG (ADR) 1,834,431 3.0
Sanofi, SA 1,697,682 2.8
AKZO Nobel NV 1,606,920 2.6
Ladbroke Group Plc 1,572,341 2.6
Credito Italiano 1,382,561 2.3
Diageo Plc 1,259,048 2.1
HSBC Holdings Plc 1,257,066 2.1
$ 16,563,931 27.3%
UTILITY INCOME PORTFOLIO
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
FPL Group, Inc. $ 923,325 4.5%
NIPSCO Industries, Inc. 899,762 4.4
American Electric Power, Inc. 872,462 4.3
CINergy Corp. 846,706 4.2
CMS Energy Corp. 810,750 4.0
Cablevision Systems Corp. 8.5% cv. pfd. 770,000 3.8
AT&T Corp. 769,300 3.8
Allegheny Energy, Inc. 763,750 3.7
Teleport Communications Group, Inc. 747,150 3.7
AirTouch Communications, Inc.
Cl.C 4.25% cv. pfd. 629,356 3.1
$ 8,032,561 39.5%
GROWTH PORTFOLIO
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Cendant Corp. $ 14,370,469 6.1%
Cisco Systems, Inc. 12,122,475 5.1
WorldCom, Inc. (common and
preferred stock) 9,327,021 3.9
Philip Morris Cos., Inc. 8,292,188 3.5
Sterling Software, Inc. 6,441,100 2.7
MCI Communications Corp. 6,426,562 2.7
Ceridian Corp. 6,345,031 2.7
MBNA Corp. 6,288,703 2.7
Travelers Group, Inc. 5,791,509 2.5
American International Group, Inc. 5,113,969 2.2
$ 80,519,027 34.1%
A-27
TEN LARGEST HOLDINGS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
WORLDWIDE PRIVATIZATION PORTFOLIO
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
AKZO Nobel NV $ 984,497 2.4%
Austria Tabakwerke AG 886,672 2.1
Sair Group 862,305 2.1
Telecomunicacoes Brasileiras SA (ADR) 815,062 1.9
Energis Plc 774,849 1.9
British Energy Plc 764,255 1.8
Viag AG 747,104 1.8
Sanofi, SA 745,867 1.8
Electricidade de Portugal SA 729,000 1.7
CSL Ltd. 687,622 1.6
$ 7,997,233 19.1%
CONSERVATIVE INVESTORS PORTFOLIO
COMPANY U.S. $ VALUEPERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
U.S. Treasury Notes $ 8,153,852 27.0%
U.S. Treasury Bond, 6.125%, 11/15/27 1,967,969 6.5
Federal National Mortgage Assn. 1,795,773 5.9
ABN Amro Bank NV Chicago, 7.125%, 6/18/07 551,000 1.8
Federal Home Loan Bank 534,045 1.8
Time Warner, Inc., 8.375%, 3/15/23 513,531 1.7
Goldman Sachs Group LP, 7.20%, 11/01/06 475,681 1.6
St. George Bank, Ltd., 7.15%, 10/15/05 437,844 1.4
Corporacion Andina de Fomento,
7.25%, 3/01/07 407,974 1.4
Philip Morris Cos., Inc. 271,875 0.9
$ 15,109,544 50.0%
GROWTH INVESTORS PORTFOLIO
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
U.S. Treasury Notes $ 1,949,176 11.7%
Merck & Co., Inc. 425,000 2.6
Philip Morris Cos., Inc. 407,812 2.5
Walt Disney Co. 346,719 2.1
Cisco Systems, Inc. 334,875 2.0
Chase Manhattan Corp. 328,500 2.0
Noble Drilling Corp. 306,250 1.8
WorldCom, Inc. 302,812 1.8
BJ Services Co. 287,750 1.7
U.S. Treasury Bond, 6.125%, 11/15/27 282,606 1.7
$ 4,971,500 29.9%
A-28
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
TECHNOLOGY PORTFOLIO
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Cisco Systems, Inc. $ 3,717,112 5.4%
Dell Computer Corp. 3,491,498 5.0
COMPAQ Computer Corp. 3,216,937 4.6
HBO & Co. 2,350,469 3.4
Intel Corp. 2,001,234 2.9
Nokia Corp. (ADR) 1,974,000 2.9
Altera Corp. 1,972,797 2.8
PeopleSoft, Inc. 1,904,875 2.8
Bay Networks, Inc. 1,863,251 2.7
Applied Materials, Inc. 1,649,137 2.4
$ 24,141,310 34.9%
QUASAR PORTFOLIO
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Continental Airlines, Inc. $ 1,881,687 3.2%
Mohawk Industries, Inc. 1,832,878 3.1
OMI Corp. 1,659,262 2.8
Telephone and Data Systems, Inc. 1,480,687 2.5
GelTex Pharmaceuticals, Inc. 1,422,041 2.4
Parker Drilling Co. 1,379,625 2.3
Centocor, Inc. 1,224,862 2.1
Budget Group, Inc. 1,223,512 2.1
Bethlehem Steel Corp. 1,216,125 2.0
Alaska Air Group, Inc. 1,127,625 1.9
$ 14,448,304 24.4%
REAL ESTATE INVESTMENT PORTFOLIO
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Equity Office Properties Trust $ 671,208 4.9%
Glenborough Realty Trust, Inc. 607,312 4.4
Essex Property Trust, Inc. 605,500 4.4
Patriot American Hospitality, Inc. 599,300 4.4
Crescent Real Estate Equities Co. 543,375 4.0
Public Storage, Inc. 534,625 3.9
SL Green Realty Corp. 510,969 3.7
Pan Pacific Retail Properties, Inc. 508,725 3.7
Starwood Lodging Trust 497,725 3.6
Highwoods Properties, Inc. 487,156 3.6
$ 5,565,895 40.6%
29
INDUSTRY DIVERSIFICATION
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
INTERNATIONAL PORTFOLIO
U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Basic Industries $ 2,698,438 4.4%
Capital Goods 724,755 1.2
Consumer Manufacturing 2,994,809 4.9
Consumer Services 8,224,171 13.5
Consumer Staples 6,238,498 10.3
Energy 2,167,020 3.6
Finance 13,094,420 21.6
Healthcare 7,885,403 13.0
Multi Industry 2,728,904 4.5
Technology 7,217,260 11.9
Transportation 90,031 0.1
Utilities 1,854,070 3.1
Total Investments* 55,917,779 92.1
Cash and receivables, net of liabilities 4,792,619 7.9
Net Assets $ 60,710,398 100.0%
WORLDWIDE PRIVATIZATION PORTFOLIO
U.S. $ VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Basic Industries $ 4,197,434 10.0%
Capital Goods 419,503 1.0
Consumer Manufacturing 924,201 2.2
Consumer Services 4,471,571 10.7
Consumer Staples 2,407,806 5.8
Electric & Gas (Utilities) 7,650,593 18.3
Energy 1,852,658 4.4
Finance 7,010,300 16.8
Healthcare 1,939,759 4.6
Multi Industry 649,891 1.6
Technology 1,310,072 3.1
Telephone (Utilities) 4,035,581 9.6
Transportation 490,738 1.2
Utilities 11,686,174 27.9
Total Investments* 37,360,107 89.3
Cash and receivables, net of liabilities 4,457,858 10.7
Net Assets $ 41,817,965 100.0%
* Excludes short-term obligations.
A-30
PREMIER GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-95.6%
TECHNOLOGY-23.7%
COMMUNICATIONS EQUIPMENT-7.3%
Ericsson (L.M.) Telephone Co. Cl.B (ADR) (a) 240,690 $ 8,988,267
Lucent Technologies, Inc. 69,421 5,545,002
Nokia Corp. (ADR) (b) 284,600 19,922,000
------------
34,455,269
COMPUTER HARDWARE-7.4%
COMPAQ Computer Corp. 315,500 17,806,031
Dell Computer Corp. (c) 202,900 17,049,941
------------
34,855,972
COMPUTER SOFTWARE-2.0%
Microsoft Corp. (c) 74,600 9,639,719
NETWORKING SOFTWARE-3.2%
Cisco Systems, Inc. (c) 271,700 15,164,256
SEMI-CONDUCTOR CAPITAL EQUIPMENT-0.2%
Applied Materials, Inc. (c) 22,600 680,119
SEMI-CONDUCTOR COMPONENTS-3.6%
Intel Corp. 9,800 688,144
warrants, expiring 3/14/98 (c) 278,800 13,844,162
Texas Instruments, Inc. 58,400 2,628,000
------------
17,160,306
------------
111,955,641
FINANCE-19.9%
BANKING - MONEY CENTER-1.1%
Citicorp 42,700 5,398,881
BANKING - REGIONAL-2.2%
Banc One Corp. 35,500 1,928,094
First Union Corp. 35,400 1,814,250
NationsBank Corp. 31,900 1,939,919
Norwest Corp. 122,200 4,719,975
------------
10,402,238
BROKERAGE & MONEY MANAGEMENT-5.7%
Merrill Lynch & Co., Inc. 182,200 13,289,213
Morgan Stanley, Dean Witter,
Discover and Co. 230,955 13,655,214
------------
26,944,427
INSURANCE-1.8%
American International Group, Inc. 56,850 6,182,438
Progressive Corp. 19,400 2,325,575
------------
8,508,013
MORTGAGE BANKING-3.0%
Federal National Mortgage Assn. 246,500 14,065,906
MISCELLANEOUS-6.1%
Household International, Inc. 49,000 6,250,562
MBNA Corp. 764,950 20,892,697
MGIC Investment Corp. 21,600 1,436,400
------------
28,579,659
------------
93,899,124
CONSUMER SERVICES-19.0%
AIRLINES-4.7%
KLM Royal Dutch Air 43,776 1,652,544
Northwest Airlines Corp. Cl.A (c) 135,060 6,470,218
UAL Corp. (c) 153,000 14,152,500
------------
22,275,262
BROADCASTING & CABLE-3.8%
AirTouch Communications, Inc. (c) 270,500 11,242,656
Cox Communications, Inc. Cl.A (c) 31,500 1,261,969
Tele-Communications, Inc. -
Liberty Media Group Cl.A (c) 144,937 5,267,554
------------
17,772,179
ENTERTAINMENT & LEISURE-2.5%
Walt Disney Co. 121,600 12,046,000
RESTAURANTS & LODGING-0.7%
Marriot International, Inc. 22,600 1,565,050
McDonald's Corp. 35,300 1,685,575
------------
3,250,625
RETAIL - GENERAL MERCHANDISE-7.3%
Dayton Hudson Corp. 100,800 6,804,000
Home Depot, Inc. 344,149 20,261,772
Kohl's Corp. (c) 61,200 4,169,250
Wal-Mart Stores, Inc. 86,100 3,395,569
------------
34,630,591
------------
89,974,657
HEALTH CARE-11.4%
DRUGS-8.0%
Merck & Co., Inc. 174,200 18,508,750
Pfizer, Inc. 174,600 13,018,612
Schering-Plough Corp. 98,500 6,119,313
------------
37,646,675
MEDICAL PRODUCTS-0.8%
Medtronic, Inc. 73,800 3,860,663
B-1
PREMIER GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
MEDICAL SERVICES-2.6%
United Healthcare Corp. 246,200 $12,233,062
------------
53,740,400
CONSUMER STAPLES-9.2%
COSMETICS-0.9%
Gillette Co. 41,500 4,168,156
FOOD-1.5%
Campbell Soup Co. 40,600 2,359,875
Coca-Cola Co. 69,600 4,637,100
------------
6,996,975
HOUSEHOLD PRODUCTS-0.9%
Colgate-Palmolive Co. 60,500 4,446,750
TOBACCO-5.9%
Philip Morris Cos., Inc. 613,900 27,817,344
------------
43,429,225
MULTI-INDUSTRY COMPANY-3.8%
Tyco International, Ltd. 401,800 18,106,113
ENERGY-3.1%
OIL SERVICE-3.1%
Baker Hughes, Inc. 68,000 2,966,500
Halliburton Co. 80,500 4,180,969
Schlumberger, Ltd. 90,400 7,277,200
------------
14,424,669
CAPITAL GOODS-2.5%
ELECTRICAL EQUIPMENT-0.4%
General Electric Co. 22,000 1,614,250
MISCELLANEOUS-2.1%
United Technologies Corp. 138,800 10,106,375
------------
11,720,625
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
UTILITIES-2.0%
TELEPHONE UTILITY-2.0%
MCI Communications Corp. 144,300 $ 6,182,353
WorldCom, Inc. (c) 109,000 3,300,656
------------
9,483,009
CONSUMER MANUFACTURING-1.0%
AUTO & RELATED-1.0%
Ford Motor Co. 96,300 4,688,606
Total Common Stocks & Other Investments
(cost $361,311,846) 451,422,069
SHORT-TERM INVESTMENTS-3.9%
COMMERCIAL PAPER-3.6%
General Electric Capital Corp.
6.75%, 1/02/98 $17,196 17,192,776
TIME DEPOSIT-0.3%
State Street Bank and Trust Co.
5.25%, 1/02/98 1,341 1,341,000
Total Short-Term Investments
(amortized cost $18,533,776) 18,533,776
TOTAL INVESTMENTS-99.5%
(cost $379,845,622) 469,955,845
Other assets less liabilities-0.5% 2,370,260
NET ASSETS-100% $472,326,105
(a) Country of origin--Sweden.
(b) Country of origin--Finland.
(c) Non-income producing security.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-2
GLOBAL BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
AUSTRALIA-4.5%
GOVERNMENT OBLIGATION-4.5%
Queensland Treasury
6.50%, 6/14/05 (a) AU$ 1,500 $ 995,134
AUSTRIA-4.5%
GOVERNMENT OBLIGATION-4.5%
Republic of Austria
4.50%, 9/28/05 (a) JPY 110,000 1,009,372
FRANCE-8.7%
GOVERNMENT OBLIGATION-8.7%
Government of France
9.50%, 4/25/00 (a) XEU 1,600 1,940,303
GERMANY-8.9%
GOVERNMENT OBLIGATION-8.9%
Government of Germany
6.00%, 2/16/06 (a) DEM 3,400 1,984,869
ITALY-9.2%
GOVERNMENT OBLIGATION-9.2%
Republic of Italy
6.00%, 5/15/00 (a) ITL 3,500,000 2,029,763
JAPAN-9.4%
DEBT OBLIGATIONS-9.4%
European Investment Bank
3.00%, 9/20/06 (a) JPY 130,000 1,085,864
Japan Development Bank
2.875%, 12/20/06 (a) 120,000 992,571
------------
2,078,435
SPAIN-9.7%
GOVERNMENT OBLIGATION-9.7%
Government of Spain
5.25%, 1/31/03 (a) ESP 325,000 2,146,259
UNITED KINGDOM-9.8%
DEBT OBLIGATION-5.4%
International Bank for
Reconstruction & Development
7.125%, 7/30/07 (a) GBP 700 1,187,692
GOVERNMENT OBLIGATION-4.4%
U.K. Treasury Gilts
8.50%, 7/16/07 (a) 520 980,346
------------
2,168,038
UNITED STATES-33.4%
GOVERNMENT/AGENCY OBLIGATIONS-31.5%
Federal National Mortgage Assn.
2.125%, 10/09/07 (a) JPY 120,000 934,211
U.S. Treasury Notes
6.25%, 2/15/03 US$ 1,300 1,329,458
6.875%, 5/15/06 3,000 3,210,000
7.25%, 8/15/04 1,400 1,513,092
6,986,761
TIME DEPOSIT-1.9%
State Street Bank and Trust Co.
5.25%, 1/05/98 425 425,000
7,411,761
TOTAL INVESTMENTS-98.1%
(cost $21,876,330) 21,763,934
Other assets less liabilities-1.9% 430,411
NET ASSETS-100% $22,194,345
(a) Securities, or portion thereof, with an aggregate market value of
$15,286,384 have been segregated to collateralize forward exchange currency
contracts.
See Notes to Financial Statements.
B-3
GROWTH AND INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-96.6%
FINANCE-19.2%
BANKING - MONEY CENTER-5.2%
Chase Manhattan Corp. 79,600 $ 8,716,200
Citicorp 33,200 4,197,725
------------
12,913,925
BANKING - REGIONAL-3.8%
Banc One Corp. 21,200 1,151,425
First Union Corp. 118,800 6,088,500
NationsBank Corp. 37,400 2,274,388
------------
9,514,313
BROKERAGE & MONEY MANAGEMENT-2.7%
Morgan Stanley, Dean Witter, Discover and Co. 114,200 6,752,075
INSURANCE-3.7%
General Reinsurance Corp. 11,500 2,438,000
Hartford Life, Inc. Cl. A 29,900 1,354,844
PennCorp Financial Group, Inc. 40,000 1,427,500
The Hartford Financial Services Group, Inc. 30,900 2,891,081
Travelers Group, Inc. 24,000 1,293,000
------------
9,404,425
MORTGAGE BANKING-0.6%
Allstate Corp. 6.76% exchangeable note (a) 25,250 1,515,000
REAL ESTATE-0.4%
Security Capital Group, Inc. Cl.B
warrants, expiring 9/18/98 (b) 1,726 9,061
Security Capital Industrial Trust (b) 37,090 922,614
------------
931,675
MISCELLANEOUS-2.8%
Household International, Inc. 16,500 2,104,781
MBNA Corp. 75,000 2,048,438
PMI Group, Inc. 39,700 2,870,806
------------
7,024,025
------------
48,055,438
CONSUMER STAPLES-12.9%
COSMETICS-0.3%
Avon Products, Inc. 12,400 761,050
FOOD-5.8%
Anheuser-Busch Cos., Inc. 77,800 3,423,200
Campbell Soup Co. 102,800 5,975,250
General Mills, Inc. 27,500 1,969,687
Heinz (H.J.) Co. 27,500 1,397,344
Tyson Foods, Inc. Cl.A 77,200 1,582,600
------------
14,348,081
RETAIL - FOOD & DRUG-0.9%
Kroger Co. (b) 62,000 2,290,125
TOBACCO-5.9%
Philip Morris Cos., Inc. 139,750 6,332,422
RJR Nabisco Holdings Corp. 224,600 8,422,500
------------
14,754,922
------------
32,154,178
CONSUMER SERVICES-11.0%
AIRLINES-0.9%
Northwest Airlines Corp. Cl.A (b) 44,200 2,117,456
APPAREL-0.6%
Reebok International, Ltd. 54,000 1,555,875
ENTERTAINMENT & LEISURE-1.8%
Eastman Kodak Co. 23,600 1,435,175
Harley-Davidson, Inc. 38,000 1,040,250
Walt Disney Co. 21,600 2,139,750
------------
4,615,175
PRINTING & PUBLISHING-2.0%
Gannett Co., Inc. 28,400 1,755,475
Reuters Holdings Plc Cl.B (ADR) (c) 48,000 3,180,000
------------
4,935,475
RESTAURANTS & LODGING-0.7%
McDonald's Corp. 37,200 1,776,300
RETAIL - GENERAL MERCHANDISE-5.0%
Dayton Hudson Corp. 34,300 2,315,250
Federated Department Stores, Inc. (b) 63,600 2,738,775
Home Depot, Inc. 64,500 3,797,438
Sears, Roebuck & Co. 82,000 3,710,500
------------
12,561,963
------------
27,562,244
ENERGY-10.3%
DOMESTIC INTEGRATED-2.0%
USX-Marathon Group 148,000 4,995,000
DOMESTIC PRODUCERS-2.5%
Apache Corp. 97,800 3,429,112
Enron Oil & Gas Co. 44,500 942,844
Murphy Oil Corp. 18,000 975,375
Union Pacific Resources Group, Inc. 37,000 897,250
------------
6,244,581
B-4
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
INTERNATIONAL-5.0%
Mobil Corp. 61,100 $ 4,410,656
Texaco, Inc. 150,600 8,188,875
------------
12,599,531
OIL SERVICE-0.8%
Dresser Industries, Inc. 47,600 1,996,225
------------
25,835,337
HEALTH CARE-9.9%
BIOTECHNOLOGY-1.4%
Centocor, Inc. (b) 74,900 2,499,788
Genzyme Corp. (b) 36,000 996,750
------------
3,496,538
DRUGS-5.4%
American Home Products Corp. 73,700 5,638,050
Merck & Co., Inc. 56,400 5,992,500
Schering-Plough Corp. 28,900 1,795,412
------------
13,425,962
MEDICAL PRODUCTS-1.7%
Baxter International, Inc. 33,200 1,674,525
Becton, Dickinson & Co. 38,700 1,935,000
Boston Scientific Corp. (b) 16,700 766,112
------------
4,375,637
MEDICAL SERVICES-1.4%
Columbia HCA/Healthcare Corp. 28,300 838,388
PacifiCare Health Systems, Inc. Cl.B (b) 52,000 2,731,625
------------
3,570,013
------------
24,868,150
TECHNOLOGY-9.9%
COMMUNICATIONS EQUIPMENT-0.5%
DSC Communications Corp. (b) 25,100 600,831
Scientific-Atlanta, Inc. 41,000 686,750
------------
1,287,581
COMPUTER HARDWARE-1.5%
COMPAQ Computer Corp. 21,775 1,228,927
Hewlett-Packard Co. 42,100 2,631,250
------------
3,860,177
COMPUTER SERVICES-3.2%
Electronic Data Systems Corp. 52,900 2,324,294
First Data Corp. 191,000 5,586,750
------------
7,911,044
NETWORKING SOFTWARE-2.5%
Cabletron Systems, Inc. (b) 61,100 916,500
Cisco Systems, Inc. (b) 95,250 5,316,141
------------
6,232,641
SEMI-CONDUCTOR CAPITAL EQUIPMENT-0.2%
Applied Materials, Inc. (b) 16,300 490,528
SEMI-CONDUCTOR COMPONENTS-1.4%
Atmel Corp. (b) 127,300 2,366,984
Micron Technology, Inc. 19,000 494,000
National Semiconductor Corp. (b) 7,600 197,125
Texas Instruments, Inc. 7,600 342,000
------------
3,400,109
MISCELLANEOUS-0.6%
Solectron Corp. (b) 34,600 1,438,062
------------
24,620,142
CAPITAL GOODS-7.1%
ELECTRICAL EQUIPMENT-1.7%
General Electric Co. 56,800 4,167,700
ENGINEERING & CONSTRUCTION-0.5%
Fluor Corp. 33,000 1,233,375
MACHINERY-0.5%
Cooper Industries, Inc. 27,000 1,323,000
POLLUTION CONTROL-2.3%
USA Waste Services, Inc. (b) 82,600 3,242,050
Waste Management, Inc. 97,200 2,673,000
------------
5,915,050
MISCELLANEOUS-2.1%
Allied-Signal, Inc. 59,400 2,312,887
United Technologies Corp. 40,000 2,912,500
------------
5,225,387
------------
17,864,512
UTILITIES-7.1%
ELECTRIC & GAS UTILITY-2.9%
CMS Energy Corp. 43,000 1,894,687
FPL Group, Inc. 47,300 2,799,569
NIPSCO Industries, Inc. 33,500 1,656,156
Pinnacle West Capital Corp. 19,000 805,125
------------
7,155,537
TELEPHONE UTILITY-4.2%
AT&T Corp. 42,200 2,584,750
MCI Communications Corp. 61,400 2,630,606
Teleport Communications Group, Inc. Cl.A (b) 58,000 3,186,375
WorldCom, Inc. (b) 71,600 2,168,138
------------
10,569,869
------------
17,725,406
B-5
GROWTH AND INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
BASIC INDUSTRY-3.2%
CHEMICALS-2.7%
Du Pont E.I. de Nemours & Co. 75,300 $ 4,522,706
Praxair, Inc. 48,000 2,160,000
-------------
6,682,706
CONTAINERS-0.5%
Sealed Air Corp. (b) 23,000 1,420,250
-------------
8,102,956
MULTI INDUSTRY COMPANIES-2.9%
Tyco International, Ltd. 109,200 4,920,825
U.S. Industries, Inc. 27,100 816,388
Whitman Corp. 55,000 1,433,437
-------------
7,170,650
TRANSPORTATION-1.2%
RAILROADS-1.2%
Canadian Pacific, Ltd. (d) 42,000 1,144,500
Union Pacific Corp. 28,200 1,760,738
------------
2,905,238
CONSUMER MANUFACTURING-1.1%
APPLIANCES-1.1%
Sunbeam Corp. 66,000 2,780,250
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
AEROSPACE & DEFENSE-0.8%
AEROSPACE-0.8%
General Dynamics Corp. 23,000 $ 1,988,063
Total Common Stocks & Other Investments
(cost $213,266,293) 241,632,564
SHORT-TERM INVESTMENTS-3.1%
COMMERCIAL PAPER-3.0%
American Express Co.
