ALLIANCE VARIABLE PRODUCTS SERIES FUND
SEMI-ANNUAL REPORT
JUNE 30, 1998
(UNAUDITED)
The following Semi-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 June 30, 1998. 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
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August 27, 1998
Dear Shareholder:
We are pleased to provide you with an update of Alliance Variable Products
Series Fund (the "Fund") for the semi-annual reporting period ended June 30,
1998.
The following pages include a discussion regarding market activity and
investment results for each of the 19 portfolios that comprise the Fund. As you
will see, each portfolio's respective investment objective, as well as general
market review, investment results and investment outlook are printed on a
separate page within the report. Each portfolio's returns for the six- and
12-month periods ended June 30, 1998, located in the commentary section of the
report, reflect unannualized total returns, and are based on each portfolio's
net asset value (NAV). In addition, returns for the same periods are provided
for the relevant benchmarks of each portfolio, as are the returns for other
comparable indices. For additional investment results over the longer term,
please refer to page A-24. A list of all comparable indices and their
respective definitions can be found on page A-25.
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
Developments in the Asian economies dictated trends in the global capital
markets during the first half of 1998. In the first quarter 1998, governments
in the region undertook substantial economic reforms that complied with the
conditions imposed by the International Monetary Fund (IMF) in order to obtain
financial assistance. During those three months investor sentiment remained
constructive and equity markets produced positive returns. For the first
quarter 1998, the S&P 500 Stock Index (S&P 500), a measure of the broad U.S.
stock market, gained 14%, and MSCI EAFE, an index of international equities,
returned 15%. Global bond yields continued to decline mirroring sluggish growth
in Japan and the continued convergence toward a common currency in continental
Europe. In the U.S., bond yields were relatively unchanged because of ongoing
evidence of strong economic activity and signs of a tightening labor markets.
Indeed there was justifiable concern that the Federal Reserve Board would raise
short-term interest rates in response to these signs of robust economic
activity.
Early in the second quarter 1998, it became apparent that Japan was entering a
recession after an extended period of stagnation. The government seemed unable
to develop enough of a political consensus to enact legislation that would
deregulate and liberalize markets, or to adopt the fiscal policies necessary to
return the economy to a growth path.
Growing concern about Japan--the second largest economy in the world and twice
the size of the rest of Asia, including China--began to affect investor
sentiment about other emerging economies in the world. And as the major
importer in the region, it became increasingly apparent that the smaller Asian
economies would not be able to stabilize or resume growth as long as Japan's
economy continued to deteriorate. To complicate matters further, Japan's
distressed banking system began to withdraw funds and refused to roll over debt
extended to these regional economies. As these smaller economies suffered a
relapse and experienced yet another round of weakness in their stock market and
currencies, the flight of capital began to extend to countries in Latin America
and Europe, specifically Russia. Significant declines in commodity prices,
especially in oil, only added to the financial and economic woes of
raw-material exporting nations. Developing country equity markets, as
represented by the MSCI Emerging Markets Index, fell by 24% in the second
quarter 1998, reflecting renewed deterioration in investor psychology and
increasing concerns about Asia's problems spreading to the rest of the world.
Concerns about the effect of Asia's financial crises were also apparent in the
behavior of capital markets for developed industrial economies. Moneys tended
to move toward safe havens--quality and large-capitalization issues--and away
from any areas of uncertainty. As a consequence, the dollar was strong and
prices of U.S. fixed income securities rose. Equity investors became more
skeptical about the sustainability of profit growth. This concern was reflected
in the performance patterns in various equity indices. For example, the S&P
500, which had turned in a robust first-quarter return of 14%, rose only 3.3%
in the second period. Broader and less concentrated U.S. equity indices, such
as the Russell 2000 Index, a performance measure of 2000 small-cap stocks,
declined by 5% in the second quarter after a good first three months. And the
MSCI EAFE index rose only 1% in the second quarter after outperforming the S&P
500 in the first quarter. Stepped up investor concerns produced substantial
divergence in performance between large- and small-capitalization issues. The
performance differential between the Wilshire Large Cap Index and its Small Cap
Index opened up to nearly 19% for the first half of the year--13% of that gap
occurred in the second quarter. Capitalization was not the only selection
factor at work; the top quintile measured in terms of prospective
price/earnings ratios (P/Es) of the S&P 500 outperformed the overall Index by
9.4% for the first half of 1998.
INVESTMENT RESULTS
The Conservative Investor Portfolio provided a return of 8.02% at net asset
value (NAV) for the first half of 1998. The result fell slightly short of its
8.24% composite benchmark rate of return. This composite is a 70%/30% mix of
the Lehman Brothers Government/Corporate Bond Index and the S&P 500,
respectively. Over the 12 months ended June 30, 1998, your Portfolio gained
14.02% at NAV while its benchmark advanced 16.95%. The two principal factors
affecting the Portfolio's performance were: (1) the Portfolio's concentration
in the U.S. market and the relative price performance of large-capitalization
and high P/E equities, and (2) the Portfolio's relative overweighting in cash
at about 19%. We increased this cash position during the period to reflect the
increased market risk accompanying the deteriorating conditions in the Far East
and Russia.
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ALLIANCE VARIABLE PRODUCTS SERIES FUND
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INVESTMENT OUTLOOK
We believe that the most important determinants of global capital markets'
performance for the balance of the year are: (1) the ability of Japan to
develop a strong enough political consensus in order to effect substantial
policy changes that produce economic expansion, and (2) the ability of the
Russian government to enact legislative reforms that will satisfy international
leaders enough to provide the much-needed external financial support. We expect
progress toward both of these goals, albeit at an uneven pace. Within this
global setting, the U.S. economy's growth rate will slow, reflecting the
build-up in the trade deficit and the reduction of inventories. This moderate
growth and benign inflation environment, however, should translate into a
positive backdrop for capital markets. Nonetheless, we expect ongoing market
volatility reflecting the uncertainty linked to the problems in Asia and Russia.
A-3
GROWTH INVESTORS PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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INVESTMENT OBJECTIVE
The Growth Investors Portfolio seeks the highest total return consistent with
what the Fund's Advisor considers to be reasonable risk by investing in a
diversified mix of publicly traded equity and fixed income securities.
MARKET REVIEW
The performance of global capital markets during the first half of 1998 was
dictated by sharp swings in investor sentiment about the effects of the Asian
financial crises. In the first three months of the year, investors were
encouraged by the combination of major financial support packages from the
International Monetary Fund (IMF) and significant economic reform programs
adopted by various governments in the region. Many believed the financial and
economic problems would be contained. Sentiment shifted during the second
quarter 1998 as it became apparent that Japan's economy--stagnant for the last
seven years--was slipping into recession. Consumer spending dropped sharply;
investment spending plummeted; and the Japanese yen came under serious pressure
as both the Japanese public and the international community began to doubt the
government's ability to effect the required economic and regulatory changes.
The sheer size of the Japanese economy--second in the world and twice the size
of the rest of Asia, including China--stresses the important and potentially
disruptive role it could play in derailing global economic growth. Investors
became increasingly concerned about Japan's growth and global role, and capital
markets in the developed world stalled during the second quarter, while
emerging markets not only in Asia, but also in Latin America and Europe,
especially Russia, posted precipitous declines.
Although the developed markets continued to produce strong economic growth,
investor sentiment--already skittish because of the Asian financial
crises--turned more negative as market participants began to question the
sustainability of profit growth. That concern was evident in the divergent
stock performance between large- and small-capitalization issues. For example,
the performance differential between the Wilshire Large Cap Index and its Small
Cap Index opened up to nearly 19% for the first half of the year--13% of that
gap occurred in the second quarter. The concentrated focus on larger cap issues
was also apparent in the S&P 500 Stock Index (S&P 500) as the 50 largest stocks
rose 22.5% in the first half of the year, while the next 450 issues advanced by
only 12.2%. Capitalization was not the only selection factor at work; the top
quintile, measured in terms of prospective price/earnings ratios (P/Es) of the
S&P 500, outperformed the market average by 9.4% during the same six-month
period.
The U.S. economy continued to perform remarkably well. Growth in domestic
demand, led by strong gains in consumption and investment spending, offset the
negative effects of the deteriorating trade balance. More important for capital
markets, inflation remained benign and under a 2% annual rate despite the
expansion in the economy. Much of the same was true in Europe; industrial
countries continued to benefit from falling commodity prices, favorable
exchange rates, and increased global competition. Fixed income markets
worldwide reacted positively to these conditions and enjoyed near
decade-low-record yields.
INVESTMENT RESULTS
For the six months ended June 30, 1998, the Growth Investors Portfolio provided
a total return of 14.21% at net asset value (NAV), outperforming its 13.66%
composite benchmark rate of return for the same period. This composite
represents 70% of the S&P 500, which returned 17.72%, and 30% of the Lehman
Brothers Government/Corporate Bond Index, which returned 4.17%. Over the 12
months ended June 30, 1998, your Portfolio gained 21.30% at NAV while its
benchmark advanced 24.50%. Two principal factors affected the Portfolio's
performance: (1) the Portfolio's concentration in the U.S. market and the
relative price performance of large capitalization, high P/E issues, and (2)
the Portfolio's approximately 15% allocation in foreign equities. The sale of
primarily U.S. securities meant the cash position of the Portfolio grew by 3%
to approximately 16% at the end of the first half of 1998. The additional cash
provided downside protection as the Asian financial crises created more
negative risk for global markets.
INVESTMENT OUTLOOK
The two key issues that will determine the course of global capital markets
include whether or not the Japanese enact economic policies that return that
country to a growth path and, whether or not the government of Russia can
achieve stabilization and reform of the economy. Japan requires internal
solutions and Russia requires both substantial external financial support and
internal reform. Progress is underway in addressing both of these issues,
albeit at an uneven pace.
We expect that the rate of growth in the U.S. economy will slow during the
second half of 1998. The growth in domestic final demand will be dampened by
the combi-
A-4
ALLIANCE VARIABLE PRODUCTS SERIES FUND
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nation of declining exports, stepped-up penetration by imports in the tradeable
goods sector, and a reduction in inventory accumulation levels. The slowdown
should help relieve some of the pressure building up in wages that worries the
Federal Reserve Board. A more moderate growth and low-inflation environment
should continue to support positive returns in the capital markets.
Nonetheless, uncertainties linked to persisting problems in Asia and Russia
will more than likely translate into ongoing market volatility.
A-5
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
Over the six-month period, the U.S. economy continued its healthy expansion
coupled with low inflation. Fueled by strong domestic demand, first-quarter
Gross Domestic Product (GDP), a standard measure of economic growth, expanded
5.5%. In the second quarter, GDP growth slowed to 1.6%, as strong domestic
demand was offset by weakening industrial production caused by lower exports to
Asia. The Consumer Price Index (CPI), a measure of inflation, recorded a 1.7%
increase year-over-year for the period ended June 30, 1998, despite the
tightest labor market in 28 years. With inflation benign and growth slowing,
the Federal Reserve left interest rates unchanged. Helped by strong economic
fundamentals and uncertainty overseas, the U.S. dollar continued to strengthen
against the major currencies.
Through the six-month period under review, the U.S. bond market continued to
climb as investors, concerned about events in the emerging markets, sought the
relative safety of U.S. Treasuries. The U.S. Treasury market posted solid
returns with longer-term Treasuries outperforming shorter-term Treasuries. In
May, renewed volatility in Asia, weakness in the yen and fiscal problems in
Russia caused a rally in the Treasury market and pushed bond prices higher. The
rally was compounded by the strong dollar which attracted overseas investors in
a "flight to quality." These factors combined to create favorable demand for
longer-term Treasury securities, which led to a flattening of the yield curve.
Treasury yields fell across the maturity spectrum with longer-term maturities
falling the most. The two-year Treasury yield fell 17 basis points to 5.48%
and the 30-year Treasury yield dropped 30 basis points to 5.63%.
INVESTMENT RESULTS
The Total Return Portfolio posted returns of 10.00% and 21.32% at net asset
value (NAV) for the six- and 12-month periods ended June 30, 1998. The
Portfolio's benchmark, a 60/40 Composite of the S&P 500 Stock Index (S&P 500)
and the Lehman Brothers Government/ Corporate Bond Index achieved returns of
12.30% and 22.61% for the same time frames.
The primary reason for the Portfolio's underperformance against its benchmark
was the equity segment's underperformance relative to the S&P 500. The
performance of the S&P 500 continues to be dominated by several very large
companies with unusually high price/earnings ratios. Our stock selection
discipline is a valuation-based process which has led us to avoid these types
of securities which appear expensive and have become even more expensive over
time. These excesses tend to reverse themselves over a full market cycle.
INVESTMENT OUTLOOK
In 1998, global growth is expected to be slower and inflation pressures should
be reduced as the consequences of excess productive capacity are felt. Asia
will continue to be the focus of nervous markets around the world, until Japan
resolves its current economic situation.
In the U.S., growth is expected to continue slowing throughout the third
quarter and perhaps into the fourth, with 1998 GDP expected to decline to 3.0%.
While industrial production will continue to weaken in response to slowing
Asian demand, U.S. consumer demand is expected to remain steady, partially
offsetting the slowdown in exports. The Federal Reserve is expected to remain
on hold, as the economy cools and inflation remains benign. U.S. interest rates
will remain low and the U.S. Treasury market will continue to provide a safe
haven during times of volatility overseas.
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. In addition, at this time we
plan to maintain the Portfolio's current position of fixed income securities to
further enhance the Portfolio's diversification and to meet the Portfolio's
investment objective.
A-6
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 stock market this year has taken on an historically unusual dynamic, as the
most expensive stocks relative to their earning potential have far outperformed
those with more modest valuations. A recent study by S.C. Bernstein found that
companies in the top quintile of forward price to earnings (P/E) ratios (29
times or greater) outperformed the lower three quintiles by 16% over the past
six months. This is the most extreme disparity since the firm began tracking
the data in 1978. These high P/E stocks have benefited over the last three and
one half years from a number of factors, primarily declining inflation
expectations and superior relative earnings momentum. Neither of these factors
seems to have been operant in 1998, however.
INVESTMENT RESULTS
The Growth and Income Portfolio lagged the Standard & Poor's 500 Stock Index
(S&P 500) for the trailing six- and 12-month periods ended June 30, 1998,
posting returns of 13.75% and 28.08% at net asset value (NAV) compared to the
S&P 500's 17.72% and 30.17%. The Portfolio outperformed its peer group, as
represented by the Lipper Growth and Income Funds Average (Lipper Average),
over the same time periods. The Lipper Average returned 11.90% and 22.11% for
the six- and 12-month periods. The Portfolio underperformed the S&P 500 because
it contains lower price to earnings (P/E) stocks than the S&P. It outperformed
its Lipper peer group due to superior stock selection based on Alliance's
research strength.
INVESTMENT OUTLOOK
What is now apparently moving the market is an unprecedented money flow into
large capitalization growth stocks from foreign investors. Net foreign
purchases of U.S. equities reached the $115 billion SAAR (seasonally adjusted
annual rate) level in the first quarter of 1998. As mutual fund equity flows
have ranged around $15-$20 billion per month for the past year, this foreign
buying represents an incremental 50% increase over mutual fund flows as a
result of a "flight to quality" from the Asian crisis. These fund flows could
reverse in an unpredictable fashion if confidence in the Asian economies begins
to be replenished. The 20 largest stocks in the S&P 500 account for 30% of the
capitalization of the index and trade at 34 times forward earnings. The
remaining 480 stocks are trading at 20 times earnings. If the Asian crisis
passes and fund flows reverse, the stock market could be threatened, especially
the large cap growth area.
PORTFOLIO STRATEGY
The Growth and Income Portfolio has always adopted a conservative,
valuation-based approach to stock selection, and therefore its underperformance
against the S&P 500 is easily explainable. We will continue to fill the
portfolio with undervalued stocks that have reasonable secular growth prospects
from among the most attractive candidates offered by our internal research
staff. We are confident that in the long run, fundamental attraction will trump
all other factors in determining portfolio performance.
A-7
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 common stocks and other equity securities.
ECONOMIC AND MARKET REVIEW
This year began in an uncertain environment. The U.S. market bounced back
quickly from the sharp sell-off in October 1997, precipitated by the collapse
of Asian currencies and securities markets, but the economic impact of these
events on the American economy was still unknown. As things turned out, there
was little short-term impact. Paradoxically, the Asian crisis may have even had
a favorable impact on the U.S. stock market in that it removed, for at least a
few months, any likelihood that the Federal Reserve would raise interest rates.
Economic overheating and resultant higher interest rates were factors that
investors had feared most, but with the sudden weakness in Asia, a weaker
economy seemed more likely. As the early months of 1998 unfolded, they provided
an unusually favorable climate for equities. Corporate earnings continued to
grow, unemployment moved to the lowest level in years and, at the same time,
inflation and interest rates moved lower. The stock market had a strong first
quarter.
As the second quarter began investors began to become concerned that the
troubles in Asia would begin to negatively impact corporate earnings. By
mid-June weakness in the Japanese yen heightened concerns that there would be
competitive devaluations by other Asian countries leading to a downward spiral
in Asian economies generally. Late in June, the United States and Japan jointly
intervened to support the yen. It was generally assumed that this was done in
the context of behind-the-scenes agreements that Japan would, after its
election in July, take meaningful steps to stimulate its domestic economy and
to shore up its ailing banking system. This bullish interpretation of events
led to a strong rally in the U.S. stock market beginning in late June and
continuing into July. As a result, the U.S. stock market ended the first half
at its high for the year.
INVESTMENT RESULTS
The Growth Portfolio enjoyed relatively good total return performance during
the six months ended June 30, 1998, gaining 18.81% at net asset value (NAV)
compared to a gain of 17.72% for the overall U.S. stock market, as represented
by the Standard and Poor's 500 Stock Index (S&P 500). The Russell 1000 Growth
Stock Index (Russell 1000), which tracks performance of large-cap U.S. stocks,
gained 20.38% for the same six-month period. Over the 12 months ended June 30,
1998, your Portfolio gained 39.89% at NAV, outperforming both the S&P 500 and
the Russell 1000 returns of 30.17% and 31.39%, respectively.
INVESTMENT OUTLOOK
In July the market environment turned less favorable. There have been
increasing signs that earnings growth for U.S. companies may be slowing.
Post-election developments in Japan have failed to live up to optimistic
expectations and the yen is once again falling sharply. Although the American
and European economies still appear to be quite sound, apprehension that Asian
economies may be headed into a deeper slump may weigh heavily on the Western
markets. We believe that it would be a mistake to turn too bearish on the U.S.
economy and stock market. Nevertheless, after the remarkable rise in the first
half of this year it would not be surprising to see a correction in the months
ahead. With the U.S. economy still enjoying good growth along with low
inflation and low interest rates, it is unlikely, in our view, that any decline
will be of bear market proportions. From a longer-term point of view, the
outlook for both the U.S. economy and the U.S. stock market is quite favorable.
AREA OF OPPORTUNITY
We are not inclined to change the areas of emphasis in the Portfolio that have
predominated for several years now. Financial services and technology still
look most promising and, we continue to underweight the commodity cyclical
areas of the economy. The pace of consolidation in financial services has
quickened, led by huge combinations such as Travelers Group, Inc. and Citicorp.
We expect this trend to continue.
In the technology sector, we have continued to move away from personal computer
oriented chip and box companies, and toward those more oriented toward
networking and telecommunications. There are clearly revolutionary changes
going on in the communications sector as digital technologies replace
traditional analog ones. Digital communications traffic is growing at an
accelerating rate. Changing technology and regulation are creating new winners
and losers. This is arguably the world's largest industry and also its fastest
growing.
A-8
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 and from income. It invests principally
in marketable securities of established non-United States companies (or United
States companies having their principal activities and interests outside the
United States), companies participating in foreign economies with prospects for
growth, and foreign government securities.
MARKET REVIEW
During the second quarter of 1998, the global economy continued to wrestle with
the effects of the Asian financial crisis. Final domestic demand in both the
United States and Europe remained strong, but demand in Japan continued to
decline. Growth in manufacturing output in most developed countries slowed.
Weakness in commodity prices, especially oil, and falling import prices kept
consumer price index (CPI) inflation rates on downward trajectories. The major
central banks held official interest rates steady. U.S. and European stock
prices spent most of the second quarter in a consolidating mode, ultimately
posting small gains, while Tokyo stocks struggled and were basically flat in
the quarter. The U.S. dollar appreciated slightly on a trade-weighted basis
during the past three months, while the German mark held steady and the
Japanese yen lost ground.
INVESTMENT RESULTS
For the six months ended June 30, 1998, the International Portfolio posted a
15.88% return at net asset value (NAV) while its benchmark, the MSCI EAFE Index
reported a 16.08% return. The International Portfolio returned 8.44% at NAV and
the Index returned 6.38% for the 12-month period ended June 30, 1998.
INVESTMENT OUTLOOK
Our outlook for global financial markets assumes that the strains created by
the Asian crisis, while persisting for several more months, will eventually be
unwound. However, many countries in East Asia, including Japan, will experience
negative growth in 1998. These reversals will be mitigated by a substantial
growth transfer from the United States, Europe and China totaling at least $100
billion. Low interest rates, lofty stock prices, and relatively strong
currencies will facilitate this growth "export."
Overall growth in the United States and Europe may temporarily slip below
2%--in China, below 7%--by this summer. However, this process should not go on
indefinitely, and a significant portion of the adjustment may have already
occurred. Wage and benefit increases have been slowly escalating in the United
States, and we expect that acceleration will show through during the remainder
of 1998 as CPI inflation rises above 2%. Inflation in Europe is likely to
remain subdued given the high levels of unemployment and wide output gaps,
while inflation is hardly a worry in Japan's recessionary environment.
Central bank policy remains in a reactive mode, although a modest upward
adjustment of official rates is possible later this year or in 1999, once the
Asian shock wave passes. The "mini-bubble" in stock prices in the United States
and Europe that occurred during the first quarter of 1998 appears to have
deflated. We believe that the fundamentals are in place for U.S. equities to
produce returns of 10%-12% over the next year, and for European equities to do
even better thanks to the advent of monetary union. Only bold action by the
Japanese authorities in tackling their economic and banking problems can turn
the tide in their stock market.
PORTFOLIO STRATEGY
In managing the Portfolio, our investment strategy will emphasize stock
selection and investment in a limited number of comparatively large,
high-quality companies. In following this strategy, we utilize the fundamental
analysis and research of Alliance's large global equity research team situated
in numerous locations around the world. The Portfolio's sector and geographic
weightings will be a by-product of our "bottom-up" stock selection approach
rather than predetermined allocation.
A-9
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 the Advisor's 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
In explaining our investment philosophy to shareholders, we have always tried
to avoid the economist's dictum of "on the one hand this, on the other that."
However, after the market's continued robust performance, we believe that a
discussion of potential opportunities and problems facing the market is in
order.
It is important to start by restating that the U.S. economy remains robust and
the fundamentals underpinning its performance over the past several years
remain solidly in place. U.S. consumer spending is healthy, corporate
cost-cutting benefits are ongoing, monetary and fiscal policies are
well-balanced and U.S. technological leadership continues. As a result, the
foundation for today's valuations is strong.
However, possible risks to the market are threefold. First, problems in Asia
may prove to be more contractionary than previously believed and impediments to
stimulating that region may prove more formidable. The Japanese are beginning
to make some of the right moves, but clearly that country, as well as China and
the ASEAN tigers, face a daunting task of structural reform in virtually every
aspect of their financial institutions. This reform ranges from more
transparent accounting to changing a history of cronyism and corruption that
has permeated their governments. Second, there remains nervousness about the
U.S.'s computer readiness for the year 2000 with costs and uncertainties we
cannot accurately forecast. And, finally, there is the possibility of some
upward pressure on wages, given the tight U.S. labor market. This may force the
Federal Reserve to raise rates to keep domestic growth within tolerable limits.
INVESTMENT RESULTS
The Premier Growth Portfolio outperformed both of its benchmarks for the six-
and 12-month periods ended June 30, 1998. The Portfolio achieved a total return
of 28.37% at net asset value (NAV) during the six-month period while the
Standard & Poor's 500 Stock Index (S&P 500) returned 17.72% and the Russell
1000 Growth Stock Index (Russell 1000) returned 20.38%. For the 12-month
period, the Portfolio posted a 43.63% return at NAV, while the S&P 500 returned
30.17% and the Russell 1000 posted a 31.39% return. The Portfolio's
outperformance can be attributed to three factors. First, stock selection in
specific technology industries performed well. Second, strong exposure to
broadline, U.S. retailers benefited from an economically strong U.S. consumer.
Third, your portfolio benefited from companies with accelerating cash flows
which were not jeopardized by the Asian economic crisis and other U.S.
pharmaceutical companies.
INVESTMENT OUTLOOK
Weighing all sides, we are still inclined to believe that equities will move
higher. Strength in Europe and in the United States is more likely to lift, or
at least to stabilize, Asia rather than the opposite; i.e., that Asia will
worsen and drag down two very strong economies. There is room for interest
rates to work downward, particularly when they are compared to lower bond
yields in Europe. And, finally, all this is unfolding in an environment where
investors are taking much more of a "buy and hold" approach to attain the
benefits of the 20% long-term capital gains rate.
PORTFOLIO STRATEGY
The Alliance Premier Growth Portfolio seeks long-term growth by investing in
many of the premier U.S. companies that demonstrate world leadership positions.
We are continuing to stay the course with an optimistic bias, but hold to a
barbell approach of having roughly equal weightings in more aggressive, high
growth technology stocks on one hand, balanced by lower price to earnings (P/E)
multiple financial stocks on the other. As a hedge against the Asian situation
worsening, we have also added a third leg to the portfolio of companies with
strong U.S. domestic exposure and limited Pacific-rim exposure. We expect
market volatility to remain high and do not intend to deviate from our basic
trading strategy of taking profits during bouts of exuberance and capitalizing
on periods of price weakness where we are confident of underlying fundamentals.