6.25%, 1/02/98 $2,100 2,099,635
Ford Motor Credit Corp.
5.91%, 1/06/98 3,800 3,796,881
Prudential Funding Corp.
5.80%, 1/05/98 1,600 1,598,969
-------------
7,495,485
TIME DEPOSIT-0.1%
State Street Bank and Trust Co.
5.25%, 1/02/98 200 200,000
Total Short-Term Investments
(amortized cost $7,695,485) 7,695,485
TOTAL INVESTMENTS-99.7%
(cost $220,961,778) 249,328,049
Other assets less liabilities-0.3% 873,546
NET ASSETS-100% $250,201,595
(a) Exchangeable for PMI Group, Inc. common stock.
(b) Non-income producing security.
(c) Country of origin--United Kingdom.
(d) Country of origin--Canada.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-6
SHORT-TERM MULTI-MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
AUSTRALIA-2.9%
GOVERNMENT OBLIGATION-2.9%
Government of Australia
7.00%, 4/15/00 (a) AU$ 275 $ 185,483
DENMARK-5.1%
GOVERNMENT OBLIGATION-5.1%
Kingdom of Denmark
9.00%, 11/15/98 (a) DKK 2,200 333,504
FRANCE-4.1%
GOVERNMENT OBLIGATION-4.1%
Government of France
7.75%, 4/12/00 (a) FRF 1,500 267,425
GERMANY-21.2%
DEBT OBLIGATIONS-12.3%
Bayerische Landesbank
5.25%, 1/29/99 (a) US$ 300 297,563
Bremer Landesbank
Kreditanstalt Oldenburg
6.375%, 12/29/99 (a) 500 502,187
------------
799,750
GOVERNMENT OBLIGATION-8.9%
Government of Germany
5.75%, 8/22/00 (a) DEM 1,000 574,446
------------
1,374,196
ITALY-8.9%
GOVERNMENT OBLIGATION-8.9%
Republic of Italy
6.00%, 2/15/00 (a) ITL 1,000,000 579,141
NEW ZEALAND-6.8%
DEBT OBLIGATION-3.5%
International Bank for Reconstruction
& Development
7.00%, 9/18/00 (a) NZ$ 400 226,686
GOVERNMENT OBLIGATION-3.3%
Government of New Zealand
6.50%, 2/15/00 (a) 380 215,903
------------
442,589
NORWAY-4.4%
GOVERNMENT OBLIGATION-4.4%
Kingdom of Norway
9.00%, 1/31/99 (a) NOK 2,000 283,463
POLAND-4.1%
GOVERNMENT/AGENCY OBLIGATION-4.1%
Government of Poland Treasury Bill
23.05%, 9/30/98 (b) PLN 1,100 266,646
SPAIN-5.1%
GOVERNMENT OBLIGATION-5.1%
Kingdom of Spain
6.75%, 4/15/00 (a) ESP 48,000 329,510
SWEDEN-6.4%
GOVERNMENT OBLIGATION-6.4%
Kingdom of Sweden
10.25%, 5/05/00 (a) SEK 3,000 417,368
UNITED STATES-22.9%
DEBT OBLIGATIONS-13.9%
Bank Nederlandse Gemeenten NV
5.875%, 4/19/99 (a) US$ 300 299,250
Rabobank Nederland
6.25%, 12/31/99 (a) 300 300,750
Suedwest Deutsche Landesbank
5.75%, 12/20/99 (a) 300 298,312
------------
898,312
GOVERNMENT/AGENCY OBLIGATIONS-9.0%
FNMA Global
7.00%, 9/26/00 (a) NZ$ 500 283,067
U.S. Treasury Note
5.875%, 8/31/99 US$ 300 300,936
------------
584,003
------------
1,482,315
TOTAL INVESTMENTS-91.9%
(cost $6,242,555) 5,961,640
Other assets less liabilities-8.1% 527,792
NET ASSETS-100% $ 6,489,432
(a) Securities, or portion thereof, with an aggregate market value of
$5,394,058 have been segregated to collateralize forward exchange currency
contracts.
(b) Interest rate represents yield to maturity at purchase date.
See Notes to Financial Statements.
B-7
U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
U.S. GOVERNMENT/AGENCY OBLIGATIONS-60.9%
U.S. TREASURY SECURITIES-50.2%
U.S. Treasury Bonds
6.125%, 11/15/27 $1,000 $ 1,027,660
6.375%, 8/15/27 500 527,345
6.625%, 2/15/27 25 27,141
U.S. Treasury Notes
5.00%, 1/31/98 3,900 3,897,543
6.25%, 2/15/07 2,750 2,837,642
7.00%, 7/15/06 4,900 5,288,913
7.125%, 9/30/99 4,480 4,586,400
------------
18,192,644
FEDERAL AGENCIES-10.7%
AID - Israel
8.00%, 11/15/01 200 214,334
Federal National Mortgage Association
7.00%, 4/01/26 1,572 1,586,970
Government National Mortgage Association
7.00%, 7/15/23 74 75,090
Overseas Private Investment Corp.
6.08%, 8/15/04 980 981,049
Student Loan Marketing Association
6.05%, 9/14/00 1,000 1,005,310
------------
3,862,753
Total U.S. Government/Agency Obligations
(cost $21,644,878) 22,055,397
CORPORATE DEBT OBLIGATIONS-18.7%
ASSET BACKED-2.7%
Chemical Master Credit Card Trust I
5.98%, 9/15/08 1,000 981,250
FINANCE-8.8%
First Union Capital
8.04%, 12/01/26 (a) 1,000 1,068,272
Ford Motor Credit Co.
6.125%, 1/09/06 500 489,026
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
Goldman Sachs Group LP
7.25%, 10/01/05 (a) $ 500 $ 518,759
John Hancock Mutual Life Insurance Co.
7.375%, 2/15/24 (a) 1,000 1,049,190
Wachovia Corp.
6.375%, 4/15/03 75 75,546
------------
3,200,793
INDUSTRIAL-1.5%
International Business Machines Corp.
7.125%, 12/01/96 500 522,549
YANKEE BONDS-5.7%
Banco Santiago
7.00%, 7/18/07 1,000 1,004,788
Bridas Corp.
12.50%, 11/15/99 500 537,500
St. George Bank, Ltd.
7.15%, 10/15/05 (a) 500 515,110
------------
2,057,398
Total Corporate Debt Obligations
(cost $6,512,957) 6,761,990
SOVEREIGN DEBT OBLIGATION-1.3%
POLAND-1.3%
Republic of Poland FRN
6.6875%, 10/27/24
(cost $490,507) 500 485,625
PREFERRED STOCK-0.2%
FINANCE-0.2%
Banesto Holdings, Ltd.
10.50% c.v. Series A (a)
(cost $49,725) 1,800 56,700
SHORT-TERM INVESTMENT-17.5%
TIME DEPOSIT-17.5%
State Street Bank and Trust Co.
5.25%, 1/02/98
(cost $6,318,000) 6,318 6,318,000
TOTAL INVESTMENTS-98.6%
(cost $35,016,067) 35,677,712
Other assets less liabilities-1.4% 520,066
NET ASSETS-100% $36,197,778
(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,
1997, the aggregate market value of these securities amounted to $3,208,031 or
8.9% of net assets.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-8
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-59.1%
FINANCE-11.6%
BANKING - MONEY CENTER-3.1%
Chase Manhattan Corp. 8,200 $ 897,900
Citicorp 3,400 429,888
------------
1,327,788
BANKING - REGIONAL-2.3%
Banc One Corp. 2,200 119,487
First Union Corp. 12,300 630,375
NationsBank Corp. 3,900 237,169
------------
987,031
BROKERAGE & MONEY MANAGEMENT-1.7%
Morgan Stanley, Dean Witter,
Discover and Co. 12,410 733,741
INSURANCE-2.7%
General Reinsurance Corp. 1,800 381,600
Hartford Life, Inc. Cl.A 3,200 145,000
PennCorp Financial Group, Inc. 5,100 182,006
The Hartford Financial Services Group, Inc. 3,200 299,400
Travelers Group, Inc. 2,700 145,463
------------
1,153,469
REAL ESTATE-0.0%
Security Capital Group, Inc.
warrants, expiring 9/18/98 (a) 223 1,171
MISCELLANEOUS-1.8%
Household International, Inc. 1,700 216,856
MBNA Corp. 9,300 254,006
PMI Group, Inc. 4,300 310,944
------------
781,806
------------
4,985,006
CONSUMER STAPLES-8.0%
COSMETICS-0.2%
Avon Products, Inc. 1,300 79,788
FOOD-3.5%
Anheuser-Busch Cos., Inc. 8,100 356,400
Campbell Soup Co. 11,000 639,375
General Mills, Inc. 2,900 207,712
Heinz (H.J.) Co. 2,800 142,275
Tyson Foods, Inc. Cl. A 8,200 168,100
------------
1,513,862
RETAIL-FOOD & DRUG-0.5%
Kroger Co. (a) 5,500 203,156
TOBACCO-3.8%
Philip Morris Cos., Inc. 16,400 743,125
RJR Nabisco Holdings Corp. 23,300 873,750
------------
1,616,875
------------
3,413,681
CONSUMER SERVICES-6.7%
AIRLINES-0.5%
Northwest Airlines Corp. Cl.A (a) 4,700 $225,159
APPAREL-0.3%
Reebok International, Ltd. 4,900 141,181
ENTERTAINMENT & LEISURE-1.2%
Eastman Kodak Co. 2,400 145,950
Harley-Davidson, Inc. 4,600 125,925
Walt Disney Co. 2,300 227,844
------------
499,719
PRINTING & PUBLISHING-1.3%
Gannett Co., Inc. 3,000 185,438
Reuters Holdings Plc Cl.B (ADR) (b) 5,700 377,625
------------
563,063
RESTAURANTS & LODGING-0.5%
McDonald's Corp. 4,000 191,000
RETAIL - GENERAL MERCHANDISE-2.9%
Dayton Hudson Corp. 3,600 243,000
Federated Department Stores, Inc. (a) 6,700 288,519
Home Depot, Inc. 7,500 441,562
Sears, Roebuck & Co. 6,400 289,600
------------
1,262,681
------------
2,882,803
ENERGY-6.5%
DOMESTIC INTEGRATED-1.2%
USX-Marathon Group 15,300 516,375
DOMESTIC PRODUCERS-1.6%
Apache Corp. 10,400 364,650
Enron Oil & Gas Co. 4,600 97,463
Murphy Oil Corp. 2,100 113,794
Union Pacific Resources Group, Inc. 4,000 97,000
------------
672,907
INTERNATIONAL-3.2%
Mobil Corp. 7,000 505,313
Texaco, Inc. 16,100 875,437
------------
1,380,750
OIL SERVICE-0.5%
Dresser Industries, Inc. 5,100 213,881
------------
2,783,913
B-9
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
HEALTH CARE-6.2%
BIOTECHNOLOGY-0.8%
Centocor, Inc. (a) 8,000 $ 267,000
Genzyme Corp. (a) 3,200 88,600
------------
355,600
DRUGS-3.4%
American Home Products Corp. 7,900 604,350
Merck & Co., Inc. 6,000 637,500
Schering-Plough Corp. 3,100 192,587
------------
1,434,437
MEDICAL PRODUCTS-1.1%
Baxter International, Inc. 3,500 176,531
Becton, Dickinson & Co. 4,000 200,000
Boston Scientific Corp. (a) 1,900 87,163
------------
463,694
MEDICAL SERVICES-0.9%
Columbia HCA/Healthcare Corp. 3,450 102,206
PacifiCare Health Systems, Inc. Cl.B (a) 5,400 283,669
------------
385,875
------------
2,639,606
TECHNOLOGY-5.9%
COMMUNICATIONS EQUIPMENT-0.3%
DSC Communications Corp. (a) 2,600 62,238
Scientific-Atlanta, Inc. 4,500 75,375
------------
137,613
COMPUTER HARDWARE-1.0%
COMPAQ Computer Corp. 2,400 135,450
Hewlett-Packard Co. 4,500 281,250
------------
416,700
COMPUTER SERVICES-1.9%
Electronic Data Systems Corp. 5,500 241,656
First Data Corp. 19,800 579,150
------------
820,806
NETWORKING SOFTWARE-1.4%
Cabletron Systems, Inc. (a) 3,300 49,500
Cisco Systems, Inc. (a) 9,900 552,544
------------
602,044
SEMI-CONDUCTOR CAPITAL EQUIPMENT-0.1%
Applied Materials, Inc. (a) 1,700 51,159
SEMI-CONDUCTOR COMPONENTS-0.8%
Atmel Corp. (a) 13,100 243,578
Micron Technology, Inc. 2,000 52,000
National Semiconductor Corp. (a) 800 20,750
Texas Instruments, Inc. 800 36,000
------------
352,328
MISCELLANEOUS-0.4%
Solectron Corp. (a) 3,800 157,937
------------
2,538,587
CAPITAL GOODS-4.4%
ELECTRICAL EQUIPMENT-1.0%
General Electric Co. 5,600 410,900
ENGINEERING & CONSTRUCTION-0.3%
Fluor Corp. 3,900 145,763
MACHINERY-0.3%
Cooper Industries, Inc. 2,200 107,800
POLLUTION CONTROL-1.4%
USA Waste Services, Inc. (a) 8,600 337,550
Waste Management, Inc. 10,000 275,000
------------
612,550
MISCELLANEOUS-1.4%
Allied-Signal, Inc. 6,800 264,775
United Technologies Corp. 4,600 334,937
------------
599,712
------------
1,876,725
UTILITIES-4.2%
ELECTRIC & GAS UTILITY-1.6%
CMS Energy Corp. 6,100 268,781
FPL Group, Inc. 5,200 307,775
NIPSCO Industries, Inc. 2,300 113,706
------------
690,262
TELEPHONE UTILITY-2.6%
AT&T Corp. 5,300 324,625
MCI Communications Corp. 6,400 274,200
Teleport Communications Group, Inc. Cl.A (a) 5,200 285,675
WorldCom, Inc. (a) 7,700 233,166
------------
1,117,666
------------
1,807,928
MULTI INDUSTRY COMPANIES-1.9%
Tyco International, Ltd. 13,200 594,825
U.S. Industries, Inc. 2,900 87,363
Whitman Corp. 5,700 148,556
------------
830,744
B-10
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
BASIC INDUSTRY-1.9%
CHEMICALS-1.7%
Du Pont E.I. de Nemours & Co. 8,100 $ 486,506
Praxair, Inc. 5,500 247,500
------------
734,006
CONTAINERS-0.2%
Sealed Air Corp. (a) 1,000 61,750
------------
795,756
CONSUMER MANUFACTURING-0.7%
APPLIANCES-0.7%
Sunbeam Corp. 7,000 294,875
TRANSPORTATION-0.6%
RAILROADS-0.6%
Canadian Pacific, Ltd. (c) 2,900 79,025
Union Pacific Corp. 3,000 187,313
------------
266,338
AEROSPACE & DEFENSE-0.5%
AEROSPACE-0.5%
General Dynamics Corp. 2,700 233,381
Total Common Stocks & Other Investments
(cost $22,156,332) 25,349,343
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS-35.5%
U.S. Treasury Notes
4.75%, 8/31/98 $2,317 $ 2,303,955
6.50%, 10/15/06 8,900 9,318,567
7.25%, 8/15/04 3,355 3,626,017
Total U.S. Government Obligations
(cost $14,932,471) 15,248,539
SHORT-TERM INVESTMENT-4.7%
TIME DEPOSIT-4.7%
State Street Bank and Trust Co.
5.25%, 1/02/98
(amortized cost $2,028,000) 2,028 2,028,000
TOTAL INVESTMENTS-99.3%
(cost $39,116,803) 42,625,882
Other assets less liabilities-0.7% 294,087
NET ASSETS-100% $42,919,969
(a) Non-income producing security.
(b) Country of origin--United Kingdom.
(c) Country of origin--Canada.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-11
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-92.1%
ARGENTINA-0.6%
Telecom Argentina, SA (ADR) 10,000 $ 357,500
AUSTRALIA-1.0%
Coca Cola Amatil, Ltd. 27,171 203,048
Normandy Mining, Ltd. 193,108 187,528
Qantas Airways, Ltd. 14,362 25,423
Woolworths, Ltd. 50,963 170,394
------------
586,393
BELGIUM-0.5%
Barco NV 1,790 328,520
BRAZIL-0.6%
Dixie Toga, SA pfd. 11,800 6,027
Telecomunicacoes Brasileiras SA (ADR) 3,000 349,312
------------
355,339
DENMARK-1.2%
Sophus Berendsen AS Cl.B 4,384 722,999
FINLAND-5.1%
Enso OY 32,000 247,737
Nokia AB OY Corp. Series A pfd. 28,700 2,037,608
Orion-Yhtymae OY Series B 31,626 835,477
------------
3,120,822
FRANCE-9.6%
Banque Nationale de Paris 14,757 784,376
Sanofi, SA 15,250 1,697,682
SGS-Thomson Microelectronics (a) 4,200 259,948
Societe Generale 8,403 1,144,880
Societe Nacionale Elf Aquitaine, SA (b) 6,811 792,174
Total, SA (ADR) 1,270 70,485
Total, SA Cl.B 10,154 1,105,071
------------
5,854,616
GERMANY-3.7%
Adidas AG 5,530 727,312
Merck KG 11,754 382,228
ProSieben Media AG pfd. (a) 24,547 1,146,195
------------
2,255,735
HONG KONG-8.5%
Cheung Kong Holdings, Ltd. 88,400 578,952
Citic Pacific, Ltd. 41,000 162,963
Dickson Concepts International, Ltd. 63,000 91,870
Guangshen Railway Co., Ltd. (ADR) (a) 6,700 90,031
Henderson Land Development Co., Ltd. 117,000 551,103
HSBC Holdings Plc. 51,000 1,257,066
Hutchison Whampoa, Ltd. 177,000 1,110,105
Hysan Development Co., Ltd
warrants, expiring 4/30/98 (a) 500 3
Sun Hung Kai Properties, Ltd. 167,000 1,163,763
Television Broadcasting, Ltd. 51,000 145,451
------------
5,151,307
INDIA-0.3%
Industrial Credit & Investment Corp. 2,000 25,200
Industrial Credit & Investment Corp. (GDR) (c) 5,000 63,000
State Bank of India (GDR) (c) 2,400 42,600
Videsh Sanchar Nigam, Ltd. (GDR) (c) 1,900 26,030
------------
156,830
INDONESIA-0.2%
PT Indosat (ADR) 56,000 103,855
ITALY-3.6%
Credito Italiano 448,350 1,382,561
Telecom Italia SpA 126,778 809,831
------------
2,192,392
JAPAN-20.5%
Advantest Corp. 14,200 804,779
Bank of Tokyo-Mitsubishi 48,200 664,471
Bridgestone Corp. 30,000 650,226
Canon, Inc. 30,000 698,476
Dai Nippon Printing Co., Ltd. 7,000 131,347
Daito Trust Construction Co., Ltd. 69,600 424,839
Fuji Photo Film Co. 3,000 114,881
Fujitsu, Ltd. 55,000 589,722
Honda Motor Co. 27,000 990,503
Hoya Corp. 12,000 376,809
Japan Tobacco, Inc. 71 503,531
Kokuyo 6,000 103,393
Nintendo Co., Ltd. 9,900 970,514
Rohm Co., Ltd. 8,000 814,888
Santen Pharmaceutical Co., Ltd. 24,100 276,863
Shimano, Inc. 11,000 202,190
Shiseido Co., Ltd. 20,000 272,651
Sony Corp. 10,000 888,412
Sumitomo Electric Industries 22,000 299,916
Sumitomo Realty & Development Co., Ltd. 47,000 269,970
Takeda Chemical Industries 3,000 85,471
TDK Corp. 11,000 828,981
Tokai Bank 156,000 726,415
Yamanouchi Pharmaceutical Co., Ltd. 35,000 750,555
------------
12,439,803
B-12
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
MEXICO-1.2%
Fomento Ecomo, SA 52,000 $ 415,588
Pan American Beverage, Inc. Cl.A 10,000 326,250
------------
741,838
NETHERLANDS-6.6%
AKZO Nobel NV 9,320 1,606,920
ING Groep NV 27,700 1,166,661
KLM Royal Dutch Air NV 32,670 1,208,419
------------
3,982,000
PHILIPPINES-0.1%
Manila Electric Co. Cl.B 21,359 70,669
RUSSIA-0.3%
Lukoil Holding (ADR) 2,190 199,290
SINGAPORE-0.3%
Singapore Press Holdings, Ltd. 16,000 200,297
SOUTH KOREA-0.3%
SK Telecom Co., Ltd. (ADR) 25,061 162,903
SWEDEN-3.8%
Abb AB 62,333 737,957
Ericsson (L.M.) Telecom Series B 20,748 780,019
Sparbanken Sverige AB Series A 34,100 775,205
------------
2,293,181
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
SWITZERLAND-11.9%
Ciba Specialty Chemicals AG (a) 16,986 $ 2,022,696
Nestle, SA 1,264 1,893,578
Novartis AG (ADR) (a) 1,131 1,834,431
Sair Group 452 618,669
Zurich Versicherungs-Gesellschaft 1,848 880,241
------------
7,249,615
UNITED KINGDOM-12.2%
Bass Plc. 41,260 641,805
BPB Plc. 145,100 810,311
Compass Group Plc. 89,500 1,101,058
Diageo Plc. 137,620 1,259,048
Guardian Royal Exchange Plc. 158,912 863,300
Ladbroke Group Plc . 362,608 1,572,341
Tomkins Plc. 82,310 389,359
United Assurance Group Plc. 87,515 754,653
------------
7,391,875
Total Common Stocks & Other Investments
(cost $55,073,226) 55,917,779
SHORT-TERM INVESTMENT-5.9%
TIME DEPOSIT-5.9%
State Street Bank and Trust Co.
5.25%, 1/02/98
(amortized cost $3,583,000) $3,583 3,583,000
TOTAL INVESTMENTS-98.0%
(cost $58,656,226) 59,500,779
Other assets less liabilities-2.0% 1,209,619
NET ASSETS-100% $60,710,398
(a) Non-income producing security.
(b) Securities, or portion thereof, with an aggregate market value of $639,694
have been segregated to collateralize forward exchange currency contracts.
(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,
1997, the aggregate market value of these securities amounted to $131,630 or
.22% of net assets.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-13
MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
COMMERCIAL PAPER-57.3%
Associates Corp. of North America
5.74%, 3/16/98 $3,000 $ 2,964,603
Bank of New York
5.72%, 2/11/98 3,000 2,980,457
Cregem North America, Inc.
5.56%, 2/23/98 1,500 1,487,722
General Electric Capital Corp.
5.59%, 2/25/98 2,600 2,577,795
General Re Corp.
5.88%, 2/27/98 3,000 2,972,070
Glencore Finance, Ltd.
5.58%, 2/04/98 2,600 2,586,298
IMI Funding Corp. (USA)
5.55%, 2/17/98 2,000 1,985,508
JES Developments, Inc.
6.00%, 2/02/98 (a) 3,000 2,984,000
Koch Industries, Inc.
6.75%, 1/02/98 (a) 2,800 2,799,475
Merrill Lynch & Co., Inc.
5.74%, 3/17/98 2,000 1,976,083
Morgan Stanley Group, Inc.
5.75%, 2/25/98 3,000 2,973,646
Motorola Credit Corp.
5.70%, 3/10/98 3,000 2,967,700
National City Corp.
5.85%, 2/13/98 3,000 2,979,038
National Rural Cooperative Finance
5.70%, 3/19/98 1,555 1,536,042
Texaco, Inc.
5.75%, 3/12/98 3,000 2,966,458
Total Commercial Paper
(amortized cost $38,736,895) 38,736,895
U.S. GOVERNMENT AND AGENCY OBLIGATIONS-25.8%
Federal Home Loan Mortgage Corp.
5.60%, 3/06/98 3,000 2,970,133
5.63%, 3/09/98 2,000 1,979,044
5.65%, 2/19/98 2,000 1,984,619
Federal National Mortgage Assn.