A-10
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 securities issued
by any company in any industry that we believe to offer possibilities for
capital appreciation. The Portfolio may also pursue investment opportunities
outside of the United States.
INVESTMENT RESULTS
The Quasar Portfolio outperformed its benchmark, the Russell 2000 Index for
both the six- and 12-month periods ended June 30, 1998. The Portfolio's returns
were 14.20% and 24.47% at net asset value (NAV) while the Russell 2000 Index
posted returns of 4.93% and 16.51%. This outperformance can be attributed to
good stock selection in the retail and apparel sectors.
INVESTMENT REVIEW
The casual apparel industry continues to do well. In addition, we continue to
be excited about the potential for the rental car industries. Daily rental
rates are increasing in 1998, for the third consecutive year, after about 10
years of virtually unchanged prices. With financial entrepreneurs now in charge
of these companies, we are optimistic about their prospects, and currently hold
positions in two companies. Lastly, we continue to be bullish on the
consolidation taking place within the automotive retailing business.
A new area of focus for us has been the leisure industry. There are several
well positioned, well financed companies gaining market share in their
respective niches of leisure. We currently hold positions in one of the largest
health club providers, the largest provider of golf driving ranges and the
largest independent operator of amusement parks. All three of these companies
should be able to grow their earnings and are very attractively valued.
In the turnaround category, we currently hold positions in a company which
operates retail superstores catering to animal owners in the U.S. We believe
there is an opportunity in this channel of distribution for animal supplies.
On the cyclical side, a steel company is currently one of the largest positions
in the Portfolio. Secondly, we continue to be bullish on the airline industry,
a group we have been overweighted in since 1995. The airline industry is
experiencing its fourth consecutive year of profitability, after having five
consecutive years of losses.
We also continue to believe that the oil tanker industry will rebound within
the next several years, when tanker rates are forced upward, older tankers are
retired, and new construction fails to keep up with demand. We continue to hold
positions in several of these companies.
Within the technology sector, we currently hold positions in an online banking
company, a database management company and a leading internet music company.
Lastly, we continue to like the real estate investment trust (REIT) sector. We
feel that the strength of the economy, coupled with minimal new construction,
has led to higher valuations. The real estate industry is also going through a
major change in ownership from being owned by private operators to well
financed public operators. This should also lead to higher valuations.
PORTFOLIO STRATEGY
Our basic investment strategy remains unchanged. We continue to adjust the
Portfolio's composition to reflect our perception of those smaller, highly
competitive companies that will, in our judgment, exhibit long-term price
appreciation through superior earnings growth. Specifically, in the last
several months, after lagging the market for several quarters, retail and
apparel stocks have performed well and these have contributed to your
Portfolio's good performance during this period under review.
A-11
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 primarily by investing in the equity
securities of companies primarily engaged in, or related to, the real estate
industry.
MARKET REVIEW
The strength and perceived safety of the U.S. economy, coupled with the
maturation of the American population and the growth of self-directed
retirement programs, continues to propel the overall stock market to new
heights. Although good for the stocks in the S&P 500, this strength undercuts
the attraction of many alternative investments.
In spite of this pricing environment, a number of real estate investment trust
(REIT) management teams sought to raise large sums of equity capital in the
first half of 1998 in order to fund property investment opportunities. Many
companies targeted individual investors for this equity issuance which was
accomplished by utilizing off market vehicles such as Unit Investment Trusts
sponsored by investment banks. REITs raised nearly $4 billion of equity in this
fashion in the first half of 1998. This disrupted the supply and demand balance
for REIT shares in the open market and left little support in the face of
normal market fluctuations. As a result, prices drifted downward.
The irony of this supply/demand imbalance for real estate stocks is that it has
happened amidst a very strong supply/demand balance for real estate itself.
Generally speaking, the U.S. economy continues to be surprisingly vibrant. This
ongoing economic growth has resulted in nearly full properties, rental rates
that are increasing well above inflation, flat operating expenses, and sharply
rising profitability. In short, real estate markets remain very favorable from
the perspective of the owners of property.
The only negative on the horizon for real estate owners today is that an
abundance of capital has recently begun flowing towards new development for the
first time since the mid 1980s. Rents have risen to the point where it makes
economic sense to add more rentable space by erecting new buildings. However,
real estate is not a monolithic market. Local markets and various property
types have, and will continue to have, their own supply and demand balances.
Hence, the length of time that the scale will be tipped in favor of the owners
of property will be vastly different from one market to the next and between
different property types.
In the current environment of strong tenant demand, new supply is being added
as it is warranted in specific markets. In some markets, capital will not be
deployed prudently and this will lead to declining rents and values. Other
markets will remain robust, and owners will continue to ride the tide of strong
earnings growth. This differentiation has already begun.
INVESTMENT RESULTS
The first six months of 1998 was not a banner period for the REIT market. The
most widely used benchmark, the NAREIT Equity Index, declined 5.04% for the
six-month period ended June 30, 1998. The Real Estate Investment Portfolio
underperformed the benchmark, declining 6.49% at net asset value (NAV) for the
six-month period ended June 30, 1998. The S&P 500 Stock Index continued to
perform well, achieving a 17.72% return during the same six-month time frame.
The REIT market performed better over the longer term with the NAREIT Index
achieving returns of 8.04% and the Portfolio posting an 8.35% return at NAV for
the 12-month period ended June 30, 1998.
INVESTMENT OUTLOOK
We follow a very rigorous investment process. This process is based on the idea
that stock prices track changes in cash flow over time and, in real estate,
cash flow is a function of market exposure. Accordingly, we track local market
trends very closely and have dedicated substantial resources to this task. All
of our research tells us that our portfolio is well positioned today. We view
the recent weakness in some of our more aggressive holdings as an opportunity
to take advantage of attractive prices as we sharpen our focus on some of the
most dynamic situations in American real estate. As a result, we remain
optimistic about the future and are determined to continue to execute our
investment strategy.
PORTFOLIO STRATEGY
Together with our research partners at CB Richard Ellis, we focus all of our
attention on investing in companies that own properties in local markets with
barriers to entry to new supply and strong demand patterns. Hence, they have
better than average rental growth prospects and are run by management teams
that are strategic by nature and have substantial capital markets acumen. This
has led us to focus on certain markets and property types. For example, office
buildings and larger full service hotels take longer to build than most other
property types. In some geographic markets, such as metropolitan New York and
the entire area around San Francisco Bay, there is little construction of these
property types underway, let
A-12
ALLIANCE VARIABLE PRODUCTS SERIES FUND
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alone nearing completion. These are regions of real economic strength led by
finance and technology industries which is why we overweight them today.
There are 13 companies exposed to either full service hotels nationally or
suburban and downtown office markets in the New York City region. They account
for about 18% of the REIT market and nearly 30% of our portfolio. They are
uniformly producing far better than average growth in earnings this year and
are expected to continue to experience strong growth next year as well. We
began the quarter owning nine of these companies and now have investments in 11
of them. Unfortunately, virtually every company in these two groups
underperformed the REIT market in the second quarter which contributed to your
Portfolio's recent underperformance. However, we are optimistic about these
companies' long-term outlook.
A-13
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. The Portfolio invests principally in securities of companies
which use technology extensively in the development of new or improved products
or processes.
MARKET REVIEW
Following a difficult fourth quarter in 1997, tech stocks recovered strongly in
the first half of 1998. Throughout the 1990s, these stocks have repeatedly
shown this up-and-down pattern of strong price gains which were then
interrupted by one or two price corrections in most years. The most recent of
these corrections has been prompted by concerns about many Asian economies and
their importance to the growth of the technology sector. The subsequent
recovery in technology stocks reflected several factors. These include the
realization that the Asian situation was more of a longer term challenge than a
sudden implosion, the continued impressive growth in many technology companies
and simple bargain hunting as valuations became more reasonable.
This volatility has probably become a permanent characteristic of technology
stocks. Therefore, whenever possible, and assuming valuations are reasonable,
we place strong emphasis on those companies which are most dominant in their
industry. The correctness of this approach is being reinforced by the fact that
consolidation in many areas of technology is helping the strong companies
become even stronger. Intense competition, short product cycles, rapid change
and increased complexity all place a premium on companies which have some
control over their competitive environment.
INVESTMENT RESULTS
The Technology Portfolio has outperformed its benchmark, the Pacific Stock
Exchange (PSE) High Tech Index, for both the six- and 12-month periods ended
June 30, 1998. Over the six- and 12-month periods, the Portfolio gained 28.42%
and 30.19% at net asset value (NAV), respectively, versus six- and 12-month PSE
High Tech returns of 19.06% and 22.57%, respectively. The Portfolio's
outperformance can be attributed to the success of maintaining relatively large
positions in the networking and personal computer sectors.
INVESTMENT OUTLOOK
The secular outlook for the technology sector remains impressive. The
transition in the U.S. to a digital-based economy is evident everywhere and
very much underway. Information technology is becoming a necessary competitive
tool, and the "on-line economy" will change the way business is conducted in
many industries. The same can be said for the ways in which consumers will be
adjusting their behavior with respect to shopping, entertainment, financial
decision making and general information access. All this sets the stage for the
rest of the world to do the same--that is, to emulate something which is
working very much in favor of the U.S. economy and for U.S.-based companies.
The fact that information technology, as a percentage of U.S. Gross Domestic
Product, has gone from 2.5% in 1990, to 8.5% in early 1998 should be a prelude
for similar and perhaps even more rapid adoption rates in many other countries.
Technology is now easier to use and much more affordable. In addition, many
companies are currently offering integrated and total solutions to customers
who need this information resource more than ever. In our opinion, all this
bodes particularly well for many of the companies in the Portfolio.
A-14
UTILITY INCOME PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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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
utilities industry.
MARKET REVIEW
Utility stocks tend to perform well during times of market stress. The fourth
quarter of 1997 witnessed the relatively sharp outperformance of utilities
brought on by the Asian crisis. The first quarter of 1998 marked a reduction of
Asian tensions and a return to higher comfort levels, and therefore, the
utilities did not keep up with the consequent overall rise in the broader
market.
INVESTMENT RESULTS
For the six-month period ended June 30, 1998, the total return for your
Portfolio was 10.07% at net asset value (NAV). This compares with returns of
9.72% and 13.67%, for the Dow Jones (DJ) Utility Index and the New York Stock
Exchange (NYSE) Utility Index, respectively. For the same time period, the
Lehman Brothers (LB) Long-Term Government Bond Index returned 6.25%. Over the
12 months ended June 30, 1998, your Portfolio gained 31.07% at NAV compared to
returns of 35.01%, 33.91%, and 19.66% for the DJ Utility Index, NYSE Utility
Index, and the LB Long-Term Government Bond Index, respectively
Telephone utilities outperformed electric utilities during the period, and as
your Portfolio is underweighted in telephones relative to the NYSE Utility
Index, your Portfolio's performance lagged that of its benchmark during the six
months ended June 30, 1998.
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 very weak
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 through mid-year 1998, which saw the S&P 500 increase by
almost 165% since the end of 1994. If the balance tilts toward economic
strength and rising interest rates, we would expect utilities stocks to
continue their underperformance relative to the broader market. If the economy
slows, however, utilities may resume the strong performance of the second half
of 1997.
A-15
WORLDWIDE PRIVATIZATION PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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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 are believed by the
Fund's Advisor to be beneficiaries of the privatization process.
ECONOMIC AND MARKET REVIEW
The first half of 1998 has seen dramatic diversity in performance from various
regions of the world. Europe has been particularly strong as investors have
become increasingly enthusiastic about the prospects for European Monetary
Union and a discernible change in savings habits has resulted in a shift
towards equity ownership by individuals in the region.
Asia, however, has remained in the doldrums. The financial crisis enveloping
the region has shown little sign of coming to an end and it is hard to envisage
a significant improvement without some sort of economic recovery in Japan,
which remains tardy in resolving the problems inside its banking system. The
key to a significant upturn in these markets will be Asian governments'
reaction to the current crisis. We believe that there is no alternative but for
governments to withdraw further from the economy and that the key to economic
revival will be privatization. We currently see a continued flow of deals from
China but the rest of the Asian region has been slow to grasp this key point.
We believe that it is only with privatization and liberalization that the
region can see brighter prospects for the future.
The contagion effect from the Asia crisis has affected both Eastern Europe and
Latin America as investors have become concerned over currency and equity
market levels. Looking forward, we currently find some excellent values in
privatization issues in these areas, although we are more sanguine about
opportunities in South East Asia.
INVESTMENT RESULTS
The Worldwide Privatization Portfolio provided a return of 13.75% at net asset
value (NAV) for the first half of 1998. This result underperformed the MSCI
EAFE Index return of 16.08% for the same period. Over the 12-month period ended
June 30, 1998, your Portfolio advanced 10.63% at NAV, substantially
outperforming the MSCI EAFE Index return of 6.38% for that period.
INVESTMENT OUTLOOK
In this volatile market environment, privatization issues have continued at a
high level. We currently anticipate more than US$100 billion of privatization
initial public offerings (IPOs) and secondary offerings over the course of
1998. We believe it is significant that market volatility has not dampened the
desire by governments to privatize and we look forward to a significant
increase in the number of transactions over the next 12 months.
On an industry basis, privatizations have continued to be dominated by telecoms
and utility transactions. However, there remains a noticeable expansion in
terms of industry representation and geographical spread. We look forward to
this trend continuing in the future, and we anticipate further opportunities to
broaden your Portfolio's industry and geographical spread.
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-16
GLOBAL BOND PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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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.
MARKET REVIEW
Investment results for the semi-annual period ended June 30, 1998 were
constrained by the low level of yields available in global bond markets.
Boosting returns above the underlying yield levels was the capital appreciation
of bonds resulting from a further decline in yields. Global bond markets'
returns, as represented by the Salomon Brothers World Government Bond Index
(the "Index"), were driven by both external and internal effects.
Externally, the dominant effect was the building of a "flight to quality"
premium focused in the U.S. Treasury market as the outlook for other
higher-risk asset markets deteriorated sharply.
Internally, markets were supported by substantial downward revisions of growth
and inflation expectations for the second half of 1998. The U.S. saw the
greatest downward revisions for growth, driving 10-year yields down by 30 basis
points, resulting in the U.S. portion of the Index returning 4.20% during the
six months ended June 30, 1998. European bond market returns maintained their
polarization in the run-up to European Monetary Union (EMU). During the recent
six months, European bonds saw the actual delivery of lower than anticipated
inflation which enabled 10-year bond yields to decline by 55 basis points,
resulting in the German portion of the Index returning 4.60%. Japanese returns
were weaker, restrained by the extraordinarily low yield levels, with this
portion of the Index gaining 2.55% during the six months ended June 30, 1998.
Foreign exchange depreciation focused on the Japanese yen detracted from the
local market returns.
INVESTMENT RESULTS
For the six-month period ended June 30, 1998, your Portfolio advanced 3.00% at
net asset value (NAV) while the Portfolio's benchmark, the Salomon Brothers
World Government Bond Index (unhedged in U.S. dollar terms), returned a
marginally lower 2.78% for the same period. Over the 12 months ended June 30,
1998, your Portfolio gained 5.28% at NAV while its benchmark advanced 4.31%.
The Portfolio marginally outperformed its benchmark as protective foreign
currency hedging enabled the Portfolio to have reduced exposure to the weak
Japanese yen. The Portfolio also benefited from maintaining increased interest
rate risk in European bonds compared to reduced interest rate risk in the U.S.
market.
INVESTMENT OUTLOOK
The key quantitative measures used to assess the likely direction of bond
yields consistently suggest that bond yields are at very low value levels and
that a move to higher yields should be expected. From our quantitative
assessment, the U.S. market appears the better value globally.
Subjective assessment is focused on three major themes: declining global
growth, declining inflation, and global cooperation to address crises.
Therefore, the subjective assessment is more positive for bonds with the
prospect of sporadic "flight to quality" premium and positive fundamentals that
should enable our quantitative measures to show better value through decreased
inflation and growth, rather than through an increase in yields.
Our foreign exchange strategy is biased toward avoiding further Japanese yen
weakness while capturing European currency appreciation against the U.S. dollar.
PORTFOLIO STRATEGY
With a cautious outlook for bond yields, the Portfolio is positioned with
moderate interest rate risk. Interest rate risk is concentrated in Europe and
we anticipate increasing exposure to the U.S. on confirmation of our subjective
outlook. We believe that European currency appreciation will play a key role in
maintaining attractive returns to U.S.-dollar-based investors during the second
half of 1998.
A-17
GLOBAL DOLLAR GOVERNMENT PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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INVESTMENT OBJECTIVE
The Global Dollar Government Portfolio seeks a high level of current income
through investing its assets in U.S. and non-U.S. fixed income securities
denominated 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 securities that are rated below investment
grade, or in unrated securities of comparable quality, and that are considered
to be speculative with regard to the issuer's capacity to pay interest and
repay principal.
MARKET REVIEW
In the emerging markets, debt prices fell over the six-month period ended June
30, 1998. Strong gains made in the first quarter of 1998 were erased in the
second quarter when more bad economic news was reported from Asia. Lower than
expected economic growth in emerging Asia, a weakening yen and recession in
Japan, and fiscal problems in Russia combined to cause a sell off throughout
the emerging markets.
Though not affected as negatively as debt prices in emerging Asia, Latin
American debt suffered when investors fled to the relative safety of developed
country debt. With the exception of Venezuela, the policy responses in Latin
America since the Asia meltdown have been impressive. Argentina, Brazil and
Mexico have all acted to maintain credible fiscal policies and to ensure that
their current account (exports minus imports) deficits do not rise to
unsustainable levels. Venezuela, however, continued to be weighed down by lower
oil prices and upcoming elections. In Eastern Europe, Russia's fiscal problems
caused its debt to post the lowest returns among all emerging markets. In Asia,
the Korean economy remained very weak, though the government continued to move
forward with necessary reforms. On a positive note, foreign currency reserves
have been built up to US$40 billion, as Korea's current account recorded a
surplus.
INVESTMENT RESULTS
Over the six-month period ended June 30, 1998, your Portfolio returned -3.25%
at net asset value (NAV). This compares with the -0.25% return posted by the JP
Morgan Emerging Markets Bond Index for the same period. Over the 12 months
ended June 30, 1998, your Portfolio declined 1.22% at NAV while its benchmark
advanced 3.88%. The underperformance of your Portfolio can be attributed to the
sluggish performance of some its emerging market debt holdings. As stated
earlier, Russian debt suffered from domestic fiscal problems, and consequently,
the Portfolio's overweight position in Russian debt hurt performance.
INVESTMENT OUTLOOK
We anticipate slowing global growth and continued benign inflation as Asia
exports cheaper goods to the world and imports less from abroad. With inflation
subdued, we expect monetary policy in the United States, Germany and Japan to
remain substantially unchanged for most of 1998.
The emerging markets face challenging problems that require time and economic
growth for resolution. Growth in Japan, the world's second largest economy, is
critical if the emerging countries are to resume their process of global
integration. In the meantime, we expect emerging market debt price volatility
to remain quite high, as renewed turmoil in Asia, fiscal and structural
problems in Russia and weakness in Japan continue to heighten investor concern
about all higher yielding asset classes.
Russia in particular will continue to add uncertainty to the emerging markets
as it struggles with the devaluation of the ruble and the repayment
requirements of existing Russian debt obligations. Although Russia is not
critically important to the world's economic prospects, it will continue to
have a significant influence on other emerging debt countries. We are currently
evaluating the political and economic events as they unfold in order to assess
the prospects for Russian debt to rebound. Presently, we are maintaining the
Fund's Russian debt positions, which currently comprise 4.38% of the Fund's
portfolio, with little change.
A-18
HIGH YIELD PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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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 spread widening of 50 to 75 basis points in
the second quarter of 1998. This was a result of investors' increasing
uncertainty regarding the impact of the Asian crisis on the earnings and
profitability of domestic companies, as well as from some supply/demand
imbalances in the market as the record level of high yield issuance continued
into the first half of 1998. The high yield market has seen a recent increase
in the number of defaults; however, the percentage of defaulted issuers at 2.6%
is still less than the historical average of 3.5%.
INVESTMENT RESULTS
The High Yield Portfolio commenced operations on October 27, 1997. From the
Portfolio's inception date to the reporting period ended June 30, 1998, the
Portfolio yielded a total return of 11.70% at net asset value (NAV). The
Portfolio outperformed its benchmark, the CS First Boston High Yield Index,
which returned 6.00% during the same time period. This outperformance can be
attributed to good credit selection and a greater emphasis on the single B
sector of the marketplace, which we believe offers more relative value than the
BB sector. For the six-month period ended June 30, 1998, the Portfolio returned
8.13% at NAV while the benchmark returned 4.31%.
INVESTMENT OUTLOOK
We remain optimistic about the outlook for the high yield market. Continued
slow growth, relatively low inflation and a healthy economy bode well for the
high yield market.
PORTFOLIO STRATEGY
As a result of the record amount of high yield issuance and the increasing
number of issuers in the high yield market recently, credit selection will play
an increasingly important role going forward. We will continue to focus our
attention on the single B sector of the market. In addition, we will try to
avoid those credits that will be most affected by the turmoil in Asia.
A-19
NORTH AMERICAN GOVERNMENT
INCOME PORTFOLIO ALLIANCE VARIABLE PRODUCTS SERIES FUND
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INVESTMENT OBJECTIVE
The North American Government Income Portfolio seeks the highest level of
current income, consistent with what the Fund's Advisor believes to be prudent
investment risk, from a portfolio of debt securities issued or guaranteed by
the governments of the United States, Canada and Mexico. The Portfolio expects
to maintain at least 25% of its assets in U.S. dollar denominated securities
and may invest up to 25% of its total assets in debt securities issued by
government entities in Argentina.
MARKET REVIEW
Through the six-month period, the U.S. bond market continued to climb as
investors, concerned about events in the emerging markets, sought the relative
safety of U.S. Treasuries. The U.S. Treasury market posted solid returns with
longer-term Treasuries outperforming shorter-term Treasuries. When overseas
markets stabilized at the beginning of the year following the volatility in the
fourth quarter of 1997, investors' focus shifted to short-term expectations of
U.S. monetary policy. In May, renewed volatility in Asia, weakness in the yen
and fiscal problems in Russia caused a rally in the Treasury market and pushed
bond prices higher.
In the emerging markets, debt prices fell over the sixmonth period. Strong
gains made in the first quarter were erased in the second quarter when more bad
economic news was reported from Asia. Though not affected as negatively as debt
prices in emerging Asia, Latin American debt suffered when investors fled to
the relative safety of developed country debt. Still, Mexico and Argentina, the
two emerging markets your Portfolio is exposed to, posted healthy positive
returns over the period.
Argentina is less exposed to a slowdown in global growth, as exports account
for just 10% of their Gross Domestic Product (GDP). Furthermore, Argentina
proved its resolve to maintain its "convertibility law" which pegs the peso
1-to-1 with the dollar in the aftermath of the 1994 Mexican crisis. The strong
policy responses and discipline Argentina has demonstrated during past
externally induced economic turmoil is impressive and gives Argentina added
credibility in the current environment of volatility. The Argentine peso has
not devalued, and we do not expect any change in current economic policies.
The Mexican peso, however, has depreciated approximately 12.3% since last
September, but the policy response from Mexico toward the Asian crisis has also
been impressive. Monetary policy has maintained a high degree of credibility,
and fiscal policy has been continually adjusted to counteract the impact of
Asia and declining oil prices. The strong monetary and tight fiscal policies
enacted by Mexico were difficult to undertake, but Mexico appears committed to
avoiding the mistakes it made in the past.
INVESTMENT RESULTS
Over the six-month period under review, your Portfolio returned 1.91% at net
asset value (NAV). This compares with the 3.93% return posted by the Lehman
Brothers (LB) Aggregate Bond Index and 3.39% for the Lehman Brothers (LB)
Intermediate-Term Government Bond Index. Over the 12 months ended June 30,
1998, your Portfolio gained 5.57% at NAV while the LB Aggregate Bond Index
advanced 10.54% and the LB Intermediate-Term Government Bond Index returned
8.38%. Your Portfolio underperformed both benchmarks over the period as a
result of its exposure to debt in Mexico and Canada. Neither benchmark is
exposed to Mexican or Canadian debt.
INVESTMENT OUTLOOK
We anticipate slowing global growth and continued benign inflation as Asia
exports cheaper goods to the world and imports less from abroad. With inflation
subdued, we expect monetary policy in the U.S. to remain substantially
unchanged for most of 1998. The current slowing of growth in the U.S. is
expected to continue with 1998 GDP estimated around 3.0%. Strong domestic
demand will continue to be offset by weakening industrial production. U.S.
interest rates will remain low as the U.S. fixed income markets continue to
provide a safe haven for investors during periods of volatility overseas.
The emerging markets face challenging problems that require time and economic
growth for resolution. Growth in Japan, the world's second largest economy, is
critical if the emerging countries are to resume their process of global
integration. In the meantime, we expect emerging market debt price volatility
to remain quite high, as renewed turmoil in Asia, fiscal and structural
problems in Russia, and a weakened Japan continue to heighten investor concern
about all higher yielding asset classes. However, we remain positive in our
view on Mexico and Argentina as economic policy in each country remains quite
strong and their long-term trend toward improving credit fundamentals remains
intact. In addition, we do not see much risk that Argentina will abandon the
convertibility plan which pegs the Argentinean peso 1-to-1 with the U.S.
dollar. In Canada, we currently see no relative value as spreads have tightened
considerably.
A-20
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 the Fund's Advisor believes to be prudent risk from a
portfolio of high-quality debt securities with remaining maturities of not more
than three years.