5.57%, 4/13/98 2,077 2,044,222
5.60%, 3/20/98 1,500 1,481,800
5.63%, 3/13/98 2,000 1,977,793
5.65%, 2/18/98 3,000 2,977,400
5.74%, 1/27/98 2,000 1,991,709
Total U.S. Government and Agency Obligations
(amortized cost $17,406,720) 17,406,720
BANK OBLIGATIONS-7.4%
Bankers Trust FRN
6.06%, 2/17/98 2,000 2,000,000
Fifth Third Bank
5.85%, 1/15/98 3,000 2,999,810
Total Bank Obligations
(amortized cost $4,999,810) 4,999,810
PROMISSORY NOTE-4.4%
Goldman Sachs Group LP
5.875%, 5/27/98
(amortized cost $3,000,000) 3,000 3,000,000
CERTIFICATE OF DEPOSIT-4.4%
Morgan Guarantee Trust Co.
5.74%, 3/04/98
(amortized cost $2,999,496) 3,000 2,999,496
TOTAL INVESTMENTS-99.3%
(cost $67,142,921) 67,142,921
Other assets less liabilities-0.7% 440,900
NET ASSETS-100% $67,583,821
(a) Securities issued in reliance on Section (4) 2 or Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. These securities
have been determined by the Adviser to be liquid pursuant to procedures
adopted by the Trustees. At December 31, 1997, the aggregate market value of
these securities amounted to $5,783,475 or 8.6% of net assets.
See Notes to Financial Statements.
B-14
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS-74.9%
NON-COLLATERALIZED BRADY BONDS-32.0%
BRAZIL-13.2%
Republic of Brazil C Bonds
4.50%, 4/15/14 (a) $1,596 $ 1,257,137
Republic of Brazil FRN
6.75%, 4/15/12 1,020 775,200
-------------
2,032,337
BULGARIA-3.2%
Republic of Bulgaria FLIRB
2.25%, 7/28/12 (b) 800 488,000
PERU-4.0%
Republic of Peru FLIRB
3.25%, 3/07/17 (b) (c) 500 296,250
Republic of Peru PDI
4.00%, 3/07/17 (c) 500 328,750
-------------
625,000
POLAND-3.4%
Republic of Poland PDI
4.00%, 10/27/14 (b) 600 519,750
VENEZUELA-8.2%
Republic of Venezuela
9.25%, 9/15/27 946 850,690
Republic of Venezuela FLIRB FRN
6.75%, 3/31/07 452 407,142
-------------
1,257,832
Total Non-Collateralized Brady Bonds
(cost $4,883,507) 4,922,919
OTHER SOVEREIGN DEBT-25.8%
ARGENTINA-6.1%
Province of Tucuman
9.45%, 8/01/04 (c) 964 944,999
MEXICO-8.2%
United Mexican States
9.875%, 1/15/07 1,200 1,254,000
PANAMA-0.5%
Republic of Panama IRB
3.75%, 7/17/14 (b) (c) 100 76,250
RUSSIA-7.8%
Russian IAN FRN
6.7188%, 12/02/15 (c) 637 452,568
Russian Principal Loans
2.6875%, 12/15/20 (b) 1,200 745,500
-------------
1,198,068
TRINIDAD & TOBAGO-0.4%
Republic of Trinidad & Tobago
11.75%, 10/03/04 50 60,150
VENEZUELA-2.8%
Republic of Venezuela
6.8125%, 12/18/07 476 427,381
Total Other Sovereign Debt
(cost $3,973,220) 3,960,848
COLLATERALIZED BRADY BONDS-17.1%
ARGENTINA-4.5%
Republic of Argentina Euro Par Bonds FRN
5.50%, 3/31/23 710 522,290
Republic of Argentina FRN
6.6875%, 3/31/05 192 172,080
-------------
694,370
ECUADOR-4.3%
Republic of Ecuador Discount Bonds, FRN
6.6875%, 2/28/25 880 664,400
JORDAN-4.5%
Republic of Jordan
5.00%, 12/23/23 1,000 690,000
PANAMA-3.8%
Republic of Panama PDI FRN
4.00%, 7/17/16 (c) 719 584,177
Total Collateralized Brady Bonds
(cost $2,643,200) 2,632,947
Total Sovereign Debt Obligations
(cost $11,499,927) 11,516,714
CORPORATE DEBT OBLIGATIONS-22.2%
INDUSTRIAL-2.0%
Impsat Corp.
12.125%, 7/15/03 300 303,000
TELEPHONE-1.7%
Interamericas Communications
14.00%, 10/27/07 (c) (d) 100 100,250
Iridium Capital Corp. LLC
14.00%, 7/15/05 (c) (e) 150 162,750
-------------
263,000
TRANSPORTATION-1.0%
Navigator Gas Transport Plc
10.50%, 6/30/07 (c) 150 159,750
B-15
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
YANKEE BONDS-17.5%
Banco Nacional
11.25%, 5/30/06 (c) $400 $ 444,000
Cantv Finance Ltd.
9.25%, 2/01/04 500 500,000
Conecel
14.00%, 5/01/02 (c) 400 408,052
14.00%, 5/01/02 250 255,032
Innova S de R.L.
12.875%, 4/01/07 (c) 500 506,250
Russian Ministry of Finance
10.00%, 6/26/07 (c) 600 556,950
Transportacion Maritima Mexicana SA
9.25%, 5/15/03 12 11,850
------------
2,682,134
Total Corporate Debt Obligations
(cost $3,497,156) 3,407,884
SHORT-TERM INVESTMENT-2.0%
TIME DEPOSIT-2.0%
State Street Bank and Trust Co.
5.25%, 1/02/98
(cost $315,000) $315 $ 315,000
TOTAL INVESTMENTS-99.1%
(cost $15,312,083) 15,239,598
Other assets less liabilities-0.9% 138,846
NET ASSETS-100% $15,378,444
(a) Coupon consists of 4.5% cash payment and 3.5% paid in kind.
(b) Coupon will increase periodically based upon a predetermined schedule.
Stated interest rate in effect at December 31, 1997.
(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,
1997, the aggregate market value of these securities amounted to $5,020,996 or
32.6% of net assets.
(d) Security trades with warrants expiring in October 2007.
(e) Indicates a security that has a zero coupon that remains in effect until a
predetermined date at which time the stated coupon rate becomes effective until
final maturity.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-16
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
ARGENTINA-13.6%
GOVERNMENT OBLIGATIONS-13.6%
Republic of Argentina
Pensioner-Bocon Pre I FRN
3.241%, 4/01/01 ARS 281 $ 246,222
Pensioner-Bocon Pre III FRN
2.43%, 9/01/02 62 49,389
Supplier-Bocon Pro I FRN
3.19%, 4/01/07 5,518 3,846,029
------------
4,141,640
CANADA-7.3%
GOVERNMENT/AGENCY OBLIGATIONS-7.3%
Government of Canada
6.50%, 6/01/04 CA$ 850 625,915
Province of British Columbia
8.00%, 9/08/23 400 345,096
Province of Manitoba
7.75%, 12/22/25 450 381,353
Province of Ontario
8.25%, 12/01/05 275 222,456
Province of Quebec
7.75%, 3/30/06 325 253,691
Province of Saskatchewan
9.60%, 2/04/22 400 396,375
------------
2,224,886
MEXICO-19.0%
GOVERNMENT/AGENCY OBLIGATIONS-19.0%
Mexican Treasury Bills (a)
19.99%, 7/02/98 MXP 7,369 829,946
21.38%, 8/27/98 5,120 561,033
22.85%, 6/04/98 17,729 2,026,237
23.16%, 5/07/98 6,097 706,686
23.86%, 4/02/98 13,687 1,615,234
25.00%, 12/17/98 696 72,484
------------
5,811,620
UNITED STATES-59.8%
FEDERAL AGENCY-25.6%
Federal Home Loan Bank
7.26%, 9/06/01 (b) US$ 200 208,718
Federal Home Loan Mortgage Corp.
6.00%, 1/02/98 3,500 3,499,417
6.13%, 8/19/99 (b) 150 150,774
Federal National Mortgage Association
5.05%, 11/10/98 (b) 305 303,094
5.70%, 1/05/98 3,500 3,497,783
Government National Mortgage Association
9.00%, 9/15/24 137 146,661
------------
7,806,447
U.S. TREASURY SECURITIES-23.0%
U.S. Treasury Notes (b)
6.25%, 10/31/01 1,300 1,322,139
6.50%, 4/30/99 85 85,916
7.00%, 7/15/06 2,400 2,590,488
7.125%, 9/30/99 320 327,600
7.25%, 8/15/04 2,500 2,701,950
------------
7,028,093
TIME DEPOSIT-11.2%
State Street Bank and Trust Co.
5.25%, 1/02/98 3,398 3,398,000
------------
18,232,540
TOTAL INVESTMENTS-99.7%
(cost $29,501,391) 30,410,686
Other assets less liabilities-0.3% 95,815
NET ASSETS-100% $30,506,501
(a) Interest rate represents annualized yield to maturity at purchase date.
(b) Securities, or portion thereof, with an aggregate market value of
$7,690,679 have been segregated to collateralize forward exchange currency
contracts .
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-17
UTILITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-92.0%
UNITED STATES INVESTMENTS-81.6%
UTILITIES-61.1%
ELECTRIC & GAS UTILITY-38.9%
AGL Resources, Inc. 6,100 $ 124,669
Allegheny Power, Inc. 23,500 763,750
American Electric Power, Inc. 16,900 872,462
CINergy Corp. 22,100 846,706
CMS Energy Corp. 18,400 810,750
DPL, Inc. 14,000 402,500
Edison International 22,000 598,125
FPL Group, Inc. 15,600 923,325
KeySpan Energy Corp. 4,600 169,338
MCN Corp. 4,600 185,725
New Jersey Resources Corp. 4,400 176,275
NIPSCO Industries, Inc. 18,200 899,762
Northwest Natural Gas Co. 5,250 163,734
Pacific Enterprises 4,100 154,263
People's Energy Corp. 3,600 141,750
Pinnacle West Capital Corp. 12,500 529,687
Questar Corp. 3,500 156,188
------------
7,919,009
TELEPHONE UTILITY-21.2%
Ameritech Corp. 4,700 378,350
AT&T Corp. 12,560 769,300
Bell Atlantic Corp. 6,400 582,400
BellSouth Corp. 7,400 416,713
Frontier Corp. 21,000 505,312
GTE Corp. 10,500 548,625
Teleport Communications Group, Inc.(a) 13,600 747,150
WorldCom, Inc. (a) 12,000 363,375
------------
4,311,225
MISCELLANEOUS-1.0%
AES Corp. (a) 4,400 205,150
------------
12,435,384
CONSUMER SERVICES-13.0%
BROADCASTING & CABLE-9.2%
AirTouch Communications, Inc. Cl.C
4.25% cv. pfd. 10,100 629,356
Comcast Corp. Cl.A 18,000 567,563
TCI Communications, Inc. Series A
$2.125 cv. pfd. 6,200 403,775
Telephone and Data Systems, Inc. 6,000 279,375
------------
1,880,069
ENTERTAINMENT & LEISURE-3.8%
Cablevision Systems Corp.
8.5% cv. pfd. 20,000 $770,000
------------
2,650,069
ENERGY-6.0%
DOMESTIC PRODUCERS-3.9%
The Williams Cos., Inc.
3.50% pfd. 4,700 625,687
Washington Gas Light Co. 5,600 173,250
------------
798,937
PIPELINES-2.1%
Enron Corp. 5,800 241,063
Piedmont Natural Gas Co., Inc. 5,100 183,281
------------
424,344
------------
1,223,281
MULTI INDUSTRY COMPANIES-1.5%
Southwest Gas Corp. 7,000 130,813
Wicor, Inc. 3,500 162,531
------------
293,344
Total United States Investments
(cost $12,417,110) 16,602,078
FOREIGN INVESTMENTS-10.4%
BRAZIL-3.6%
Companhia Energetica de Minas Gerais (ADR) 1,600 64,800
Companhia Paranaense de Energia-Copel pfd. 4,700 64,331
Companhia Riograndense de Telecom pfd. (a) 129,000 158,931
Telecomunicacoes Brasileiras, SA(ADR) 3,800 442,463
------------
730,525
FINLAND-0.8%
Nokia Corp. (ADR) 2,500 175,000
MEXICO-1.7%
Telefonos de Mexico, SA Series L (ADR) 6,200 347,588
PERU-0.7%
Telefonica del Peru, SA Cl.B (ADR) 62,000 138,561
PHILIPPINES-0.7%
Philippine Long Distance Telephone Co.
Series III
3.50% cv. pfd. (GDS) 6,000 135,000
SOUTH KOREA-0.7%
Korea Electric Power Corp. 4,020 36,761
SK Telecom Co., Ltd. (ADR) 15,244 99,086
------------
135,847
B-18
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
SWEDEN-1.0%
Ericsson (L.M.) Telephone Co. Cl.B (ADR) 5,600 $ 209,125
VENEZUELA-1.2%
Compania Anonima Nacional Telefonos
de Venezuela 5,800 241,425
Total Foreign Investments
(cost $1,967,429) 2,113,071
Total Common & Preferred Stocks
(cost $14,384,539) 18,715,149
CORPORATE BOND-0.6%
International Cabletel, Inc.
7.25%, 4/15/05
(cost $124,200) $115 131,675
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
SHORT-TERM INVESTMENTS-7.2%
COMMERCIAL PAPER-7.2%
General Electric Capital Corp.
5.65%, 1/02/98 459 458,928
6.10%, 1/02/98 300 299,949
6.10%, 1/05/98 400 399,729
Prudential Funding Corp.
5.50%, 1/02/98 300 299,954
Total Short-Term Investments
(amortized cost $1,458,560) 1,458,560
TOTAL INVESTMENTS-99.8%
(cost $15,967,299) 20,305,384
Other assets less liabilities-0.2% 41,622
NET ASSETS-100% $20,347,006
(a) Non-income producing security.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-19
GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-96.1%
FINANCE-26.0%
BANKING - MONEY CENTER-4.0%
Automatic Common Exchange Security Trust II 25,000 $ 587,500
Chase Manhattan Corp. 43,920 4,809,240
NationsBank Corp. 22,000 1,337,875
Newcourt Credit Group, Inc. (a) 35,000 1,150,625
The CIT Group, Inc. Cl. A (a) 52,000 1,677,000
------------
9,562,240
BANKING - REGIONAL-1.3%
First Union Corp. 44,000 2,255,000
Fleet Financial Group, Inc. 9,500 711,906
------------
2,966,906
BROKERAGE & MONEY MANAGEMENT-0.8%
Morgan Stanley, Dean Witter,
Discover and Co. 30,600 1,809,225
INSURANCE-6.3%
20th Century Industries, Inc. 58,000 1,508,000
Acceptance Insurance Co. (a) 44,000 1,064,250
American International Group, Inc. 47,025 5,113,969
Progressive Corp. 6,900 827,137
Stirling Cooke Brown Holdings, Ltd. (a) 20,000 496,250
Travelers Group, Inc. 107,499 5,791,509
------------
14,801,115
INVESTMENT COMPANY-1.6%
TCI Ventures Group Series A 132,300 3,749,878
REAL ESTATE-7.7%
Alexandria Real Estate Equities, Inc. 50,800 1,603,375
Arden Realty Group, Inc. 75,600 2,324,700
Entertainment Properties Trust 56,000 1,085,000
Equity Office Properties Trust 36,100 1,139,406
Excel Realty Trust, Inc. 60,000 1,890,000
Humphrey Hospitality Trust, Inc. 78,100 917,675
JP Realty, Inc. 38,000 985,625
Koger Equity, Inc. 100,000 2,193,750
Macerich Co. 52,500 1,496,250
Prentiss Properties Trust 49,000 1,368,938
SL Green Realty Corp. 30,000 778,125
Spieker Properties, Inc. 56,000 2,401,000
------------
18,183,844
MISCELLANEOUS-4.3%
American Express Co. 42,600 $3,802,050
MBNA Corp. 230,250 6,288,703
------------
10,090,753
------------
61,163,961
TECHNOLOGY-20.9%
COMMUNICATION EQUIPMENT-1.9%
DSC Communications Corp. (a) 26,000 622,375
Sterling Commerce, Inc. (a) 100,789 3,874,077
------------
4,496,452
COMMUNICATION SERVICES-0.9%
Nextel Communications, Inc. (a) 86,000 2,225,250
COMPUTER SERVICES-2.7%
Ceridian Corp. (a) 138,500 6,345,031
COMPUTER SOFTWARE-2.7%
Sterling Software, Inc. 157,100 6,441,100
ELECTRONICS-0.3%
EMC Corp. (a) 24,000 658,500
SCI Systems, Inc. (a) 1,400 60,988
------------
719,488
NETWORKING SOFTWARE-6.3%
3Com Corp. (a) 6,800 237,363
Cisco Systems, Inc. (a) 217,200 12,122,475
Networks Associates, Inc. (a) 45,000 2,375,156
------------
14,734,994
SEMI-CONDUCTOR CAPITAL EQUIPMENT-0.2%
Teradyne, Inc. (a) 17,000 544,000
TELECOM SERVICES-0.6%
Electric Lightwave, Inc. Cl. A (a) 90,000 1,344,375
TELECOMMUNICATIONS-4.4%
Brooks Fiber Properties, Inc. (a) 54,600 3,008,119
Colt Telecom Group Plc (a) (b) 95,400 4,036,612
Millicom International Cellular, SA (a) (c) 39,500 1,476,312
Telephone and Data Systems, Inc. 37,900 1,764,719
------------
10,285,762
MISCELLANEOUS-0.9%
Sanmina Corp. (a) 18,000 1,225,125
Solectron Corp. (a) 23,300 968,406
------------
2,193,531
------------
49,329,983
B-20
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
CONSUMER SERVICES-15.7%
AIRLINES-3.4%
Continental Airlines, Inc. Cl.B (a) 67,000 $ 3,224,375
Delta Air Lines, Inc. 19,400 2,308,600
Northwest Airlines Corp. Cl.A (a) 16,300 780,872
UAL Corp. (a) 11,600 1,073,000
U.S. Airways Group, Inc. (a) 10,000 625,000
------------
8,011,847
BROADCASTING & CABLE-1.2%
ProSieben Media AG (a) (d) 27,500 639,375
Tele-Communications, Inc. -
Liberty Media Group Cl.A (a) 62,037 2,254,657
------------
2,894,032
BUSINESS SERVICES-6.1%
Cendant Corp. (a) 418,050 14,370,469
ENTERTAINMENT & LEISURE-0.0%
Carnival Corp. Cl.A 2,100 116,288
PRINTING & PUBLISHING-0.2%
Readers Digest Association, Inc. 18,000 425,250
RESTAURANTS & LODGING-1.1%
ITT Corp. 32,000 2,652,000
RETAIL - GENERAL MERCHANDISE-3.7%
AutoZone, Inc. (a) 62,100 1,800,900
Home Depot, Inc. 64,150 3,776,831
The Limited, Inc. 119,000 3,034,500
------------
8,612,231
------------
37,082,117
ENERGY-11.2%
DOMESTIC PRODUCERS-0.7%
Union Pacific Resources Group, Inc. 67,600 1,639,300
OIL SERVICE-10.5%
Baker Hughes, Inc. 21,000 916,125
BJ Services Co. (a) 21,300 1,532,269
Dresser Industries, Inc. 90,600 3,799,538
Gulf Canada Resources, Ltd. (a) 700,300 4,902,100
Halliburton Co. 56,800 2,950,050
Nabors Industries, Inc. (a) 123,000 3,866,812
Noble Drilling Corp. (a) 74,000 2,266,250
Rowan Cos., Inc. (a) 37,000 1,128,500
Santa Fe International Corp. 32,700 1,330,481
Transocean Offshore, Inc. 44,000 2,120,250
------------
24,812,375
------------
26,451,675
UTILITIES-8.7%
TELEPHONE UTILITY-8.7%
AT&T Corp. 13,000 796,250
MCI Communications Corp. 150,000 6,426,562
Telecomunicacoes Brasileiras, SA (ADR) 10,400 1,210,950
Teleport Communications
Group, Inc. Cl.A (a) 50,200 2,757,863
WorldCom, Inc. (a) 265,462 8,038,521
8.0% cv. pfd. 12,000 1,288,500
------------
20,518,646
CONSUMER STAPLES-5.6%
TOBACCO-5.6%
Loews Corp. 46,800 4,966,650
Philip Morris Cos., Inc. 183,000 8,292,188
------------
13,258,838
HEALTH CARE-5.5%
BIOTECHNOLOGY-0.1%
Gensia Sicor, Inc.
3.75%, conv. pfd. 8,000 212,000
DRUGS-3.8%
Merck & Co., Inc. 47,900 5,089,375
Pfizer, Inc. 30,000 2,236,875
Schering-Plough Corp. 25,000 1,553,125
------------
8,879,375
MEDICAL PRODUCTS-1.5%
Boston Scientific Corp. (a) 37,400 1,715,725
Medtronic, Inc. 33,200 1,736,775
------------
3,452,500
MEDICAL SERVICES-0.1%
Quest Medical, Inc. (a) 38,000 265,406
------------
12,809,281
CONSUMER MANUFACTURING-1.3%
AUTO & RELATED-1.3%
Republic Industries, Inc. (a) 134,000 3,123,875
MULTI INDUSTRY COMPANIES-1.2%
Tyco International, Ltd. 62,572 2,819,651
Total Common Stocks & Other Investments
(cost $171,611,145) 226,558,027
B-21
GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
CONVERTIBLE BONDS-0.9%
Altera Corp.
5.75%, 6/15/02 (d) $ 185 $ 254,606
Applied Magnetics Corp.
7.00%, 3/15/06 900 730,125
HMT Technology Corp.
5.75%, 1/15/04 (d) 1,195 1,053,094
Total Convertible Bonds
(cost $3,127,986) 2,037,825
SHORT-TERM INVESTMENTS-6.1%
U.S. GOVERNMENT & AGENCY-6.1%
Federal Home Loan Mortgage Corp.
5.75%, 1/30/98 $ 3,796 $3,778,417
6.00%, 1/02/98 10,700 10,698,217
Total Short-Term Investments
(amortized cost $14,476,634) 14,476,634
TOTAL INVESTMENTS-103.1%
(cost $189,215,765) 243,072,486
Other assets less liabilities-(3.1%) (7,197,501)
NET ASSETS-100% $235,874,985
(a) Non-income producing security.
(b) Country of origin--United Kingdom.
(c) Country of origin--Luxembourg.