MARKET REVIEW
Throughout the period, the U.S. bond market continued to climb as investors,
concerned about events in the emerging markets, sought the relative safety of
U.S. Treasuries. The U.S. Treasury market posted solid returns with longer-term
Treasuries outperforming shorter-term Treasuries. In May, renewed volatility in
Asia, weakness in the yen and fiscal problems in Russia caused a rally in the
U.S. Treasury market and pushed bond prices higher. The rally was compounded by
the strong dollar which attracted overseas investors in a "flight to quality."
These factors combined to create favorable demand for longer-term Treasury
securities, which led to a flattening of the yield curve.
In Europe, resolution of first round European Monetary Union membership,
confidence in the new central bank, and continued favorable growth and
inflation data, pushed European bond prices higher. Renewed volatility in world
markets also aided European bond prices as investors favored the safety of more
liquid securities. In the U.K., debt prices declined in June when the Bank of
England unexpectedly raised the benchmark lending rate, citing inflation
concerns. In Sweden, the Riksbank cut official interest rates, as a result of
lower inflation. The Bundesbank left rates unchanged.
Economic problems in Japan deepened as economic data confirmed that the economy
is in recession and the yen weakened to record lows against the U.S. dollar.
Japan, as the second largest economy, is integral to the rest of Asia as that
region continues to struggle with its economic problems.
In the Dollar Bloc countries (Australia, New Zealand and Canada) growth slowed
and inflation remained low as a result of falling demand from Asia. The Bank of
Canada raised rates early in the period to support a weakened Canadian Dollar.
In New Zealand, the Reserve Bank continued to ease monetary policy in response
to the weak economy.
INVESTMENT RESULTS
The Portfolio's total return for the six-month period ended June 30, 1998 was
3.37% at net asset value (NAV) compared to the Merrill Lynch 1-3 Year Treasury
Index's return of 3.02% for the same period. On a 12-month basis, the Portfolio
posted a return of 6.18% at NAV versus 6.80% for the benchmark. Your
Portfolio's performance exceeded that of its benchmark over the past six months
helped by the strength of the European debt market and its favorable economic
fundamentals.
INVESTMENT OUTLOOK
In 1998, global growth will be slower and inflation pressures will be reduced
as the consequences of excess productive capacity are felt. Asia will continue
to be the focus of nervous markets around the world, until Japan resolves its
current economic situation.
In the U.S., growth is expected to continue slowing throughout the third
quarter and perhaps into the fourth with 1998 GDP expected to decline to 3.0%.
While industrial production will continue to weaken in response to slowing
Asian demand, U.S. consumer demand is expected to remain steady, partially
offsetting the slowdown in exports. The Federal Reserve is expected to remain
on hold, as the economy cools and inflation remains benign. U.S. interest rates
will remain low and the U.S. Treasury market will continue to provide a safe
haven during times of volatility overseas.
In Europe, interest rates will remain low reflecting confidence in the European
Monetary Union, low inflation and healthy growth. A small rate increase by the
European Central Bank is anticipated. European growth for 1998 is estimated
between 2.5% and 3.0%.
A-21
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
Over the six-month period, the U.S. economy continued its healthy expansion
coupled with low inflation. Fueled by strong domestic demand, first quarter
Gross Domestic Product (GDP), a standard measure of economic growth, expanded
5.5%. In the second quarter, GDP growth slowed to 1.6%, as strong domestic
demand was offset by weakening industrial production caused by lower exports to
Asia. The Consumer Price Index (CPI), a measure of inflation, recorded a 1.7%
increase year-over-year for the period ended June 30, 1998, despite the
tightest labor market in 28 years. With inflation benign and growth slowing,
the Federal Reserve left interest rates unchanged. Helped by strong economic
fundamentals and uncertainty overseas, the U.S. dollar continued to strengthen
against the major currencies.
Through the six-month period, the U.S. bond market continued to climb as
investors, concerned about events in the emerging markets, sought the relative
safety of U.S. Treasuries. The U.S. Treasury market posted solid returns with
longer-term Treasuries outperforming shorter-term Treasuries. When overseas
markets stabilized at the beginning of 1998, following the volatility in the
fourth quarter of 1997, investors' focus shifted to short-term expectations of
U.S. monetary policy. In May, renewed volatility in Asia, weakness in the yen
and fiscal problems in Russia caused a rally in the Treasury market and pushed
bond prices higher. The rally was compounded by the strong U.S. dollar which
attracted overseas investors in a "flight to quality." These factors combined
to create favorable demand for longer-term Treasury securities, which led to a
flattening of the yield curve. Treasury yields fell across the maturity
spectrum with longer-term maturities falling most. The two-year Treasury yield
fell 17 basis points to 5.48%, and the 30-year Treasury yield dropped 30 basis
points to 5.63%.
INVESTMENT RESULTS
For the six months ended June 30, 1998, the Portfolio returned 3.72% at net
asset value (NAV), versus 4.17% for its benchmark, (a composite of 67% Lehman
Brothers Government Bond Index and 33% Lehman Brothers Corporate Bond Index).
For the 12-month period ended June 30, 1998, the Portfolio posted a return of
9.50% at NAV, while its benchmark posted a return of 11.29%. The Portfolio's
performance during the period was affected by weakness in our Yankee bond
holdings. Volatility during the period, caused by events overseas, prompted
investors to shun credit issuers, particularly Yankees.
INVESTMENT OUTLOOK
We believe that in 1998 global growth will be slower and inflation pressures
will be reduced as the consequences of excess productive capacity are felt.
Asia will continue to be the focus of nervous markets around the world, until
Japan resolves its current economic situation.
In the U.S., growth is expected to continue slowing throughout the third
quarter 1998 and perhaps into the fourth quarter with 1998 GDP expected to
decline to 3.0%. While industrial production will continue to weaken in
response to slowing Asian demand, U.S. consumer demand is expected to remain
steady, partially offsetting the slowdown in exports. The Federal Reserve is
expected to remain on hold, as the economy cools and inflation remains benign.
We anticipate that U.S. interest rates will remain low and the U.S. Treasury
market will continue to provide a safe haven during times of volatility
overseas.
A-22
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.
MARKET REVIEW
Second quarter 1998 economic activity appears to indicate a moderate-to-strong
growth cycle being maintained throughout most sectors. Real Gross Domestic
Product (GDP), which was preliminarily reported at 4.8% during the first
quarter 1998, was revised upward to 5.5%. Consumer spending through May rose
4.0% in the quarter. This comes on the heels of a strong 6.0% surge for the
initial quarter. The Producer Price Index (PPI) has remained relatively stable
over the past year (second quarter 1997 to second quarter 1998) actually
finishing down 0.9% while core PPI rose by 0.6%. The employment rate dropped
from 4.7% to 4.5% during the quarter indicating that labor markets remain
resolute. In May, new home sales rose to a revised annual rate of 901,000. This
sets a new all-time high for such reports as the low mortgage rate environment
certainly has aided the current housing boom.
The Federal Open Market Committee convened twice during the second quarter
1998. The minutes of the May 19th meeting revealed a bias in favor of raising
interest rates if needed to guard against inflation. However, in early June,
Chairman Greenspan made clear he sees little upward pressure on U.S. inflation
in the near term, and remains sensitive to the international repercussions of
Federal Reserve policy decisions. Neither the mid-May nor late June meetings
produced any movements to the Fed Funds target level of 5.50%.
INVESTMENT RESULTS
For the six- and 12-month periods ended June 30, 1998, the Money Market
Portfolio returned 2.52% and 6.15% at net asset value (NAV), respectively.
During the same six- and 12-month periods, the total returns for the
Portfolio's benchmark, the Salomon Brothers 3-Month Treasury Bill Index, were
2.60% and 5.30%, respectively.
INVESTMENT OUTLOOK
Any projection of domestic economic activity remains contingent on the ongoing
crisis in Asia. Looking ahead to the next 12 months, we believe that the global
economic distortions caused by East Asia's slowdown will crest and then recede.
The U.S. economy will cool, but the "Goldilocks scenario"--an economy not too
hot and not too cold--will not be derailed. We believe that Fed officials will
continue to view the Asian crisis as a means to slowdown economic growth here.
Ideally, overall growth would slow down, thereby offsetting a rapid first half
expansion. Under such a scenario, we feel that the Fed is not likely to raise
interest rates. We shall monitor this cause and effect relationship and apply
its development toward our future investing strategies.
PORTFOLIO STRATEGY
The Portfolio continued to strategically maneuver its maturities to match the
strong technical areas along the short-term yield curve. In essence, this meant
heavily weighing investments towards month-end and quarter-end maturities while
maintaining enough liquidity during the interim periods to meet any Portfolio
needs.
A-23
INVESTMENT RESULTS ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
INVESTMENT RESULTS AS OF JUNE 30, 1998
Listed below are the Portfolios' average annual total returns for the one-year,
five-year (where applicable) and since inception periods ended June 30, 1998.
ASSET ALLOCATION PORTFOLIOS
CONSERVATIVE INVESTORS PORTFOLIO
. One Year 14.02%
. Since Inception (10/94) 11.05%
GROWTH INVESTORS PORTFOLIO
. One Year 21.30%
. Since Inception (10/94) 15.69%
TOTAL RETURN PORTFOLIO
. One Year 21.32%
. Five Years 13.70%
. Since Inception (12/92) 13.44%
COMMON STOCK/EQUITY SECURITIES PORTFOLIOS
GROWTH AND INCOME PORTFOLIO
. One Year 28.08%
. Five Years 21.31%
. Since Inception (1/91) 16.22%
GROWTH PORTFOLIO
. One Year 39.89%
. Since Inception (9/94) 31.54%
INTERNATIONAL PORTFOLIO
. One Year 8.44%
. Five Years 10.40%
. Since Inception (12/92) 11.60%
PREMIER GROWTH PORTFOLIO
. One Year 43.63%
. Five Years 26.24%
. Since Inception (6/92) 24.87%
QUASAR PORTFOLIO
. One Year 24.47%
. Since Inception (8/96) 21.21%
REAL ESTATE INVESTMENT PORTFOLIO
. One Year 8.35%
. Since Inception (1/97) 10.23%
TECHNOLOGY PORTFOLIO
. One Year 30.19%
. Since Inception (1/96) 18.14%
UTILITY INCOME PORTFOLIO
. One Year 31.07%
. Since Inception (5/94) 15.34%
WORLDWIDE PRIVATIZATION PORTFOLIO
. One Year 10.63%
. Since Inception (9/94) 14.60%
INCOME-ORIENTED PORTFOLIOS
GLOBAL BOND PORTFOLIO
. One Year 5.28%
. Five Years 6.61%
. Since Inception (7/91) 7.79%
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
. One Year -1.22%
. Since Inception (5/94) 12.89%
HIGH YIELD PORTFOLIO
. Since Inception (10/97)* 11.70%
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO
. One Year 5.57%
. Since Inception (5/94) 8.98%
SHORT-TERM MULTI-MARKET PORTFOLIO
. One Year 6.18%
. Five Years 3.81%
. Since Inception (11/90) 4.18%
U.S. GOVERNMENT/HIGH-GRADE SECURITIES PORTFOLIO
. One Year 9.50%
. Five Years 6.05%
. Since Inception (9/92) 6.36%
SHORT-TERM INCOME PORTFOLIOS
MONEY MARKET PORTFOLIO
. One Year 6.15%
. Annualized 7-Day Yield 5.01%
(*) 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 June 30, 1998.
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.
CS FIRST BOSTON HIGH YIELD INDEX--Credit Suisse First Boston High Yield Index
is an unmanaged, trader-priced portfolio constructed to mirror the high yield
debt market.
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.
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.
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 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 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 INTERMEDIATE-TERM GOV'T BOND--The Lehman Brothers Intermediate-Term
Government Bond Index is composed of U.S. Government agency and Treasury
securities with maturities of one to 10 years.
LB LONG-TERM GOV'T BOND--The Lehman Brothers Long-Term Government Bond Index is
composed of U.S. Government agency and Treasury securities with maturities of
10 years or more.
LIPPER GROWTH AND INCOME FUNDS AVERAGE--The Lipper Growth and Income Funds
Average reflects performance of 799 and 701 mutual funds over the six- and
12-month periods ended June 30, 1998, respectively.
ML 1-3 YEAR TREASURY--The Merrill Lynch 1-3 Year Treasury Index is composed of
U.S. Treasury securities with maturities of between one and three years.
MSCI EAFE--The Morgan Stanley Capital International EAFE Index measures the
overall performance of stock markets in 21 countries within Europe, Australia
and the Far East.
NAREIT INDEX--The NAREIT Index represents returns for the National Association
of Real Estate Investment Trust Equity Index.
NYSE UTILITY--The New York Stock Exchange Utility Index is composed of all
utility issues traded on the Exchange.
PSE HIGH TECHNOLOGY--The Pacific Stock Exchange High Technology Index is
comprised of technology stocks traded on the Pacific Stock Exchange.
RUSSELL 1000--The Russell 1000 Growth Stock 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.
SB 3-MONTH TREASURY BILL INDEX--The Salomon Brothers 3-Month Treasury Bill
Index represents the average of T-bill rates for each of the prior three
months, adjusted to a bond equivalent basis.
SB WORLD GOV'T BOND--The Salomon Brothers World Government Bond Index
represents performance of government bond markets in 14 countries.
S&P 500--The Standard and Poor's 500 Stock Index includes 500 stocks and is a
common measure of the performance of the overall U.S. stock market.
A-25
TEN LARGEST HOLDINGS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PREMIER GROWTH PORTFOLIO
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Dell Computer Corp. $ 38,198,041 4.7%
Nokia Corp. (ADR) 37,906,650 4.7
Cisco Systems, Inc. 37,261,131 4.6
Philip Morris Cos., Inc. 36,823,500 4.5
AirTouch Communications, Inc. 33,660,000 4.1
Home Depot, Inc. 28,585,876 3.5
Tyco International, Ltd. 26,573,400 3.3
MBNA Corp. 25,657,500 3.1
Merck & Co., Inc. 23,299,250 2.9
Walt Disney Co. 22,756,538 2.8
$310,721,886 38.2%
GROWTH AND INCOME PORTFOLIO
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Chase Manhattan Corp. $ 13,325,750 4.1%
Bristol-Myers Squibb Co. 12,309,806 3.8
Citicorp 10,178,850 3.1
USX-Marathon Group 8,636,456 2.6
First Union Corp. 8,155,000 2.5
First Data Corp. 7,931,706 2.4
Philip Morris Cos., Inc. 7,672,219 2.3
Texaco, Inc. 7,067,000 2.2
Tyco International, Ltd. 6,879,600 2.1
Household International, Inc. 6,681,425 2.0
$ 88,837,812 27.1%
TOTAL RETURN PORTFOLIO
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
U.S. Treasury Notes $ 16,915,030 31.7%
Chase Manhattan Corp. 1,449,600 2.7
Bristol-Myers Squibb Co. 1,298,794 2.4
Citicorp 1,044,750 1.9
USX-Marathon Group 861,244 1.6
First Union Corp. 838,800 1.6
Tyco International, Ltd. 831,600 1.6
First Data Corp. 819,488 1.5
Philip Morris Cos., Inc. 787,500 1.5
Texaco, Inc. 740,125 1.4
$ 25,586,931 47.9%
A-26
TEN LARGEST HOLDINGS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
INTERNATIONAL PORTFOLIO
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Nokia AB OY Corp. Series A $ 4,417,037 6.0%
Akzo Nobel NV 4,004,231 5.5
Nestle, SA 3,000,991 4.1
ING Groep NV 2,621,080 3.6
Diageo Plc 2,252,413 3.1
Ladbroke Group Plc 2,032,526 2.8
Total, SA Cl.B 1,950,146 2.7
Credito Italiano 1,832,982 2.5
Sanofi SA 1,728,782 2.3
Novartis AG 1,666,777 2.3
$ 25,506,965 34.9%
UTILITY INCOME PORTFOLIO
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Cablevision Systems Corp.
Series I 8.50% cv. pfd. $ 1,278,750 4.9%
WorldCom, Inc. 1,160,250 4.4
Consolidated Edison, Inc. 1,128,531 4.3
Pinnacle West Capital Corp. 1,125,000 4.3
NIPSCO Industries, Inc. 1,019,200 3.9
FPL Group, Inc. 982,800 3.8
AES Corp. 904,075 3.4
Ameritech Corp. 870,575 3.3
AirTouch Communications, Inc.
Cl.C 4.25% CV. PFD. 833,250 3.2
CMS Energy Corp. 809,600 3.1
$ 10,112,031 38.6%
GROWTH PORTFOLIO
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
WorldCom, Inc., 8.00%, cv. pfd. $ 19,230,370 6.5%
Cisco Systems, Inc. 13,648,294 4.6
American International Group, Inc. 10,223,650 3.4
Sterling Software, Inc. 9,288,538 3.1
Ceridian Corp. 8,724,375 2.9
Mannesmann AG 8,539,820 2.9
TCI Ventures Group Series A 8,447,178 2.8
MBNA Corp. 7,598,250 2.5
Travelers Group, Inc. 6,517,127 2.2
Chase Manhattan Corp. 6,480,920 2.2
$ 98,698,522 33.1%
A-27
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
WORLDWIDE PRIVATIZATION PORTFOLIO
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Energis Plc $ 1,414,026 2.9%
Akzo Nobel NV 1,401,481 2.9
Viag AG 1,251,332 2.6
ING Groep NV 1,206,352 2.5
Bank Austria AG (preferred stock & rights) 1,149,793 2.4
Austria Tabakwerke AG 1,142,679 2.3
Telecomunicacoes Brasileiras, SA (ADR) 1,053,659 2.2
SGS-Thomson Microelectronics NV 1,024,879 2.1
CSL, Ltd. 977,566 2.0
British Energy Plc 953,666 2.0
$ 11,575,433 23.9%
CONSERVATIVE INVESTORS PORTFOLIO
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
U.S. Treasury Notes $ 6,171,797 16.9%
Government National Mortgage Assn. 2,947,681 8.1
U.S. Treasury Bond, 6.125%, 11/15/27 2,807,487 7.7
Federal National Mortgage Assn. 2,635,477 7.2
City National Bank California, 6.375%, 1/15/08 628,375 1.7
Computer Associates International, Inc.,
6.375%, 4/15/05 603,461 1.7
Bristol-Myers Squibb Co. 574,688 1.6
Australian Gas Light Co., 6.40%, 4/15/08 553,634 1.5
Time Warner, Inc., 8.375%, 3/15/23 527,090 1.4
Goldman Sachs Group LP, 7.20%, 11/01/06 482,337 1.3
$ 17,932,027 49.1%
GROWTH INVESTORS PORTFOLIO
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
U.S. Treasury Notes $ 1,229,761 6.3%
Chase Manhattan Corp. (common &
corporate debt) 611,264 3.1
Bristol-Myers Squibb Co. 574,688 3.0
Federal National Mortgage Assn. 569,240 2.9
Merck & Co., Inc. 535,000 2.7
Home Depot, Inc. 498,375 2.6
WorldCom, Inc. 483,438 2.5
Harley-Davidson, Inc. 465,000 2.4
Government National Mortgage Assn. 455,721 2.3
U.S. Treasury Bond, 6.125%, 11/15/27 417,909 2.1
$ 5,840,396 29.9%
A-28
TEN LARGEST HOLDINGS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
TECHNOLOGY PORTFOLIO
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Cisco Systems, Inc. $ 6,133,444 6.7%
Dell Computer Corp. 5,362,756 5.8
Intuit, Inc. 3,542,056 3.8
Compaq Computer Corp. 3,470,262 3.8
Networks Associates, Inc. 3,334,709 3.6
Nokia Corp. (ADR) 3,294,338 3.6
HBO & Co. 3,175,313 3.4
Tellabs, Inc. 3,121,488 3.4
FORE Systems, Inc. 2,660,109 2.9
Sanmina Corp. 2,584,481 2.8
$ 36,678,956 39.8%
QUASAR PORTFOLIO
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Mohawk Industries, Inc. $ 2,118,309 2.5%
Bethlehem Steel Corp. 2,003,681 2.4
Alaska Air Group, Inc. 1,964,250 2.3
Chelsea GCA Realty, Inc. 1,820,000 2.2
Budget Group, Inc. Cl.A 1,810,856 2.1
Tiffany & Co. 1,492,800 1.8
America West Airlines, Inc. Cl.B 1,291,025 1.5
OMI Corp. 1,288,000 1.5
United Rentals, Inc. 1,239,000 1.5
Consolidated Freightways Corp. 1,222,319 1.5
$ 16,250,240 19.3%
REAL ESTATE INVESTMENT PORTFOLIO
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Starwood Hotels & Resorts $ 884,118 5.1%
Equity Office Properties Trust 805,850 4.6
Glenborough Realty Trust, Inc. 683,113 3.9
SL Green Realty Corp. 670,500 3.9
Avalon Bay Communities, Inc. 658,692 3.8
Crescent Real Estate Equities Co. 652,325 3.8
Public Storage, Inc. 649,600 3.8
Essex Property Trust, Inc. 623,100 3.6
Patriot American Hospitality, Inc. 605,619 3.5
Spieker Properties, Inc. 596,750 3.4
$ 6,829,667 39.4%
A-29
INDUSTRY DIVERSIFICATION
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
INTERNATIONAL PORTFOLIO
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Basic Industries $ 3,016,426 4.1%
Capital Goods 8,353 0.0
Consumer Manufacturing 6,190,823 8.5
Consumer Services 11,274,724 15.4
Consumer Staples 8,659,410 11.9
Energy 3,070,146 4.2
Finance 10,632,010 14.6
Healthcare 11,249,850 15.4
Multi Industry 2,087,589 2.9
Technology 7,834,598 10.7
Utilities 4,516,985 6.2
Total Investments* 68,540,914 93.9
Cash and receivables, net of liabilities 4,473,927 6.1
Net Assets $ 73,014,841 100.0%
WORLDWIDE PRIVATIZATION PORTFOLIO
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Basic Industries $ 3,617,300 7.5%
Capital Goods 244,665 0.5
Consumer Manufacturing 1,140,235 2.3
Consumer Services 4,084,439 8.4
Consumer Staples 3,478,520 7.2
Energy 2,500,393 5.2
Finance 11,579,695 23.9
Healthcare 3,460,955 7.1
Multi Industry 801,173 1.6
Technology 1,880,500 3.9
Transportation 1,124,752 2.3
Utilities 11,806,266 24.3
Total Investments 45,718,893 94.2
Cash and receivables, net of liabilities 2,791,104 5.8
Net Assets $ 48,509,997 100.0%
* Excludes short-term obligations.
A-30
PREMIER GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-94.8%
TECHNOLOGY-24.0%
COMMUNICATIONS EQUIPMENT-8.4%
EMC Corp. (a) 104,000 $ 4,660,500
Ericsson (L.M.) Telephone Co.
Cl.B (ADR) (b) 481,380 13,809,589
Lucent Technologies, Inc. 87,342 7,265,762
Nokia Corp. (ADR) (c) 522,400 37,906,650
Tellabs, Inc. (a) 68,000 4,868,375
------------
68,510,876
COMPUTER HARDWARE-6.6%
Compaq Computer Corp. 557,200 15,810,550
Dell Computer Corp. (a) 411,700 38,198,041
------------
54,008,591
COMPUTER SOFTWARE-2.0%
Microsoft Corp. (a) 148,700 16,120,009
NETWORKING SOFTWARE-4.6%
Cisco Systems, Inc. (a) 404,600 37,261,131
SEMI-CONDUCTOR COMPONENTS-2.4%
Intel Corp. 262,900 19,479,247
------------
195,379,854
FINANCE-21.4%
BANKING-MONEY CENTER-3.2%
BankAmerica Corp. 57,500 4,970,156
Citicorp 144,400 21,551,700
------------
26,521,856
BANKING-REGIONAL-2.6%
Fifth Third Bancorp 54,300 3,415,809
First Union Corp. 35,400 2,062,050
NationsBank Corp. 143,700 10,993,050
Norwest Corp. 122,200 4,567,225
------------
21,038,134
BROKERAGE & MONEY MANAGEMENT-4.5%
Merrill Lynch & Co., Inc. 167,700 15,470,325
Morgan Stanley Dean Witter and Co. 230,955 21,103,513
------------
36,573,838
INSURANCE-2.3%
American International Group, Inc. 81,850 11,950,100
Progressive Corp. 48,300 6,810,300
------------
18,760,400
MORTGAGE BANKING-3.4%
Federal National Mortgage Assn. 246,500 14,974,875
H.F. Ahmanson & Co. 185,500 13,170,500
------------
28,145,375
MISCELLANEOUS-5.4%
Associates First Capital Corp. Cl.A 134,028 10,303,403
Household International, Inc. 147,000 7,313,250
MBNA Corp. 777,500 25,657,500
MGIC Investment Corp. 6,900 393,731
------------
43,667,884
------------
174,707,487
CONSUMER SERVICES-21.4%
AIRLINES-3.3%
KLM Royal Dutch Air 117,776 4,821,455
Northwest Airlines Corp. Cl.A (a) 271,960 10,495,956
UAL Corp. (a) 153,000 11,934,000
------------
27,251,411
BROADCASTING & CABLE-5.2%
AirTouch Communications, Inc. (a) 576,000 33,660,000
Tele-Communications, Inc.-
Liberty Media Group Cl.A (a) 217,405 8,444,825
------------
42,104,825
ENTERTAINMENT & LEISURE-3.1%
Carnival Corp. Cl.A 52,600 2,084,275
Walt Disney Co. 216,600 22,756,538
------------
24,840,813
PRINTING & PUBLISHING-0.2%
Gannett Co., Inc. 23,100 1,641,544
RESTAURANTS & LODGING-0.5%
Marriott International, Inc. C1.A 45,200 1,463,350
McDonald's Corp. 35,300 2,435,700
------------
3,899,050
RETAIL-GENERAL MERCHANDISE-9.1%
Dayton Hudson Corp. 427,000 20,709,500
Federated Department Stores, Inc. (a) 136,300 7,334,644
Home Depot, Inc. 344,149 28,585,876
Kohl's Corp. (a) 122,400 6,349,500
May Department Stores Co. 60,000 3,930,000
Wal-Mart Stores, Inc. 124,300 7,551,225
------------
74,460,745
------------
174,198,388
B-1
PREMIER GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
HEALTH CARE-11.6%
DRUGS-8.7%
Bristol-Myers Squibb Co. 174,500 $ 20,056,594
Merck & Co., Inc. 174,200 23,299,250
Pfizer, Inc. 174,600 18,976,837
Schering-Plough Corp. 98,500 9,025,063
------------
71,357,744
MEDICAL PRODUCTS-0.6%
Medtronic, Inc. 73,800 4,704,750
MEDICAL SERVICES-2.3%
Humana, Inc. (a) 53,300 1,662,294
United Healthcare Corp. 267,600 16,992,600
------------
18,654,894
------------
94,717,388
CONSUMER STAPLES-6.5%
COSMETICS-0.6%
Gillette Co. 83,000 4,705,063
FOOD-0.7%
Coca-Cola Co. 69,600 5,950,800
HOUSEHOLD PRODUCTS-0.7%
Colgate-Palmolive Co. 60,500 5,324,000
TOBACCO-4.5%
Philip Morris Cos., Inc. 935,200 36,823,500
------------
52,803,363
MULTI INDUSTRY COMPANY-3.3%
Tyco International, Ltd. 421,800 26,573,400
ENERGY-2.9%
OIL SERVICE-2.9%
Baker Hughes, Inc. 68,000 2,350,250
Camco International, Inc. 49,100 3,823,663
Halliburton Co. 172,300 7,678,119
Schlumberger, Ltd. 148,100 10,117,081
------------
23,969,113
CAPITAL GOODS-2.6%
ELECTRICAL EQUIPMENT-1.0%
General Electric Co. 87,900 7,998,900
MISCELLANEOUS-1.6%
United Technologies Corp. 138,800 12,839,000
------------
20,837,900
UTILITIES-1.1%
TELEPHONE UTILITY-1.1%
MCI Communications Corp. 152,600 8,865,106
Total Common Stocks
(cost $548,992,686) 772,051,999
SHORT-TERM INVESTMENTS-5.3%
COMMERCIAL PAPER-4.7%
General Electric Capital Corp.