(d) 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,
1997, the aggregate market value of these securities amounted to $1,947,075 or
0.8% of net assets.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-22
WORLDWIDE PRIVATIZATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-89.3%
ARGENTINA-0.8%
Banco Rio de La Plata, SA Cl.B(ADR) 2,300 $ 32,200
Metrogas, SA Cl.B (ADR) 7,663 59,388
Nortel Inversora, SA pfd. (ADR) 4,800 122,400
Telecom Argentina, SA (ADR) 3,700 132,275
------------
346,263
AUSTRALIA-2.8%
Amrad Corp. 140,000 209,864
CSL, Ltd. 109,900 687,622
TAB Corp. Holdings, Ltd. 58,600 274,986
------------
1,172,472
AUSTRIA-3.2%
Austria Mikro Systeme International AG 4,270 216,348
Austria Tabakwerke AG (a) 20,000 886,672
Bohler-Uddeholm AG 2,300 134,834
Voest Alpine Stahl AG 3,000 115,663
------------
1,353,517
BELGIUM-1.0%
Credit Communal Holding Dexia 3,000 402,823
BOTSWANA-0.5%
Sechaba Investment Trust, Ltd. 200,000 210,040
BRAZIL-9.2%
Banco do Estado de Sao Paulo, SA pfd. (a) 3,100,000 126,383
Bardella Industrias Mecanicas, SA pfd. 1,600 172,035
Celesc (b) 750 77,250
pfd. 315,001 392,322
Companhia Energetica de Minas Gerais (ADR) 3,600 145,800
Companhia Paranaense de Energia-Copel
pfd. (ADR) 5,000 68,438
Companhia Paulista de
Forca e Luz 2,316,000 305,051
pfd. 373,501 38,486
Companhia Riograndense de Telecom 7,258 8,997
pfd. (a) 364,500 449,073
Companhia Vale Do Rio Doce PNB (Receipts) 2,360 0
Escelsa Espirito Santo Centrais 324 42,092
Gerdau, SA pfd. 20,824,144 261,223
Iven, SA pfd. 438,100 249,266
Light Participacoes, SA 480,000 144,080
Metalurgica Gerdau, SA 419,660 8,340
pfd. 7,438,243 223,271
Multicanal Participacoes, SA (ADR)(a) 8,700 52,200
Petroleo Brasileiro, SA (ADR) 7,500 166,763
Telecomunicacoes Brasileiras SA (ADR) 7,000 815,062
Telepar Tel Parana pfd. 14,000 7,527
Trikem, SA pfd. (a) 15,000,000 22,176
Uniao de Bancos Brasileiras, SA (GDR) (a) 2,300 74,031
------------
3,849,866
CHINA-1.6%
Beijing Datang Power Generation Co., Ltd. 448,000 205,239
China Southern Airlines Co., Ltd. 694,000 179,120
Zhejiang Southeast Electric Power Co.,
Ltd. (GDR) (a) (b) 17,700 281,430
------------
665,789
COLOMBIA-0.1%
Banco de Colombia (GDS) (a) (b) 8,400 48,300
CZECH REPUBLIC-0.9%
Ceske Energeticke Zavody (GDR) (a) 1,500 49,225
Ceske Radiokomunikace AS 990 124,487
Komercni Banka AS (GDR) 3,600 43,200
Podnik Vypocetni Techniky 500 31,617
Tabak AS 480 109,640
------------
358,169
EGYPT-2.5%
Commercial International Bank 10,250 206,838
(GDR) 10,500 217,350
Egypt International Pharmaceutical
Industries Co. 2,996 209,566
Egyptian Financial & Industrial 950 57,232
Housing & Development Bank 2,200 58,839
MISR Bank 500 14,914
NASR City for Housing & Reconstruction 2,000 129,317
Paints & Chemicals 1,600 51,256
Tourah Portland Cement Co. 4,000 91,685
------------
1,036,997
FINLAND-0.7%
Outokumpu OY Cl.A 23,500 286,693
B-23
WORLDWIDE PRIVATIZATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
FRANCE-8.1%
Pechiney, SA Cl.A 3,248 $ 128,225
Renault, SA 7,300 205,349
Sanofi, SA 6,700 745,867
SEITA 11,000 394,783
SGS-Thomson Microelectronics N.V. (a) 4,000 247,570
Societe Generale 2,656 361,871
Societe Nacionale Elf Aquitaine SA 4,390 510,592
Union des Assurances Federales 2,800 367,534
Usinor Sacilor 30,000 433,164
------------
3,394,955
GERMANY-3.1%
BHW Holding AG (a) 7,150 117,249
Deutsche Lufthansa AG (a) 23,200 444,926
Viag AG 1,387 747,104
------------
1,309,279
GREECE-0.0%
Hellenic Telecommunication Organization, SA 645 13,215
HONG KONG-0.1%
Guangshen Railway Co., Ltd. (ADR) 4,600 61,813
Tianjin Development Holdings, Ltd.(a) 11,000 10,221
------------
72,034
HUNGARY-0.7%
Mol Magyar Olay (GDR) (b) 6,000 144,600
OTP Bank (GDR) 4,000 150,000
------------
294,600
INDIA-1.8%
Industrial Credit & Investment Corp. (GDR) 3,000 37,800
(GDR) (b) 16,900 212,940
Mahanagar Telephone Nigam Ltd. (GDR) (a) 9,700 149,089
State Bank of India (GDS) 3,900 69,225
(GDR) (b) 1,200 21,300
Videsh Sanchar Nigam, Ltd. (GDS) (a) 2,000 27,400
(GDR) (b) 18,700 256,190
------------
773,944
INDONESIA-1.8%
PT Indosat (ADR) 239,000 443,236
PT Tambang Timah (GDR) 20,000 208,000
PT Telekomunikasi Indonesia 55,000 29,250
(ADR) 6,000 66,375
------------
746,861
ISRAEL-0.6%
Bank Hapoalim, Ltd. 62,500 149,964
Tadiran Ltd. (ADR) 3,000 106,125
------------
256,089
ITALY-4.9%
Aeroporti di Roma S.p.A. (a) 51,000 529,028
Ente Nazionale Idrocarburi S.p.A. 51,300 290,864
IMI LNV 33,000 391,747
Instituto Nazionale delle Assicurazioni 100,000 202,657
Telecom Italia Mobile S.p.A 109,000 309,932
(RNC) 25,000 115,390
Telecom Italia S.p.A. (a) 46,569 205,335
------------
2,044,953
JAPAN-4.2%
Daiwa Securities Co., Ltd. 67,000 230,911
DDI Corp. 17 44,918
East Japan Railway Co. 23 103,753
Japan Tobacco, Inc. 82 581,542
Nippon Telegraph and Telephone Corp. 41 351,689
Nomura Securities Co., Ltd. 33,000 439,764
------------
1,752,577
JORDAN-0.2%
Arab Potash Co. 8,300 72,673
KOREA-0.1%
Korean Air 1,700 7,241
Pohang Iron & Steel Co., Ltd. 440 12,219
------------
19,460
MALAYSIA-0.0%
Malakoff Berhad 6,820 14,203
MEXICO-2.8%
ALFA SA 26,000 176,222
Empresas Ica Sociedad Control (ADR) 3,200 52,600
Grupo Financiero Banamex, SA Cl.B (a) 78,700 235,500
Grupo Financiero Bancrecer,
SA de C.V. Cl.B (a) 75,000 3,996
Grupo Financiero Banorte,
SA de C.V. Cl.B (a) 218,500 380,659
Grupo Financiero GBM Atlantico Cl.L
(ADR) (a) (c) 8,400 8,400
Grupo Financiero Probursa, SA
de C.V. Cl.B (a) 152,173 39,408
Grupo Minsa, SA C.V. (a) 75,000 54,829
Grupo Profesional Planeacion
Proyectos, SA Cl.B (c) 4,800 18,646
B-24
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Telefonos de Mexico, SA Cl.L (ADR) 1,400 $ 78,488
Tubos de Acero de Mexico, SA (ADR) (a) 5,000 108,125
------------
1,156,873
NETHERLANDS-5.1%
AKZO Nobel NV 5,710 984,497
ING Groep NV 12,030 506,676
KLM Royal Dutch Airlines NV 17,192 635,909
------------
2,127,082
NEW ZEALAND-0.1%
Tranz Rail Holdings, Ltd. 12,800 48,310
NORWAY-0.7%
Christiana Bank OG Kreditkasse 40,000 161,391
Den Norske Bank 30,000 141,352
------------
302,743
PAKISTAN-0.5%
Hub Power Co. (GDR) (a) 4,000 124,000
Pakistan Telecom (GDS) 1,350 98,550
------------
222,550
PERU-1.3%
Cementos Lima, SA 3,785 82,478
Cl.C 90,175 129,058
Cementos Norte Pacasmayo Cl.T 46,810 66,135
Explosivios, SA Cl. C (c) 86,354 98,238
Ferreyros, SA 62,300 65,844
Telefonica Del Peru, SA ADR 42,000 93,864
------------
535,617
PHILIPPINES-1.1%
First Philippines Holdings Corp. Series B 140,450 109,239
International Container Terminal
Services, Inc. 299,000 36,913
Manila Electric Co. Series B 96,000 317,630
------------
463,782
POLAND-2.1%
Bank Handlowy W Warseawie (GDR) (a) (c) 7,500 95,745
Banka Przemyslowo Handlowy, SA 1,400 72,681
Elektrim, SA 13,000 125,759
Kredyt Bank, SA (GDR) (a) (b) 41,000 514,550
Wielkopolski Bank Kredytowy, SA 15,000 75,319
------------
884,054
PORTUGAL-1.9%
Electricidade de Portugal, SA (a) 38,500 729,000
Portucel Industrial Empresa
Productora de Celulose, SA 9,600 58,576
------------
787,576
RUSSIA-1.7%
Gazprom (ADR) (b) 4,500 107,100
Lukoil Holding (ADR) 2,000 182,000
Nearmedic, SA (a) (c) 65,000 133,792
RNGS Holdings (ADR) (a) 6,842 98,126
Sun Brewing (GDR) (a) (b) 13,000 170,300
------------
691,318
SLOVAKIA-0.2%
Slovakofarma AS (GDR) (a) 10,400 86,840
SOUTH AFRICA-0.4%
Iscor Ltd. 625,492 185,083
SOUTH KOREA-1.3%
Korea Electric Power Corp. (ADR) 17,000 171,063
SK Telecom, Ltd. 220 71,036
(ADR) 49,191 319,746
------------
561,845
SPAIN-4.1%
Aceralia Corporacion Siderurgica, SA (a) 48,700 597,762
Aldeasa, SA (a) 23,465 497,486
Empresa Nacional de Celulosas, SA 21,788 296,751
Repsol, SA 7,320 312,307
------------
1,704,306
SWEDEN-1.9%
Assi Doman AB 10,450 264,544
Castellum AB (a) 20,900 207,950
Sparbanken Sverige AB Cl.A 15,000 340,999
------------
813,493
SWITZERLAND-2.1%
Sair Group 630 862,305
TURKEY-0.8%
Petrokimya Holdings AS 141,000 76,538
Tupras Turkiye Petrol Rafinerileri AS 1,300,000 147,406
Usas Ucak Servisi AS 43,500 104,946
------------
328,890
UNITED KINGDOM-11.5%
Anglian Water Plc 40,000 545,310
Birkby Plc 46,000 118,621
British Energy Plc 110,000 764,255
Energis Plc (a) 185,000 774,849
National Grid Group Plc 70,000 332,278
National Power Plc 36,600 360,693
B-25
WORLDWIDE PRIVATIZATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Northern Ireland Electricity Plc 36,600 $ 318,966
PowerGen Plc 40,000 520,344
RJB Mining 12,000 25,032
Scottish Hydro Electric 36,600 301,780
Stagecoach Holdings Plc 20,187 276,862
Wessex Water Plc 53,772 453,084
------------
4,792,074
UNITED STATES-0.3%
Central European Media Enterprises, Ltd. (a) 4,300 108,575
VENEZUELA-0.5%
Compania Anonima Nacional
Telefonos de Venezuela Cl.D (ADR) 3,100 129,038
Mercantil Servicios Financier (ADR) (a) 5,000 71,981
------------
201,019
Total Common & Preferred Stocks
(cost $36,460,970) 37,360,107
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
SHORT-TERM INVESTMENT-10.6%
TIME DEPOSIT-10.6%
State Street Bank and Trust Co.
5.25%, 1/02/98
(amortized cost $4,409,000) $4,409 $ 4,409,000
TOTAL INVESTMENTS-99.9%
(cost $40,869,970) 41,769,107
Other assets less liabilities-0.1% 48,858
NET ASSETS-100% $41,817,965
(a) Non-income producing security.
(b) 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,
1997, the aggregate market value of these securities amounted to $2,004,260 or
4.8% of net assets.
(c) Illiquid securities valued at fair market value (see Note A).
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-26
CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-27.9%
UNITED STATES INVESTMENTS-18.4%
FINANCE-4.6%
BANKING - MONEY CENTER-1.2%
Chase Manhattan Corp. 1,600 $ 175,200
Citicorp 1,500 189,656
------------
364,856
BANKING - REGIONAL-0.4%
Banc One Corp. 2,000 108,625
BROKERAGE & MONEY MANAGEMENT-0.9%
Merrill Lynch & Co., Inc. 2,000 145,875
Morgan Stanley, Dean Witter, Discover and Co. 2,000 118,250
------------
264,125
INSURANCE-0.8%
American International Group, Inc. 1,200 130,500
Travelers Group, Inc. 2,250 121,219
------------
251,719
MISCELLANEOUS-1.3%
MBNA Corp. 8,000 218,500
PMI Group, Inc. 2,500 180,781
------------
399,281
------------
1,388,606
TECHNOLOGY-2.5%
COMMUNICATION EQUIPMENT-0.5%
Lucent Technologies, Inc. 2,000 159,750
COMPUTER HARDWARE-0.6%
COMPAQ Computer Corp. 3,000 169,313
NETWORKING SOFTWARE-0.7%
Cisco Systems, Inc. (a) 3,750 209,297
SEMI-CONDUCTOR CAPITAL EQUIPMENT-0.3%
Applied Materials, Inc. (a) 3,000 90,281
SEMI-CONDUCTOR COMPONENTS-0.4%
Altera Corp. (a) 1,500 49,734
Intel Corp. 1,000 70,219
------------
119,953
------------
748,594
CONSUMER STAPLES-2.4%
COSMETICS-0.9%
Avon Products, Inc. 1,000 61,375
Estee Lauder Co., Inc. Cl. A 1,800 92,588
Gillette Co. 1,100 110,481
------------
264,444
RETAIL - FOOD & DRUG-0.6%
Kroger Co. (a) 5,000 $184,687
TOBACCO-0.9%
Philip Morris Cos., Inc. 6,000 271,875
------------
721,006
CONSUMER SERVICES-2.4%
BROADCASTING & CABLE-0.6%
Cox Communications, Inc. Cl.A (a) 3,000 120,187
Tele-Communications, Inc. -
Liberty Media Group Cl.A (a) 2,000 72,688
------------
192,875
ENTERTAINMENT & LEISURE-1.3%
Harley-Davidson, Inc. 6,000 164,250
Walt Disney Co. 2,300 227,844
------------
392,094
RETAIL - GENERAL MERCHANDISE-0.5%
Dayton Hudson Corp. 2,000 135,000
------------
719,969
ENERGY-2.4%
DOMESTIC INTEGRATED-0.5%
USX-Marathon Group 4,000 135,000
DOMESTIC PRODUCERS-0.2%
Apache Corp. 2,000 70,125
OIL SERVICE-1.7%
BJ Services Co. (a) 2,500 179,844
Halliburton Co. 3,400 176,587
Noble Drilling Corp. (a) 5,000 153,125
------------
509,556
------------
714,681
HEALTH CARE-1.7%
DRUGS-1.5%
Merck & Co., Inc. 2,500 265,625
Schering-Plough Corp. 3,000 186,375
------------
452,000
MEDICAL PRODUCTS-0.2%
Medtronic, Inc. 1,520 79,515
------------
531,515
MULTI INDUSTRY COMPANIES-0.7%
Tyco International, Ltd. 2,800 126,175
U.S. Industries, Inc. 2,850 85,856
------------
212,031
UTILITIES-0.7%
TELEPHONE UTILITY-0.7%
WorldCom, Inc. (a) 7,000 211,969
B-27
CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
CAPITAL GOODS-0.7%
POLLUTION CONTROL-0.3%
USA Waste Services, Inc. (a) 2,500 $ 98,125
MISCELLANEOUS-0.4%
United Technologies Corp. 1,500 109,219
------------
207,344
CONSUMER MANUFACTURING-0.3%
APPLIANCES-0.3%
Sunbeam Corp. 2,100 88,463
Total United States Investments
(cost $4,638,749) 5,544,178
FOREIGN INVESTMENTS-9.5%
AUSTRALIA-0.1%
Normandy Mining, Ltd. 17,000 16,509
BRAZIL-0.2%
Telecomunicacoes Brasileiras, SA (ADR) 600 69,862
CANADA-0.4%
Gulf Canada Resources, Ltd. (a) 8,000 56,000
Magna International, Inc. Cl.A 1,000 62,979
------------
118,979
DENMARK-0.3%
Den Danske Bank 500 66,624
Sophus Berendsen AS Cl.B 200 32,983
------------
99,607
FINLAND-0.7%
Nokia AB OY Corp. Series A pfd. 2,000 141,993
Orion-Yhtymae OY Cl.B 2,800 73,969
------------
215,962
FRANCE-0.5%
Sanofi, SA 500 55,662
Societe Generale 401 54,635
Unibail, SA 502 50,129
------------
160,426
GERMANY-0.6%
Adidas AG 400 52,608
Hornbach Holding AG pfd. 600 41,524
ProSieben Media AG pfd. (a) 1,500 70,041
Schmalbach-Lubeca AG pfd. 166 27,360
------------
191,533
HONG KONG-0.3%
Cheung Kong Holdings, Ltd. 4,000 $26,197
Citic Pacific, Ltd. 6,000 23,848
Dickson Concepts International, Ltd. 6,000 8,750
Sun Hung Kai Properties, Ltd. 3,000 20,906
------------
79,701
JAPAN-2.3%
Bank of Tokyo, Ltd. 2,000 27,571
Canon, Inc. 2,000 46,565
Daiwa Securities Co., Ltd. 7,000 24,125
Honda Motor Co. 2,000 73,371
Japan Tobacco, Inc. 4 28,368
Nintendo Corp., Ltd. 500 49,016
Promise Co., Ltd. 1,000 55,449
Rohm Co. 1,000 101,861
Santen Pharmaceutical Co. 2,000 22,976
Sony Corp. 700 62,189
Sumitomo Electric Industries 2,000 27,265
TDK Corp. 1,000 75,362
Yamanouchi Pharmaceutical Co., Ltd. 4,000 85,778
------------
679,896
MEXICO-0.3%
Coca-Cola Femsa, SA (ADR) 1,500 87,000
NETHERLANDS-0.6%
AKZO Nobel NV 500 86,208
Internationale Nederlanden Groep NV 2,000 84,236
------------
170,444
NORWAY-0.1%
Bergesen D.Y. AS Cl.A 1,500 35,338
PHILIPPINES-0.0%
Manila Electric Co. Cl.B 2,000 6,617
SPAIN-0.1%
Tabacalera, SA Series A 500 40,532
SWEDEN-0.4%
Ericsson (L.M.) Telecom Series B 900 33,836
Sparbanken Sverige AB Series A 1,000 22,733
Volvo AB Series A 2,000 53,401
------------
109,970
SWITZERLAND-1.3%
Baloise Holdings, Ltd. 50 92,493
Ciba Specialty Chemicals AG (a) 400 47,632
Nestle, SA 50 74,904
Novartis AG 50 81,098
Zurich Versicherungs-Gesellschaft 200 95,264
------------
391,391
B-28
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
UNITED KINGDOM-1.3%
BAA Plc 8,000 $ 65,437
BPB Plc 12,000 67,014
British Petroleum Co. Plc 3,007 39,778
Compass Group Plc 7,000 86,116
SmithKline Beecham Plc 6,000 61,840
Tomkins Plc 8,000 37,843
United News & Media Plc 3,000 34,148
------------
392,176
Total Foreign Investments
(cost $2,860,912) 2,865,943
Total Common & Preferred Stocks
(cost $7,499,661) 8,410,121
U.S. GOVERNMENT & AGENCIES-41.2%
Federal Home Loan Mortgage
7.00%, 9/01/11 $ 432 440,351
7.00%, 1/01/12 92 93,694
Federal National Mortgage Assn.
6.00%, 4/01/11 433 426,364
6.50%, 6/01/11 303 304,403
6.50%, 4/01/12 240 240,223
7.00%, 5/01/26 568 573,127
7.00%, 9/01/27 250 251,656
U.S. Treasury Bond
6.125%, 11/15/27 1,915 1,967,969
U.S. Treasury Notes
6.00%, 8/15/00 1,950 1,964,020
6.25%, 4/30/01 1,240 1,259,369
6.375%, 5/15/99 1,395 1,407,862
6.50%, 8/31/01 1,900 1,947,196
6.50%, 5/31/02 1,325 1,363,717
6.625%, 5/15/07 200 211,688
Total U.S. Government & Agencies
(cost $12,288,350) 12,451,639
PRINCIPAL
AMOUNT
(000) U.S. $ Value
- -------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS-5.1%
BANKING-1.8%
ABN Amro Bank NV Chicago
7.125%, 6/18/07 $ 525 $ 551,000
FINANCIAL-1.6%
Goldman Sachs Group LP
7.20%, 11/01/06 (b) 450 475,681
INDUSTRIAL-1.7%
Time Warner, Inc.
8.375%, 3/15/23 450 513,531
Total Corporate Debt Obligations
(cost $1,444,853) 1,540,212
YANKEE BONDS-2.8%
Corporacion Andina de Fomento
7.25%, 3/01/07 400 407,974
St. George Bank, Ltd.
7.15%, 10/15/05 (b) 425 437,844
Total Yankee Bonds
(cost $821,641) 845,818
SHORT-TERM INVESTMENT-22.2%
Federal Home Loan Mortgage Corp.
6.00%, 1/02/98
(amortized cost $6,698,883) 6,700 6,698,883
TOTAL INVESTMENTS -99.2%
(cost $28,753,388) 29,946,673
Other assets less liabilities-0.8% 249,708
NET ASSETS-100% $30,196,381
(a) Non-income producing security.
(b) 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,
1997, the aggregate market value of these securities amounted to $913,525 or
3.0% of net assets.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-29
GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-71.3%
UNITED STATES INVESTMENTS-48.7%
FINANCE-11.8%
BANKING - MONEY CENTER-3.5%
Chase Manhattan Corp. 3,000 $ 328,500
Citicorp 2,000 252,875
------------
581,375
BANKING - REGIONAL-1.0%
Banc One Corp. 3,000 162,937
BROKERAGE & MONEY MANAGEMENT-2.2%
Merrill Lynch & Co., Inc. 2,500 182,344
Morgan Stanley, Dean Witter, Discover and Co. 3,000 177,375
------------
359,719
INSURANCE-2.1%
American International Group, Inc. 1,800 195,750
Travelers Group, Inc. 3,000 161,625
------------
357,375
MISCELLANEOUS-3.0%
MBNA Corp. 8,000 218,500
PMI Group, Inc. 3,900 282,019
------------
500,519
------------
1,961,925
ENERGY-7.0%
DOMESTIC INTEGRATED-1.4%
USX-Marathon Group, Inc. 7,000 236,250
DOMESTIC PRODUCERS-0.9%
Apache Corp. 4,000 140,250
OIL SERVICE-4.7%
BJ Services Co. (a) 4,000 287,750
Halliburton Co. 3,700 192,169
Noble Drilling Corp. (a) 10,000 306,250
------------
786,169
------------
1,162,669
CONSUMER STAPLES-6.4%
COSMETICS-2.3%
Avon Products, Inc. 1,000 61,375
Gillette Co. 1,900 190,831
The Estee Lauder Co., Inc. Cl. A 2,600 133,738
------------
385,944
RETAIL - FOOD & DRUG-1.6%
Kroger Co. (a) 7,000 258,563
TOBACCO-2.5%
Philip Morris Cos., Inc. 9,000 407,812
------------
1,052,319
TECHNOLOGY-6.2%
COMMUNICATION EQUIPMENT-0.7%
Lucent Technologies, Inc. 1,500 119,813
COMPUTER HARDWARE-1.7%
COMPAQ Computer Corp. (a) 5,000 282,187
NETWORKING SOFTWARE-2.0%
Cisco Systems, Inc. (a) 6,000 334,875
SEMI-CONDUCTOR CAPITAL EQUIPMENT-0.7%
Applied Materials, Inc. (a) 4,000 120,375
SEMI-CONDUCTOR COMPONENTS-1.1%
Altera Corp. (a) 2,800 92,837
Intel Corp. 1,200 84,263
------------
177,100
------------
1,034,350
CONSUMER SERVICES-6.2%
BROADCASTING & CABLE-1.4%
Cox Communications, Inc. Cl.A (a) 4,000 160,250
Tele-Communications, Inc. -
Liberty Media Group Cl.A (a) 2,000 72,687
------------
232,937
ENTERTAINMENT & LEISURE-3.6%
Harley-Davidson, Inc. 9,000 246,375
Walt Disney Co. 3,500 346,719
------------
593,094
RETAIL - GENERAL MERCHANDISE-1.2%
Dayton Hudson Corp. 3,000 202,500
------------
1,028,531
HEALTH CARE-4.5%
DRUGS-4.0%
Merck & Co., Inc. 4,000 425,000
Schering-Plough Corp. 4,000 248,500
------------
673,500
MEDICAL PRODUCTS-0.5%
Medtronic, Inc. 1,500 78,469
------------
751,969
MULTI INDUSTRY COMPANIES-2.1%
Tyco International, Ltd. 3,400 153,213
U.S. Industries, Inc. 6,300 189,787
------------
343,000
B-30
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
UTILITIES-1.8%
TELEPHONE UTILITY-1.8%
WorldCom, Inc. (a) 10,000 $ 302,812
CAPITAL GOODS-1.8%
POLLUTION CONTROL-0.9%
USA Waste Services, Inc. (a) 4,000 157,000
MISCELLANEOUS-0.9%
United Technologies Corp. 2,000 145,625
------------
302,625
CONSUMER MANUFACTURING-0.9%
APPLIANCES-0.9%
Sunbeam Corp., Inc. 3,300 139,013
Total United States Investments
(cost $7,025,543) 8,079,213
FOREIGN INVESTMENTS-22.6%
AUSTRALIA-0.1%
Normandy Mining, Ltd. 25,000 24,278
BRAZIL-0.7%
Telecomunicacoes Brasileiras, SA (ADR) 1,000 116,437
CANADA-0.8%
Gulf Canada Resources, Ltd. (a) 10,000 70,000
Magna International, Inc. Cl.A 1,000 62,979
------------
132,979
DENMARK-1.0%
Den Danske Bank 500 66,624
Sophus Berendsen AS Cl.B 600 98,950
------------
165,574
FINLAND-1.9%
Nokia AB OY Corp. Series A pfd. 3,000 212,991
Orion-Yhtymae OY Cl.B 4,200 110,953
------------
323,944
FRANCE-1.0%
Sanofi, SA 500 55,662
Societe Generale 401 54,635
Unibail, SA 502 50,129
------------
160,426
GERMANY-1.6%
Adidas AG 500 65,761
Hornbach Holding AG pfd. 1,000 69,207
ProSieben Media AG pfd. (a) 2,000 93,388
Schmalbach-Lubeca AG pfd. 258 42,523
------------
270,879
HONG KONG-0.8%
Cheung Kong Holdings, Ltd. 6,000 39,295
Citic Pacific, Ltd. 12,000 47,697
Dickson Concepts International, Ltd. 9,000 13,124
Sun Hung Kai Properties, Ltd. 4,000 27,875
------------
127,991
JAPAN-4.6%
Bank of Tokyo, Ltd. 3,000 41,357
Canon, Inc. 2,000 46,565
Daiwa Securities Co., Ltd. 12,000 41,357
Honda Motor Co. 2,000 73,371
Japan Tobacco, Inc. 6 42,552
Nintendo Corp., Ltd. 1,000 98,032
Promise Co., Ltd. 1,000 55,449
Rohm Co. 1,000 101,861
Santen Pharmaceutical Co. 3,000 34,464
Sony Corp. 700 62,189
Sumitomo Electric Industries 2,000 27,265
TDK Corp. 1,000 75,362
Yamanouchi Pharmaceutical Co., Ltd. 3,000 64,333
------------
764,157
MEXICO-0.7%
Coca-Cola Femsa, SA (ADR) 2,000 116,000
NETHERLANDS-1.2%
AKZO Nobel NV 700 120,692
Internationale Nederlanden Groep NV 2,000 84,235
------------
204,927
NORWAY-0.3%
Bergesen D.Y. AS Cl.A 2,000 47,117
PHILIPPINES-0.1%
Manila Electric Co. Cl.B 3,000 9,926
SPAIN-0.5%
Tabacalera, SA Series A 1,000 81,063
SWEDEN-0.9%
Ericsson (L.M.) Telecom Series B 1,400 52,633
Sparbanken Sverige AB Series A 1,000 22,733
Volvo AB Series A 3,000 80,102
------------
155,468
SWITZERLAND-2.9%
Baloise Holdings Ltd. 40 73,994
Ciba Specialty Chemicals AG (a) 600 71,448
Nestle, SA 50 74,904
Novartis AG 100 162,196
Zurich Versicherungs-Gesellschaft 200 95,264
------------
477,806
B-31
GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
UNITED KINGDOM-3.5%
BAA Plc 10,000 $ 81,796
BPB Plc 20,000 111,690
British Petroleum Co. Plc 4,007 53,007
Compass Group Plc 10,000 123,023
SmithKline Beecham Plc 12,000 123,680
Tomkins Plc 9,000 42,574
United News Media Plc 4,000 45,530
------------
581,300
Total Foreign Investments
(cost $3,784,640) 3,760,272
Total Common & Preferred Stocks
(cost $10,810,183) 11,839,485
U.S. GOVERNMENT & AGENCIES-15.5%
Federal Home Loan Bank
7.00%, 8/01/11 $ 73 74,860
Federal National Mortgage Assn.