6.10%, 7/01/98 $38,412 38,412,000
TIME DEPOSIT-0.6%
State Street Cayman Islands
5.25%, 7/01/98 4,499 4,499,000
Total Short-Term Investments
(amortized cost $42,911,000) 42,911,000
TOTAL INVESTMENTS-100.1%
(cost $591,903,686) 814,962,999
Other assets less liabilities-(0.1%) (536,927)
NET ASSETS-100% $ 814,426,072
(a) Non-income producing security.
(b) Country of origin--Sweden.
(c) Country of origin--Finland.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-2
GLOBAL BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
AUSTRALIA-3.9%
GOVERNMENT OBLIGATION-3.9%
Queensland Treasury
6.50%, 6/14/05 (a) AU$ 1,500 $ 970,698
AUSTRIA-3.8%
GOVERNMENT OBLIGATION-3.8%
Republic of Austria
4.50%, 9/28/05 (a) JPY 110,000 959,029
FRANCE-9.2%
GOVERNMENT OBLIGATION-9.2%
Government of France Treasury
Bill 4.00%, 7/12/00 XEU 2,100 2,295,320
GERMANY-13.9%
GOVERNMENT OBLIGATION-13.9%
Government of Germany
6.00%, 2/16/06 (a) DEM 5,800 3,478,167
ITALY-10.0%
GOVERNMENT OBLIGATION-10.0%
Republic of Italy
6.25%, 5/15/02 ITL 4,200,000 2,500,025
JAPAN-8.2%
DEBT OBLIGATION-8.2%
European Investment Bank
3.00%, 9/20/06 (a) JPY 130,000 1,041,730
Export Import Bank
2.875%, 7/28/05 130,000 1,024,807
------------
2,066,537
SPAIN-8.7%
GOVERNMENT OBLIGATION-8.7%
Government of Spain
5.25%, 1/31/03 (a) ESP 325,000 2,176,557
UNITED KINGDOM-4.8%
DEBT OBLIGATION-0.7%
International Bank for
Reconstruction & Development
7.125%, 7/30/07 GBP 100 177,155
GOVERNMENT OBLIGATIONS-4.1%
U.K. Treasury Gilts
8.50%, 7/16/07 (a) 520 1,021,489
------------
1,198,644
UNITED STATES-35.7%
GOVERNMENT/AGENCY OBLIGATIONS-33.2%
Federal National Mortgage Assn.
2.125%, 10/09/07 (a) JPY 120,000 903,450
U.S. Treasury Notes
6.25%, 2/15/03 US$ 900 926,154
6.875%, 5/15/06 3,600 3,898,116
7.25%, 8/15/04 2,400 2,611,128
------------
8,338,848
TIME DEPOSIT-2.5%
State Street Bank and Trust Co.
5.25%, 7/02/98 620,000 620,000
------------
8,958,848
TOTAL INVESTMENTS-98.2%
(cost $24,542,635) 24,603,825
Other assets less liabilities-1.8% 460,858
NET ASSETS-100% $ 25,064,683
(a) Securities, or portion thereof, with an aggregate market value of
$9,111,878 have been segregated to collateralize forward exchange currency
contracts.
See Notes to Financial Statements.
B-3
GROWTH AND INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-94.3%
FINANCE-20.8%
BANKING-MONEY CENTER-7.2%
Chase Manhattan Corp. 176,500 $ 13,325,750
Citicorp 68,200 10,178,850
------------
23,504,600
BANKING-REGIONAL-3.6%
First Union Corp. 140,000 8,155,000
NationsBank Corp. 48,650 3,721,725
------------
11,876,725
BROKERAGE & MONEY MANAGEMENT-0.9%
Morgan Stanley Dean Witter and Co. 32,300 2,951,413
INSURANCE-2.6%
Conseco, Inc. 26,000 1,215,500
Hartford Life, Inc. Cl.A 34,600 1,970,037
PennCorp Financial Group, Inc. 43,700 895,850
Travelers Group, Inc. 19,500 1,182,188
Travelers Property Casualty Corp. Cl.A 77,100 3,305,662
------------
8,569,237
MORTGAGE BANKING-1.2%
Federal National Mortgage Assn. 65,600 3,985,200
Security Capital Group, Inc. Cl.B
warrants, expiring 9/18/98 (a) 1,726 593
------------
3,985,793
REAL ESTATE-0.3%
Security Capital Industrial Trust 37,090 927,250
MISCELLANEOUS-5.0%
Associates First Capital Corp.
Cl.A 40,250 3,094,219
Household International, Inc. 134,300 6,681,425
MBNA Corp. 75,900 2,504,700
PMI Group, Inc. 58,787 4,313,496
------------
16,593,840
------------
68,408,858
HEALTH CARE-12.4%
BIOTECHNOLOGY-1.0%
Centocor, Inc. (a) 49,100 1,781,410
Genzyme Corp. (a) 57,500 1,462,656
------------
3,244,066
DRUGS-5.2%
Bristol-Myers Squibb Co. 107,100 12,309,806
Merck & Co., Inc. 35,400 4,734,750
------------
17,044,556
MEDICAL PRODUCTS-1.9%
Abbott Laboratories 155,600 6,360,150
MEDICAL SERVICES-4.3%
Columbia HCA/Healthcare Corp. 172,300 5,018,237
PacifiCare Health Systems, Inc.
Cl.B (a) 52,000 4,593,875
United Healthcare Corp. 68,050 4,321,175
------------
13,933,287
------------
40,582,059
TECHNOLOGY-12.0%
COMMUNICATIONS EQUIPMENT-0.3%
PairGain Technologies, Inc. 53,900 938,197
COMPUTER HARDWARE-1.6%
Compaq Computer Corp. 189,150 5,367,131
COMPUTER SERVICES-3.6%
Electronic Data Systems Corp. 98,100 3,924,000
First Data Corp. 238,100 7,931,706
------------
11,855,706
COMPUTER SOFTWARE-0.9%
Oracle Corp. (a) 122,600 3,007,531
NETWORKING SOFTWARE-1.8%
Cisco Systems, Inc. (a) 50,000 4,604,688
FORE Systems, Inc. (a) 42,300 1,119,628
------------
5,724,316
SEMI-CONDUCTOR COMPONENTS-2.7%
Altera Corp. (a) 121,200 3,579,187
Atmel Corp. (a) 200,500 2,731,813
National Semiconductor Corp. (a) 15,300 201,769
Xilinx, Inc. (a) 71,400 2,429,831
------------
8,942,600
MISCELLANEOUS-1.1%
Solectron Corp. (a) 83,100 3,495,394
------------
39,330,875
ENERGY-9.9%
DOMESTIC INTEGRATED-2.6%
USX-Marathon Group 251,700 8,636,456
DOMESTIC PRODUCERS-1.7%
Apache Corp. 116,600 3,672,900
Murphy Oil Corp. 20,850 1,056,834
Union Pacific Resources Group, Inc. 48,200 846,513
------------
5,576,247
B-4
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
INTERNATIONAL-2.5%
Mobil Corp. 15,400 $ 1,180,025
Texaco, Inc. 118,400 7,067,000
------------
8,247,025
OIL SERVICE-2.5%
BJ Services Co. (a) 33,600 976,500
Dresser Industries, Inc. 71,600 3,154,875
Halliburton Co. 61,000 2,718,312
Noble Drilling Corp. (a) 52,000 1,251,250
------------
8,100,937
MISCELLANEOUS-0.6%
AES Corp. (a) 35,000 1,839,688
------------
32,400,353
CONSUMER SERVICES-9.3%
AIRLINES-1.1%
Northwest Airlines Corp.
Cl.A (a) 58,500 2,257,734
UAL Corp. (a) 18,500 1,443,000
------------
3,700,734
APPAREL-0.5%
Nautica Enterprises, Inc. (a) 62,400 1,677,000
BROADCASTING & CABLE-1.3%
A.H. Belo Corp. Series A 175,500 4,277,813
ENTERTAINMENT & LEISURE-2.2%
Eastman Kodak Co. 28,200 2,060,363
Harley-Davidson, Inc. 91,100 3,530,125
Mirage Resorts, Inc. (a) 82,400 1,756,150
------------
7,346,638
PRINTING & PUBLISHING-0.9%
Donnelley (R.R.) & Sons Co. 63,700 2,914,275
RETAIL-GENERAL MERCHANDISE-3.3%
CompUSA, Inc. (a) 57,000 1,029,563
Dayton Hudson Corp. 105,700 5,126,450
Federated Department Stores, Inc. (a) 80,600 4,337,287
Staples, Inc. (a) 9,400 272,306
------------
10,765,606
------------
30,682,066
CONSUMER STAPLES-9.1%
COSMETICS-1.8%
Avon Products, Inc. 76,200 5,905,500
FOOD-4.1%
Campbell Soup Co. 95,100 5,052,187
General Mills, Inc. 46,300 3,165,762
Tyson Foods, Inc. Cl.A 152,100 3,298,669
Whitman Corp. 87,300 2,002,444
------------
13,519,062
TOBACCO-3.2%
Philip Morris Cos., Inc. 194,850 7,672,219
RJR Nabisco Holdings Corp. 110,900 2,633,875
------------
10,306,094
------------
29,730,656
UTILITIES-8.9%
ELECTRIC & GAS UTILITY-4.3%
Allegheny Energy, Inc. 56,200 1,693,025
CMS Energy Corp. 58,400 2,569,600
Duke Power Energy Corp. 16,200 959,850
FPL Group, Inc. 90,900 5,726,700
NIPSCO Industries, Inc. 43,000 1,204,000
Pinnacle West Capital Corp. 19,900 895,500
Texas Utilities Co. 22,600 940,725
------------
13,989,400
TELEPHONE UTILITY-4.6%
AT&T Corp. 61,100 3,490,337
MCI Communications Corp. 74,900 4,351,222
Teleport Communications
Group, Inc. Cl.A (a) 58,000 3,144,688
WorldCom, Inc. (a) 87,400 4,225,244
------------
15,211,491
------------
29,200,891
CAPITAL GOODS-4.7%
ELECTRICAL EQUIPMENT-1.0%
General Electric Co. 35,700 3,248,700
POLLUTION CONTROL-0.2%
USA Waste Services, Inc. (a) 13,000 641,875
MISCELLANEOUS-3.5%
Allied-Signal, Inc. 113,800 5,049,875
United Technologies Corp. 69,700 6,447,250
------------
11,497,125
------------
15,387,700
MULTI INDUSTRY COMPANIES-3.2%
Honeywell, Inc. 15,100 1,261,794
Tyco International, Ltd. 109,200 6,879,600
U.S. Industries, Inc. 94,800 2,346,300
------------
10,487,694
BASIC INDUSTRIES-1.8%
CHEMICALS-1.6%
Dow Chemical Co. 19,200 1,856,400
Praxair, Inc. 71,500 3,347,094
------------
5,203,494
CONTAINERS-0.2%
Sealed Air Corp. (a) 23,000 845,250
------------
6,048,744
B-5
GROWTH AND INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
AEROSPACE & DEFENSE-1.3%
AEROSPACE-1.3%
General Dynamics Corp. 90,800 $ 4,222,200
TRANSPORTATION-0.7%
RAILROAD-0.7%
Canadian Pacific, Ltd. (b) 42,900 1,217,287
Union Pacific Corp. 28,200 1,244,325
------------
2,461,612
CONSUMER MANUFACTURING-0.2%
APPLIANCES-0.2%
Sunbeam Corp. 49,900 517,713
Total Common Stocks &
Other Investments
(cost $271,198,857) 309,461,421
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
SHORT-TERM INVESTMENTS-5.6%
COMMERCIAL PAPER-5.3%
American Express Co.
5.57%, 7/01/98 $ 4,100 $ 4,100,000
5.60%, 7/07/98 4,389 4,384,903
Ford Motor Credit Corp.
5.70%, 7/02/98 4,600 4,599,272
Prudential Funding Corp.
5.75%, 7/06/98 4,500 4,496,406
------------
17,580,581
TIME DEPOSIT-0.3%
State Street Cayman Islands
5.25%, 7/01/98 979 979,000
Total Short-Term Investments
(amortized cost $18,559,581) 18,559,581
TOTAL INVESTMENTS-99.9%
(cost $289,758,438) 328,021,002
Other assets less liabilities-0.1% 246,543
NET ASSETS-100% $ 328,267,545
(a) Non-income producing security.
(b) 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
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
DENMARK-5.2%
GOVERNMENT OBLIGATION-5.2%
Kingdom of Denmark
9.00%, 11/15/00 DKK 2,000 $ 320,780
FRANCE-4.2%
GOVERNMENT OBLIGATION-4.2%
Government of France
7.75%, 4/12/00 (a) FRF 1,500 263,741
GERMANY-22.1%
DEBT OBLIGATIONS-12.9%
Bayerische Landesbank
5.25%, 1/29/99 (a) US$ 300 298,500
Bremer Landesbank
Kreditanstalt Oldenburg
6.375%, 12/29/99 (a) 500 503,000
------------
801,500
GOVERNMENT OBLIGATION-9.2%
Government of Germany
5.75%, 8/22/00 (a) DEM 1,000 573,346
------------
1,374,846
ITALY-9.3%
GOVERNMENT OBLIGATION-9.3%
Republic of Italy
6.00%, 2/15/00 (A) ITL 1,000,000 576,502
NEW ZEALAND-6.5%
DEBT OBLIGATION-3.3%
International Bank for
Reconstruction &
Development
7.00%, 9/18/00 (a) NZ$ 400 205,538
GOVERNMENT OBLIGATION-3.2%
Government of New Zealand
6.50%, 2/15/00 (a) 380 195,657
------------
401,195
NORWAY-4.3%
GOVERNMENT OBLIGATION-4.3%
Kingdom of Norway
9.00%, 1/31/99 (a) NOK 2,000 266,215
POLAND-4.8%
GOVERNMENT/AGENCY OBLIGATION-4.8%
Government of Poland
Treasury Bill
21.29%, 9/30/98 (b) PLN 1,100 299,180
SPAIN-5.2%
GOVERNMENT OBLIGATION-5.2%
Government of Spain
6.75%, 4/15/00 (a) ESP 48,000 326,312
SWEDEN-6.7%
GOVERNMENT OBLIGATION-6.7%
Kingdom of Sweden
10.25%, 5/05/00 (a) SEK 3,000 414,907
UNITED STATES-29.9%
DEBT OBLIGATIONS-14.5%
Bank Nederlandse
Gemeenten NV
5.875%, 4/19/99 (a) US$ 300 299,700
Rabobank Nederland
6.25%, 12/31/99 (a) 300 302,100
Suedwest Deutsche
Landesbank
5.75%, 12/20/99 (a) 300 298,950
------------
900,750
GOVERNMENT/AGENCY OBLIGATIONS-8.9%
FNMA Global
7.00%, 9/26/00 (a) NZ$ 500 255,362
U.S. Treasury Note
5.875%, 8/31/99 US$ 300 301,173
------------
556,535
TIME DEPOSIT-6.5%
State Street Bank and Trust Co.
5.25%, 7/01/98 404 404,000
------------
1,861,285
TOTAL INVESTMENTS-98.2%
(cost $6,391,416) 6,104,963
Other assets less liabilities-1.8% 111,651
NET ASSETS-100% $ 6,216,614
(a) Securities, or portion thereof, with an aggregate market value of
$4,486,149 have been segregated to collateralize forward exchange currency
contracts.
(b) Interest rate represents yield to maturity at purchase date.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-7
U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
U.S. GOVERNMENT/AGENCY OBLIGATIONS-67.5%
FEDERAL AGENCIES-45.8%
Federal Home Loan Bank
5.67%, 1/14/00 $5,000 $ 5,000,800
Federal National Mortgage Association
5.25%, 1/15/03 1,500 1,472,340
6.50%, 5/01/13 792 796,664
7.00%, 4/01/26 1,459 1,480,232
7.00%, 5/01/28 1,957 1,985,952
Government National Mortgage Association
6.50%, 3/15/28 1,824 1,819,702
7.00%, 7/15/23 69 70,548
7.00%, 7/15/27 965 980,575
7.00%, 2/15/28 789 802,002
7.00%, 3/15/28 1,084 1,101,403
7.50%, 6/15/27 1,431 1,470,374
7.50%, 3/15/28 1,487 1,528,430
Student Loan Marketing Association
6.05%, 9/14/00 1,000 1,006,410
------------
19,515,432
U.S. TREASURY SECURITIES-21.7%
U.S. Treasury Bond
6.125%, 11/15/27 5,280 5,657,837
U.S. Treasury Notes
6.50%, 8/31/01 125 128,398
6.50%, 5/31/02 1,575 1,627,416
6.875%, 5/15/06 1,700 1,840,777
------------
9,254,428
Total U.S. Government/Agency Obligations
(cost $28,549,770) 28,769,860
CORPORATE DEBT OBLIGATIONS-20.2%
FINANCE-1.5%
Goldman Sachs Group LP
7.25%, 10/01/05 (a) 500 529,576
Wachovia Corp.
6.375%, 4/15/03 75 76,020
------------
605,596
INDUSTRIAL-9.2%
Comcast Corp.
8.375%, 5/01/07 1,000 1,124,941
Computer Associates International, Inc.
6.375%, 4/15/05 (a) 1,350 1,357,788
Time Warner, Inc.
9.125%, 1/15/13 1,170 1,443,092
------------
3,925,821
YANKEE BONDS-9.5%
Australian Gas Light Company
6.40%, 4/15/08 (a) 1,150 1,168,218
CS First Boston
6.50%, 5/01/08 (a) 1,000 1,011,497
Sony Corp.
6.125%, 3/04/03 1,350 1,354,212
St. George Bank, Ltd.
7.15%, 10/15/05 (a) 500 518,935
------------
4,052,862
Total Corporate Debt Obligations
(cost $8,457,027) 8,584,279
SHORT-TERM INVESTMENT-11.3%
TIME DEPOSIT-11.3%
State Street Bank and Trust Co.
5.25%, 7/01/98
(cost $4,809,000) 4,809 4,809,000
TOTAL INVESTMENTS-99.0%
(cost $41,815,797) 42,163,139
Other assets less liabilities-1.0% 435,052
NET ASSETS-100% $ 42,598,191
(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 June 30, 1998,
the aggregate market value of these securities amounted to $4,586,014 or 10.8%
of net assets.
See Notes to Financial Statements.
B-8
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-61.0%
FINANCE-13.3%
BANKING-MONEY CENTER-4.7%
Chase Manhattan Corp. 19,200 $ 1,449,600
Citicorp 7,000 1,044,750
------------
2,494,350
BANKING-REGIONAL-2.3%
First Union Corp. 14,400 838,800
NationsBank Corp. 5,400 413,100
------------
1,251,900
BROKERAGE & MONEY MANAGEMENT-0.6%
Morgan Stanley Dean Witter and Co. 3,410 311,589
INSURANCE-1.8%
Conseco, Inc. 3,000 140,250
Hartford Life, Inc. Cl.A 3,600 204,975
PennCorp Financial Group, Inc. 5,400 110,700
Travelers Group, Inc. 2,250 136,406
Travelers Property Casualty
Corp. Cl.A 8,300 355,863
------------
948,194
MORTGAGE BANKING-0.8%
Federal National Mortgage Assn. 7,100 431,325
Security Capital Group, Inc. Cl.B
warrants, expiring 9/18/98 (a) 223 76
------------
431,401
MISCELLANEOUS-3.1%
Associates First Capital Corp.
Cl.A 4,400 338,250
Household International, Inc. 14,400 716,400
MBNA Corp. 9,500 313,500
PMI Group, Inc. 4,200 308,175
------------
1,676,325
------------
7,113,759
HEALTH CARE-8.0%
BIOTECHNOLOGY-0.7%
Centocor, Inc. (a) 5,300 192,291
Genzyme Corp. (a) 6,300 160,256
------------
352,547
DRUGS-3.4%
Bristol-Myers Squibb Co. 11,300 1,298,794
Merck & Co., Inc. 3,700 494,875
------------
1,793,669
MEDICAL PRODUCTS-1.2%
Abbott Laboratories 16,400 670,350
MEDICAL SERVICES-2.7%
Columbia HCA/Healthcare Corp. 18,050 525,706
PacifiCare Health Systems, Inc. Cl.B (a) 5,400 477,056
United Healthcare Corp. 7,300 463,550
------------
1,466,312
------------
4,282,878
TECHNOLOGY-7.8%
COMMUNICATIONS EQUIPMENT-0.2%
PairGain Technologies, Inc. 5,600 97,475
COMPUTER HARDWARE-1.1%
Compaq Computer Corp. 20,000 567,500
COMPUTER SERVICES-2.3%
Electronic Data Systems Corp. 10,500 420,000
First Data Corp. 24,600 819,488
------------
1,239,488
COMPUTER SOFTWARE-0.6%
Oracle Corp. (a) 13,100 321,359
NETWORKING SOFTWARE-1.1%
Cisco Systems, Inc. (a) 5,300 488,097
FORE Systems, Inc. (a) 4,600 121,756
------------
609,853
SEMI-CONDUCTOR COMPONENTS-1.8%
Altera Corp. (a) 12,900 380,953
Atmel Corp. (a) 21,200 288,850
National Semiconductor Corp. (a) 1,600 21,100
Xilinx, Inc. (a) 7,600 258,638
------------
949,541
MISCELLANEOUS-0.7%
Solectron Corp. (a) 8,900 374,356
------------
4,159,572
ENERGY-6.4%
DOMESTIC INTEGRATED-1.6%
USX-Marathon Group 25,100 861,244
DOMESTIC PRODUCERS-1.2%
Apache Corp. 12,400 390,600
Murphy Oil Corp. 2,550 129,253
Union Pacific Resources Group, Inc. 5,400 94,837
------------
614,690
INTERNATIONAL-1.6%
Mobil Corp. 1,600 122,600
Texaco, Inc. 12,400 740,125
------------
862,725
B-9
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
OIL SERVICE-1.6%
BJ Services Co. (a) 3,600 $ 104,625
Dresser Industries, Inc. 7,700 339,281
Halliburton Co. 6,600 294,113
Noble Drilling Corp. (a) 5,700 137,156
------------
875,175
MISCELLANEOUS-0.4%
AES Corp. (a) 4,000 210,250
------------
3,424,084
CONSUMER SERVICES-6.1%
AIRLINES-0.8%
Northwest Airlines Corp. Cl.A (a) 6,100 235,422
UAL Corp. (a) 2,100 163,800
------------
399,222
APPAREL-0.3%
Nautica Enterprises, Inc. (a) 6,800 182,750
BROADCASTING & CABLE-0.9%
A.H. Belo Corp. Series A 18,800 458,250
ENTERTAINMENT & LEISURE-1.4%
Eastman Kodak Co. 3,000 219,188
Harley-Davidson, Inc. 9,400 364,250
Mirage Resorts, Inc. (a) 8,800 187,550
------------
770,988
PRINTING & PUBLISHING-0.6%
Donnelley (R.R.) & Sons Co. 6,800 311,100
RETAIL-GENERAL MERCHANDISE-2.1%
CompUSA, Inc. (a) 6,200 111,987
Dayton Hudson Corp. 11,200 543,200
Federated Department Stores, Inc. (a) 8,100 435,881
Staples, Inc. (a) 1,000 28,969
------------
1,120,037
------------
3,242,347
CONSUMER STAPLES-5.8%
COSMETICS-1.2%
Avon Products, Inc. 8,200 635,500
FOOD-2.6%
Campbell Soup Co. 9,400 499,375
General Mills, Inc. 4,900 335,037
Tyson Foods, Inc. Cl.A 16,700 362,181
Whitman Corp. 9,700 222,494
------------
1,419,087
TOBACCO-2.0%
Philip Morris Cos., Inc. 20,000 787,500
RJR Nabisco Holdings Corp. 11,700 277,875
------------
1,065,375
------------
3,119,962
UTILITIES-5.7%
ELECTRIC & GAS UTILITY-2.8%
Allegheny Energy, Inc. 6,200 186,775
CMS Energy Corp. 6,200 272,800
Duke Power Energy Corp. 1,700 100,725
FPL Group, Inc. 9,500 598,500
NIPSCO Industries, Inc. 4,600 128,800
Pinnacle West Capital Corp. 2,300 103,500
Texas Utilities Co. 2,400 99,900
------------
1,491,000
TELEPHONE UTILITY-2.9%
AT&T Corp. 6,400 365,600
MCI Communications Corp. 7,900 458,941
Teleport Communications
Group, Inc. Cl.A (a) 5,200 281,937
WorldCom, Inc. (a) 9,300 449,597
------------
1,556,075
------------
3,047,075
CAPITAL GOODS-3.1%
ELECTRICAL EQUIPMENT-0.7%
General Electric Co. 3,800 345,800
POLLUTION CONTROL-0.1%
USA Waste Services, Inc. (a) 1,400 69,125
MISCELLANEOUS-2.3%
Allied-Signal, Inc. 12,000 532,500
United Technologies Corp. 7,500 693,750
------------
1,226,250
------------
1,641,175
MULTI INDUSTRY COMPANIES-2.3%
Honeywell, Inc. 1,700 142,056
Tyco International, Ltd. 13,200 831,600
U.S. Industries, Inc. 10,100 249,975
------------
1,223,631
BASIC INDUSTRIES-1.1%
CHEMICALS-1.0%
Dow Chemical Co. 2,000 193,375
Praxair, Inc. 7,800 365,138
------------
558,513
CONTAINERS-0.1%
Sealed Air Corp. (a) 1,000 36,750
------------
595,263
B-10
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
AEROSPACE & DEFENSE-0.9%
AEROSPACE-0.9%
General Dynamics Corp. 9,700 $ 451,050
TRANSPORTATION-0.4%
RAILROAD-0.4%
Canadian Pacific, Ltd. (b) 3,200 90,800
Union Pacific Corp. 3,100 136,788
------------
227,588
CONSUMER MANUFACTURING-0.1%
APPLIANCES-0.1%
Sunbeam Corp. 5,200 53,950
Total Common Stocks &
Other Investments
(cost $28,336,869) 32,582,334
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS-31.6%
U.S. Treasury Notes
4.75%, 8/31/98 $2,317 $ 2,315,193
5.50%, 2/15/08 1,500 1,499,055
6.50%, 10/15/06 8,900 9,450,643
7.25%, 8/15/04 3,355 3,650,139
Total U.S. Government Obligations
(cost $16,438,042) 16,915,030
SHORT-TERM INVESTMENT-7.3%
TIME DEPOSIT-7.3%
State Street Cayman Islands
5.25%, 7/01/98
(amortized cost $3,899,000) 3,899 3,899,000
TOTAL INVESTMENTS-99.9%
(cost $48,673,911) 53,396,364
Other assets less liabilities-0.1% 40,738
NET ASSETS-100% $ 53,437,102
(a) Non-income producing security.