6.00%, 4/01/11 87 85,273
6.50%, 12/01/10 58 58,128
7.00%, 12/01/11 45 45,718
7.00%, 4/01/26 77 77,945
U.S. Treasury Bond
6.125%, 11/15/27 275 282,606
U.S. Treasury Notes
6.00%, 8/15/00 200 201,438
6.25%, 4/30/01 50 50,781
6.375%, 5/15/99 390 393,596
6.50%, 8/31/01 275 281,831
6.50%, 5/31/02 795 818,230
6.875%, 5/15/06 190 203,300
Total U.S. Government & Agencies
(cost $2,545,915) 2,573,706
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS-2.8%
BANKING-1.1%
ABN Amro Bank NV Chicago
7.125%, 6/18/07 $ 100 $ 104,952
Dime Capital Trust I Series A
9.33%, 5/06/27 75 84,342
------------
189,294
FINANCIAL-0.5%
United Companies Financial Corp.
8.375%, 7/01/05 80 82,371
INDUSTRIAL-1.2%
Auburn Hills Trust
12.00%, 5/01/20 50 79,496
Time Warner, Inc.
9.125%, 1/15/13 100 119,685
------------
199,181
Total Corporate Debt Obligations
(cost $451,788) 470,846
SHORT-TERM INVESTMENT-9.7%
Federal Home Loan Mortgage Corp.
6.00%, 1/02/98
(amortized cost $1,599,733) 1,600 1,599,733
TOTAL INVESTMENTS -99.3%
(cost $15,407,619) 16,483,770
Other assets less liabilities-0.7% 116,140
NET ASSETS-100% $16,599,910
(a) Non-income producing security.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-32
TECHNOLOGY PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-84.9%
TECHNOLOGY-83.5%
COMMUNICATIONS EQUIPMENT-9.0%
Ericsson (L.M.) Telephone Co. Cl.B (ADR) (a) 26,900 $ 1,004,547
Lucent Technologies, Inc. 10,900 870,638
Motorola, Inc. 10,180 580,896
Nokia Corp. (ADR) (b) 28,200 1,974,000
PairGain Technologies, Inc. (c) 16,000 310,500
Tellabs, Inc. (c) 27,790 1,466,791
------------
6,207,372
COMPUTER HARDWARE-10.6%
Apex PC Solutions, Inc. (c) 15,800 341,675
COMPAQ Computer Corp. 57,000 3,216,937
Dell Computer Corp. (c) 41,550 3,491,498
Sun Microsystems, Inc. (c) 7,000 279,563
------------
7,329,673
COMPUTER PERIPHERALS-0.8%
Iomega Corp. (c) 43,200 537,300
COMPUTER SERVICES-9.4%
Computer Sciences Corp. (c) 17,300 1,444,550
DST Systems, Inc. (c) 19,925 850,548
ETRADE Group, Inc. (c) 6,500 149,703
First Data Corp. 23,200 678,600
Fiserv, Inc. (c) 11,900 586,075
Galileo International, Inc. 13,900 383,988
Gartner Group, Inc. Cl.A (c) 26,200 977,587
PMT Services, Inc. (c) 12,400 173,213
Registry, Inc. (c) 8,270 382,488
SunGard Data Systems, Inc. (c) 29,200 905,200
------------
6,531,952
COMPUTER SOFTWARE-14.7%
Cadence Design Systems, Inc (c) 35,000 857,500
Concord Communications, Inc. (c) 1,100 22,619
HBO & Co. 49,000 2,350,469
I2 Technologies, Inc. (c) 4,000 211,125
Industri-Matematik International Corp. (c) 15,800 467,087
J.D. Edwards & Co. (c) 8,400 249,375
Microsoft Corp. (c) 12,000 1,550,625
Networks Associates, Inc. (c) 22,600 1,192,856
New Era of Networks, Inc. (c) 3,700 40,700
Oracle Corp. (c) 44,250 985,945
Pegasystems, Inc. (c) 17,500 351,641
PeopleSoft, Inc. (c) 49,000 1,904,875
SCM Microsystems, Inc. (c) 900 21,431
------------
10,206,248
NETWORKING SOFTWARE-11.9%
3Com Corp. (c) 17,800 621,331
Bay Networks, Inc. (c) 72,890 1,863,251
Cisco Systems, Inc. (c) 66,600 3,717,112
Fore Systems (c) 85,000 1,296,250
Newbridge Networks Corp. (c) 21,000 732,375
------------
8,230,319
SEMI-CONDUCTOR CAPITAL EQUIPMENT-4.4%
Applied Materials, Inc. (c) 54,800 1,649,137
Silicon Valley Group, Inc. (c) 26,600 605,150
Teradyne, Inc. (c) 25,800 825,600
------------
3,079,887
SEMI-CONDUCTOR COMPONENTS-16.1%
Altera Corp. (c) 59,500 1,972,797
Atmel Corp. (c) 21,000 390,469
Cirrus Logic, Inc. (c) 90,000 959,062
Intel Corp. 28,500 2,001,234
KLA-Tencor Corp. (c) 21,600 833,625
Microchip Technology, Inc. (c) 26,720 803,270
National Semiconductor Corp. (c) 39,300 1,019,344
PMC-Sierra, Inc. (c) 19,700 614,394
Taiwan Semiconductor Manufacturing Co.,
Ltd. (ADR) (c) (d) 68,500 1,245,844
Texas Instruments, Inc. 14,100 634,500
Xilinx, Inc. (c) 20,000 700,000
------------
11,174,539
MISCELLANEOUS-6.6%
Ingram Micro, Inc. Cl.A (c) 27,500 800,938
Sanmina Corp. (c) 23,400 1,592,662
Solectron Corp. (c) 37,900 1,575,219
Tech Data Corp. (c) 14,800 577,200
------------
4,546,019
------------
57,843,309
UTILITIES-1.0%
TELEPHONE UTILITY-1.0%
WorldCom, Inc. (c) 22,700 687,385
CONSUMER SERVICES-0.4%
MISCELLANEOUS-0.4%
Equifax, Inc. 8,000 283,500
Total Common Stocks
(cost $53,422,945) 58,814,194
B-33
TECHNOLOGY PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
SHORT-TERM INVESTMENTS-14.2%
COMMERCIAL PAPER-14.2%
American Express Credit Corp.
5.85%, 1/02/98 $2,480 $ 2,479,597
Ford Motor Credit Corp.
5.80%, 1/14/98 3,000 2,993,716
General Electric Capital Corp.
5.95%, 1/12/98 2,000 1,996,364
Prudential Funding Corp.
5.85%, 1/07/98 2,360 2,357,699
Total Short-Term Investments
(amortized cost $9,827,376) 9,827,376
TOTAL INVESTMENTS-99.1%
(cost $63,250,321) $68,641,570
Other assets less liabilities-0.9% 598,263
NET ASSETS-100% $69,239,833
(a) Country of origin--Sweden.
(b) Country of origin--Finland.
(c) Non-income producing security.
(d) Country of origin--Taiwan.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-34
QUASAR PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS& OTHER INVESTMENTS-89.8%
CONSUMER PRODUCTS & SERVICES-27.5%
ADVERTISING-1.3%
Princeton Video Image, Inc. (a) 12,100 $ 111,169
Snyder Communications, Inc. (a) 17,500 638,750
------------
749,919
AIRLINES-6.3%
Alaska Air Group, Inc. (a) 29,100 1,127,625
America West Airlines, Inc. Cl.B (a) 21,600 402,300
Continental Airlines, Inc. (a) 39,100 1,881,687
Trans World Airlines, Inc. (a) 28,600 289,575
------------
3,701,187
APPAREL-4.1%
Nautica Enterprises, Inc. (a) 24,900 585,150
St. John Knits, Inc. 10,000 400,000
Tommy Hilfiger Corp. (a) 23,300 818,412
Wolverine World Wide, Inc. 28,600 647,075
------------
2,450,637
BROADCASTING & CABLE-0.9%
Sinclair Broadcast Group, Inc. Cl.A (a) 11,400 527,963
ENTERTAINMENT & LEISURE-1.6%
Bally Total Fitness Holding Corp. (a) 22,100 482,056
Signature Resorts, Inc. (a) 22,400 491,400
------------
973,456
RESTAURANTS & LODGING-1.5%
Extended Stay America, Inc. (a) 20,035 249,186
Florida Panthers Holdings, Inc. Cl.A 16,700 288,075
Suburban Lodges of America, Inc. (a) 24,600 328,256
------------
865,517
RETAILING-11.4%
Avis Rent A Car, Inc. (a) 24,800 792,050
Brylane, Inc. (a) 8,800 433,400
Budget Group, Inc. (a) 35,400 1,223,512
Circuit City Stores, Inc. - Car Max Group (a) 62,500 562,500
Furniture Brands International, Inc. 27,900 571,950
Industrie Natuzzi SpA (ADR) (b) 27,800 573,375
Movado Group, Inc. 19,400 446,200
Pacific Sunwear of California (a) 16,950 504,262
Pep Boys - Manny, Moe & Jack 12,900 307,988
PETsMART, Inc. 14,800 106,838
The Finish Line, Inc. (a) 29,800 392,988
Tiffany & Co. (a) 18,600 670,762
United Rentals, Inc. (a) 10,100 195,056
------------
6,780,881
MISCELLANEOUS-0.4%
Central Garden & Pet Company (a) 9,800 258,475
------------
16,308,035
BASIC INDUSTRIES-18.9%
CONTAINERS-1.8%
Ivex Packaging Corp. 22,500 540,000
U.S. Can Corp. (a) 30,300 511,312
------------
1,051,312
ENVIRONMENTAL CONTROL-2.6%
American Disposal Services, Inc. (a) 15,300 559,406
Culligan Water Technologies, Inc. (a) 11,200 562,800
Superior Services, Inc. (a) 15,700 458,244
------------
1,580,450
METAL HARDWARE-2.3%
Bethlehem Steel Corp. (a) 141,000 1,216,125
Steel Dynamics, Inc. (a) 8,200 131,712
------------
1,347,837
METALS & MINING-0.6%
Royal Oak Mines, Inc. 226,200 353,438
TEXTILE PRODUCTS-3.6%
Mohawk Industries, Inc. (a) 83,550 1,832,878
Novel Denim Holdings, Ltd. (a) 17,100 337,725
------------
2,170,603
TRANSPORTATION & SHIPPING-8.0%
Consolidated Freightways Corp. (a) 77,400 1,064,250
Genesee & Wyoming, Inc. 8,600 207,475
Knightsbridge Tankers, Ltd. 23,900 670,694
OMI Corp. (a) 180,600 1,659,262
Roadway Express, Inc. 13,400 299,825
Teekay Shipping Corp. 24,600 825,638
------------
4,727,144
------------
11,230,784
B-35
QUASAR PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
TECHNOLOGY-16.3%
AEROSPACE & DEFENSE-1.2%
Gulfstream Aerospace Corp. 24,300 $ 710,775
COMMUNICATION EQUIPMENT-1.4%
Comverse Technology, Inc. (a) 21,800 847,475
COMPUTER HARDWARE-0.7%
Hadco Corp. 9,200 416,588
COMPUTER PERIPHERALS-0.5%
ENCAD, Inc. (a) 10,700 296,925
COMPUTER SOFTWARE & SERVICES-4.4%
CDW Computer Centers, Inc. (a) 17,900 933,037
Checkfree Corp. (a) 24,000 652,500
DBT Online, Inc. (a) 31,500 785,531
QAD, Inc. (a) 20,200 256,288
------------
2,627,356
NETWORKING SOFTWARE-1.2%
Registry, Inc. (a) 14,720 680,800
SEMI-CONDUCTOR EQUIPMENT-1.8%
Actel Corp. (a) 7,500 95,156
Applied Micro Circuits Corp. (a) 27,000 335,813
PMC-Sierra, Inc. (a) 19,400 605,037
------------
1,036,006
TELECOMMUNICATIONS-5.1%
Globecomm Systems, Inc. 20,900 236,431
GST Telecommunications, Inc 22,200 263,625
Millicom International Cellular, SA (a) (c) 28,100 1,050,238
Telephone and Data Systems, Inc. 31,800 1,480,687
------------
3,030,981
------------
9,646,906
HEALTH CARE-11.1%
BIOTECHNOLOGY-8.4%
AutoCyte, Inc. (a) 28,500 204,844
Centocor, Inc. (a) 36,700 1,224,862
Corixa Corp. (a) 20,300 183,334
GelTex Pharmaceuticals, Inc. 53,410 1,422,041
Gensia Sicor, Inc. 18,700 108,109
Inhale Therapeutic Systems 1,000 25,875
MedImmune, Inc. 21,300 915,900
Neurex Corp. (a) 59,400 822,319
Novoste Corp. (a) 3,500 78,313
------------
4,985,597
DRUGS, HOSPITAL SUPPLIES & MEDICAL SERVICES-2.7%
Mid Atlantic Medical Services, Inc. 34,900 444,975
National Surgery Centers, Inc. (a) 30,200 790,863
Synetic, Inc. (a) 10,400 384,150
------------
1,619,988
------------
6,605,585
ENERGY-7.0%
OIL & GAS SERVICES-7.0%
Costilla Energy, Inc. (a) 6,600 73,837
Oceaneering International, Inc. (a) 31,400 620,150
Parker Drilling Co. (a) 113,200 1,379,625
Rowan Companies, Inc. 19,400 591,700
Southern Union Co. (a) 28,025 669,097
Valero Energy Corp. 25,700 807,944
------------
4,142,353
FINANCIAL SERVICES-6.0%
REAL ESTATE-4.7%
CCA Prison Realty Trust 9,900 441,788
Chelsea GCA Realty, Inc. 23,200 885,950
Glenborough Realty Trust, Inc. 18,500 548,062
Security Capital Group, Inc. Cl.B (a) 27,900 906,750
------------
2,782,550
OTHER-1.3%
International Alliance
warrants, expiring 1/01/49 (a) 9,700 75,321
International Alliance Services, Inc. 38,800 669,300
------------
744,621
------------
3,527,171
CONSUMER MANUFACTURING-1.9%
AUTO & RELATED-1.9%
Miller Industries, Inc. (a) 61,450 660,588
Monaco Coach Corp. (a) 17,600 442,200
------------
1,102,788
B-36
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
UTILITIES-1.1%
TELEPHONE UTILITY-1.1%
ACC Corp. (a) 12,800 $ 648,000
Total Common Stocks & Other Investments
(cost $52,984,268) 53,211,622
SHORT-TERM INVESTMENT-9.4%
U.S. GOVERNMENT & AGENCY-9.4%
Federal Home Loan Mortgage Corp.
6.00%, 1/02/98
(amortized cost $5,599,067) $5,600 5,599,067
TOTAL INVESTMENTS-99.2%
(cost $58,583,335) $58,810,689
Other assets less liabilities-0.8% 466,479
NET ASSETS-100% $59,277,168
(a) Non-income producing security.
(b) Country of origin--Luxembourg.
(c) Country of origin--Italy.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-37
REAL ESTATE INVESTMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-97.1%
REAL ESTATE INVESTMENT TRUSTS-97.0%
APARTMENTS-12.5%
Ambassador Apartments, Inc. 4,100 $ 84,306
Avalon Properties, Inc. 10,300 318,656
Bay Apartment Communities, Inc. 7,900 308,100
Essex Property Trust, Inc. 17,300 605,500
Security Capital Pacific Trust 16,400 397,700
------------
1,714,262
DIVERSIFIED-6.8%
Glenborough Realty Trust, Inc. 20,500 607,312
Golf Trust of America, Inc. 10,900 316,100
------------
923,412
HOTELS & RESTAURANTS-16.8%
American General Hospitality Corp. 13,800 369,150
Innkeepers USA Trust 24,600 381,300
ITT Corp. 2,000 165,750
Patriot American Hospitality, Inc. 20,800 599,300
Starwood Lodging Trust 8,600 497,725
Sunstone Hotel Investors, Inc. 16,300 281,175
------------
2,294,400
OFFICE-19.2%
Arden Realty Group, Inc. 13,500 415,125
Crescent Real Estate Equities Co. 13,800 543,375
Equity Office Properties Trust 21,266 671,208
Great Lakes REIT, Inc. 6,800 132,175
Mack-Cali Realty Corp. 8,600 352,600
SL Green Realty Corp. 19,700 510,969
------------
2,625,452
OFFICE - INDUSTRIAL MIX-15.6%
Brandywine Realty Trust 18,800 472,350
Duke Realty Investments, Inc. 12,500 303,125
Highwoods Properties, Inc. 13,100 487,156
Reckson Associates Realty Corp. 16,200 411,075
Spieker Properties, Inc. 10,800 463,050
------------
2,136,756
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
REGIONAL MALLS-5.7%
Macerich Co. 14,100 $ 401,850
Mills Corp. 15,200 372,400
------------
774,250
SHOPPING CENTERS-11.2%
Entertainment Properties Trust 12,500 242,188
Excel Realty Trust, Inc. 11,900 374,850
IRT Property Co. 14,100 166,556
Pacific Retail Trust Co. (a) 19,000 247,000
Pan Pacific Retail Properties, Inc. 23,800 508,725
------------
1,539,319
STORAGE-3.9%
Public Storage, Inc. 18,200 534,625
WAREHOUSE & INDUSTRIAL-5.3%
Meridian Industrial Trust, Inc. 13,500 344,250
Security Capital Industrial Trust 15,500 385,563
------------
729,813
------------
13,272,289
REAL ESTATE DEVELOPMENT & MANAGEMENT-0.1%
Crescent Operating, Inc. (a) 750 18,328
Security Capital Group, Inc.
warrants, expiring 9/18/98 (a) 498 2,615
------------
20,943
Total Common Stocks & Other Investments
(cost $12,260,771) 13,293,232
SHORT-TERM INVESTMENT-3.2%
TIME DEPOSIT-3.2%
State Street Bank and Trust Co.
5.25%, 1/02/98
(cost $443,000) $443 443,000
TOTAL INVESTMENTS-100.3%
(cost $12,703,771) 13,736,232
Other assets less liabilities-(0.3%) (42,175)
NET ASSETS-100% $13,694,057
(a) Non-income producing security.
See Notes to Financial Statements.
B-38
HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS-77.6%
BUILDING PRODUCTS-0.9%
American Architectural Products Corp.
11.75%, 12/01/07 (a) $10 $ 10,150
BUSINESS SERVICES-3.5%
Dialog Corp. Plc
11.00%, 11/15/07 (a) 10 10,425
International Logistics, Ltd.
9.75%, 10/15/07 (a) 10 9,950
TSF Communications Corp.
10.375%, 11/01/07 (a) 20 19,900
------------
40,275
CABLE-0.9%
Northland Cable Television
10.25%, 11/15/07 (a) 10 10,575
CHEMICALS-1.8%
AEP Industries, Inc.
9.875%, 11/15/07 (a) 10 10,300
Climachem, Inc.
10.75%, 12/01/07 (a) 10 10,350
------------
20,650
COMMUNICATIONS-4.0%
Globalstar LP
10.75%, 11/01/04 (a) 10 9,800
Iridium Capital Corp. LLC
14.00%, 7/15/05 (b) 10 10,850
Telex Communications, Inc.
10.50%, 5/01/07 25 24,825
------------
45,475
CONSUMER MANUFACTURING-0.8%
Pen-Tab Industries
10.875%, 2/01/07 10 9,650
ENERGY-3.1%
Newpark Resources, Inc.
8.625%, 12/15/07 (a) 25 25,375
Transamerican Energy Corp.
11.50%, 6/15/02 (a) 10 9,850
------------
35,225
ENTERTAINMENT & LEISURE-0.9%
Livent, Inc.
9.375%, 10/15/04 (a) 10 10,050
FINANCIAL-8.9%
American Banknote Corp.
11.25%, 12/01/07 25 25,063
Emergent Group, Inc.
10.75%, 9/15/04 25 24,937
Metris Companies, Inc.
10.00%, 11/01/04 (a) 50 51,000
------------
101,000
FOOD/BEVERAGES-6.2%
Cuddy International Corp.
10.75%, 12/01/07 (a) 10 10,175
Imperial Holly Corp.
9.75%, 12/15/07 (a) 25 25,156
Iowa Select Farms
10.75%, 12/01/05 (a) 10 10,313
Richmont Marketing Specialist
10.125%, 12/15/07 (a) 25 25,375
------------
71,019
HEALTHCARE-4.5%
Kinetic Concepts, Inc.
9.625%, 11/01/07 (a) 50 51,062
INDUSTRIAL-7.1%
Bucyrus International, Inc.
9.75%, 9/15/07 20 20,200
Scotsman Industries, Inc.
8.625%, 12/15/07 25 25,000
Scovill Fasteners
11.25%, 11/30/07 (a) 10 10,250
Walbro Corp.