(b) Country of origin--Canada.
See Notes to Financial Statements.
B-11
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-93.9%
AUSTRALIA-0.3%
Normandy Mining, Ltd. 250,000 $ 204,847
BRAZIL-2.3%
Telecomunicacoes Brasileiras,
SA (ADR) 15,000 1,637,812
CANADA-0.8%
Newcourt Credit Group, Inc. 11,500 548,214
DENMARK-1.7%
Ratin A/S Series B 6,000 1,270,835
FINLAND-8.2%
Nokia AB OY Corp.
Series A 60,000 4,417,037
Orion-Yhtymae OY Cl.B 49,564 1,528,232
------------
5,945,269
FRANCE-6.1%
Sanofi SA 14,700 1,728,783
SEITA 17,000 770,465
Total, SA Cl.B 15,000 1,950,146
Union des Assurances Federales 100 15,763
------------
4,465,157
GERMANY-6.6%
Adidas AG 9,000 1,569,492
Merck KG 4,420 198,275
ProSieben Media AG pfd. (a) 21,985 1,139,814
Volkswagen AG 1,500 1,449,721
Wella AG pfd. 400 448,030
------------
4,805,332
HONG KONG-2.9%
Cheung Kong Holdings, Ltd. 120,400 592,055
Dickson Concepts
International, Ltd. 97,500 135,906
Hong Kong Electric
Holdings, Ltd. 100,000 309,757
Hutchison Whampoa, Ltd. 200,000 1,055,756
------------
2,093,474
ITALY-4.1%
Credito Italiano 350,000 1,832,982
Telecom Italia SpA 160,000 1,178,331
------------
3,011,313
JAPAN-14.3%
Bridgestone Corp. 40,000 948,868
Canon, Inc. 28,000 637,883
Daito Trust Construction Co., Ltd. 1,100 8,353
Daiwa Securities Co., Ltd. 180,000 777,175
Fuji Photo Film Co. (b) 19,000 663,702
Honda Motor Co. (b) 35,000 1,250,452
Japan Tobacco, Inc. 65 441,419
Nintendo Corp. Ltd. 10,000 929,341
Orix Corp. 7,000 474,362
Rohm Co. 9,000 927,533
Sankyo Co., Ltd. 10,000 228,539
Sony Corp. (b) 12,000 1,037,101
TDK Corp. 13,000 963,694
Tokai Bank 91,000 502,813
Yamanouchi Pharmaceutical Co., Ltd. 32,000 668,836
------------
10,460,071
MEXICO-1.0%
Coca-Cola Femsa, SA (ADS) 7,600 132,050
Pan American Beverage, Inc. Cl.A 20,000 628,750
------------
760,800
NETHERLANDS-13.4%
Akzo Nobel NV (a) 18,000 4,004,231
ASM Lithography Holding NV 30,000 888,451
ING Groep NV 40,000 2,621,080
Philips Electronics 12,000 1,009,470
Wolters Kluwer NV 9,295 1,276,676
------------
9,799,908
NORWAY-1.5%
Stolt Comex Seaway, SA 40,000 772,500
Cl.A (a) 20,000 347,500
------------
1,120,000
SOUTH KOREA-0.0%
SK Telecom Co., Ltd. (ADR) 729 4,060
SPAIN-3.9%
Tabacalera, SA Series A 70,000 1,433,323
Telefonica de Espana 30,000 1,387,023
------------
2,820,346
SWEDEN-2.9%
Astra AB Series A 60,000 1,226,178
Sparbanken Sverige AB
Series A 10,000 300,903
Volvo AB Series B 20,000 595,537
------------
2,122,618
SWITZERLAND-10.1%
Ciba Specialty Chemicals AG (a) 11,000 1,414,680
Nestle, SA 1,400 3,000,991
Novartis AG (a) 1,000 1,666,777
Zurich Versicherungsgesellschaft 2,025 1,294,459
------------
7,376,907
UNITED KINGDOM-13.8%
Bank of Scotland 90,000 1,008,332
BPB Plc 140,000 848,541
Compass Group Plc 120,000 1,380,508
Diageo Plc 189,999 2,252,413
Granada Group Plc 40,000 736,004
B-12
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Ladbroke Group Plc 370,000 $ 2,032,526
Tomkins Plc 190,000 1,031,833
United Assurance Group Plc 70,000 663,873
United News Media Plc 10,000 139,921
------------
10,093,951
Total Common & Preferred Stocks
(cost $59,764,668) 68,540,914
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
SHORT-TERM INVESTMENTS-5.7%
TIME DEPOSIT -5.7%
State Street Cayman Islands
5.25%, 7/01/98
(amortized cost $4,211,000) $4,211 $ 4,211,000
TOTAL INVESTMENTS-99.6%
(cost $63,975,668) 72,751,914
Other assets less liabilities-0.4% 262,927
NET ASSETS-100% $ 73,014,841
(a) Non-income producing security.
(b) Securities, or portion thereof, with an aggregate market value of
$2,951,255 have been segregated to collateralized forward exchange currency
contracts.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-13
MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
COMMERCIAL PAPER-83.1%
Associates Corp. of North America
6.15%, 7/01/98 $2,000 $ 2,000,000
Bank of America
5.53%, 8/17/98 4,000 3,971,121
Bankers Trust
5.52%, 9/15/98 4,000 3,953,387
Cargill Financial Services Corp.
5.60%, 7/15/98 4,000 3,991,289
Colgate Palmolive Co.
5.53%, 8/28/98 4,000 3,964,362
Dupont (E. I.) de Nemours & Co.
5.54%, 8/12/98 4,000 3,974,147
Ford Motor Credit Corp.
5.55%, 7/15/98 4,000 3,991,367
General Electric Capital Corp.
5.53%, 9/21/98 4,000 3,949,615
General Motors Acceptance Corp.
5.54%, 8/17/98 4,000 3,971,069
General Re Corp.
5.60%, 7/31/98 4,000 3,981,333
Henkel Corp.
5.52%, 8/11/98 3,000 2,981,140
Household Finance Corp.
5.57%, 7/15/98 4,000 3,991,336
Koch Industries
6.30%, 7/01/98 (a) 4,000 4,000,000
Merrill Lynch & Co., Inc.
5.57%, 7/29/98 4,000 3,982,671
Morgan Stanley Group, Inc.
6.25%, 7/01/98 3,458 3,458,000
Norwest Corp.
5.54%, 8/31/98 4,000 3,962,451
Prudential Funding Corp.
6.45%, 7/01/98 4,000 4,000,000
Salomon Smith Barney, Inc.
5.55%, 8/12/98 4,000 3,974,100
Total Commercial Paper
(amortized cost $68,097,388) 68,097,388
U.S. GOVERNMENT & AGENCY OBLIGATIONS-7.3%
Federal Home Loan Bank
5.44%, 7/30/98 FRN 3,000 2,999,817
5.65%, 3/12/99 3,000 3,000,000
Total U.S. Government &
Agency Obligations
(amortized cost $5,999,817) 5,999,817
CERTIFICATE OF DEPOSIT-4.9%
First Tennessee Bank
5.57%, 7/30/98
(amortized cost $4,000,000) 4,000 4,000,000
PROMISSORY NOTE-4.9%
Goldman Sachs Group LP FRN
5.66%, 11/24/98 (a)
(amortized cost $4,000,000) 4,000 4,000,000
TOTAL INVESTMENTS-100.2%
(cost $82,097,205) 82,097,205
Other assets less liabilities-(0.2%) (173,146)
NET ASSETS-100% $ 81,924,059
(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. At June 30, 1998,
the aggregate market value of these securities amounted to $8,000,000 or 9.8%
of net assets.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-14
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
SOVEREIGN DEBT OBLIGATIONS-70.7%
OTHER SOVEREIGN DEBT-29.0%
ARGENTINA-6.0%
Province of Tucuman
9.45%, 8/01/04 (a) $ 714 $ 662,906
Republic of Argentina Global Bond
11.375%, 1/30/17 250 265,250
------------
928,156
COLOMBIA-3.1%
Republic of Colombia
8.625%, 4/01/08 500 475,500
MEXICO-4.0%
United Mexican States
9.875%, 1/15/07 600 624,000
RUSSIA-12.5%
Russian IAN FRN
6.625%, 12/15/15 1,769 983,415
Russian Ministry of Finance
12.75%, 6/24/28 (a) 350 312,812
Russian Principal Loans FRN
6.625%, 12/15/20 (b) 1,350 628,965
------------
1,925,192
SOUTH KOREA-3.0%
Republic of Korea
8.875%, 4/15/08 500 458,750
TRINIDAD & TOBAGO-0.4%
Republic of Trinidad & Tobago
11.75%, 10/03/04 50 57,925
Total Other Sovereign Debt
(cost $5,050,562) 4,469,523
NON-COLLATERALIZED BRADY BONDS-33.5%
BRAZIL-14.3%
Republic of Brazil C-Bonds
8.00%, 4/15/14 (c) 2,019 1,488,839
Republic of Brazil FRN
6.688%, 4/15/12 1,020 712,776
------------
2,201,615
BULGARIA-3.1%
Republic of Bulgaria FLIRB
2.25%, 7/28/12 (d) 800 483,040
ECUADOR-5.0%
Republic of Ecuador FRN
6.625%, 2/27/15 (e) 1,335 767,742
PANAMA-2.6%
Republic of Panama PDI FRN
6.562%, 7/17/16 (f) 521 395,759
PERU-3.8%
Republic of Peru FLIRB
3.25%, 3/07/17 (a)(d) 500 281,250
Republic of Peru PDI
4.00%, 3/07/17 (d) 500 308,150
------------
589,400
VENEZUELA-4.7%
Republic of Venezuela
6.625%, 12/18/07 452 369,821
Republic of Venezuela
FLIRB FRN
6.625%, 3/31/07 429 355,714
------------
725,535
Total Non-Collateralized Brady Bonds
(cost $5,474,930) 5,163,091
COLLATERALIZED BRADY BONDS-8.2%
ARGENTINA-2.2%
Republic of Argentina Euro
Par Bonds FRN
5.75%, 3/31/23 460 342,412
BULGARIA-1.5%
Republic of Bulgaria Series A
Discount FRN
6.563%, 7/28/24 300 229,140
ECUADOR-4.5%
Republic of Ecuador Discount
Bonds FRN
6.625%, 2/28/25 430 298,850
Republic of Ecuador Par Bonds
3.50%, 2/28/25 750 404,100
------------
702,950
Total Collateralized Brady Bonds
(cost $1,298,752) 1,274,502
Total Sovereign Debt Obligations
(cost $11,824,244) 10,907,116
CORPORATE DEBT OBLIGATIONS-23.9%
INDUSTRIAL-11.0%
Impsat Corp.
12.125%, 7/15/03 300 309,750
Petroleos Mexicanos
9.25%, 3/30/18 (a) 1,500 1,387,500
------------
1,697,250
B-15
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
TELEPHONE-1.7%
Interamericas Communications
14.00%, 10/27/07 (a)(g) $100 $ 99,000
Iridium Capital Corp. LLC
14.00%, 7/15/05 (a)(h) 150 167,625
------------
266,625
TRANSPORTATION-1.0%
Navigator Gas Transport Plc
10.50%, 6/30/07 (a) 150 157,125
YANKEE BONDS-10.2%
Cantv Finance Ltd.
9.25%, 2/01/04 500 473,750
Conecel
14.00%, 5/01/02 (a) 400 400,000
Fugi Jgb Investment LLC
9.87%, 12/31/49 (a)(d) 200 176,065
Innova S de R.L.
12.875%, 4/01/07 (a) 500 506,250
Transportacion Maritima
Mexicana SA
9.25%, 5/15/03 12 11,040
------------
1,567,105
Total Corporate Debt Obligations
(cost $3,849,773) 3,688,105
TOTAL INVESTMENTS-94.6%
(cost $15,674,017) 14,595,221
Other assets less liabilities-5.4% 829,721
NET ASSETS-100% $ 15,424,942
(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 June 30, 1998 the
aggregate market value of these securities amounted to $4,150,533 or 26.9% of
net assets.
(b) Coupon consists of 3.3125% cash payment and 3.3125% paid in kind of
Russian IAN'S.
(c) Coupon consists of 5.0% cash payment and 3.0% paid-in-kind.
(d) Coupon will increase periodically based upon a predetermined schedule.
Stated interest rate in effect at June 30, 1998.
(e) Coupon consists of 3.25% cash payment and 3.375% paid-in-kind.
(f) Coupon consists of 4.00% cash payment and 2.5625% paid-in-kind.
(g) Security trades with warrants expiring in October 2007.
(h) 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
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
ARGENTINA-16.6%
GOVERNMENT OBLIGATIONS-16.6%
Republic of Argentina
Pensioner-Bocon Pre I FRN
2.99%, 4/01/01 ARS 238 $ 214,147
Pensioner-Bocon Pre III FRN
2.99%, 9/01/02 63 51,766
Supplier-Bocon Pro I FRN
2.99%, 4/01/07 7,638 5,400,980
------------
5,666,893
CANADA-6.5%
GOVERNMENT/AGENCY OBLIGATIONS-6.5%
Government of Canada
6.50%, 6/01/04 CA$ 850 611,153
Province of British Columbia
8.00%, 9/08/23 400 348,748
Province of Manitoba
7.75%, 12/22/25 450 389,751
Province of Ontario
8.25%, 12/01/05 275 217,806
Province of Quebec
7.75%, 3/30/06 325 249,878
Province of Saskatchewan
9.60%, 2/04/22 400 403,711
------------
2,221,047
MEXICO-23.7%
GOVERNMENT/AGENCY OBLIGATIONS-23.7%
Mexican Treasury Bills (a)
19.75%, 12/17/98 MXP 30,417 3,043,090
19.99%, 7/02/98 7,369 819,079
20.18%, 5/06/99 7,341 672,244
20.72%, 3/11/99 11,567 1,094,314
21.38%, 8/27/98 5,120 550,301
21.93%, 6/03/99 21,660 1,952,339
------------
8,131,367
UNITED STATES-52.4%
FEDERAL AGENCY/OBLIGATIONS-2.3%
Federal Home Loan Bank
7.26%, 9/06/01 US$ 200 208,812
Federal Home Loan Mortgage
Corp.
6.13%, 8/19/99 150 150,633
Federal National Mortgage
Association
5.05%, 11/10/98 305 303,999
Government National Mortgage
Association
9.00%, 9/15/24 111 119,091
------------
782,535
U.S. GOVERNMENT OBLIGATIONS-20.7%
U.S. Treasury Notes
6.25%, 10/31/01 1,300 1,327,014
6.50%, 4/30/99 85 85,678
7.00%, 7/15/06 2,400 2,620,872
7.125%, 9/30/99 320 326,099
7.25%, 8/15/04 2,500 2,719,925
------------
7,079,588
TIME DEPOSIT-29.4%
State Street Bank and Trust Co.
5.25%, 7/01/98 10,089 10,089,000
------------
17,951,123
TOTAL INVESTMENTS-99.2%
(cost $33,684,893) 33,970,430
Other assets less liabilities-0.8% 282,948
NET ASSETS-100% $ 34,253,378
(a) Interest rate represents annualized yield to maturity at purchase date.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-17
UTILITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-90.6%
UNITED STATES INVESTMENTS-81.7%
UTILITIES-56.0%
ELECTRIC & GAS UTILITY-30.3%
AGL Resources, Inc. 6,100 $ 121,238
American Electric Power, Inc. 16,900 766,837
CINergy Corp. 22,100 773,500
CMS Energy Corp. 18,400 809,600
Consolidated Edison, Inc. 24,500 1,128,531
DPL, Inc. 21,000 380,625
FPL Group, Inc. 15,600 982,800
MarketSpan Corp. (a) 4,600 137,713
MCN Corp. 4,600 114,425
New Jersey Resources Corp. 4,400 157,025
NIPSCO Industries, Inc. 36,400 1,019,200
Northwest Natural Gas Co. 5,250 146,836
People's Energy Corp. 3,600 139,050
Pinnacle West Capital Corp. 25,000 1,125,000
Questar Corp. 7,000 137,375
------------
7,939,755
TELEPHONE UTILITY-25.0%
Ameritech Corp. 19,400 870,575
AT&T Corp. 12,560 717,490
Bell Atlantic Corp. 12,800 584,000
BellSouth Corp. 7,400 496,725
Frontier Corp. 21,000 661,500
GTE Corp. 10,500 584,062
Telephone and Data Systems, Inc. 6,000 236,250
Teleport Communications Group, Inc.
Cl.A (a) 13,600 737,375
US West Communications Group 10,800 507,600
WorldCom, Inc. 24,000 1,160,250
------------
6,555,827
MISCELLANEOUS-0.7%
Sempra Energy (a) 6,165 171,079
------------
14,666,661
CONSUMER SERVICES-14.8%
BROADCASTING & CABLE-9.9%
AirTouch Communications, Inc. Cl.C
4.25% cv. pfd. 10,100 833,250
Comcast Corp. Cl.A 18,000 730,687
Omnipoint Corp.
7.00% cv. pfd. (a)(b) 11,000 522,500
TCI Communications, Inc. Series A
$2.125 cv. pfd. 6,200 516,150
------------
2,602,587
ENTERTAINMENT & LEISURE-4.9%
Cablevision Systems Corp. Series I
8.50% cv. pfd. 20,000 1,278,750
------------
3,881,337
ENERGY-8.7%
DOMESTIC PRODUCERS-3.4%
The Williams Cos., Inc.
3.50% pfd. 4,700 747,300
Washington Gas Light Co. 5,600 149,800
------------
897,100
PIPELINES-1.8%
Enron Corp. 5,800 313,562
Piedmont Natural Gas Co., Inc. 5,100 171,488
------------
485,050
MISCELLANEOUS-3.5%
AES Corp. (a) 17,200 904,075
------------
2,286,225
MULTI INDUSTRY COMPANIES-1.3%
Southwest Gas Corp. 7,000 171,063
Wicor, Inc. 7,000 161,875
------------
332,938
TECHNOLOGY-0.9%
COMMUNICATION EQUIPMENT-0.9%
NTL, Inc. (a) 4,172 223,072
Total United States Investments
(cost $15,493,008) 21,390,233
FOREIGN INVESTMENTS-8.9%
BRAZIL-2.5%
Companhia Energetica de
Minas Gerais (ADR) 1,958 60,606
Companhia Paranaense de
Energia-Copel pfd. (ADR) 4,700 43,475
Companhia Riograndense de
Telecom pfd. 129,000 140,650
Telecomunicacoes Brasileiras,
SA (ADR) 3,800 414,913
------------
659,644
FINLAND-1.4%
Nokia Corp. (ADR) 5,000 362,812
KOREA-0.5%
Korea Electric Power Corp. 4,020 42,893
SK Telecom Co., Ltd. (ADR) 15,244 84,795
------------
127,688
MEXICO-2.3%
Telefonos de Mexico, SA
Series L (ADR) 12,400 595,975
B-18
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
PERU-0.5%
Telefonica del Peru, SA
Cl.B 62,000 $ 127,694
PHILIPPINES-0.5%
Philippine Long Distance
Telephone Co. Series III
3.50% cv. pfd. (ADR) 6,000 135,750
SWEDEN-1.2%
Ericsson (L.M.) Telephone Co. Cl.B (ADR) 11,200 321,300
Total Foreign Investments
(cost $2,044,985) 2,330,863
Total Common & Preferred Stocks
(cost $17,537,993) 23,721,096
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
SHORT-TERM INVESTMENTS-9.1%
COMMERCIAL PAPER-9.1%
American Express Co.
5.95%, 7/02/98 1,200 1,199,801
Ford Motor Credit Corp.
5.61%, 7/06/98 1,200 1,199,065
Total Short-Term Investments
(amortized cost $2,398,866) 2,398,866
TOTAL INVESTMENTS-99.7%
(cost $19,936,859) 26,119,962
Other assets less liabilities-0.3% 66,204
NET ASSETS-100% $ 26,186,166
(a) Non-income producing security.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration
normally applied to certain qualified buyers. At June 30, 1998, the aggregate
market value of this security amounted to $522,500 or 2.0% of net assets.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-19
GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-94.1%
FINANCE-26.5%
BANKING-MONEY CENTER-7.3%
American Express Co. 42,600 $4,856,400
Automatic Common Exchange
Security Trust II 25,000 600,000
Chase Manhattan Corp. 85,840 6,480,920
Citicorp 20,000 2,985,000
NationsBank Corp. 80,600 6,165,900
The Bank of Tokyo-Mitsubishi,
Ltd. (ADR) 59,400 653,400
------------
21,741,620
BANKING-REGIONAL-1.8%
First Union Corp. 55,000 3,203,750
Newcourt Credit Group, Inc. 43,000 2,115,063
------------
5,318,813
BROKERAGE & MONEY MANAGEMENT-0.3%
Morgan Stanley, Dean Witter,
Discover and Co. 10,600 968,575
INSURANCE-5.7%
Acceptance Insurance Co. 9,000 221,062
American International Group, Inc. 70,025 10,223,650
Travelers Group, Inc. 107,499 6,517,127
------------
16,961,839
INVESTMENT COMPANY-2.8%
TCI Ventures Group
Series A (a) 421,700 8,447,178
REAL ESTATE-4.8%
Alexandria Real Estate
Equities, Inc. 50,800 1,520,825
Arden Realty Group, Inc. 45,600 1,179,900
Entertainment Properties
Trust 56,000 1,022,000
Excel Realty Trust, Inc. 60,000 1,728,750
Humphrey Hospitality Trust, Inc. 99,100 997,194
JP Realty, Inc. 38,000 895,375
Koger Equity, Inc. 100,000 2,018,750
Macerich Co. 52,500 1,538,906
Prentiss Properties Trust 14,000 340,375
Spieker Properties, Inc. 56,000 2,170,000
Starwood Hotels & Resorts 19,395 937,021
------------
14,349,096
MISCELLANEOUS-3.8%
Associates First Capital Corp.
Cl. A 26,000 1,998,750
MBNA Corp. 230,250 7,598,250
PMI Group, Inc. 23,000 1,687,625
------------
11,284,625
------------
79,071,746
TECHNOLOGY-25.4%
COMMUNICATION SERVICES-0.8%
Nextel Communications, Inc.
Cl. A (a) 102,000 2,534,063
COMMUNICATIONS EQUIPMENT-4.5%
ADC Telecommunications, Inc. (a) 56,000 2,045,750
Ericsson (L.M.) Telephone Co.