10.125%, 12/15/07 (a) 25 25,625
------------
81,075
MEDIA-3.2%
Perry-Judd, Inc.
10.625%, 12/15/07 (a) 25 26,000
Transwestern Publishing Co. LP
9.625%, 11/15/07 (a) 10 10,450
------------
36,450
METAL / MINERALS-4.3%
Acme Metals, Inc.
10.875%, 12/15/07 (a) 25 24,719
Wheeling-Pittsburgh Steel Corp.
9.25%, 11/15/07 (a) 25 24,250
------------
48,969
PAPER / PACKAGING-5.3%
Amscan Holdings, Inc.
9.875%, 12/15/07 (a) 25 25,500
Doman Industries, Ltd.
9.25%, 11/15/07 (a) 10 9,800
Stone Container Corp.
12.25%, 4/01/02 25 25,500
------------
60,800
B-39
HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
RETAIL-3.9%
Big 5 Corp.
10.875%, 11/15/07 (a) $10 $ 10,000
Maxim Group, Inc.
9.25%, 10/15/07 (a) 25 24,938
United Auto Group, Inc.
11.00%, 7/15/07 (a) 10 9,900
------------
44,838
SUPERMARKET / DRUG-2.2%
Pueblo Xtra International
9.50%, 8/01/03 15 14,325
The Pantry, Inc.
10.25%, 10/15/07 (a) 10 10,250
------------
24,575
TECHNOLOGY-7.6%
Axiohm, Inc.
9.75%, 10/01/07 (a) 50 51,125
Concentric Network Corp.
12.75%, 12/15/07 25 25,687
Details, Inc.
10.00%, 11/15/05 (a) 10 10,275
------------
87,087
TEXTILE PRODUCTS-3.2%
Pillowtex Corp.
9.00%, 12/15/07 (a) 25 25,625
Worldtex, Inc.
9.625%, 12/15/07 (a) 10 10,350
------------
35,975
TRANSPORTATION-3.1%
Panoceanic Bulk Carriers, Ltd.
12.00%, 12/15/07 (a) $ 10 $9,900
Ryder TRS, Inc.
10.00%, 12/01/06 25 25,125
------------
35,025
UTILITY-2.2%
Trench Electric & Trench, Inc.
10.25%, 12/15/07 (a) 25 25,438
Total Corporate Debt Obligations
(cost $873,805) 885,363
SHORT-TERM INVESTMENT-18.4%
TIME DEPOSIT-18.4%
State Street Bank and Trust Co.
5.25%, 1/02/98
(cost $210,000) 210 210,000
TOTAL INVESTMENTS-96.0%
(cost $1,083,805) 1,095,363
Other assets less liabilities-4.0% 45,992
NET ASSETS-100% $1,141,355
(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,
1997, the aggregate market value of these securities amounted to $654,201 or
57.3% of net assets.
(b) Indicates a security that has a zero coupon that remains in effect until a
predetermined date at which time the stated coupon rate becomes effective until
final maturity.
Glossary of Terms:
ADR - American Depositary Receipts
FLIRB - Front Load Interest Reduction Bond
FNMA - Federal National Mortgage Association
FRN - Floating Rate Note
GDR - Global Depositary Receipts
GDS - Global Depositary Shares
IAN - Interest Arrears Note
IRB - Interest Reduction Bond
PDI - Past Due Interest
pfd. - Preferred Stock
RNC - Non Convertible Saving Share
See Notes to Financial Statements.
B-40
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
GROWTH SHORT-TERM
PREMIER GROWTH GLOBAL BOND AND INCOME MULTI-MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $379,845,622, $21,876,330,
$220,961,778 and $6,242,555,
respectively) $469,955,845 $ 21,763,934 $249,328,049 $ 5,961,640
Cash, at value (cost $668, $43,596,
$515 and $206,018, respectively) 668 43,141 515 206,018
Receivable for investment
securities sold 1,769,566 -0- 1,835,905 -0-
Receivable for capital stock sold 647,310 13,185 22,028 10
Dividends receivable 492,359 -0- 438,608 -0-
Interest receivable 195 419,697 27 175,486
Unrealized appreciation of forward
exchange currency contracts -0- 124,654 -0- 160,399
Total assets 472,865,943 22,364,611 251,625,132 6,503,553
LIABILITIES
Advisory fee payable 316,787 8,303 128,938 2,995
Payable for capital stock redeemed 89,007 147,985 86,517 7,121
Payable for investment securities
purchased -0- -0- 1,137,929 -0-
Accrued expenses 134,044 13,978 70,153 4,005
Total liabilities 539,838 170,266 1,423,537 14,121
NET ASSETS $472,326,105 $ 22,194,345 $250,201,595 $ 6,489,432
COMPOSITION OF NET ASSETS
Capital stock, at par $ 22,504 $ 1,999 $ 12,553 $ 614
Additional paid-in capital 389,213,455 21,846,305 191,694,750 7,269,654
Undistributed net investment income 594,942 229,154 2,192,351 473,715
Accumulated net realized gain
(loss) on investments and
foreign currency transactions (7,615,019) 108,075 27,935,659 (1,130,586)
Net unrealized appreciation
(depreciation) of investments
and foreign currency
denominated assets and liabilities 90,110,223 8,812 28,366,282 (123,965)
$472,326,105 $ 22,194,345 $250,201,595 $ 6,489,432
Shares of capital stock outstanding 22,504,318 1,999,231 12,552,817 613,666
Net asset value per share $ 20.99 $ 11.10 $ 19.93 $ 10.57
</TABLE>
See Notes to Financial Statements.
B-41
STATEMENTS OF ASSETS AND LIABILITIES
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
U.S. GOVERNMENT
/HIGH GRADE
SECURITIES TOTAL RETURN INTERNATIONAL MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $35,016,067, $39,116,803,
$58,656,226 and $67,142,921,
respectively) $35,677,712 $42,625,882 $59,500,779 $67,142,921
Cash, at value (cost $201, $182,
$644,199 and $55,023, respectively) 201 182 641,669 55,023
Interest receivable 563,570 253,530 507 54,094
Receivable for capital stock sold 11,946 11,707 8,007 901,623
Dividends receivable 1,181 44,916 87,258 -0-
Receivable for investment
securities sold -0- 162,908 226,457 -0-
Unrealized appreciation of forward
exchange currency contracts -0- -0- 698,285 -0-
Total assets 36,254,610 43,099,125 61,162,962 68,153,661
LIABILITIES
Payable for capital stock redeemed 21,990 14,023 357,794 198,635
Advisory fee payable 18,040 22,034 32,681 30,817
Payable for investment securities
purchased -0- 124,155 -0- -0-
Dividends payable -0- -0- -0- 316,379
Accrued expenses 16,802 18,944 62,089 24,009
Total liabilities 56,832 179,156 452,564 569,840
NET ASSETS $36,197,778 $42,919,969 $60,710,398 $67,583,821
COMPOSITION OF NET ASSETS
Capital stock, at par $ 3,034 $ 2,537 $ 4,042 $ 67,583
Additional paid-in capital 33,468,495 34,796,439 57,503,795 67,515,833
Undistributed net investment income 1,860,125 822,392 242,000 1,046
Accumulated net realized gain
(loss) on investments and
foreign currency transactions 204,479 3,789,522 1,419,480 (641)
Net unrealized appreciation of
investments and foreign
currency denominated assets
and liabilities 661,645 3,509,079 1,541,081 -0-
$36,197,778 $42,919,969 $60,710,398 $67,583,821
Shares of capital stock outstanding 3,033,854 2,536,298 4,042,053 67,584,219
Net asset value per share $ 11.93 $ 16.92 $ 15.02 $ 1.00
</TABLE>
See Notes to Financial Statements.
B-42
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
NORTH AMERICAN
GLOBAL DOLLAR GOVERNMENT
GOVERNMENT INCOME UTILITY INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $15,312,083, $29,501,391,
$15,967,299 and $189,215,765,
respectively) $15,239,598 $30,410,686 $20,305,384 $243,072,486
Cash, at value (cost $203, $675,
$22,476 and $363,513, respectively) 203 675 22,473 363,513
Receivable for investment
securities sold 400,240 57,355 -0- 88,393
Interest receivable 292,531 222,482 1,760 50,707
Deferred organization expenses 4,449 5,744 4,137 3,402
Unrealized appreciation of forward
exchange currency contracts -0- 4,138 -0- -0-
Dividends receivable -0- -0- 42,913 255,741
Receivable for capital stock sold -0- -0- 15,773 98,136
Total assets 15,937,021 30,701,080 20,392,440 243,932,378
LIABILITIES
Payable for investment securities
purchased 525,850 -0- -0- 7,660,848
Payable for capital stock redeemed 16,714 167,262 29,349 176,625
Advisory fee payable 3,553 5,322 11,927 146,116
Accrued expenses 12,460 21,995 4,158 73,804
Total liabilities 558,577 194,579 45,434 8,057,393
NET ASSETS $15,378,444 $30,506,501 $20,347,006 $235,874,985
COMPOSITION OF NET ASSETS
Capital stock, at par $ 1,050 $ 2,353 $ 1,298 $ 10,521
Additional paid-in capital 13,698,404 27,237,510 15,333,594 165,726,908
Undistributed net investment income 1,013,027 2,082,356 461,439 684,284
Accumulated net realized gain on
investments and foreign
currency transactions 738,448 271,275 212,592 15,596,551
Net unrealized appreciation
(depreciation) of investments
and foreign currency
denominated assets and liabilities (72,485) 913,007 4,338,083 53,856,721
$15,378,444 $30,506,501 $20,347,006 $235,874,985
Shares of capital stock outstanding 1,050,053 2,352,683 1,298,346 10,521,215
Net asset value per share $ 14.65 $ 12.97 $ 15.67 $ 22.42
</TABLE>
See Notes to Financial Statements.
B-43
STATEMENTS OF ASSETS AND LIABILITIES
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
WORLDWIDE CONSERVATIVE GROWTH
PRIVATIZATION INVESTORS INVESTORS TECHNOLOGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $40,869,970, $28,753,388,
$15,407,619 and $63,250,321,
respectively) $41,769,107 $29,946,673 $16,483,770 $68,641,570
Cash, at value (cost $50,351,
$92,235, $74,516 and $52,750,
respectively) 50,029 91,849 74,531 52,750
Receivable for investment
securities sold 340,238 4,683 7,021 519,124
Dividends receivable 81,815 8,842 12,253 5,573
Receivable for capital stock sold 38,983 -0- 5,985 90,474
Deferred organization expenses 3,446 3,638 3,638 13,179
Interest receivable 792 182,360 34,776 -0-
Receivable from Adviser -0- 2,345 -0- -0-
Total assets 42,284,410 30,240,390 16,621,974 69,322,670
LIABILITIES
Payable for investment securities
purchased 416,006 50 -0- -0-
Advisory fee payable 8,844 -0- 2,490 45,391
Payable for capital stock redeemed 4,461 11,882 3,841 2,454
Accrued expenses 37,134 32,077 15,733 34,992
Total liabilities 466,445 44,009 22,064 82,837
NET ASSETS $41,817,965 $30,196,381 $16,599,910 $69,239,833
COMPOSITION OF NET ASSETS
Capital stock, at par $ 2,945 $ 2,305 $ 1,155 $ 5,910
Additional paid-in capital 38,366,241 26,776,245 13,976,715 66,298,024
Undistributed net investment income 502,310 973,022 202,165 86,270
Accumulated net realized gain
(loss) on investments and
foreign currency transactions 2,052,094 1,252,054 1,343,830 (2,541,620)
Net unrealized appreciation of
investments and foreign
currency denominated assets
and liabilities 894,375 1,192,755 1,076,045 5,391,249
$41,817,965 $30,196,381 $16,599,910 $69,239,833
Shares of capital stock outstanding 2,944,708 2,304,722 1,154,452 5,910,211
Net asset value per share $ 14.20 $ 13.10 $ 14.38 $ 11.72
</TABLE>
See Notes to Financial Statements.
B-44
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
REAL ESTATE
QUASAR INVESTMENT HIGH YIELD
PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- -------------
ASSETS
Investments in securities, at value
(cost $58,583,335, $12,703,771
and $1,083,805, respectively) $58,810,689 $13,736,232 $1,095,363
Cash, at value (cost $164,628,
$955 and $508, respectively) 164,628 955 508
Receivable for investment
securities sold 1,273,105 18,404 -0-
Receivable for capital stock sold 59,740 200 31,160
Deferred organization expenses 18,767 16,091 -0-
Dividends receivable 6,706 90,769 -0-
Receivable from Adviser -0- 1,853 6,521
Interest receivable -0- 65 12,085
Total assets 60,333,635 13,864,569 1,145,637
LIABILITIES
Payable for investment
securities purchased 1,003,660 120,361 -0-
Advisory fee payable 19,979 -0- -0-
Payable for capital stock redeemed 13,376 16,873 30
Accrued expenses 19,452 33,278 4,252
Total liabilities 1,056,467 170,512 4,282
NET ASSETS $59,277,168 $13,694,057 $1,141,355
COMPOSITION OF NET ASSETS
Capital stock, at par $ 4,701 $ 1,110 $ 110
Additional paid-in capital 53,776,345 12,293,375 1,121,749
Undistributed net investment
income 45,520 287,942 7,694
Accumulated net realized gain
on investments and foreign
currency transactions 5,223,248 79,169 244
Net unrealized appreciation of
investments and foreign
currency denominated assets
and liabilities 227,354 1,032,461 11,558
$59,277,168 $13,694,057 $1,141,355
Shares of capital stock
outstanding 4,700,876 1,110,131 110,466
Net asset value per share $ 12.61 $ 12.34 $ 10.33
See Notes to Financial Statements.
B-45
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
GROWTH SHORT-TERM
PREMIER GROWTH GLOBAL BOND AND INCOME MULTI-MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign tax
withheld of $18,235, $0,
$9,288 and $0, respectively) $ 2,517,129 $ -0- $ 3,122,096 $ -0-
Interest 769,879 1,116,903 425,839 463,113
Total investment income 3,287,008 1,116,903 3,547,935 463,113
EXPENSES
Advisory fee 2,833,207 126,392 1,180,305 39,511
Audit and legal 123,356 4,374 56,713 2,267
Custodian 82,134 60,967 69,869 54,874
Printing 73,187 3,567 38,936 946
Amortization of organization
expenses 2,657 -0- -0- -0-
Directors fees 1,764 1,396 1,452 1,396
Transfer agency 1,176 1,007 968 1,003
Miscellaneous 8,461 2,280 4,358 1,732
Total expenses 3,125,942 199,983 1,352,601 101,729
Less: expense reimbursement (434,465) (17,683) -0- (33,958)
Net expenses 2,691,477 182,300 1,352,601 67,771
Net investment income 595,531 934,603 2,195,334 395,342
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain (loss) on
investment transactions (6,667,622) 509,828 27,935,671 (18,594)
Net realized gain (loss) on foreign
currency transactions -0- (1,061,111) -0- 130,313
Net change in unrealized
appreciation (depreciation) of
investments 72,666,731 (186,705) 15,634,977 (282,434)
Net change in unrealized
appreciation (depreciation) of
foreign currency denominated
assets and liabilities -0- (710) -0- 100,899
Net gain (loss) on investments 65,999,109 (738,698) 43,570,648 (69,816)
NET INCREASE IN NET ASSETS FROM
OPERATIONS $66,594,640 $ 195,905 $45,765,982 $ 325,526
</TABLE>
See Notes to Financial Statements.
B-46
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
U.S. GOVERNMENT
/HIGH GRADE
SECURITIES TOTAL RETURN INTERNATIONAL MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $2,119,415 $ 760,827 $ 193,058 $3,890,830
Dividends (net of foreign tax
withheld of $0, $1,062, $110,684
and $0, respectively) 4,725 354,398 807,702 -0-
Total investment income 2,124,140 1,115,225 1,000,760 3,890,830
EXPENSES
Advisory fee 189,543 209,008 550,231 345,313
Custodian 53,494 60,327 188,437 51,134
Audit and legal 6,340 8,674 18,615 20,859
Printing 6,155 5,773 11,302 11,858
Amortization of organization
expenses 3,464 4,826 4,941 4,969
Directors fees 1,396 1,438 1,444 1,453
Transfer agency 1,005 997 1,088 884
Miscellaneous 2,734 2,560 3,632 2,177
Total expenses 264,131 293,603 779,690 438,647
Less: expense reimbursement -0- (390) (256,970) -0-
Net expenses 264,131 293,213 522,720 438,647
Net investment income 1,860,009 822,012 478,040 3,452,183
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain (loss) on
investment transactions 225,380 3,789,362 1,551,682 (298)
Net realized gain (loss) on foreign
currency transactions 17,596 -0- (248,359) -0-
Net change in unrealized
appreciation of investments 571,200 1,754,576 118,113 -0-
Net change in unrealized
appreciation (depreciation) of
foreign currency denominated
assets and liabilities (12,381) -0- (1,267) -0-
Net gain (loss) on investments 801,795 5,543,938 1,420,169 (298)
NET INCREASE IN NET ASSETS FROM
OPERATIONS $2,661,804 $6,365,950 $1,898,209 $3,451,885
</TABLE>
See Notes to Financial Statements.
B-47
STATEMENTS OF OPERATIONS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
NORTH AMERICAN
GLOBAL DOLLAR GOVERNMENT
GOVERNMENT INCOME UTILITY INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $1,139,769 $2,326,884 $ 63,761 $ 647,161
Dividends (net of foreign tax
withheld of $0, $0, $1,607 and
$4,004, respectively) 3,343 -0- 554,341 1,599,093
Total investment income 1,143,112 2,326,884 618,102 2,246,254
EXPENSES
Advisory fee 97,176 162,844 122,569 1,393,231
Custodian 55,709 74,016 37,975 74,475
Audit and legal 5,006 10,786 4,952 45,919
Amortization of organization expenses 3,343 4,314 3,059 2,000
Printing 2,248 4,555 3,515 38,877
Directors fees 1,396 1,384 1,762 1,444
Transfer agency 1,005 1,005 1,128 727
Miscellaneous 1,739 2,101 2,199 1,942
Total expenses 167,622 261,005 177,159 1,558,615
Less: expense reimbursement (44,532) (23,002) (21,907) -0-
Net expenses 123,090 238,003 155,252 1,558,615
Net investment income 1,020,022 2,088,881 462,850 687,639
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain on investment
transactions 739,413 277,640 259,000 15,669,717
Net realized gain (loss) on foreign
currency transactions -0- 15,299 (986) -0-
Net change in unrealized appreciation
(depreciation) of investments (463,672) (227,280) 3,238,862 33,639,619
Net change in unrealized appreciation
(depreciation) of foreign currency
denominated assets and liabilities -0- (16,635) (2) -0-
Net gain on investments 275,741 49,024 3,496,874 49,309,336
NET INCREASE IN NET ASSETS FROM
OPERATIONS $1,295,763 $2,137,905 $3,959,724 $49,996,975
</TABLE>
See Notes to Financial Statements.
B-48
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
WORLDWIDE CONSERVATIVE GROWTH
PRIVATIZATION INVESTORS INVESTORS TECHNOLOGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign tax
withheld of $79,217, $4,607,
$5,078 and $1,588, respectively) $ 707,801 $ 80,090 $ 94,064 $ 33,141
Interest 168,207 1,145,503 257,948 543,765
Total investment income 876,008 1,225,593 352,012 576,906
EXPENSES
Advisory fee 322,889 191,414 98,931 517,882
Custodian 149,110 130,212 107,458 59,014
Audit and legal 15,465 5,584 9,968 19,740
Printing 6,158 4,541 2,089 11,719
Amortization of organization
expenses 2,000 2,000 2,000 4,296
Directors fees 1,439 1,444 1,347 1,450
Transfer agency 1,006 1,005 1,394 1,006
Miscellaneous 2,457 2,897 1,514 2,140
Total expenses 500,524 339,097 224,701 617,247
Less: expense reimbursement (193,781) (96,640) (99,387) (125,260)
Net expenses 306,743 242,457 125,314 491,987
Net investment income 569,265 983,136 226,698 84,919
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
Net realized gain (loss) on
investment transactions 2,105,312 1,312,334 1,375,441 (2,186,460)
Net realized loss on foreign
currency transactions (74,322) (17,301) (28,035) -0-
Net change in unrealized
appreciation (depreciation)
of investments (433,990) 470,046 334,877 3,331,455
Net change in unrealized
appreciation (depreciation) of
foreign currency denominated
assets and liabilities (5,034) (386) 15 -0-
Net gain on investments 1,591,966 1,764,693 1,682,298 1,144,995
NET INCREASE IN NET ASSETS FROM
OPERATIONS $2,161,231 $2,747,829 $1,908,996 $1,229,914
</TABLE>
See Notes to Financial Statements.
B-49
STATEMENTS OF OPERATIONS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
REAL ESTATE
QUASAR INVESTMENT HIGH YIELD
PORTFOLIO PORTFOLIO(A) PORTFOLIO(B)
------------ ------------ ------------
INVESTMENT INCOME
Interest $ 284,496 $ 14,551 $ 8,698
Dividends (net of foreign
tax withheld of $514, $0
and $0, respectively) 102,551 323,414 -0-
Total investment income 387,047 337,965 8,698
EXPENSES
Advisory fee 345,030 47,390 793
Custodian 81,564 56,855 5,300
Printing 22,582 3,024 192
Audit and legal 14,768 7,142 1,320
Amortization of organization
expenses 5,216 3,909 -0-
Directors fees 1,375 1,442 278
Transfer agency 858 916 157
Miscellaneous 2,320 780 693
Total expenses 473,713 121,458 8,733
Less: expense reimbursement (145,934) (71,435) (7,729)
Net expenses 327,779 50,023 1,004
Net investment income 59,268 287,942 7,694
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain on
investment transactions 5,195,196 79,169 244
Net change in unrealized
appreciation of investments 79,213 1,032,461 11,558
Net gain on investments 5,274,409 1,111,630 11,802
NET INCREASE IN NET ASSETS
FROM OPERATIONS $5,333,677 $1,399,572 $ 19,496
(a) Commencement of operations, January 9, 1997.
(b) Commencement of operations, October 27, 1997.
See Notes to Financial Statements.
B-50
STATEMENTS OF CHANGES
IN NET ASSETS ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
PREMIER GROWTH PORTFOLIO GLOBAL BOND PORTFOLIO
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 595,531 $ 323,694 $ 934,603 $ 863,097
Net realized gain (loss) on
investments and foreign
currency transactions (6,667,622) (442,478) (551,283) 276,324
Net change in unrealized
appreciation (depreciation) of
investments and foreign
currency denominated assets
and liabilities 72,666,731 14,126,172 (187,415) (125,897)
Net increase in net assets from
operations 66,594,640 14,007,388 195,905 1,013,524
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (324,686) (316,135) (945,935) (1,035,617)
Net realized gain on investments -0- (17,322,907) (219,946) (309,324)
CAPITAL STOCK TRANSACTIONS
Net increase 309,621,843 70,787,668 5,047,231 6,895,530
Total increase 375,891,797 67,156,014 4,077,255 6,564,113
NET ASSETS
Beginning of year 96,434,308 29,278,294 18,117,090 11,552,977
End of year (including
undistributed net investment
income of $594,272, $323,427,
$909,235 and $920,567,
respectively) $472,326,105 $96,434,308 $22,194,345 $18,117,090
</TABLE>
See Notes to Financial Statements.
B-51
STATEMENTS OF CHANGES
IN NET ASSETS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
SHORT-TERM MULTI-
GROWTH AND INCOME PORTFOLIO MARKET PORTFOLIO
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 2,195,334 $ 1,277,693 $ 395,342 $308,027
Net realized gain on investments
and foreign currency transactions 27,935,671 9,400,260 111,719 48,358
Net change in unrealized
appreciation (depreciation) of
investments and foreign
currency denominated assets
and liabilities 15,634,977 8,263,950 (181,535) 107,268
Net increase in net assets from
operations 45,765,982 18,941,903 325,526 463,653
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (1,272,246) (1,128,565) (412,899) (369,515)
Net realized gain on investments (9,150,387) (11,815,383) -0- -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 88,128,841 78,738,622 (535,499) 3,866,088
Total increase (decrease) 123,472,190 84,736,577 (622,872) 3,960,226
NET ASSETS
Beginning of year 126,729,405 41,992,828 7,112,304 3,152,078
End of year (including
undistributed net investment
income of $2,192,336,
$1,269,248, $329,344 and
$346,901, respectively) $250,201,595 $126,729,405 $6,489,432 $7,112,304
</TABLE>
See Notes to Financial Statements.
B-52
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<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,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 1,860,009 $ 1,425,623 $ 822,012 $ 480,735
Net realized gain (loss) on
investments and foreign
currency transactions 242,976 (5,171) 3,789,362 1,019,837
Net change in unrealized
appreciation (depreciation) of
investments and foreign currency
denominated assets and
liabilities 558,819 (477,962) 1,754,576 1,338,504
Net increase in net assets from
operations 2,661,804 942,490 6,365,950 2,839,076
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (1,409,036) (621,506) (480,826) (88,093)
Net realized gain on investments (54,796) (289,591) (1,019,434) (44,705)
CAPITAL STOCK TRANSACTIONS
Net increase 5,849,902 12,171,992 12,178,929 14,926,631
Total increase 7,047,874 12,203,385 17,044,619 17,632,909
NET ASSETS
Beginning of year 29,149,904 16,946,519 25,875,350 8,242,441
End of year (including
undistributed net investment
income of $1,821,509,
$1,370,536, $822,229
and $481,043, respectively) $36,197,778 $29,149,904 $42,919,969 $25,875,350
</TABLE>
See Notes to Financial Statements.
B-53
STATEMENTS OF CHANGES
IN NET ASSETS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO MONEY MARKET PORTFOLIO
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $ 478,040 $ 395,473 $ 3,452,183 $ 2,336,884
Net realized gain (loss) on
investments and foreign
currency transactions 1,303,323 906,640 (298) (343)
Net change in unrealized
appreciation of investments
and foreign currency
denominated assets and
liabilities 116,846 684,246 -0- -0-
Net increase in net assets from
operations 1,898,209 1,986,359 3,451,885 2,336,541
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (523,610) (155,834) (3,452,183) (2,336,884)
Net realized gain on investments (836,368) (244,881) -0- -0-
CAPITAL STOCK TRANSACTIONS
Net increase 15,848,071 26,196,817 2,814,828 36,677,326
Total increase 16,386,302 27,782,461 2,814,530 36,676,983
NET ASSETS
Beginning of year 44,324,096 16,541,635 64,769,291 28,092,308
End of year (including
undistributed net investment
income of $416,539, $462,109,
$1,046 and $1,046, respectively) $60,710,398 $44,324,096 $67,583,821 $64,769,291
</TABLE>
See Notes to Financial Statements.
B-54
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
GLOBAL DOLLAR NORTH AMERICAN GOVERNMENT
GOVERNMENT PORTFOLIO INCOME PORTFOLIO
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 1,020,022 $ 481,784 $ 2,088,881 $ 1,243,424
Net realized gain (loss) on
investments and foreign
currency transactions 739,413 745,244 292,939 (165,830)
Net change in unrealized
appreciation of investments and
foreign currency denominated
assets and liabilities (463,672) 126,646 (243,915) 841,208
Net increase in net assets from
operations 1,295,763 1,353,674 2,137,905 1,918,802
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (489,948) (191,319) (1,103,754) (49,608)
Net realized gain on investments (742,125) (13,292) -0- (3,969)
CAPITAL STOCK TRANSACTIONS
Net increase 6,467,348 3,920,248 12,776,700 7,552,498
Total increase 6,531,038 5,069,311 13,810,851 9,417,723
NET ASSETS
Beginning of year 8,847,406 3,778,095 16,695,650 7,277,927
End of year (including
undistributed net investment
income of $1,013,027,
$482,953, $2,062,913 and
$1,077,786, respectively) $15,378,444 $ 8,847,406 $30,506,501 $16,695,650
</TABLE>
See Notes to Financial Statements.
B-55
STATEMENTS OF CHANGES
IN NET ASSETS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
UTILITY INCOME PORTFOLIO GROWTH PORTFOLIO
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 462,850 $ 291,723 $ 687,639 $ 312,217
Net realized gain (loss) on
investments and foreign
currency transactions 258,014 (31,022) 15,669,717 6,454,479
Net change in unrealized
appreciation of investments and
foreign currency denominated
assets and liabilities 3,238,860 796,030 33,639,619 16,515,677
Net increase in net assets from
operations 3,959,724 1,056,731 49,996,975 23,282,373
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (289,532) (81,842) (265,892) (230,200)
Net realized gain on investments -0- (155,981) (6,564,799) (1,507,259)
CAPITAL STOCK TRANSACTIONS
Net increase 1,820,021 7,787,344 54,020,810 71,923,266
Total increase 5,490,213 8,606,252 97,187,094 93,468,180
NET ASSETS
Beginning of year 14,856,793 6,250,541 138,687,891 45,219,711
End of year (including
undistributed net investment
income of $462,346,
$289,028, $684,284 and
$262,537, respectively) $20,347,006 $14,856,793 $235,874,985 $138,687,891
</TABLE>
See Notes to Financial Statements.
B-56
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
WORLDWIDE PRIVATIZATION CONSERVATIVE INVESTORS
PORTFOLIO PORTFOLIO
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 569,265 $ 260,056 $ 983,136 $ 611,534
Net realized gain (loss) on
investments and foreign
currency transactions 2,030,990 507,830 1,295,033 (55,570)
Net change in unrealized
appreciation of investments and
foreign currency denominated
assets and liabilities (439,024) 1,117,579 469,660 466,246
Net increase in net assets from
operations 2,161,231 1,885,465 2,747,829 1,022,210
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (348,486) (90,574) (608,412) (127,029)
Net realized gain on investments (421,270) -0- -0- (56,297)
CAPITAL STOCK TRANSACTIONS
Net increase 21,619,677 11,065,148 6,327,771 13,470,589
Total increase 23,011,152 12,860,039 8,467,188 14,309,473
NET ASSETS
Beginning of year 18,806,813 5,946,774 21,729,193 7,419,720
End of year (including
undistributed net investment
income of $529,226, $308,447,
$982,634 and $607,910,
respectively) $41,817,965 $18,806,813 $30,196,381 $21,729,193
</TABLE>
See Notes to Financial Statements.
B-57
STATEMENTS OF CHANGES
IN NET ASSETS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
GROWTH INVESTORS PORTFOLIO TECHNOLOGY PORTFOLIO
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 226,698 $ 177,916 $ 84,919 $ 142,949
Net realized gain (loss) on
investments and foreign
currency transactions 1,347,406 175,340 (2,186,460) (355,160)
Net change in unrealized
appreciation of investments and
foreign currency denominated
assets and liabilities 334,892 507,668 3,331,455 2,059,794
Net increase in net assets from
operations 1,908,996 860,924 1,229,914 1,847,583
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (180,480) (55,626) (141,660) -0-
Net realized gain on investments (200,739) (16,764) -0- -0-
CAPITAL STOCK TRANSACTIONS
Net increase 4,362,797 4,942,686 40,068,148 26,235,848
Total increase 5,890,574 5,731,220 41,156,402 28,083,431
NET ASSETS
Beginning of period 10,709,336 4,978,116 28,083,431 -0-
End of period (including
undistributed net investment
income of $223,918, $177,700,
$86,218 and $142,959,
respectively) $16,599,910 $10,709,336 $69,239,833 $28,083,431
</TABLE>
(a) Commencement of operations, January 11, 1996.
See Notes to Financial Statements.
B-58
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
REAL ESTATE
INVESTMENT HIGH YIELD
QUASAR PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------- ------------- -------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS FROM
OPERATIONS
Net investment income $ 59,268 $ 11,162 $ 287,942 $ 7,694
Net realized gain on investment
transactions 5,195,196 25,330 79,169 244
Net change in unrealized
appreciation of investments
and foreign currency
denominated assets and
liabilities 79,213 148,141 1,032,461 11,558
Net increase in net assets from
operations 5,333,677 184,633 1,399,572 19,496
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (22,104) -0- -0- -0-
CAPITAL STOCK TRANSACTIONS
Net increase 45,123,778 8,657,184 12,294,485 1,121,859
Total increase 50,435,351 8,841,817 13,694,057 1,141,355
NET ASSETS
Beginning of period 8,841,817 -0- -0- -0-
End of period (including
undistributed net investment
income of $48,326, $11,162,
$287,942 and $7,694,
respectively) $59,277,168 $ 8,841,817 $13,694,057 $ 1,141,355
</TABLE>
(a) Commencement of operations, August 5, 1996.
(b) Commencement of operations, January 9, 1997.
(c) Commencement of operations, October 27, 1997.
See Notes to Financial Statements.
B-59
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
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
nineteen 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, Quasar Portfolio, Real Estate Investment Portfolio and High Yield
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 to balance the objectives of reasonable
current income and reasonable 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 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.
B-60
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
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.
REAL ESTATE INVESTMENT PORTFOLIO--seeks total return on its assets from
long-term growth of capital and from income principally through investing in a
portfolio of equity securities of issuers that are primarily engaged in or
related to the real estate industry.
HIGH YIELD PORTFOLIO--seeks the highest level of current income available
without assuming undue risk by investing principally in high-yielding
fixed-income securities.
The Fund offers and sells its shares only to separate accounts of certain life
insurance companies, for the purpose of funding variable annuity contracts and
variable life insurance policies. Sales are made without a sales charge, at
each Portfolio's net asset value per share.
The financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities in the financial statements and amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange 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. Restricted securities, illiquid securities and 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.
Securities in which the Money Market Portfolio invests are valued at amortized
cost, under which method a portfolio instrument is valued at cost and any
premium or discount is amortized on a straight-line basis to maturity.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked prices of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at rates of
exchange prevailing when earned or 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) represent foreign exchange gains and losses
from sales and maturities of securities, closed forward exchange currency
contracts, 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.
B-61
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
Net currency gains and losses from valuing foreign currency denominated assets
and liabilities at year end exchange rates are reflected as a component of net
unrealized appreciation (depreciation) of investments and foreign currency
denominated assets and liabilities.
3. 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; US 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; Quasar Portfolio $26,098
through August 2001; Real Estate Investment Portfolio $20,000 through January
2002.
4. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
5. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. The Fund accretes discounts as adjustments to interest
income and in the case of the Money Market Portfolio, amortizes premium as
well. Investment gains and losses are determined on the identified cost basis.
6. 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. Dividends and distributions to shareholders
are recorded on the ex-dividend date. Income and capital gains distributions
are determined in accordance with federal tax regulations and may differ from
those determined in accordance with generally accepted accounting principles.
To the extent these differences are permanent, such amounts are reclassified
within the capital accounts based on their federal tax basis treatment;
temporary differences, do not require such reclassification. During the current
fiscal year, certain portfolios had permanent differences, primarily due to
foreign exchange gains and losses and short-term capital gains which resulted
in reclassification of amounts within the composition of net assets. These
reclassifications had no affect on net assets.
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%; Quasar
Portfolio, 1%; Real Estate Investment Portfolio, .90%; and High Yield
Portfolio, .75 of 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 Limited, an affiliate of American
International Group, Inc.
Each Portfolio compensates Alliance Fund Services, Inc., a wholly-owned
subsidiary of the Adviser, under a Transfer Agency Agreement for providing
personnel and facilities to perform transfer agency services for the Fund. Such
compensation amounted to $1,500 per month 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 Portfo-
B-62
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
lio, the Growth Portfolio, the Worldwide Privatization Portfolio, the
Conservative Investors Portfolio, the Growth Investors Portfolio, the
Technology Portfolio, the Quasar Portfolio, the Real Estate Investment
Portfolio and the High Yield Portfolio, respectively, for the year ended
December 31, 1997.
During the year ended December 31, 1997, the Adviser voluntarily agreed to
waive its fee and to reimburse the additional operating expenses of each
Portfolio so that expenses did not exceed .95% of average net assets. Expense
waivers/reimbursements, if any, are accrued daily and paid monthly. For the
year ended December 31, 1997, such waivers/reimbursements amounted to $434,465,
$17,683, $33,958, $390, $256,970, $44,532, $23,002, $21,907, $193,781, $96,640,
$99,387, $125,260, $145,934, $71,435 and $7,729 for the Premier Growth
Portfolio, the Global Bond Portfolio, the Short-Term Multi-Market Portfolio,
the Total Return Portfolio, the International Portfolio, the Global Dollar
Government Portfolio, the North American Government Income Portfolio, the
Utility Income Portfolio, the Worldwide Privatization Portfolio, the
Conservative Investors Portfolio, the Growth Investors Portfolio, the
Technology Portfolio, the Quasar Portfolio, the Real Estate Investment
Portfolio and the High Yield Portfolio, respectively.
Brokerage commissions paid for the year ended December 31, 1997, on securities
transactions amounted to $377,288, $409,972, $48,588, $355,055, $14,332,
$272,666, $110,817, $33,041, $43,551, $35,250, $231,416 and $26,891 for the
Premier Growth Portfolio, the Growth and Income Portfolio, the Total Return
Portfolio, the International Portfolio, the Utility Income Portfolio, the
Growth Portfolio, the Worldwide Privatization Portfolio, the Conservative
Investors Portfolio, the Growth Investors Portfolio, the Technology Portfolio,
the Quasar Portfolio and the Real Estate Investment Portfolio, respectively, of
which $820 was paid by the Growth Portfolio to Donaldson, Lufkin & Jenrette
Securities Corp. ("DLJ"), an affiliate of the Adviser.
NOTE C: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
for the year ended December 31, 1997, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
---------------------------- ----------------------------
STOCKS U.S. STOCKS U.S.
AND DEBT GOVERNMENT AND DEBT GOVERNMENT
PORTFOLIO OBLIGATIONS AND AGENCIES OBLIGATIONS AND AGENCIES
- --------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Premier Growth $356,848,879 $ 6,945,071 $ 71,818,409 $ 130,886
Global Bond 43,400,048 10,280,023 39,170,477 8,975,203
Growth and Income 233,664,495 -0- 156,137,216 -0-
Short-Term Multi-Market 7,904,135 3,325,585 5,511,400 3,702,344
U.S. Government/High Grade Securities 8,868,413 23,641,752 14,770,869 17,289,292
Total Return 24,683,318 7,049,633 20,725,390 -0-
International 81,249,598 -0- 67,260,340 -0-
Global Dollar Government 33,314,188 -0- 26,223,120 -0-
North American Government Income 2,158,062 3,976,117 1,016,748 1,474,219
Utility Income 5,931,429 -0- 4,708,871 -0-
Growth 155,399,953 -0- 109,881,555 -0-
Worldwide Privatization 36,175,181 -0- 16,515,361 -0-
Conservative Investors 16,245,042 30,443,081 16,303,426 26,331,792
Growth Investors 17,122,167 4,983,068 15,022,933 4,023,095
Technology 56,873,659 -0- 19,097,172 -0-
Quasar 102,672,953 -0- 62,040,959 -0-
Real Estate Investment (a) 13,660,121 -0- 1,478,519 -0-
High Yield (b) 908,786 -0- 35,244 -0-
</TABLE>
(a) Commencement of operations, January 9, 1997.
(b) Commencement of operations, October 27, 1997.
B-63
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
At December 31, 1997, 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>
NET
GROSS UNREALIZED UNREALIZED
---------------------------- APPRECIATION
PORTFOLIO COST APPRECIATION DEPRECIATION (DEPRECIATION)
- --------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Premier Growth $380,071,358 $94,661,440 $(4,776,953) $89,884,487
Global Bond 21,882,611 213,452 (332,129) (118,677)
Growth and Income 221,131,766 35,057,829 (6,861,546) 28,196,283
Short-Term Multi-Market 6,242,555 3,538 (284,453) (280,915)
U.S. Government/High Grade Securities 35,016,344 770,806 (109,438) 661,368
Total Return 39,270,657 4,070,886 (715,661) 3,355,225
International 59,216,975 5,013,496 (4,729,692) 283,804
Global Dollar Government 15,312,083 255,298 (327,783) (72,485)
North American Government Income 29,501,391 1,033,337 (124,042) 909,295
Utility Income 15,967,311 4,643,936 (305,863) 4,338,073
Growth 189,231,061 57,257,356 (3,415,931) 53,841,425
Worldwide Privatization 41,120,962 4,802,213 (4,154,068) 648,145
Conservative Investors 28,771,580 1,412,718 (237,625) 1,175,093
Growth Investors 15,427,340 1,372,611 (316,181) 1,056,430
Technology 63,666,546 9,839,119 (4,864,095) 4,975,024
Quasar 58,758,348 3,993,110 (3,940,769) 52,341
Real Estate Investment 12,671,427 1,081,160 (16,355) 1,064,805
High Yield 1,083,805 12,666 (1,108) 11,558
</TABLE>
At December 31, 1997, for federal income tax purposes, the Premier Growth,
Money Market, North American Government Income and Technology Portfolios had
net capital loss carryforwards of $1,518,008 (of which $714,472 expires in the
year 2004 and $803,536 expires in the year 2005), $641 (of which $343 expires
in the year 2004 and $298 expires in the year 2005), $2,290 which expires in
the year 2004, $2,125,395 (of which $355,160 expires in the year 2004 and
$1,770,235 expires in the year 2005). During the year ended December 31, 1997,
the Conservative Investors and Utility Income utilized all of the capital loss
carryforward which amounted to $33,655 and $46,396. Short-Term Multi-Market had
net capital loss carryforward of $1,130,583 (of which $5,518 expires in the
year 2000, $150,822 expires in the year 2002, $941,593 expires in the year 2003
and $32,650 expires in the year 2005).
1. FORWARD EXCHANGE CURRENCY CONTRACTS
The Global Bond, Short-Term Multi-Market, International 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.
Each Portfolio's custodian will place and maintain liquid assets in a separate
account of the Fund having a value equal to the aggregate amount of the
respective portfolios 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.
B-64
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
At December 31, 1997, the outstanding forward exchange currency contracts were
as follows:
GLOBAL BOND PORTFOLIO:
<TABLE>
<CAPTION>
U.S. $
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION/
(000) DATE VALUE (DEPRECIATION)
---------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
FOREIGN EXCHANGE CURRENCY BUY CONTRACTS
Australian Dollar, expiring 1/30/98 1,500 $ 977,250 $ 978,278 $ 1,028
FOREIGN EXCHANGE CURRENCY SALE CONTRACTS
Australian Dollar, expiring 1/30/98 2,950 2,038,509 1,923,947 114,562
Deutsche Mark, expiring 1/20/98 1,900 1,071,841 1,057,418 14,423
Japanese Yen, expiring 1/20/98 290,000 2,222,110 2,227,469 (5,359)
-----------
$124,654
</TABLE>
SHORT-TERM MULTI-MARKET PORTFOLIO:
<TABLE>
<CAPTION>
U.S. $
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION/
(000) DATE VALUE (DEPRECIATION)
---------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
FOREIGN EXCHANGE CURRENCY BUY CONTRACTS
Indonesian Rupiah, expiring 1/16/98 400,000 $ 158,541 $ 72,421 $(86,120)
FOREIGN EXCHANGE CURRENCY SALE CONTRACTS
Australian Dollar, expiring 1/12/98 285 198,695 185,579 13,116
Deutsche Mark, expiring 1/20/98 2,657 1,528,389 1,478,518 49,871
French Franc, expiring 1/14/98 1,769 307,858 294,106 13,752
Indonesian Rupiah, expiring 1/16/98 400,000 155,195 72,421 82,774
Italian Lira, expiring 1/26/98 1,004 588,928 567,154 21,774
New Zealand Dollar,
expiring 1/12/98-1/20/98 1,403 868,805 813,861 54,944
Spanish Peseta, expiring 1/14/98 3,000 20,661 19,698 963
Swedish Krona, expiring 2/4/98 3,438 442,757 433,432 9,325
-----------
$160,399
</TABLE>
INTERNATIONAL PORTFOLIO:
<TABLE>
<CAPTION>
U.S. $
CONTRACT VALUE ON U.S. $
AMOUNT ORIGINATION CURRENT UNREALIZED
(000) DATE VALUE APPRECIATION
---------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
FOREIGN EXCHANGE CURRENCY
SALE CONTRACTS
French Francs, expiring 3/05/98 29,234 $4,961,096 $4,875,541 $ 85,555
Japanese Yen, expiring 2/04/98 871,051 7,317,911 6,705,181 612,730
----------
$698,285
</TABLE>
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO:
<TABLE>
<CAPTION>
U.S. $
CONTRACT VALUE ON U.S. $
AMOUNT ORIGINATION CURRENT UNREALIZED
(000) DATE VALUE APPRECIATION
---------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
FOREIGN EXCHANGE CURRENCY SALE CONTRACTS
Canadian Dollars, expiring 1/08/98 1,100 $773,945 $769,807 $4,138
</TABLE>
B-65
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
2. OPTION TRANSACTIONS
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 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.
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:
PREMIER GROWTH PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
Shares sold 18,381,290 3,544,816 $348,392,336 $57,846,653
Shares issued in
reinvestment of
dividends and
distributions 17,344 1,261,734 324,686 17,639,042
Shares redeemed (2,038,212) (307,428) (39,095,179) (4,698,027)
Net increase 16,360,422 4,499,122 $309,621,843 $70,787,668
GLOBAL BOND PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
Shares sold 615,554 542,902 $ 6,854,237 $6,400,878
Shares issued in
reinvestment of
dividends and
distributions 107,060 122,714 1,165,881 1,344,941
Shares redeemed (266,344) (73,483) (2,972,887) (850,289)
Net increase 456,270 592,133 $ 5,047,231 $6,895,530
GROWTH AND INCOME PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
Shares sold 4,651,201 4,431,728 $85,220,780 $69,859,324
Shares issued in
reinvestment of
dividends and
distributions 585,541 897,017 10,422,633 12,943,948
Shares redeemed (411,208) (260,259) (7,514,572) (4,064,650)
Net increase 4,825,534 5,068,486 $88,128,841 $78,738,622
B-66
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SHORT-TERM MULTI-MARKET PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
Shares sold 366,280 664,791 $ 3,882,391 $ 7,076,379
Shares issued in
reinvestment of
dividends 40,165 36,156 412,899 369,515
Shares redeemed (455,606) (336,158) (4,830,789) (3,579,806)
Net increase(decrease) (49,161) 364,789 $ (535,499) $ 3,866,088
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,
1997 1996 1997 1996
------------ ------------ -------------- --------------
Shares sold 870,507 1,420,578 $10,135,743 $16,046,280
Shares issued in
reinvestment of
dividends and
distributions 129,085 84,596 1,463,832 911,097
Shares redeemed (497,164) (426,894) (5,749,673) (4,785,385)
Net increase 502,428 1,078,280 $ 5,849,902 $12,171,992
TOTAL RETURN PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
Shares sold 880,572 1,193,848 $14,008,071 $15,859,123
Shares issued in
reinvestment of
dividends and
distributions 97,356 10,076 1,500,260 132,799
Shares redeemed (210,529) (78,997) (3,329,402) (1,065,291)
Net increase 767,399 1,124,927 $12,178,929 $14,926,631
INTERNATIONAL PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
Shares sold 5,433,762 2,116,357 $ 83,558,930 $30,825,850
Shares issued in
reinvestment of
dividends and
distributions 85,533 27,149 1,359,978 400,715
Shares redeemed (4,454,018) (342,716) (69,070,837) (5,029,748)
Net increase 1,065,277 1,800,790 $ 15,848,071 $26,196,817
B-67
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
MONEY MARKET PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
Shares sold 260,121,111 178,619,585 $ 260,121,111 $ 178,619,585
Shares issued in
reinvestment of
dividends 3,452,183 2,336,582 3,452,183 2,336,582
Shares redeemed (260,758,466) (144,278,841) (260,758,466) (144,278,841)
Net increase 2,814,828 36,677,326 $ 2,814,828 $ 36,677,326
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
Shares sold 567,148 373,824 $ 8,477,375 $ 4,866,573
Shares issued in
reinvestment of
dividends and
distributions 90,285 17,037 1,232,073 204,610
Shares redeemed (225,116) (89,291) (3,242,100) (1,150,935)
Net increase 432,317 301,570 $ 6,467,348 $ 3,920,248
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
Shares sold 1,306,695 933,567 $16,666,170 $10,739,062
Shares issued in
reinvestment of
dividends and
distributions 88,019 4,805 1,103,754 53,576
Shares redeemed (391,062) (283,721) (4,993,224) (3,240,140)
Net increase 1,003,652 654,651 $12,776,700 $ 7,552,498
UTILITY INCOME PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
Shares sold 353,259 776,031 $ 4,795,124 $ 9,308,720
Shares issued in
reinvestment of
dividends and
distributions 22,136 20,206 289,532 237,823
Shares redeemed (247,410) (146,278) (3,264,635) (1,759,199)
Net increase 127,985 649,959 $ 1,820,021 $ 7,787,344
B-68
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
GROWTH PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
Shares sold 3,011,243 4,744,489 $ 58,667,838 $74,657,741
Shares issued in
reinvestment of
dividends and
distributions 359,699 111,233 6,830,691 1,737,459
Shares redeemed (589,726) (292,788) (11,477,719) (4,471,934)
Net increase 2,781,216 4,562,934 $ 54,020,810 $71,923,266
WORLDWIDE PRIVATIZATION PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
Shares sold 1,621,182 977,499 $23,165,163 $12,011,656
Shares issued in
reinvestment of
dividends and
distributions 53,013 7,424 769,756 90,574
Shares redeemed (162,366) (84,263) (2,315,242) (1,037,082)
Net increase 1,511,829 900,660 $21,619,677 $11,065,148
CONSERVATIVE INVESTORS PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
Shares sold 780,780 1,387,334 $ 9,838,439 $15,999,200
Shares issued in
reinvestment of
dividends and
distributions 48,986 16,196 608,412 183,326
Shares redeemed (325,161) (234,084) (4,119,080) (2,711,937)
Net increase 504,605 1,169,446 $ 6,327,771 $13,470,589
GROWTH INVESTORS PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ -------------- --------------
Shares sold 436,739 646,812 $ 6,003,204 $ 7,777,769
Shares issued in
reinvestment of
dividends and
distributions 28,259 6,038 381,219 72,389
Shares redeemed (150,934) (231,754) (2,021,626) (2,907,472)
Net increase 314,064 421,096 $ 4,362,797 $ 4,942,686
B-69
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
TECHNOLOGY PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996(A) 1997 1996(A)
------------ ------------ -------------- --------------
Shares sold 3,792,319 2,807,022 $45,101,686 $29,063,181
Shares issued in
reinvestment of
dividends and
distributions 12,276 -0- 141,660 -0-
Shares redeemed (437,863) (263,543) (5,175,198) (2,827,333)
Net increase 3,366,732 2,543,479 $40,068,148 $26,235,848
QUASAR PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996(B) 1997 1996(B)
------------ ------------ -------------- --------------
Shares sold 4,114,230 832,347 $48,077,255 $8,673,741
Shares issued in
reinvestment of
dividends and
distributions 1,959 -0- 22,104 -0-
Shares redeemed (246,062) (1,598) (2,975,581) (16,557)
Net increase 3,870,127 830,749 $45,123,778 $8,657,184
REAL ESTATE INVESTMENT PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
PERIOD ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1997(c) 1997(c)
------------ --------------
Shares sold 1,182,129 $13,064,224
Shares redeemed (71,998) (769,739)
Net increase 1,110,131 $12,294,485
HIGH YIELD PORTFOLIO
SHARES AMOUNT
-------------------------- ------------------------------
PERIOD ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1997(D) 1997(D)
------------ --------------
Shares sold 110,513 $1,122,331
Shares redeemed (47) (472)
Net increase 110,466 $1,121,859
(a) Commencement of operations, January 11, 1996.