Cl.B (ADR) (b) 30,000 860,625
Loral Space & Communications (a) 55,800 1,576,350
PairGain Technologies, Inc. 147,000 2,558,719
Sterling Commerce, Inc. (a) 112,789 5,470,266
Tellabs, Inc. (a) 11,000 787,531
------------
13,299,241
COMPUTER SERVICES-2.9%
Ceridian Corp. (a) 148,500 8,724,375
COMPUTER SOFTWARE-4.3%
Networks Associates, Inc. (a) 74,200 3,550,006
Sterling Software, Inc. (a) 314,200 9,288,538
------------
12,838,544
ELECTRONICS-1.3%
EMC Corp. (a) 24,000 1,075,500
Philips Electronics NV 8,000 680,000
SCI Systems, Inc. (a) 57,400 2,159,675
------------
3,915,175
MULTIMEDIA-0.7%
Reuters Group Plc (ADR) (c) 30,213 2,075,255
NETWORKING SOFTWARE-4.9%
Cisco Systems, Inc. (a) 148,200 13,648,294
Fore Systems, Inc. (a) 39,000 1,032,281
------------
14,680,575
SEMI-CONDUCTOR COMPONENTS-1.8%
Texas Instruments, Inc. 84,000 4,898,250
Xilinx, Inc. (a) 16,000 544,500
------------
5,442,750
TELECOM SERVICES-0.3%
Electric Lightware, Inc.
Cl.A (a) 77,800 858,231
TELECOMMUNICATIONS-2.0%
Colt Telecom Group Plc
(ADR) (a)(c) 18,500 2,999,312
Millicom International Cellular,
SA (a)(d) 39,500 1,726,891
Telephone and Data Systems, Inc. 27,900 1,098,563
------------
5,824,766
B-20
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
MISCELLANEOUS-1.9%
Sanmina Corp. (a) 84,000 $ 3,630,375
Solectron Corp. (a) 45,300 1,905,431
------------
5,535,806
------------
75,728,781
CONSUMER SERVICES-13.3%
AIRLINES-3.3%
Continental Airlines, Inc.
Cl.B (a) 67,000 4,078,625
Delta Air Lines, Inc. 27,000 3,489,750
Northwest Airlines Corp.
Cl.A (a) 11,500 443,828
U.S. Airways Group, Inc. (a) 10,000 792,500
UAL Corp. (a) 11,600 904,800
------------
9,709,503
BROADCASTING & CABLE-3.2%
Tele-Communications, Inc.-
Liberty Media Group
Cl.A (a) 111,055 4,313,793
Viacom, Inc. Cl.B (a) 90,900 5,294,925
------------
9,608,718
BUSINESS SERVICES-1.9%
Cendant Corp. (a) 271,050 5,658,169
ENTERTAINMENT & LEISURE-1.0%
Harley-Davidson, Inc. 17,800 689,750
Royal Caribbean Cruises, Ltd. 30,200 2,400,900
------------
3,090,650
PRINTING & PUBLISHING-0.8%
Readers Digest Association, Inc. 90,000 2,317,500
RETAIL-GENERAL MERCHANDISE-3.1%
Home Depot, Inc. 49,150 4,082,522
Office Depot, Inc. (a) 36,000 1,136,250
The Limited, Inc. 118,300 3,918,687
------------
9,137,459
------------
39,521,999
UTILITIES-7.3%
TELEPHONE UTILITY-7.3%
Telecomunicacoes Brasilieras,
SA (ADR) (e) 22,400 2,445,800
WorldCom, Inc.
8.00%, cv. pfd. 397,784 19,230,370
------------
21,676,170
HEALTH CARE-7.1%
BIOTECHNOLOGY-0.1%
Gensia Sicor, Inc.
3.75%, cv. pfd. (a)(f) 8,000 194,000
DRUGS-4.9%
Bristol-Myers Squibb Co. 52,000 5,976,750
Merck & Co., Inc. 47,900 6,406,625
Schering-Plough Corp. 25,000 2,290,625
------------
14,674,000
MEDICAL PRODUCTS-1.6%
Boston Scientific Corp. (a) 43,400 3,108,525
Medtronic, Inc. 26,200 1,670,250
------------
4,778,775
MEDICAL SERVICES-0.5%
Columbia HCA/Healthcare Corp. 18,600 541,725
Quest Medical, Inc. (a) 38,000 358,625
United Healthcare Corp. 11,000 698,500
------------
1,598,850
------------
21,245,625
ENERGY-5.1%
OIL SERVICE-5.1%
BJ Services Co. (a) 47,700 1,386,281
Dresser Industries, Inc. 94,600 4,168,312
Gulf Canada Resources, Ltd. (g) 619,300 3,057,794
Halliburton Co. 56,800 2,531,150
Nabors Industries, Inc. (a) 27,000 534,938
Noble Drilling Corp. (a) 96,000 2,310,000
Transocean Offshore, Inc. 28,000 1,246,000
------------
15,234,475
CAPITAL GOODS-2.9%
MACHINERY-2.9%
Mannesmann AG (h) 83,025 8,539,820
CONSUMER STAPLES-2.5%
TOBACCO-2.5%
Loews Corp. 46,800 4,077,450
Philip Morris Cos., Inc. 88,000 3,465,000
------------
7,542,450
MULTI INDUSTRY COMPANIES-1.3%
Tyco International, Ltd. 62,572 3,942,036
CONSUMER MANUFACTURING-1.1%
AUTO & RELATED-1.1%
Republic Industries, Inc. (a) 134,000 3,350,000
BUSINESS SERVICES-1.1%
BROADCASTING & CABLE-0.7%
CBS Corp. 61,400 1,949,450
PRINTING & PUBLISHING-0.4%
News Corp., Ltd. (ADR) 35,800 1,150,075
------------
3,099,525
B-21
GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
BASIC INDUSTRY-0.5%
CONTAINERS-0.5%
Sealed Air Corp. (a) 40,900 $ 1,503,075
Total Common & Preferred Stocks
(cost $202,376,157) 280,455,702
SHORT-TERM INVESTMENTS-6.1%
US GOVERNMENT & AGENCIES-6.0%
Federal Home Loan Mortgage Corp.
5.45%, 7/20/98 $3,000 2,991,371
5.45%, 8/24/98 3,000 2,975,475
5.85%, 7/01/98 9,000 9,000,000
Federal National Mortgage Assn.
5.45%, 8/14/98 3,000 2,980,016
------------
17,946,862
TIME DEPOSIT-0.1%
State Street Cayman Islands
5.25%, 7/01/98 312 312,000
Total Short-Term Investments
(amortized cost $18,258,862) 18,258,862
TOTAL INVESTMENTS-100.2%
(cost $220,635,019) 298,714,564
Other assets less liabilities-(0.2%) (485,700)
NET ASSETS-100% $ 298,228,864
(a) Non-income producing security.
(b) Country of origin--Sweden.
(c) Country of origin--United Kingdom.
(d) Country of origin--Luxembourg.
(e) Country of origin--Brazil.
(f) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration
normally applied to certain qualified buyers. At June 30, 1998, the aggregate
market value of this security amounted to $194,000 or 0.1% of net assets.
(g) Country of origin--Canada.
(h) Country of origin--Germany.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-22
WORLDWIDE PRIVATIZATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-94.2%
ARGENTINA-0.6%
Nortel Inversora, SA
Series B pfd. (ADR) 7,400 $ 184,075
Telecom Argentina, SA (ADR) 3,700 110,306
------------
294,381
AUSTRALIA-3.9%
Amrad Corporation, Ltd. (a) 140,000 169,465
CSL, Ltd. 150,700 977,566
GIO Australia Holdings, Ltd. 140,000 360,134
TAB Corp. Holdings, Ltd. 66,500 340,559
TAB Ltd. (a) 29,200 43,139
------------
1,890,863
AUSTRIA-6.3%
Austria Mikro Systeme
International AG 4,270 289,435
Austria Tabakwerke AG 20,506 1,142,679
Bank Austria AG 14,000 1,137,655
rights (a) 14,000 12,138
Boehler-Uddeholm AG 2,800 185,159
Premier Telesports (a) (b) 6,600 119,645
Voest-Alpine Stahl AG 4,000 160,473
------------
3,047,184
BELGIUM-0.9%
Credit Communal Holding Dexia 2,920 439,688
BOTSWANA-0.3%
Sechaba Breweries, Ltd. 120,500 159,708
BRAZIL-7.9%
Banco Estado de Sao Paulo,
SA pfd. (a) 3,500,000 161,934
Bardella Industrias
Mecanicas, SA pfd. 1,600 162,539
Celese Centrais Eletricas de
Santa Catarina, SA pfd. 315,001 239,679
pfd. (GDR) (c) 750 61,603
Companhia Energetica de
Minas Gerais (ADR) 4,405 136,363
Companhia Paranaense de
Energia-Copel (ADR) 6,300 58,275
Companhia Paulista de
Forca e Luz pfd. 2,000,000 204,072
Receipts pfd. (a) 1,591 146
Companhia Riograndense de
Telecom Cl. A pfd. 354,782 386,823
Empresa Bandeirant de
Energia, SA pfd. (a) 816,000 12,911
Eletropaulo Metropolitana pfd. 816,000 61,383
Empresa Metropolitana de
Aguas e Energie,
SA pfd. (a) 816,000 635
Empresa Paulista de
Transmissao de Energia
Eletrica, SA pfd. (a) 816,000 2,886
Espirito Santo Centrais
Electricas, SA 324 19,050
Gerdau, SA pfd. 19,024,144 263,185
Iven, SA pfd. (b) 588,100 294,673
Light Particpacoes, SA 480,000 170
Metalurgica Gerdau, SA (b) 419,660 9,834
pfd. 11,038,243 352,941
Multicanal Participacoes,
SA (ADR) (a) 15,700 77,519
Petroleo Brasileros, SA (ADR) 7,500 139,335
Telecomunicacoes Brasileiras,
SA (ADR) 9,650 1,053,659
Telepar Cellular, SA pfd. (a) 129,000 11,710
Telepar Tel Parana pfd. (a) 129,000 32,346
rights, (a) 4,359 0
Trikem, SA pfd. (a) 15,000,000 21,400
Uniao de Bancos Brasileiras,
SA (GDR) 2,300 67,850
------------
3,832,921
COLOMBIA-0.1%
Banco de Colombia
(GDR) (a)(c) 8,400 37,548
CZECH REPUBLIC-1.9%
Ceske Energeticke Zavody
(GDR) (a) 3,000 82,963
Ceske Radiokomunikace
AS (a) 1,340 254,714
New Shares (a) 4,861 92,400
Komercni Banka AS (GDR) (a) 28,900 358,360
Podnik Vypocetni Techniky (a) 500 40,485
Tabak AS 330 79,584
------------
908,506
EGYPT-0.7%
Commercial International Bank (GDR) 9,152 97,022
Egyptian Financial & Industrial 1,900 40,659
Housing Development Bank 2,200 52,271
Madinet Nasar for Housing &
Development Bank 2,000 95,713
Torrah Portland Cement 4,000 68,890
------------
354,555
FINLAND-1.4%
Merita, PLC Series A 62,100 410,144
Outokumpu Oy Cl.A 22,200 283,522
------------
693,666
FRANCE-8.9%
Sanofi, SA 7,270 854,983
Seita 19,630 889,660
SGS-Thomson Microelectronics NV (a) 14,460 1,024,879
Societe Generale 2,176 452,426
B-23
WORLDWIDE PRIVATIZATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Societe National Elf Aquitaine 5,660 $ 795,772
Union Assurances Federales 2,070 326,300
------------
4,344,020
GERMANY-4.4%
BHW Holding AG 16,350 282,586
Salzgitter AG 14,000 183,981
Viag AG 1,817 1,251,332
Volkswagen AG 440 425,251
------------
2,143,150
GREECE-2.2%
Commercial Bank of Greece 4,000 297,052
Hellenic Petroleum, SA (a) 21,000 171,706
Hellenic Telecommunication
Organization, SA 11,827 303,536
National Bank Of Greece 1,080 138,554
Stet Hellas Telecommunications,
SA (a) 2,190 90,748
(ADR) (a) 2,190 91,575
------------
1,093,171
HONG KONG-0.0%
The Guangshen Railway Co.,
Ltd. (ADR) 4,600 31,337
HUNGARY-1.0%
Inter-Europa Bank rights 838 51,357
Magyar Olaj Gazipare
Resvenytar 4,000 107,935
(GDR) (c) 6,000 160,800
OTP Bank (GDR) 3,630 176,055
------------
496,147
INDIA-1.2%
Industrial Credit & Investment
Corporation of India,
Ltd. (GDR) (c) 20,900 206,388
Mahanagar Telephone Nigam,
Ltd. (GDR) (a) 8,400 85,260
State Bank of India (GDR) (c) 1,200 13,800
(GDS) (c) 3,900 44,850
Videsh Sanchar Nigam, Ltd.
(GDR) (c) 21,700 221,340
(GDS) (a) 2,000 20,400
------------
592,038
INDONESIA-0.2%
PT Tambang Timah (GDR) 20,000 87,000
ISRAEL-0.7%
Bank Hapoalim, Ltd. 79,500 240,351
Tadiran, Ltd. (ADR) 3,800 125,875
------------
366,226
ITALY-4.7%
Alitalia SpA (a) 114,800 368,291
ENI SpA 73,300 480,622
Instituto Mobilaire Italiano
SpA 28,800 453,862
Instituto Nazionale delle
Assicurazioni 118,300 336,240
Telecom Italia Mobile di Risp
SpA 109,000 368,088
Telecom Italia SpA 55,169 267,190
------------
2,274,293
JAPAN-5.5%
Daiwa Securities Co., Ltd. 149,000 643,328
East Japan Railway Co. 50 235,771
Japan Tobacco, Inc. 117 794,554
Nippon Telegraph &
Telephone, Corp. 65 540,609
Nomura Securities Co., Ltd. 37,000 432,162
------------
2,646,424
JORDAN-0.2%
Arab Potash Co. 14,500 121,955
MALAYSIA-0.2%
Telekom Malaysia Berhad 70,000 118,065
MALTA-0.2%
Maltacom Plc (GDR) (a) 7,000 98,000
MEXICO-1.6%
ALFA, SA 17,400 71,068
Grupo Financiero Banamex,
Cl.B (a) 95,700 186,384
Grupo Financiero Bancrecer,
SA de CV Cl.B (a)(b) 75,000 2,504
Grupo Financiero Banorte, SA
de CV Cl.B (a) 248,500 276,557
Grupo Financiero GBM Atlantico
Cl.L (ADR) (a)(b) 8,400 8,400
Grupo Profesional Planeacion y
Proyectos, SA Cl.B (a) (b) 4,800 11,058
Telefonos de Mexico, SA
Cl.L (ADR) 2,500 120,156
Tubos de Acero de Mexico,
SA (ADR) 7,000 89,687
------------
765,814
NETHERLANDS-5.4%
Akzo Nobel NV 6,300 1,401,481
ING Groep NV 18,410 1,206,352
------------
2,607,833
NEW ZEALAND-0.1%
Tranz Rail Holdings, Ltd. 12,800 29,306
NORWAY-0.7%
Christiana Bank OG
Kreditkasse 40,000 167,526
Den Norske Bank 36,300 190,392
------------
357,918
PAKISTAN-0.1%
Hub Power Co., Ltd. (GDR) 5,000 34,375
B-24
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
PEOPLES REPUBLIC OF CHINA-1.0%
Beijing Datang Power
Generation Co., Ltd. 442,000 $ 124,077
Yanzhou Coal Mining Co.,
Ltd. Cl. H (a) 456,000 87,104
Zhejiang Southeast Electric
Power Co., Ltd. (GDR) (c) 18,300 253,455
------------
464,636
PERU-0.8%
Cementos Norte Pacasmayo,
SA Cl.C 93,596 149,754
Explosivios, SA Cl.C (a) (b) 104,636 115,766
Ferreyros, SA 82,300 110,947
------------
376,467
PHILIPPINES-1.5%
First Philippine Holdings Corp.
Series B 168,540 113,168
International Container Terminal
Services, Inc. (a) 299,000 34,059
Manila Electric Co. Series B 149,300 393,837
Philippine Long Distance
Telephone Co. 7,290 166,079
------------
707,143
POLAND-1.6%
Bank Polska Kasa Opieki, SA 10,700 168,770
Banka Przemyslowo Handlowy, SA 1,400 100,373
Elektrim, SA 16,400 199,885
Kredyt Bank, SA
(GDR) (a)(c) 8,000 149,600
Orbis, SA (a) 17,886 159,009
------------
777,637
PORTUGAL-1.2%
Electricidade de Portugal, SA 25,000 581,528
RUSSIA-1.7%
Gazprom (ADR) (c) 6,100 67,100
Lukoil Holdings (ADR) 10,800 362,880
Nearmedic, Ltd. (a)(b) 65,000 66,601
JSC Rosneftegazstroy (ADR) (a) 6,842 33,386
Sberbank of Russia 1,845 177,120
Sun Brewing, Ltd. (GDR) (a)(c) 10,400 121,118
------------
828,205
SLOVAKIA-0.1%
Slovakofarma AS (GDR) (a) 10,400 57,460
SOUTH AFRICA-0.8%
Iscor, Ltd. 2,160,492 408,052
SOUTH KOREA-1.5%
Korea Electric Power Corp.
(ADR) 17,000 121,125
Korean Air Lines 2,125 5,479
Pohang Iron & Steel Co., Ltd. 440 14,672
(ADR) 13,800 165,600
SK Telecom Co., Ltd. 516 249,318
(ADR) 29,000 161,317
------------
717,511
SPAIN-5.8%
Aceralia Corporacion
Siderurgica, SA 43,600 643,978
Aldeasa, SA 14,600 521,734
Empresa Nacional de
Celulosas, SA 21,800 383,828
Repsol, SA 6,550 360,923
Tabacalera, SA Cl. A 21,000 429,997
Telefonica de Espana 10,000 462,341
------------
2,802,801
SWEDEN-2.4%
Assi Doman AB 13,250 385,406
Castellum AB 20,900 246,314
Diligentia AB 10,400 89,970
Mandamus AB (a) 690 4,325
Sparbanken Sverige AB, Cl. A 14,500 436,309
------------
1,162,324
SWITZERLAND-1.7%
Sair group 2,450 807,337
THAILAND-0.4%
PTT Exploration & Production
Public Co., Ltd. (a) 24,500 185,782
TURKEY-1.4%
Eregli Demir Ve Celik
Fabrikalari TAS (a) 454,000 70,751
Petrokimya Holdings AS 141,000 76,774
Turkiye Is Bankasi Series C 3,500,000 141,288
Tupras Turkiye Petrol
Rafinerileri AS (a) 1,453,000 234,619
Usas Ucak Servisi AS 57,000 134,848
------------
658,280
UNITED KINGDOM-10.5%
Anglian Water Plc 21,800 305,756
Birkby Plc 63,800 162,986
British Energy Plc 109,000 953,666
Energis Plc (a) 92,800 1,414,026
Mersey Docks & Harbor Co. 37,700 357,858
National Grid Holding Plc 61,800 416,877
National Power Plc 48,000 452,021
Powergen Plc 16,500 228,114
RJB Mining 21,800 44,407
Stagecoach Holdings Plc 22,100 470,480
Wessex Water Plc 35,000 266,484
------------
5,072,675
UNITED STATES-0.2%
Central European Media
Enterprises, Ltd. Cl. A (a) 4,300 92,853
B-25
WORLDWIDE PRIVATIZATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
VENEZUELA-0.3%
Compania Anonima Nacional
Telefonos de Venezuela
(ADR) 5,100 $ 127,500
Mercantil Servicios Financieros
(ADR) 5,000 24,610
------------
152,110
Total Common Stocks & Other Investments
(cost $42,155,473) 45,718,893
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
SHORT-TERM INVESTMENTS-5.2%
TIME DEPOSIT-5.2%
State Street Cayman Islands
5.25%, 7/01/98
(amortized cost $2,500,000) $2,500 $ 2,500,000
TOTAL INVESTMENTS-99.4%
(cost $44,655,473) 48,218,893
Other assets less liabilities-0.6% 291,104
NET ASSETS-100% $ 48,509,997
(a) Non-income producing security.
(b) Illiquid security-valued at fair market value. (see Note A)
(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 June 30, 1998,
the aggregate market value of these securities amounted to $1,337,602 or 2.8%
of net assets.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-26
CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-28.4%
UNITED STATES INVESTMENTS-21.1%
FINANCE-4.9%
BANKING-MONEY CENTER-1.8%
BankAmerica Corp. 4,000 $ 345,750
Chase Manhattan Corp. 4,000 302,000
------------
647,750
BROKERAGE & MONEY MANAGEMENT-1.2%
Merrill Lynch & Co., Inc. 3,000 276,750
Morgan Stanley Dean Witter and Co. 2,000 182,750
------------
459,500
INSURANCE-1.2%
American International Group, Inc. 2,000 292,000
Travelers Group, Inc. 2,250 136,406
------------
428,406
MISCELLANEOUS-0.7%
MBNA Corp. 8,000 264,000
------------
1,799,656
CONSUMER SERVICES-4.9%
BROADCASTING & CABLE-1.8%
Cox Communications, Inc.
Cl.A (a) 4,000 193,750
Scripps E.W. Co. Cl.A 4,000 219,250
Tele-Communications, Inc.-
Liberty Media Group
Cl.A (a) 6,000 233,062
------------
646,062
ENTERTAINMENT & LEISURE-1.5%
Harley-Davidson, Inc. 9,000 348,750
Walt Disney Co. 2,000 210,125
------------
558,875
RETAIL-GENERAL MERCHANDISE-1.6%
Dayton Hudson Corp. 6,000 291,000
Home Depot, Inc. 3,500 290,719
------------
581,719
------------
1,786,656
HEALTH CARE-3.2%
DRUGS-2.7%
Bristol-Myers Squibb Co. 5,000 574,688
Merck & Co., Inc. 3,000 401,250
------------
975,938
MEDICAL PRODUCTS-0.5%
Medtronic, Inc. 3,000 191,250
------------
1,167,188
TECHNOLOGY-2.9%
COMMUNICATION EQUIPMENT-0.4%
Tellabs, Inc. (a) 2,000 143,188
COMPUTER HARDWARE-0.5%
Compaq Computer Corp. 6,000 170,250
COMPUTER SERVICES-0.5%
First Data Corp. 6,000 199,875
COMPUTER SOFTWARE-0.2%
Microsoft Corp. (a) 800 86,725
NETWORKING SOFTWARE-0.9%
Cisco Systems, Inc. (a) 3,500 322,328
SEMI-CONDUCTOR COMPONENTS-0.4%
Altera Corp. (a) 2,000 59,063
Intel Corp. 1,200 88,912
------------
147,975
------------
1,070,341
CONSUMER STAPLES-2.4%
COSMETICS-1.2%
Avon Products, Inc. 2,000 155,000
Gillette Co. 2,400 136,050
The Estee Lauder Co., Inc.
Cl.A 2,000 139,375
------------
430,425
RETAIL-FOOD & DRUG-0.6%
Kroger Co. (a) 5,000 214,375
TOBACCO-0.6%
Philip Morris Cos., Inc. 6,000 236,250
------------
881,050
ENERGY-1.1%
DOMESTIC PRODUCERS-0.3%
Apache Corp. 3,000 94,500
OIL SERVICE-0.8%
Halliburton Co. 3,000 133,688
Noble Drilling Corp. (a) 7,000 168,437
------------
302,125
------------
396,625
UTILITIES-0.9%
TELEPHONE UTILITY-0.9%
WorldCom, Inc. 7,000 338,406
B-27
CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
MULTI INDUSTRY COMPANIES-0.8%
Tyco International, Ltd. 3,000 $ 189,000
U.S. Industries, Inc. 4,000 99,000
------------
288,000
Total United States Investments
(cost $5,815,835) 7,727,922
FOREIGN INVESTMENTS-7.3%
BRAZIL-0.3%
Telecomunicacoes Brasileiras,
SA (ADR) 900 98,269
DENMARK-0.3%
Ratin Series B 600 127,083
FINLAND-1.4%
Nokia AB OY Corp.
Series A 6,000 441,704
Orion-Yhtymae OY Cl.B 2,800 86,334
------------
528,038
FRANCE-0.9%
Sanofi, SA 1,000 117,604
SEITA 1,400 63,450
Total, SA Cl.B 1,100 143,011
------------
324,065
GERMANY-0.4%
Adidas AG 400 69,755
ProSieben Media AG pfd. 1,500 77,768
------------
147,523
HONG KONG-0.2%
Cheung Kong Holdings, Ltd. 5,000 24,587
Hutchison Whampoa, Ltd. 7,000 36,951
------------
61,538
JAPAN-0.5%
Canon, Inc. 2,000 45,563
Fuji Photo Film 2,000 69,863
Honda Motor Co. 2,000 71,455
------------
186,881
NETHERLANDS-1.3%
AKZO Nobel NV (a) 700 155,720
ASM Lithography Holding
NV 4,000 118,460
ING Groep NV 3,000 196,581
------------
470,761
SPAIN-0.3%
Telefonica de Espana 2,000 92,468
SWEDEN-0.1%
Astra AB Series A 2,000 40,873
SWITZERLAND-0.9%
Nestle, SA 100 214,356
Zurich Versicherungsgesellschaft 200 127,848
------------
342,204
UNITED KINGDOM-0.7%
BPB Plc 12,000 72,732
Compass Group Plc 8,000 92,034
Tomkins Plc 8,000 43,446
United News & Media Plc 3,000 41,976
------------
250,188
Total Foreign Investments
(cost $2,234,127) 2,669,891
Total Common & Preferred Stocks
(cost $8,049,962) 10,397,813
DEBT OBLIGATIONS-70.8%
U.S. GOVERNMENT & AGENCY OBLIGATIONS-60.0%
Federal Home Loan Bank
7.00%, 9/01/11 $ 386 394,472
7.00%, 1/01/12 81 82,912
Federal Home Loan Mortgage Corp.
5.44%, 8/24/98 2,000 1,983,680
5.85%, 7/01/98 4,900 4,900,000
Federal National Mortgage Assn.