(b) Commencement of operations, August 5, 1996.
(c) Commencement of operations, January 9, 1997.
(d) Commencement of operations, October 27, 1997.
B-70
FINANCIAL HIGHLIGHTS ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
PREMIER GROWTH PORTFOLIO
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $15.70 $17.80 $12.37 $12.79 $11.38
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .04 .08 .09 .03 -0-
Net realized and unrealized gain (loss)
on investment transactions 5.27 3.29 5.44 (.41) 1.43
Net increase (decrease) in net asset
value from operations 5.31 3.37 5.53 (.38) 1.43
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.02) (.10) (.03) (.01) (.01)
Distributions from net realized gains -0- (5.37) (.07) (.03) (.01)
Total dividends and distributions (.02) (5.47) (.10) (.04) (.02)
Net asset value, end of year $20.99 $15.70 $17.80 $12.37 $12.79
TOTAL RETURN
Total investment return based on
net asset value (c) 33.86% 22.70% 44.85% (2.96)% 12.63%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $472,326 $96,434 $29,278 $37,669 $13,659
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .95% .95% .95% .95% 1.18%
Expenses, before waivers
and reimbursements 1.10% 1.23% 1.19% 1.40% 2.05%
Net investment income (a) .21% .52% .55% .42% .22%
Portfolio turnover rate 27% 32% 97% 38% 42%
Average commission rate paid (d) $.0541 $.0609 -0- -0- -0-
</TABLE>
<TABLE>
<CAPTION>
GLOBAL BOND PORTFOLIO
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.74 $12.15 $ 9.82 $11.33 $11.24
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .54 .67 .69 .57 .77
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions (.48) .01 1.73 (1.16) .43
Net increase (decrease) in net
asset value from operations .06 .68 2.42 (.59) 1.20
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.57) (.84) (.09) (.62) (.85)
Distributions from net realized gains (.13) (.25) -0- (.30) (.26)
Total dividends and distributions (.70) (1.09) (.09) (.92) (1.11)
Net asset value, end of year $11.10 $11.74 $12.15 $ 9.82 $11.33
TOTAL RETURN
Total investment return based on
net asset value (c) .67% 6.21% 24.73% (5.16)% 11.15%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $22,194 $18,117 $11,553 $7,298 $6,748
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .94% .94% .95% .95% 1.50%
Expenses, before waivers
and reimbursements 1.03% 1.15% 1.77% 2.05% 1.50%
Net investment income (a) 4.81% 5.76% 6.22% 6.01% 4.85%
Portfolio turnover rate 257% 191% 262% 102% 125%
</TABLE>
See footnote summary on page B-79.
B-71
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $16.40 $15.79 $11.85 $12.18 $10.99
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .21 .24 .27 .10 .01
Net realized and unrealized gain (loss)
on investment transactions 4.39 3.18 3.94 (.16) 1.27
Net increase (decrease) in net asset
value from operations 4.60 3.42 4.21 (.06) 1.28
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.13) (.25) (.13) (.10) (.06)
Distributions from net realized gains (.94) (2.56) (.14) (.17) (.03)
Total dividends and distributions (1.07) (2.81) (.27) (.27) (.09)
Net asset value, end of year $19.93 $16.40 $15.79 $11.85 $12.18
TOTAL RETURN
Total investment return based
on net asset value (c) 28.80% 24.09% 35.76% (.35)% 11.69%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $250,202 $126,729 $41,993 $41,702 $22,756
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .72% .82% .79% .90% 1.18%
Expenses, before waivers
and reimbursements .72% .82% .79% .91% 1.28%
Net investment income (a) 1.16% 1.58% 1.95% 1.71% 1.76%
Portfolio turnover rate 86% 87% 150% 95% 69%
Average commission rate paid (d) $.0581 $.0602 -0- -0- -0-
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM MULTI-MARKET PORTFOLIO
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.73 $10.58 $ 9.91 $11.07 $10.77
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .59 .64 .82 .47 .28
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions (.11) .33 (.15) (1.16) .43
Net increase (decrease) in net
asset value from operations .48 .97 .67 (.69) .71
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.64) (.82) -0- (.46) (.41)
Return of capital -0- -0- -0- (.01) -0-
Total dividends and distributions (.64) (.82) -0- (.47) (.41)
Net asset value, end of year $10.57 $10.73 $10.58 $ 9.91 $11.07
TOTAL RETURN
Total investment return based
on net asset value (c) 4.59% 9.57% 6.76% (6.51)% 6.62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $6,489 $7,112 $3,152 $20,921 $23,560
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .94% .95% .95% .94% 1.17%
Expenses, before waivers
and reimbursements 1.42% 2.09% 1.30% .99% 1.24%
Net investment income (a) 5.50% 6.03% 8.22% 6.52% 6.39%
Portfolio turnover rate 222% 159% 379% 134% 210%
</TABLE>
See footnote summary on page B-79.
B-72
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.52 $11.66 $ 9.94 $10.72 $ 9.89
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .68 .66 .65 .28 .43
Net realized and unrealized gain (loss)
on investment transactions .29 (.39) 1.25 (.71) .48
Net increase (decrease) in net
asset value from operations .97 .27 1.90 (.43) .91
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.54) (.28) (.18) (.21) (.08)
Distributions from net realized gains (.02) (.13) -0- (.14) -0-
Total dividends and distributions (.56) (.41) (.18) (.35) (.08)
Net asset value, end of year $11.93 $11.52 $11.66 $ 9.94 $10.72
TOTAL RETURN
Total investment return based
on net asset value (c) 8.68% 2.55% 19.26% (4.03)% 9.20%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $36,198 $29,150 $16,947 $5,101 $1,350
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .84% .92% .95% .95% 1.16%
Expenses, before waivers
and reimbursements .84% .98% 1.58% 3.73% 5.42%
Net investment income (a) 5.89% 5.87% 5.96% 5.64% 4.59%
Portfolio turnover rate 114% 137% 68% 32% 177%
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN PORTFOLIO
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $14.63 $12.80 $10.41 $10.97 $10.01
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .39 .27 .36 .15 .15
Net realized and unrealized gain (loss)
on investment transactions 2.62 1.66 2.10 (.56) .81
Net increase (decrease) in net
asset value from operations 3.01 1.93 2.46 (.41) .96
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.23) (.07) (.07) (.09) -0-
Distributions from net realized gains (.49) (.03) -0- (.06) -0-
Total dividends and distributions (.72) (.10) (.07) (.15) -0-
Net asset value, end of year $16.92 $14.63 $12.80 $10.41 $10.97
TOTAL RETURN
Total investment return based
on net asset value (c) 21.11% 15.17% 23.67% (3.77)% 9.59%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $42,920 $25,875 $8,242 $750 $360
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .88% .95% .95% .95% 1.20%
Expenses, before waivers
and reimbursements .88% 1.12% 4.49% 19.49% 25.96%
Net investment income (a) 2.46% 2.76% 3.16% 2.29% 1.45%
Portfolio turnover rate 65% 57% 30% 83% 25%
Average commission rate paid (d) $.0577 $.0593 -0- -0- -0-
</TABLE>
See footnote summary on page B-79.
B-73
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $14.89 $14.07 $12.88 $12.16 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .13 .19 .18 .10 .03
Net realized and unrealized gain
on investments and foreign
currency transactions .39 .83 1.08 .72 2.13
Net increase in net asset
value from operations .52 1.02 1.26 .82 2.16
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.15) (.08) (.03) (.02) -0-
Distributions from net realized gains (.24) (.12) (.04) (.08) -0-
Total dividends and distributions (.39) (.20) (.07) (.10) -0-
Net asset value, end of year $15.02 $14.89 $14.07 $12.88 $12.16
TOTAL RETURN
Total investment return based
on net asset value (c) 3.33% 7.25% 9.86% 6.70% 21.60%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $60,710 $44,324 $16,542 $7,276 $688
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .95% .95% .95% .95% 1.20%
Expenses, before waivers
and reimbursements 1.42% 1.91% 2.99% 7.26% 39.28%
Net investment income (a) .87% 1.29% 1.41% .90% .26%
Portfolio turnover rate 134% 60% 87% 95% 85%
Average commission rate paid (d) $.0272 $.0431 -0- -0- -0-
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .05 .05 .05 .03 .22
Net realized and unrealized gain
on investment transactions -0- -0- -0- -0- -0-
Net increase in net asset
value from operations .05 .05 .05 .03 .22
LESS: DIVIDENDS
Dividends from net investment income (.05) (.05) (.05) (.03) (.22)
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN
Total investment return based
on net asset value (c) 5.11% 4.71% 4.97% 3.27% 2.25%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $67,584 $64,769 $28,092 $6,899 $102
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .64% .69% .95% .95% 1.16%
Expenses, before waivers
and reimbursements .64% .69% 1.07% 4.46% 68.14%
Net investment income (a) 5.00% 4.64% 4.85% 3.98% 2.15%
Portfolio turnover rate 0% 0% 0% 0% 0%
</TABLE>
See footnote summary on page B-79.
B-74
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
----------------------------------------------------
MAY 2, 1994(E)
YEAR ENDED DECEMBER 31, TO
------------------------------------- DEC. 31,
1997 1996 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $14.32 $11.95 $ 9.84 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) 1.17 1.10 .92 .36
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions .70 1.78 1.32 (.52)
Net increase (decrease) in net
asset value from operations 1.87 2.88 2.24 (.16)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.61) (.48) (.13) -0-
Distributions from net realized gains (.93) (.03) -0- -0-
Total dividends and distributions (1.54) (.51) (.13) -0-
Net asset value, end of period $14.65 $14.32 $11.95 $ 9.84
TOTAL RETURN
Total investment return based
on net asset value (c) 13.23% 24.90% 22.98% (1.60)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $15,378 $8,847 $3,778 $1,146
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .95% .95% .95% .95%(f)
Expenses, before waivers
and reimbursements 1.29% 1.97% 4.82% 15.00%(f)
Net investment income (a) 7.87% 8.53% 8.65% 6.02%(f)
Portfolio turnover rate 214% 155% 13% 9%
</TABLE>
<TABLE>
<CAPTION>
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO
----------------------------------------------------
MAY 3, 1994(E)
YEAR ENDED DECEMBER 31, TO
--------------------------------------- DEC. 31,
1997 1996 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.38 $10.48 $ 8.79 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) 1.07 1.26 1.13 .50
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions .10 .69 .83 (1.71)
Net increase (decrease) in net asset
value from operations 1.17 1.95 1.96 (1.21)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.58) (.05) (.27) -0-
Distributions from net realized gains -0- -0- -0- -0-
Total dividends and distributions (.58) (.05) (.27) -0-
Net asset value, end of period $12.97 $12.38 $10.48 $ 8.79
TOTAL RETURN
Total investment return based
on net asset value (c) 9.62% 18.70% 22.71% (12.10)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $30,507 $16,696 $7,278 $3,848
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .95% .95% .95% .95%(f)
Expenses, before waivers
and reimbursements 1.04% 1.41% 2.57% 4.43%(f)
Net investment income (a) 8.34% 11.04% 12.24% 8.49%(f)
Portfolio turnover rate 20% 4% 35% 15%
</TABLE>
See footnote summary on page B-79.
B-75
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
UTILITY INCOME PORTFOLIO
----------------------------------------------------
MAY 10, 1994(E)
YEAR ENDED DECEMBER 31, TO
--------------------------------------- DEC. 31,
1997 1996 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.69 $12.01 $9.96 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .38 .31 .30 .28
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions 2.84 .62 1.83 (.32)
Net increase (decrease) in net asset
value from operations 3.22 .93 2.13 (.04)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.24) (.09) (.08) -0-
Distributions from net realized gains -0- (.16) -0- -0-
Total dividends and distributions (.24) (.25) (.08) -0-
Net asset value, end of period $15.67 $12.69 $12.01 $9.96
TOTAL RETURN
Total investment return based
on net asset value (c) 25.71% 7.88% 21.45% (.40)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $20,347 $14,857 $6,251 $1,254
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .95% .95% .95% .95%(f)
Expenses, before waivers
and reimbursements 1.08% 1.51% 3.79% 15.98%(f)
Net investment income (a) 2.83% 2.61% 2.73% 4.62%(f)
Portfolio turnover rate 30% 75% 138% 31%
Average commission rate paid (d) $.0541 $.0579 -0- -0-
</TABLE>
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
----------------------------------------------------
SEPTEMBER 15,
1994(E)
YEAR ENDED DECEMBER 31, TO
--------------------------------------- DEC. 31,
1997 1996 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $17.92 $14.23 $10.53 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .07 .06 .17 .03
Net realized and unrealized gain
on investment transactions 5.18 3.95 3.54 .50
Net increase in net asset
value from operations 5.25 4.01 3.71 .53
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.03) (.04) (.01) -0-
Distributions from net realized gains (.72) (.28) -0- -0-
Total dividends and distributions (.75) (.32) (.01) -0-
Net asset value, end of period $22.42 $17.92 $14.23 $10.53
TOTAL RETURN
Total investment return based
on net asset value (c) 30.02% 28.49% 35.23% 5.30%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $235,875 $138,688 $45,220 $5,492
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .84% .93% .95% .95%(f)
Expenses, before waivers
and reimbursements .84% .93% 1.27% 4.19%(f)
Net investment income (a) .37% .35% 1.31% 1.17%(f)
Portfolio turnover rate 62% 98% 86% 25%
Average commission rate paid (d) $.0548 $.0578 -0- -0-
</TABLE>
See footnote summary on page B-79.
B-76
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
WORLDWIDE PRIVATIZATION PORTFOLIO
----------------------------------------------------
SEPT. 23,
1994(E)
YEAR ENDED DECEMBER 31, TO
--------------------------------------- DEC. 31,
1997 1996 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $13.13 $11.17 $10.10 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .25 .28 .32 .10
Net realized and unrealized gain
on investments and foreign
currency transactions 1.17 1.78 .78 -0-
Net increase in net asset
value from operations 1.42 2.06 1.10 .10
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.16) (.10) (.03) -0-
Distributions from net realized gains (.19) -0- -0- -0-
Total dividends and distributions (.35) (.10) (.03) -0-
Net asset value, end of period $14.20 $13.13 $11.17 $10.10
TOTAL RETURN
Total investment return based
on net asset value (c) 10.75% 18.51% 10.87% 1.00%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $41,818 $18,807 $5,947 $1,127
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .95% .95% .95% .95%(f)
Expenses, before waivers
and reimbursements 1.55% 1.85% 4.17% 18.47%(f)
Net investment income (a) 1.76% 2.26% 2.96% 4.27%(f)
Portfolio turnover rate 58% 47% 23% 0%
Average commission rate paid (d) $.0137 $.0148 -0- -0-
</TABLE>
<TABLE>
<CAPTION>
CONSERVATIVE INVESTORS PORTFOLIO
----------------------------------------------------
OCT. 28,
1994(E)
YEAR ENDED DECEMBER 31, TO
--------------------------------------- DEC. 31,
1997 1996 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.07 $11.76 $10.07 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .48 .45 .51 .06
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions .86 (.01) 1.20 .01
Net increase in net asset value
from operations 1.34 .44 1.71 .07
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.31) (.09) (.02) -0-
Distributions from net realized gains -0- (.04) -0- -0-
Total dividends and distributions (.31) (.13) (.02) -0-
Net asset value, end of period $13.10 $12.07 $11.76 $10.07
TOTAL RETURN
Total investment return based
on net asset value (c) 11.22% 3.79% 16.99% 0.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $30,196 $21,729 $7,420 $701
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .95% .95% .95% .95%(f)
Expenses, before waivers
and reimbursements 1.33% 1.40% 4.25% 20.35%(f)
Net investment income (a) 3.85% 3.93% 4.65% 3.55%(f)
Portfolio turnover rate 209% 211% 61% 2%
Average commission rate paid (d) $.0360 $.0578 -0- -0-
</TABLE>
See footnote summary on page B-79.
B-77
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
GROWTH INVESTORS PORTFOLIO
----------------------------------------------------
OCT. 28,
1994(E)
YEAR ENDED DECEMBER 31, TO
--------------------------------------- DEC. 31,
1997 1996 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.74 $11.87 $ 9.86 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .23 .24 .35 .04
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions 1.83 .72 1.67 (.18)
Net increase (decrease) in net asset
value from operations 2.06 .96 2.02 (.14)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.20) (.07) (.01) -0-
Distributions from net realized gains (.22) (.02) -0- -0-
Total dividends and distributions (.42) (.09) (.01) -0-
Net asset value, end of period $14.38 $12.74 $11.87 $ 9.86
TOTAL RETURN
Total investment return based
on net asset value (c) 16.34% 8.18% 20.48% (1.40)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $16,600 $10,709 $4,978 $321
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .95% .95% .95% .95%(f)
Expenses, before waivers
and reimbursements 1.70% 1.85% 6.17% 41.62%(f)
Net investment income (a) 1.72% 2.01% 3.21% 2.29%(f)
Portfolio turnover rate 164% 160% 50% 3%
Average commission rate paid (d) $.0379 $.0562 -0- -0-
</TABLE>
TECHNOLOGY PORTFOLIO
-------------------------------
JANUARY 11,
1996(E)
YEAR ENDED TO
DECEMBER 31, DECEMBER 31,
1997 1996
-------------- --------------
Net asset value, beginning of period $11.04 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .02 .11
Net realized and unrealized gain
on investment transactions .69 .93
Net increase in net asset value
from operations .71 1.04
LESS: DIVIDENDS
Dividends from net investment income (.03) -0-
Net asset value, end of period $11.72 $11.04
TOTAL RETURN
Total investment return based
on net asset value (c) 6.47% 10.40%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $69,240 $28,083
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .95% .95%(f)
Expenses, before waivers
and reimbursements 1.19% 1.62%(f)
Net investment income (a) .16% 1.17%(f)
Portfolio turnover rate 46% 22%
Average commission rate paid $.0542 $.0553
See footnote summary on page B-79.
B-78
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
REAL ESTATE HIGH
QUASAR INVESTMENT YIELD
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------ ----------- -----------
AUG. 5, JAN. 9, OCT. 27,
1996(E) 1997(E) 1997(E)
YEAR ENDED TO TO TO
DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1997 1996 1997 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.64 $10.00 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .02 .04 .56 .13
Net realized and unrealized gain
on investment transactions 1.96 .60 1.78 .20
Net increase in net asset
value from operations 1.98 .64 2.34 .33
LESS: DIVIDENDS
Dividends from net investment income (.01) -0- -0- -0-
Net asset value, end of period $12.61 $10.64 $12.34 $10.33
TOTAL RETURN
Total investment return based
on net asset value (c) 18.60% 6.40% 23.40% 3.30%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $59,277 $8,842 $13,694 $1,141
Ratio to average net assets of:
Expenses, net of waivers
and reimbursements .95% .95%(f) .95%(f) .95%(f)
Expenses, before waivers
and reimbursements 1.37% 4.44%(f) 2.31%(f) 8.26%(f)
Net investment income (a) .17% .93%(f) 5.47%(f) 7.28%(f)
Portfolio turnover rate 210% 40% 26% 8%
Average commission rate paid $.0521 $.0511 $.0526 --
</TABLE>
Footnote Summary:
(a) Net of expenses reimbursed or waived by the Adviser.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Total investment return calculated
for a period of less than one year is not annualized.
(d) 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.
(e) Commencement of operations.
(f) Annualized.
B-79
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
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, Quasar,
Real Estate Investment and High Yield Portfolios), as of December 31, 1997, 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, 1997, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Portfolios constituting Alliance Variable Products Series
Fund, Inc. at December 31, 1997, 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.
New York, New York
January 30, 1998
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, 1997:
PER SHARE
---------
GLOBAL BOND $ .01
GROWTH AND INCOME $ .35
U.S. GOVERNMENT/HIGH GRADE SECURITIES $ .02
TOTAL RETURN $ .12
INTERNATIONAL $ .08
GLOBAL DOLLAR GOVERNMENT $ .38
GROWTH $ .24
GROWTH INVESTORS $ .09
WORLDWIDE PRIVATIZATION $ .04
B-80
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
DONALD J. ROBINSON (1)
OFFICERS
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
ALFRED L. HARRISON, SENIOR VICE PRESIDENT
NELSON JANTZEN, SENIOR VICE PRESIDENT
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
ALDEN M. STEWART, SENIOR VICE PRESIDENT
PETER ANASTOS, VICE PRESIDENT
EDWARD BAKER, VICE PRESIDENT
STEVEN BEINHACKER, VICE PRESIDENT
MARK H. BREEDON, VICE PRESIDENT
PAUL J. DENOON, VICE PRESIDENT
DAVID EDGERLY, VICE PRESIDENT
VICKI L. FULLER, VICE PRESIDENT
RANDALL E. HAASE, VICE PRESIDENT
ROBERT G. HEISTERBERG, VICE PRESIDENT
A. RAMA KRISHNA, VICE PRESIDENT
GERALD T. MALONE, VICE PRESIDENT
DOUGLAS J. PEEBLES, VICE PRESIDENT
DANIEL G. PINE, VICE PRESIDENT
FRANCIS P. REEVES, VICE PRESIDENT
PAUL RISSMAN, VICE PRESIDENT
TYLER J. SMITH, VICE PRESIDENT
WAYNE C. TAPPE, VICE PRESIDENT
JEAN VAN DE WALLE, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
THOMAS MANLEY, CONTROLLER
CUSTODIAN
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, MA 02110
DISTRIBUTOR
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-free 1-(800) 221-5672
(1) Member of the Audit Committee.
B-81