6.00%, 4/01/11 410 406,306
6.50%, 6/01/11 278 279,964
6.50%, 4/01/12 225 226,176
7.00%, 5/01/26 525 532,393
7.00%, 9/01/27 238 241,450
7.00%, 12/01/27 936 949,188
Government National Mortgage Assn.
6.50%, 3/15/28 708 706,005
7.00%, 2/15/28 793 805,776
7.00%, 5/15/28 795 807,978
7.50%, 3/15/28 611 627,922
U.S. Treasury Bond
6.125%, 11/15/27 2,620 2,807,487
U.S. Treasury Notes
6.00%, 8/15/00 2,100 2,120,013
6.25%, 4/30/01 1,240 1,263,052
6.375%, 5/15/99 1,395 1,405,030
6.50%, 8/31/01 995 1,022,054
6.50%, 5/31/02 350 361,648
------------
21,923,506
B-28
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS-6.9%
BANKING-1.7%
City National Bank California
6.375%, 1/15/08 $625 $ 628,375
FINANCIAL-1.3%
Goldman Sachs Group LP
7.20%, 11/01/06 (b) 450 482,337
INDUSTRIAL-3.1%
Computer Associates International, Inc.
6.375%, 4/15/05 (b) 600 603,461
Time Warner, Inc.
8.375%, 3/15/23 450 527,090
------------
1,130,551
PUBLIC UTILITIES-0.8%
Texas Utilities Co. Series C
6.375%, 1/01/08 300 294,908
------------
2,536,171
YANKEE BONDS-3.9%
Australian Gas Light Co.
6.40%, 4/15/08 (b) 545 553,634
Corporacion Andina de Fomento
7.25%, 3/01/07 400 415,283
St. George Bank, Ltd.
7.15%, 10/15/05 (b) 425 441,095
------------
1,410,012
Total Debt Obligations
(cost $25,501,782) 25,869,689
TOTAL INVESTMENTS -99.2%
(cost $33,551,744) 36,267,502
Other assets less liabilities-0.8% 290,424
NET ASSETS-100% $ 36,557,926
(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 June 30, 1998,
the aggregate market value of these securities amounted to $2,080,527 or 5.7%
of net assets.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-29
GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON & PREFERRED STOCKS-65.7%
UNITED STATES INVESTMENTS-50.9%
CONSUMER SERVICES-12.9%
BROADCASTING & CABLE-4.4%
Cox Communications, Inc. Cl.A (a) 4,000 $ 193,750
Scripps E.W. Co. Cl.A 5,000 274,063
Tele-Communications, Inc.-
Liberty Media Group Cl.A (a) 10,000 388,437
------------
856,250
ENTERTAINMENT & LEISURE-4.0%
Harley-Davidson, Inc. 12,000 465,000
Walt Disney Co. 3,000 315,187
------------
780,187
RETAIL-GENERAL MERCHANDISE-4.5%
Dayton Hudson Corp. 8,000 388,000
Home Depot, Inc. 6,000 498,375
------------
886,375
------------
2,522,812
FINANCE-11.6%
BANKING-MONEY CENTER-4.5%
BankAmerica Corp. 4,000 345,750
Chase Manhattan Corp. 7,000 528,500
------------
874,250
BROKERAGE & MONEY MANAGEMENT-3.3%
Merrill Lynch & Co., Inc. 4,000 369,000
Morgan Stanley Dean Witter and Co. 3,000 274,125
------------
643,125
INSURANCE-2.4%
American International Group, Inc. 2,000 292,000
Travelers Group, Inc. 3,000 181,875
------------
473,875
MISCELLANEOUS-1.4%
MBNA Corp. 8,000 264,000
------------
2,255,250
HEALTH CARE-6.7%
DRUGS-5.7%
Bristol-Myers Squibb Co. 5,000 574,688
Merck & Co., Inc. 4,000 535,000
------------
1,109,688
MEDICAL PRODUCTS-1.0%
Medtronic, Inc. 3,000 191,250
------------
1,300,938
CONSUMER STAPLES-6.1%
COSMETICS-3.0%
Avon Products, Inc. 2,000 155,000
Gillette Co. 3,800 215,412
The Estee Lauder Co., Inc. Cl.A 3,000 209,063
------------
579,475
RETAIL-FOOD & DRUG-1.5%
Kroger Co. (a) 7,000 300,125
TOBACCO-1.6%
Philip Morris Cos., Inc. 8,000 315,000
------------
1,194,600
TECHNOLOGY-5.9%
COMMUNICATION EQUIPMENT-0.7%
Tellabs, Inc. (a) 2,000 143,188
COMPUTER HARDWARE-0.9%
Compaq Computer Corp. 6,000 170,250
COMPUTER SERVICES-1.0%
First Data Corp. 6,000 199,875
COMPUTER SOFTWARE-0.4%
Microsoft Corp. (a) 700 75,884
NETWORKING SOFTWARE-1.9%
Cisco Systems, Inc. (a) 4,000 368,375
SEMI-CONDUCTOR COMPONENTS-1.0%
Altera Corp. (a) 2,800 82,687
Intel Corp. 1,500 111,141
------------
193,828
------------
1,151,400
ENERGY-2.7%
DOMESTIC PRODUCERS-0.3%
Apache Corp. 2,000 63,000
OIL SERVICE-2.4%
Halliburton Co. 4,000 178,250
Noble Drilling Corp. (a) 12,000 288,750
------------
467,000
------------
530,000
UTILITIES-2.5%
TELEPHONE UTILITY-2.5%
WorldCom, Inc. 10,000 483,438
MULTI INDUSTRY COMPANIES-1.6%
Tyco International, Ltd. 3,400 214,200
U.S. Industries, Inc. 4,000 99,000
------------
313,200
B-30
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
CAPITAL GOODS-0.9%
MISCELLANEOUS-0.9%
United Technologies Corp. 2,000 $ 185,000
Total United States Investments
(cost $7,584,828) 9,936,638
FOREIGN INVESTMENTS-14.8%
BRAZIL-0.6%
Telecomunicacoes Brasileiras, SA (ADR) 1,000 109,188
DENMARK-0.6%
Ratin Series B 600 127,083
FINLAND-2.5%
Nokia AB OYJ Corp. Cl. A 5,000 368,086
Orion-Yhtyma OY Cl.B 4,200 129,501
------------
497,587
FRANCE-2.1%
Sanofi, SA 1,000 117,604
SEITA 2,000 90,643
Total, SA Cl.B 1,500 195,015
------------
403,262
GERMANY-1.0%
Adidas-Salomon AG 500 87,194
ProSieben Media AG pfd. 2,000 103,690
------------
190,884
HONG KONG-0.3%
Cheung Kong Holdings, Ltd. 7,000 34,422
Hutchison Whampoa, Ltd. 6,000 31,672
------------
66,094
JAPAN-1.0%
Canon, Inc. 2,000 45,563
Fuji Photo Film Co. 2,000 69,863
Honda Motor Co. 2,000 71,455
------------
186,881
NETHERLANDS-2.6%
Akzo Nobel NV (a) 1,000 222,457
ASM Lithography Holdings NV 3,000 88,845
ING Groep NV 3,000 196,581
------------
507,883
SPAIN-0.5%
Telefonica de Espana 2,000 92,468
SWEDEN-0.5%
Astra AB Series A 5,000 102,182
SWITZERLAND-1.2%
Nestle, SA 50 107,178
Zurich Versicherungsgesellschaft 200 127,848
------------
235,026
UNITED KINGDOM-1.9%
BPB Plc 20,000 121,220
Compass Group Plc 12,000 138,051
Tomkins Plc 9,000 48,876
United News & Media Plc 4,000 55,969
------------
364,116
Total Foreign Investments
(cost $2,348,703) 2,882,654
Total Common & Preferred Stocks
(cost $9,933,531) 12,819,292
DEBT OBLIGATIONS-17.7%
U.S. GOVERNMENT & AGENCY OBLIGATIONS-14.0%
Federal Home Loan Mortgage Corp.
7.00%, 9/01/11 6,667,060
Federal National Mortgage Assn.
6.00%, 4/01/11 82 81,261
6.50%, 1/01/11 52 52,838
6.50%, 5/01/13 50 49,792
7.00%, 12/01/11 40 40,675
7.00%, 5/01/26 71 72,405
7.00%, 3/01/27 121 122,398
7.00%, 12/01/27 148 149,871
Government National Mortgage Assn.
6.50%, 3/15/28 184 183,959
7.00%, 2/15/28 148 150,822
7.50%, 4/15/27 118 120,940
U.S. Treasury Bond
6.125%, 11/15/27 390 417,909
U.S. Treasury Notes
6.375%, 5/15/99 390 392,804
6.50%, 5/31/02 810 836,957
------------
2,739,691
CORPORATE DEBT OBLIGATIONS-2.7%
AUTOMOTIVE-0.4%
Federal Mogul Corp.
7.75%, 7/01/06 75 75,000
BANKING-0.4%
Chase Manhattan Corp.
6.75%, 8/15/08 80 82,764
INDUSTRIAL-1.9%
Auburn Hills Trust
12.00%, 5/01/20 50 82,451
Beckman Instruments, Inc.
7.45%, 3/04/08 (b) 40 40,648
B-31
GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
Coltec Industries, Inc.
7.50%, 4/15/08 (b) $ 60 $ 59,700
Iridium LLC/CAP
10.875%, 7/15/05 60 59,850
Time Warner, Inc.
9.125%, 1/15/13 100 123,341
------------
365,990
------------
523,754
YANKEE BONDS-1.0%
Corporacion Andina de Fomento
7.25%, 3/01/07 100 103,821
Credit Suisse First Boston
6.50%, 5/01/08 (b) 85 85,977
------------
189,798
Total Debt Obligations
(cost $3,404,523) 3,453,243
SHORT-TERM DEBT SECURITIES -16.9%
Federal Home Loan Mortgage Corp.
5.85%, 7/01/98 3,300
(amortized cost $3,300,000) 3,300,000
TOTAL INVESTMENTS -100.3%
(cost $16,638,054) 19,572,535
Other assets less liabilities-(0.3%) (67,071)
NET ASSETS-100% $19,505,464
(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 June 30, 1998,
the aggregate market value of these securities amounted to $186,325 or 1.0% of
net assets.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-32
TECHNOLOGY PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS-92.4%
TECHNOLOGY-90.9%
COMMUNICATIONS EQUIPMENT-10.4%
Alcatel Alsthom (ADR) (a) 50,000 $ 2,034,375
Glenayre Technologies, Inc. (b) 62,900 680,106
Nokia Corp. (ADR) (c) 45,400 3,294,337
PairGain Technologies, Inc. 24,000 417,750
Tellabs, Inc. (b) 43,600 3,121,488
------------
9,548,056
COMPUTER HARDWARE-10.5%
Apex PC Solutions, Inc. (b) 30,300 844,613
Compaq Computer Corp. 122,300 3,470,262
Dell Computer Corp. (b) 57,800 5,362,756
------------
9,677,631
COMPUTER PERIPHERALS-1.6%
Lexmark International Group, Inc. Cl.A (b) 24,000 1,464,000
COMPUTER SERVICES-14.2%
Computer Sciences Corp. 35,900 2,297,600
DST Systems, Inc. (b) 39,625 2,219,000
First Data Corp. 57,200 1,905,475
Fiserv, Inc. (b) 41,600 1,766,700
Galileo International, Inc. 21,000 946,313
Gartner Group, Inc. Cl.A (b) 32,800 1,146,975
Renaissance Worldwide, Inc. (b) 26,540 578,074
SunGard Data Systems, Inc. (b) 57,400 2,202,725
------------
13,062,862
COMPUTER SOFTWARE-18.3%
Cadence Design Systems, Inc. (b) 34,000 1,062,500
HBO & Co. 90,000 3,175,313
Health Management Systems, Inc. (b) 61,900 700,244
I2 Technologies, Inc. (b) 8,000 281,500
Industri-Matematik International Corp. (b) 25,300 277,509
Interplay Entertainment Corp. (b) 33,000 192,844
Intuit, Inc. (b) 57,800 3,542,056
J.D. Edwards & Co. (b) 12,400 532,425
Microsoft Corp. (b) 16,000 1,734,500
Networks Associates, Inc. (b) 69,700 3,334,709
Pegasystems, Inc. (b) 21,000 570,938
PeopleSoft, Inc. (b) 32,000 1,503,000
------------
16,907,538
NETWORKING SOFTWARE-14.9%
America Online, Inc. 6,000 636,000
Ascend Communications, Inc. (b) 14,800 733,062
Bay Networks, Inc. (b) 30,000 967,500
CIENA Corp. (b) 30,500 2,121,656
Cisco Systems, Inc. (b) 66,600 6,133,444
FORE Systems, Inc. (b) 100,500 2,660,109
Newbridge Networks Corp. (b) 21,000 502,688
------------
13,754,459
SEMI-CONDUCTOR CAPITAL EQUIPMENT-3.6%
Amkor Technology, Inc. (b) 41,100 384,028
Applied Materials, Inc. (b) 39,300 1,160,578
KLA-Tencor Corp. (b) 38,000 1,053,313
Teradyne, Inc. (b) 25,800 690,150
------------
3,288,069
SEMI-CONDUCTOR COMPONENTS-8.7%
Altera Corp. (b) 66,100 1,952,016
Cirrus Logic, Inc. 12,900 143,916
Intel Corp. 17,200 1,274,412
PMC-Sierra, Inc. (b) 23,700 1,109,456
Taiwan Semiconductor
Manufacturing Co., Ltd. (ADR) (b)(d) 44,000 742,500
Texas Instruments, Inc. 26,300 1,533,619
Xilinx, Inc. (b) 36,400 1,238,737
------------
7,994,656
MISCELLANEOUS-8.7%
Ingram Micro, Inc. Cl.A (b) 50,000 2,212,500
Sanmina Corp. (b) 59,800 2,584,482
Solectron Corp. (b) 48,500 2,040,031
Tech Data Corp. (b) 28,500 1,222,828
------------
8,059,841
------------
83,757,112
UTILITIES-1.2%
TELEPHONE UTILITY-1.2%
WorldCom, Inc. 22,700 1,097,403
CONSUMER SERVICES-0.3%
MISCELLANEOUS-0.3%
Equifax, Inc. 8,000 290,500
Total Common Stocks
(cost $62,912,346) 85,145,015
B-33
TECHNOLOGY PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS-7.9%
COMMERCIAL PAPER-7.5%
American Express Credit Corp.
5.57%, 7/02/98 $ 990 $ 989,847
Ford Motor Credit Corp.
5.62%, 7/06/98 2,500 2,498,048
5.63%, 7/09/98 575 574,281
Prudential Funding Corp.
5.62%, 7/14/98 2,780 2,774,358
------------
6,836,534
TIME DEPOSIT-0.4%
State Street Bank and Trust Co.
5.25%, 7/01/98 385 385,000
Total Short-Term Investments
(amortized cost $7,221,534) 7,221,534
TOTAL INVESTMENTS-100.3%
(cost $70,133,880) 92,366,549
Other assets less liabilities-(0.3%) (235,838)
NET ASSETS-100% $92,130,711
(a) Country of origin--France
(b) Non-income producing security.
(c) Country of origin--Finland.
(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
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-74.9%
CONSUMER PRODUCTS & SERVICES-38.3%
ADVERTISING-0.1%
Princeton Video Image, Inc. (a) 16,100 $ 73,456
AIRLINES-4.4%
Alaska Air Group, Inc. (a) 36,000 1,964,250
America West Airlines, Inc. Cl.B (a) 45,200 1,291,025
Mesa Air Group, Inc. (a) 58,100 470,247
------------
3,725,522
APPAREL-3.4%
Nautica Enterprises, Inc. (a) 24,900 669,188
Stride Rite Corp. 44,100 664,256
Tommy Hilfiger Corp. (a) 11,800 737,500
Wolverine World Wide, Inc. 37,900 821,956
------------
2,892,900
BROADCASTING & CABLE-2.1%
Sinclair Broadcast Group, Inc. Cl.A (a) 26,200 751,612
Young Broadcasting Corp. Cl.A (a) 15,100 982,444
------------
1,734,056
BUSINESS SERVICES-2.7%
Carey International, Inc. (a) 29,600 832,500
FirstService Corp. (a) 5,400 68,850
Renaissance Worldwide, Inc. (a) 30,000 653,438
TeleSpectrum Worldwide, Inc. (a) 81,700 717,428
------------
2,272,216
ENTERTAINMENT & LEISURE-4.6%
Bally Total Fitness Holding Corp. (a) 29,500 1,062,000
Family Golf Centers, Inc. (a) 15,250 386,016
N2K, Inc. (a) 15,600 306,637
Premier Parks, Inc. (a) 18,200 1,212,575
Signature Resorts, Inc. (a) 54,400 897,600
------------
3,864,828
FUNERAL SERVICES-0.6%
Carriage Services, Inc. Cl.A (a) 20,100 505,012
RESTAURANTS & LODGING-1.9%
CapStar Hotel Co. (a) 34,300 960,400
Florida Panthers Holdings, Inc. Cl.A (a) 32,000 630,000
------------
1,590,400
RETAILING-16.4%
Abercrombie & Fitch Co. Cl.A (a) 23,100 1,016,400
Avis Rent A Car, Inc. (a) 25,800 638,550
Brylane, Inc. (a) 21,300 979,800
Budget Group, Inc. Cl.A (a) 56,700 1,810,856
Cash America International, Inc. 6,700 102,175
Circuit City Stores, Inc.- Car
Max Group (a) 97,000 988,188
Furniture Brands International, Inc. (a) 27,200 763,300
Industrie Natuzzi SpA (ADR) (b) 40,800 1,060,800
Mens Wearhouse, Inc. (a) 23,850 787,795
Movado Group, Inc. 18,500 558,469
Pacific Sunwear of California (a) 32,775 1,149,174
Petco Animal Supplies, Inc. (a) 23,500 470,000
PETsMART, Inc. (a) 38,700 386,395
Tiffany & Co. 31,100 1,492,800
Transport World Entertainment Corp. (a) 7,600 326,325
United Rentals, Inc. (a) 29,500 1,239,000
------------
13,770,027
MISCELLANEOUS-2.1%
Central Garden & Pet Co. (a) 16,200 503,213
Century Business Services, Inc. (a) 58,700 1,170,331
Hines Horticulture, Inc. (a) 11,900 131,272
------------
1,804,816
------------
32,233,233
BASIC INDUSTRIES-10.5%
BUILDING & RELATED-0.4%
Associate Materials, Inc. (a) 26,200 347,150
METAL HARDWARE-2.4%
Bethlehem Steel Corp. (a) 161,100 2,003,681
METALS & MINING-0.2%
Royal Oak Mines, Inc. (a) 242,000 211,750
TEXTILE PRODUCTS-2.9%
Mohawk Industries, Inc. (a) 66,850 2,118,309
Novel Denim Holdings, Ltd. (a) 11,500 299,000
------------
2,417,309
B-35
QUASAR PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------------
TRANSPORTATION & SHIPPING-4.6%
Consolidated Freightways Corp. (a) 87,700 $1,222,319
Knightsbridge Tankers, Ltd. 21,900 584,456
Marine Transport Corp. 16,100 65,910
OMI Corp. (a) 161,000 1,288,000
Teekay Shipping Corp. 28,000 701,750
------------
3,862,435
------------
8,842,325
TECHNOLOGY-8.9%
COMMUNICATIONS EQUIPMENT-1.1%
Comverse Technology, Inc. (a) 17,300 897,978
COMPUTER HARDWARE-1.0%
Apex PC Solutions, Inc. (a) 31,400 875,275
COMPUTER SOFTWARE & SERVICES-3.8%
Checkfree Corp. (a) 19,500 574,640
DBT Online, Inc. (a) 35,200 950,400
Insight Enterprises, Inc. (a) 30,500 1,218,094
Preview Travel, Inc. (a) 11,700 401,091
QAD, Inc. (a) 6,700 60,719
------------
3,204,944
SEMI-CONDUCTOR EQUIPMENT-0.8%
Brooks Automation, Inc. (a) 24,200 316,113
Photronics, Inc. (a) 14,500 319,906
------------
636,019
TELECOMMUNICATIONS-1.9%
Globecomm Systems, Inc. (a) 13,300 119,700
GST Telecommunications, Inc. (a) 31,800 458,119
Millicom International Cellular, SA (a)(c) 23,500 1,027,390
------------
1,605,209
MISCELLANEOUS-0.3%
Excalibur Technologies Corp. (a) 20,100 222,356
Seitel, Inc. (a) 2,800 45,325
------------
267,681
------------
7,487,106
HEALTH CARE-6.3%
BIOTECHNOLOGY-3.3%
Corixa Corp. (a) 12,000 82,125
GelTex Pharmaceuticals, Inc. (a) 63,410 1,184,974
Gensia Sicor, Inc. (a) 80,100 317,897
MedImmune, Inc. (a) 19,000 1,189,875
------------
2,774,871
DRUGS, HOSPITAL SUPPLIES &
MEDICAL SERVICES-3.0%
Aradigm Corp. (a) 32,900 448,263
Physio-Control International Corp. (a) 33,700 887,784
Synetic, Inc. (a) 12,800 731,200
Veterinary Centers of America, Inc. (a) 26,100 491,822
------------
2,559,069
------------
5,333,940
FINANCIAL SERVICES-5.4%
INSURANCE-0.5%
Reinsurance Group of America, Inc. (a) 8,500 436,156
REAL ESTATE-4.8%
Chelsea GCA Realty, Inc. 45,500 1,820,000
Glenborough Realty Trust, Inc. 24,400 643,550
Golf Trust of America, Inc. 21,700 745,938
Taubman Centers, Inc. 56,600 806,550
------------
4,016,038
OTHER-0.1%
International Alliance Services, Inc.
warrants, expiring 1/01/49 (a) 9,700 95,933
------------
4,548,127
CONSUMER MANUFACTURING-3.0%
AUTO & RELATED-3.0%
Group 1 Automotive, Inc. (a) 43,700 699,200
Miller Industries, Inc. (a) 49,350 382,462
Monaco Coach Corp. (a) 23,800 699,125
United Auto Group, Inc. (a) 33,600 735,000
------------
2,515,787
ENERGY-2.5%
OIL & GAS SERVICES-2.5%
Oceaneering International, Inc. (a) 31,000 550,250
Parker Drilling Co. (a) 92,700 654,694
Southern Union Co. 28,925 932,831
------------
2,137,775
Total Common Stocks & Other Investments
(cost $57,897,448) 63,098,293
B-36
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
SHORT-TERM
INVESTMENTS-24.3%
U.S. GOVERNMENT & AGENCIES-23.9%
Federal Home Loan Mortgage Corp.
Zero Coupon, 7/27/98 $3,000 $ 2,988,127
5.45%, 8/24/98 3,000 2,975,475
5.48%, 7/27/98 3,000 2,988,127
5.85%, 7/01/98 6,200 6,200,000
Federal National Mortgage Assn.
5.45%, 8/14/98 5,000 4,966,694
------------
20,118,423
TIME DEPOSIT-0.4%
State Street Bank and Trust Co.
5.25%, 7/01/98 341 341,000
Total Short-Term Investments
(amortized cost $20,459,423) 20,459,423
TOTAL INVESTMENTS-99.2%
(cost $78,356,871) 83,557,716
Other assets less liabilities-0.8% 700,248
NET ASSETS-100% $84,257,964
(a) Non-income producing security.
(b) Country of origin--Italy.
(c) Country of origin--Luxembourg.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-37
REAL ESTATE INVESTMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-97.2%
REAL ESTATE INVESTMENT TRUSTS-97.2%
APARTMENTS-10.4%
Avalon Bay Communities, Inc. 17,334 $ 658,692
Essex Property Trust, Inc. 20,100 623,100
Security Capital Pacific Trust 23,100 519,750
------------
1,801,542
DIVERSIFIED-9.9%
Correctional Properties Trust (a) 15,700 317,925
Excel Legacy Corp. (a) 7,100 31,284
Glenborough Realty Trust, Inc. 25,900 683,113
Golf Trust of America, Inc. 12,400 426,250
Vornado Realty Trust 6,400 254,000
------------
1,712,572
HOTELS-14.5%
American General Hospitality Corp. 17,500 371,875
Innkeepers USA Trust 25,600 323,200
Patriot American Hospitality, Inc. 25,300 605,619
Starwood Hotels & Resorts 18,300 884,118
Sunstone Hotel Investors, Inc. 25,100 334,144
------------
2,518,956
OFFICE-18.0%
Arden Realty Group, Inc. 22,800 589,950
Boston Properties, Inc. 9,100 313,950
Cornerstone Properties, Inc. 20,500 361,312
Crescent Real Estate Equities Co. 19,400 652,325
Mack-Cali Realty Corp. 15,200 522,500
SL Green Realty Corp. 29,800 670,500
------------
3,110,537
OFFICE-INDUSTRIAL MIX-20.7%
Brandywine Realty Trust 24,600 550,425
Duke Realty Investments, Inc. 15,000 354,375
Equity Office Properties Trust 28,400 805,850
Great Lakes REIT, Inc. 10,800 188,325
Highwoods Properties, Inc. 17,400 562,238
Reckson Associates Realty Corp. 21,000 496,125
Reckson Services Industries, Inc. (a) 9,880 33,654
Spieker Properties, Inc. 15,400 596,750
------------
3,587,742
REGIONAL MALLS-5.8%
Macerich Co. 18,500 542,281
Mills Corp. 19,200 460,800
------------
1,003,081
SHOPPING CENTERS-8.5%
Entertainment Properties Trust 18,000 328,500
Excel Realty Trust, Inc. 11,600 334,225
Pacific Retail Trust Co. (b) 19,000 247,000
Pan Pacific Retail Properties, Inc. 28,800 558,000
------------
1,467,725
STORAGE-3.7%
Public Storage, Inc. 23,200 649,600
WAREHOUSE & INDUSTRIAL-5.7%
Cabot Industrial Trust 18,800 401,850
Security Capital Group, Inc. Cl.B
warrants, expiring 9/18/98 (a) 498 171
Security Capital Industrial Trust 23,600 590,000
------------
992,021
Total Common Stocks & Other Investments
(cost $17,401,282) 16,843,776
SHORT-TERM INVESTMENT-3.4%
TIME DEPOSIT-3.4%
State Street Cayman Islands
5.25%, 7/01/98
(amortized cost $585,000) $ 585 585,000
TOTAL INVESTMENTS-100.6%
(cost $17,986,282) 17,428,776
Other assets less liabilities-(0.6%) (107,354)
NET ASSETS-100% $17,321,422
(a) Non-income producing security.
(b) Illiquid security valued at fair market value (see Note A).
See Notes to Financial Statements.
B-38
HIGH-YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS-95.5%
AIRLINES-2.3%
Canadian Airlines Corp.
10.00%, 5/01/05 $300 $304,500
BANKING-2.0%
Fuji Jgb Investment LLC
9.87%, 12/31/49 (a) (b) 300 264,098
BUSINESS SERVICES-2.9%
ATC Group Services, Inc.
12.00%, 1/15/08 (a) 40 37,000
Employee Solutions, Inc.
10.00%, 10/15/04 50 49,500
United States Office Product Co.
9.75%, 6/15/08 (a) 300 297,000
------------
383,500
CHEMICALS-2.4%
Aqua Chemical, Inc.
11.25%, 7/01/08 (a) 300 305,250
Climachem, Inc.
10.75%, 12/01/07 10 10,475
------------
315,725
COMMUNICATIONS-21.6%
Dobson Wireline Co.
12.25%, 6/15/08 (a) 300 292,500
Globalstar LP
10.75%, 11/01/04 110 105,600
Iridium Capital Corp. LLC
14.00%, 7/15/05 (c) 50 55,875
Iridium Operating LLC
10.875%, 7/15/05 500 498,750
Long Distance International, Inc.
12.25%, 4/15/08 (a) 500 497,500
Nextel Communications, Inc.
Zero Coupon, 10/31/07 (c) 500 327,500
Price Communications Wireless
9.125%, 12/15/06 (a) 300 300,000
Startec Global Communications
12.00%, 5/15/08 (a) 300 292,500
United States Xchange LLC
15.00%, 7/01/08 (a) 500 515,000
------------
2,885,225
CONGLOMERATES-2.2%
Wesco Distribution, Inc.
9.125%, 6/01/08 (a) 300 297,000
CONSUMER MANUFACTURING-5.3%
Imperial Home Decor Group, Inc.
11.00%, 3/15/08 (a) 400 416,000
Samsonite Corp.
10.75%, 6/15/08 (a) 300 298,125
------------
714,125
ELECTRONICS-2.2%
CHS Electronics, Inc.
9.875%, 4/15/05 (a) 300 296,250
ENERGY-9.0%
Dailey International, Inc.
9.50%, 2/15/08 575 563,500
Gothic Production Corp.
11.125%, 5/01/05 (a) 300 288,750
Northern Offshore ASA
10.00%, 5/15/05 (a) 300 288,000
Transamerican Energy Corp.
11.50%, 6/15/02 60 56,100
------------
1,196,350
ENTERTAINMENT & LEISURE-0.1%
Livent, Inc.
9.375%, 10/15/04 10 10,025
FINANCIAL-2.1%
Emergent Group, Inc.
10.75%, 9/15/04 225 165,375
Metris Companies, Inc.
10.00%, 11/01/04 50 52,500
Wilshire Financial Services
Group, Inc.
13.00%, 8/15/04 55 59,400
------------
277,275
FOOD/BEVERAGES-2.5%
Favorite Brands International, Inc.
10.75%, 5/15/06 (a) 300 304,500
Grupo Azucarero Mexico SA de CV
11.50%, 1/15/05 (a) 40 34,350
------------
338,850
HEALTHCARE-0.7%
Packard Bioscience, Inc.
9.375%, 3/01/07 100 97,500
INDUSTRIAL-7.6%
Advanced Accessory Systems
9.75%, 10/01/07 (a) 300 302,250
Anchor Lamina, Inc.
9.875%, 2/01/08 75 73,875
Elgar Holdings, Inc.
9.875%, 2/01/08 (a) 50 46,750
Marsulex, Inc.
9.625%, 7/01/08 (a) 300 304,125
Morris Material Handling, Inc.
9.50%, 4/01/08 (a) 300 281,250
------------
1,008,250
MEDIA-4.0%
Perry-Judd, Inc.
10.625%, 12/15/07 (a) 25 26,375
Regional Independent Media Group
10.50%, 7/01/08 (a) 500 505,000
------------
531,375
B-39
HIGH-YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------------
METALS & MINERALS-4.5%
Great Central Mines, Ltd.
8.875%, 4/01/08 (a) $ 300 $ 296,250
P&L Coal Holdings Corp.
9.625%, 5/15/08 (a) 300 309,750
------------
606,000
METALS & MINING-5.2%
Schuff Steel Co.
10.50%, 6/01/08 (a) 400 396,000
Simcala, Inc.
9.625%, 4/15/06 (a) 300 296,625
------------
692,625
PAPER / PACKAGING-1.5%
Plainwell, Inc.
11.00%, 3/01/08 (a) 100 101,000
Riverwood International Corp.
10.875%, 4/01/08 100 101,500
------------
202,500
REAL ESTATE-2.3%
LNR Property Corp.
9.375%, 3/15/08 (A) 300 302,250
RETAIL-4.6%
HMV Media Group Plc
10.25%, 5/15/08 (a) 300 306,000
Home Interiors & Gifts, Inc.
10.125%, 6/01/08 (a) 300 308,250
------------
614,250
TECHNOLOGY-6.2%
American Mobile Satellite Corp.
12.25%, 4/01/08 (a) 300 283,500
Concentric Network Corp.
12.75%, 12/15/07 25 26,562
Telex Communications, Inc.
10.50%, 5/01/07 25 22,625
Viasystems, Inc.
9.75%, 6/01/07 500 496,250
------------
828,937
TRANSPORTATION-4.3%
American Commercial Lines LLC
10.25%, 6/30/08 (a) 300 305,250
Cathay International, Ltd.
13.00%, 4/15/08 (a) 300 265,500
------------
570,750
Total Corporate Debt Obligations
(cost $12,837,540) 12,737,360
PREFERRED STOCK-0.4%
Nextel Communications, Inc.
11.125%, 2/15/10 (a)
(cost $49,560) 0 52,530
SHORT-TERM INVESTMENT-1.9%
TIME DEPOSIT-1.9%
State Street Bank and Trust Co.
5.25%, 7/01/98
(cost $250,000) 250 250,000
TOTAL INVESTMENTS-97.8%
(cost $13,137,100) 13,039,890
Other assets less liabilities-2.2% 292,496
NET ASSETS-100% $ 13,332,386
(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 June 30, 1998,
the aggregate market value of these securities amounted to $9,712,478 or 72.8%
of net assets.
(b) Coupon will increase periodically based upon a predetermined schedule.
Stated interest rate in effect at June 30, 1998.
(c) 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
ADS - American Depositary Shares
FLIRB - Front Load Interest Reduction Bond
FRN - Floating Rate Note
GDR - Global Depositary Receipts
GDS - Global Depositary Shares
IAN - Interest Arrears Note
PDI - Past Due Interest
See Notes to Financial Statements.
B-40
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
PREMIER GLOBAL GROWTH AND SHORT-TERM
GROWTH BOND INCOME MULTI-MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $591,903,686, $24,542,635,
$289,758,438 and $6,391,416,
respectively) $814,962,999 $24,603,825 $328,021,002 $6,104,963
Cash, at value (cost $361, $9,320,
$366 and $310,
respectively) 361 9,320 366 310
Dividends receivable 675,583 -0- 374,796 -0-
Interest receivable 656 478,780 143 145,563
Receivable for investment
securities sold -0- -0- 2,214,704 -0-
Receivable from Adviser -0- -0- -0- 3,780
Total assets 815,639,599 25,091,925 330,611,011 6,254,616
LIABILITIES
Advisory fee payable 627,213 13,139 162,824 -0-
Payable for investment securities
purchased 399,731 -0- 2,097,523 -0-
Unrealized depreciation on
forward exchange currency contracts -0- 706 -0- 31,376
Accrued expenses 186,583 13,397 83,119 6,626
Total liabilities 1,213,527 27,242 2,343,466 38,002
NET ASSETS $814,426,072 $25,064,683 $328,267,545 $6,216,614
COMPOSITION OF NET ASSETS
Capital stock, at par $30,255 $2,235 $15,973 $633
Additional paid-in capital 577,779,874 24,506,746 263,855,852 7,414,689
Undistributed net investment income 212,983 387,032 1,772,741 40,935
Accumulated net realized gain
(loss) on investments and
foreign currency transactions 13,343,647 110,833 24,360,419 (920,687)
Net unrealized appreciation
(depreciation) of investments
and foreign currency
denominated assets and liabilities 223,059,313 57,837 38,262,560 (318,956)
$814,426,072 $25,064,683 $328,267,545 $6,216,614
Shares of capital stock
outstanding 30,255,644 2,235,069 15,972,577 632,923
Net asset value per share $26.92 $11.21 $20.55 $9.82
</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 TOTAL MONEY
SECURITIES RETURN INTERNATIONAL MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- --------- ------------- ---------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $41,815,797, $48,673,911,
$63,975,668 and $82,097,205,
respectively) $42,163,139 $53,396,364 $72,751,914 $82,097,205
Cash, at value (cost $33, $413,
$121,439 and $117,913,
respectively) 33 413 123,151 117,913
Interest receivable 472,973 281,437 614 144,283
Dividends receivable -0- 39,732 137,606 -0-
Receivable for investment
securities sold -0- 235,321 426,317 -0-
Unrealized appreciation of
forward exchange currency
contracts -0- -0- 7,359 -0-
Total assets 42,636,145 53,953,267 73,446,961 82,359,401
LIABILITIES
Advisory fee payable 20,593 26,640 40,250 37,805
Payable for investment securities
purchased -0- 466,116 333,896 -0-
Dividends payable -0- -0- -0- 374,657
Accrued expenses 17,361 23,409 57,974 22,880
Total liabilities 37,954 516,165 432,120 435,342
NET ASSETS $42,598,191 $53,437,102 $73,014,841 $81,924,059
COMPOSITION OF NET ASSETS
Capital stock, at par $3,623 $3,147 $4,403 $81,924
Additional paid-in capital 40,523,453 45,455,931 63,450,511 81,841,606
Undistributed (overdistributed)
net investment income 1,039,030 626,577 (654,618) 1,046
Accumulated net realized gain
(loss) on investments and
foreign currency transactions 684,743 2,628,994 1,426,498 (517)
Net unrealized appreciation of
investments and foreign
currency denominated assets
and liabilities 347,342 4,722,453 8,788,047 -0-
$42,598,191 $53,437,102 $73,014,841 $81,924,059
Shares of capital stock
outstanding 3,622,893 3,146,540 4,403,195 81,924,333
Net asset value per share $11.76 $16.98 $16.58 $1.00
</TABLE>
See Notes to Financial Statements.
B-42
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
GLOBAL DOLLAR NORTH AMERICAN UTILITY
GOVERNMENT GOVERNMENT INCOME INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------------- ---------- ---------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $15,674,017, $33,684,893,
$19,936,859 and $220,635,019,
respectively) $14,595,221 $33,970,430 $26,119,962 $298,714,564
Cash, at value (cost $159,246,
$31,374, $37,575 and $576,
respectively) 159,246 31,344 37,575 576
Receivable for investment
securities sold 384,396 80,584 -0- 1,402,061
Interest receivable 302,471 232,856 -0- 46
Dividends receivable -0- -0- 46,741 290,152
Deferred organization expenses 2,791 3,605 2,620 2,410
Total assets 15,444,125 34,318,819 26,206,898 300,409,809
LIABILITIES
Advisory fee payable 6,436 18,898 18,797 172,788
Payable for investment securities
purchased -0- -0- -0- 1,928,965
Accrued expenses 12,747 46,543 1,935 79,192
Total liabilities 19,183 65,441 20,732 2,180,945
NET ASSETS $15,424,942 $34,253,378 $26,186,166 $298,228,864
COMPOSITION OF NET ASSETS
Capital stock, at par $1,226 $2,787 $1,560 $11,858
Additional paid-in capital 16,016,410 32,785,673 19,594,660 198,666,088
Undistributed net investment
income 670,942 1,422,218 246,306 1,007,361
Accumulated net realized gain
(loss) on investments and
foreign currency transactions (184,290) (242,068) 160,537 20,464,112
Net unrealized appreciation
(depreciation) of investments
and foreign currency
denominated assets and
liabilities (1,079,346) 284,768 6,183,103 78,079,445
$15,424,942 $34,253,378 $26,186,166 $298,228,864
Shares of capital stock
outstanding 1,226,388 2,786,886 1,560,020 11,858,536
Net asset value per share $12.58 $12.29 $16.79 $25.15
</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 $44,655,473, $33,551,744,
$16,638,054 and $70,133,880,
respectively) $48,218,893 $36,267,502 $19,572,535 $92,366,549
Cash, at value (cost $287,632,
$124,939, $0 and $574,
respectively) 287,955 124,974 -0- 574
Dividends receivable 235,244 14,112 16,287 24,209
Deferred organization expenses 2,454 2,646 2,646 11,049
Interest receivable 203 224,909 29,571 56
Receivable for investment
securities sold -0- -0- -0- 437,688
Total assets 48,744,749 36,634,143 19,621,039 92,840,125
LABILITIES
Due to custodian -0- -0- 60,225 -0-
Payable for investment securities
purchased 165,504 -0- -0- 618,000
Advisory fee payable 19,557 17,872 6,842 68,256
Accrued expenses 49,691 58,345 48,508 23,158
Total liabilities 234,752 76,217 115,575 709,414
NET ASSETS $48,509,997 $36,557,926 $19,505,464 $92,130,711
COMPOSITION OF NET ASSETS
Capital stock, at par $3,192 $2,756 $1,294 $6,132
Additional paid-in capital 42,246,711 32,830,312 16,067,077 69,376,873
Undistributed (overdistributed)
net investment income 569,091 616,895 147,020 (147,857)
Accumulated net realized gain
on investments and
foreign currency transactions 2,127,084 392,275 355,638 662,894
Net unrealized appreciation of
investments and foreign
currency denominated assets
and liabilities 3,563,919 2,715,688 2,934,435 22,232,669
$48,509,997 $36,557,926 $19,505,464 $92,130,711
Shares of capital stock
outstanding 3,192,469 2,755,506 1,293,818 6,131,713
Net asset value per share $15.20 $13.27 $15.08 $15.03
</TABLE>
See Notes to Financial Statements.
B-44
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
REAL ESTATE
QUASAR INVESTMENT HIGH-YIELD
PORTFOLIO PORTFOLIO PORTFOLIO
---------- ----------- ----------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $78,356,871, $17,986,282 and
$13,137,100, respectively) $83,557,716 $17,428,776 $13,039,890
Cash, at value (cost $671, $885 and $1,982,
respectively) 671 885 1,982
Receivable for investment securities sold 696,042 34,881 104,337
Dividends receivable 100,017 132,902 -0-
Deferred organization expenses 16,180 14,109 -0-
Interest receivable 49 85 201,871
Total assets 84,370,675 17,611,638 13,348,080
LIABILITIES
Advisory fee payable 50,958 6,440 6,495
Payable for investment securities purchased 35,788 240,190 -0-
Accrued expenses 25,965 43,586 9,199
Total liabilities 112,711 290,216 15,694
NET ASSETS $84,257,964 $17,321,422 $13,332,386
COMPOSITION OF NET ASSETS
Capital stock, at par $6,328 $1,533 $1,195
Additional paid-in capital 75,872,338 17,299,903 12,965,832
Undistributed net investment income 37,000 450,493 285,415
Accumulated net realized gain on investment
transactions 3,041,453 126,999 177,154
Net unrealized appreciation (depreciation) of
investments 5,200,845 (557,506) (97,210)
$84,257,964 $17,321,422 $13,332,386
Shares of capital stock
outstanding 6,328,037 1,533,299 1,195,112
Net asset value per share $13.32 $11.30 $11.16
</TABLE>
See Notes to Financial Statements.
B-45
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
SHORT-TERM
PREMIER GLOBAL GROWTH AND MULTI-
GROWTH BOND INCOME MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign tax
withheld of $57,643, $0,
$1,267 and $0, respectively) $ 2,863,527 $ -0- $ 2,483,369 $ -0-
Interest 678,205 626,933 360,258 228,141
Total investment income 3,541,732 626,933 2,843,627 228,141
EXPENSES
Advisory fee 3,200,706 75,773 905,109 17,714
Printing 89,999 1,605 34,597 873
Custodian 61,079 31,724 48,464 32,397
Audit and legal 59,074 2,776 23,769 812
Transfer agency 514 440 458 526
Directors' fees 391 643 660 793
Administrative fee -0- -0- 21,811 -0-
Miscellaneous 4,308 383 1,413 476
Total expenses 3,416,071 113,344 1,036,281 53,591
Less: expense reimbursement (240,762) (3,662) -0- (23,485)
Net expenses 3,175,309 109,682 1,036,281 30,106
Net investment income 366,423 517,251 1,807,346 198,035
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain (loss) on
investment transactions 20,958,666 47,933 24,585,084 (7,860)
Net realized gain (loss) on foreign
currency transactions -0- 81,150 (105) 217,759
Net change in unrealized
appreciation (depreciation) of
investments 132,949,090 173,586 9,896,293 (5,538)
Net change in unrealized
appreciation (depreciation) of
foreign currency denominated
assets and liabilities -0- (124,561) (15) (189,453)
Net gain on investments 153,907,756 178,108 34,481,257 14,908
NET INCREASE IN NET
ASSETS FROM OPERATIONS $154,274,179 $ 695,359 $ 36,288,603 $ 212,943
</TABLE>
See Notes to Financial Statements.
B-46
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
U.S. GOVERNMENT/
HIGH GRADE TOTAL MONEY
SECURITIES RETURN INTERNATIONAL MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------- ------------ ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 1,207,400 $ 560,673 $ 58,133 $ 2,281,465
Dividends (net of foreign tax
withheld of $0, $81, $99,316
and $0, respectively) -0- 267,358 728,518 -0-
Total investment income 1,207,400 828,031 786,651 2,281,465
EXPENSES
Advisory fee 117,198 149,683 331,793 201,300
Custodian 31,418 32,353 69,929 35,186
Printing 2,879 5,594 8,273 5,857
Audit and legal 1,892 5,697 6,324 6,250
Directors' fees 672 756 1,061 754
Transfer agency 327 481 428 572
Administrative fee -0- -0- -0- 12,190
Miscellaneous 576 395 868 1,477
Total expenses 154,962 194,959 418,676 263,586
Less: expense reimbursement -0- -0- (103,073) -0-
Net expenses 154,962 194,959 315,603 263,586
Net investment income 1,052,438 633,072 471,048 2,017,879
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain on investment
transactions 695,983 2,663,792 923,992 124
Net realized gain (loss) on foreign
currency transactions (723) (8) 1,124,005 -0-
Net change in unrealized
appreciation (depreciation) of
investments (314,303) 1,213,374 7,931,693 -0-
Net change in unrealized
appreciation (depreciation) of
foreign currency denominated
assets and liabilities -0- -0- (684,727) -0-
Net gain on investments 380,957 3,877,158 9,294,963 124
NET INCREASE IN NET
ASSETS FROM OPERATIONS $ 1,433,395 $ 4,510,230 $ 9,766,011 $ 2,018,003
</TABLE>
See Notes to Financial Statements.
B-47
STATEMENTS OF OPERATIONS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
NORTH
GLOBAL AMERICAN
DOLLAR GOVERNMENT UTILITY
GOVERNMENT INCOME INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ----------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 754,931 $ 1,610,056 $ 62,077 $ 312,940
Dividends (net of foreign tax
withheld of $0, $0, $2,824
and $18,693, respectively) -0- -0- 299,775 1,787,754
Total investment income 754,931 1,610,056 361,852 2,100,694
EXPENSES
Advisory fee 60,336 107,234 86,392 988,896
Custodian 28,061 57,754 25,530 46,599
Audit and legal 2,887 6,550 3,759 21,040
Amortization of organization
expenses 1,658 2,139 1,517 992
Printing 1,408 6,617 1,832 27,415
Directors' fees 736 682 391 660
Transfer agency 470 486 460 484
Administrative fee -0- -0- -0- 21,799
Miscellaneous 200 895 412 1,853
Total expenses 95,756 182,357 120,293 1,109,738
Less: expense reimbursement (19,330) (39,141) (10,892) -0-
Net expenses 76,426 143,216 109,401 1,109,738
Net investment income 678,505 1,466,840 252,451 990,956
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain (loss) on
investment transactions (177,545) 164,350 165,717 20,502,391
Net realized gain (loss) on foreign
currency transactions -0- (392,367) 131 (28,709)
Net change in unrealized
appreciation (depreciation) of
investments (1,006,861) (623,758) 1,845,018 24,222,823
Net change in unrealized
appreciation (depreciation) of
foreign currency denominated
assets and liabilities -0- (4,481) 2 (99)
Net gain (loss) on investments (1,184,406) (856,256) 2,010,868 44,696,406
NET INCREASE (DECREASE)
IN NET ASSETS FROM
OPERATIONS $ (505,901) $ 610,584 $ 2,263,319 $ 45,687,362
</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 $112,079,
$8,539, $9,505 and
$7,016, respectively) $ 821,355 $ 65,905 $ 83,364 $ 75,964
Interest 65,430 720,255 162,174 188,550
Total investment income 886,785 786,160 245,538 264,514
EXPENSES
Advisory fee 229,437 125,337 67,692 397,453
Custodian 95,744 64,881 77,474 31,074
Audit and legal 5,084 3,614 3,089 7,117
Printing 4,084 3,543 2,480 7,685
Amortization of organization
expenses 992 992 992 2,130
Directors' fees 777 1,721 619 865
Transfer agency 514 529 307 497
Miscellaneous 128 1,493 202 954
Total expenses 336,760 202,110 152,855 447,775
Less: expense reimbursement (118,794) (43,350) (67,112) (70,194)
Net expenses 217,966 158,760 85,743 377,581
Net investment income (loss) 668,819 627,400 159,795 (113,067)
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain on investment
transactions 2,300,455 431,228 392,627 3,204,514
Net realized gain (loss) on foreign
currency transactions 5,087 (13,197) (9,239) -0-
Net change in unrealized
appreciation of investments 2,664,283 1,522,473 1,858,330 16,841,420
Net change in unrealized
appreciation (depreciation) of
foreign currency denominated
assets and liabilities 5,261 460 60 -0-
Net gain on investments 4,975,086 1,940,964 2,241,778 20,045,934
NET INCREASE IN NET
ASSETS FROM OPERATIONS $ 5,643,905 $ 2,568,364 $ 2,401,573 $ 19,932,867
</TABLE>
See Notes to Financial Statements.
B-49
STATEMENTS OF OPERATIONS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
REAL ESTATE
QUASAR INVESTMENT HIGH-YIELD
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest $ 286,088 $ 15,039 $ 322,026
Dividends (net of foreign tax
withheld of $5,486, $0
and $0, respectively) 199,644 460,041 -0-
Total investment income 485,732 475,080 322,026
EXPENSES
Advisory fee 353,886 67,786 25,918
Custodian 49,820 38,064 14,734
Audit and legal 11,886 3,127 2,302
Printing 9,404 1,228 196
Amortization of organization
expenses 2,587 1,982 -0-
Directors' fees 631 668 685
Transfer agency 422 528 483
Miscellaneous 1,100 397 813
Total expenses 429,736 113,780 45,131
Less: expense reimbursement (93,544) (42,229) (12,301)
Net expenses 336,192 71,551 32,830
Net investment income 149,540 403,529 289,196
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENT
TRANSACTIONS
Net realized gain on investment
transactions 3,856,466 152,603 176,910
Net change in unrealized
appreciation (depreciation)
of investments 4,973,491 (1,589,967) (108,768)
Net gain (loss) on investments 8,829,957 (1,437,364) 68,142
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 8,979,497 $ (1,033,835) $ 357,338
</TABLE>
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
------------------------------------- -------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS
Net investment income $ 366,423 $ 595,531 $ 517,251 $ 934,603
Net realized gain (loss) on
investments and foreign
currency transactions 20,958,666 (6,667,622) 129,083 (551,283)
Net change in unrealized
appreciation (depreciation) of
investments and foreign
currency denominated assets
and liabilities 132,949,090 72,666,731 49,025 (187,415)
Net increase in net assets from
operations 154,274,179 66,594,640 695,359 195,905
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (748,382) (324,686) (359,373) (945,935)
Net realized gain on investments -0- -0- (126,325) (219,946)
CAPITAL STOCK TRANSACTIONS
Net increase 188,574,170 309,621,843 2,660,677 5,047,231
Total increase 342,099,967 375,891,797 2,870,338 4,077,255
NET ASSETS
Beginning of year 472,326,105 96,434,308 22,194,345 18,117,090
End of period (including
undistributed net investment
income of $212,983, $594,942,
$387,032 and $229,154,
respectively) $ 814,426,072 $ 472,326,105 $ 25,064,683 $ 22,194,345
</TABLE>
See Notes to Financial Statements.
B-51
STATEMENTS OF CHANGES
IN NET ASSETS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO SHORT-TERM MULTI-MARKET PORTFOLIO
------------------------------------- -------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS
Net investment income $ 1,807,346 $ 2,195,334 $ 198,035 $ 395,342
Net realized gain on investments
and foreign currency
transactions 24,584,979 27,935,671 209,899 111,719
Net change in unrealized
appreciation (depreciation) of
investments and foreign
currency denominated assets
and liabilities 9,896,278 15,634,977 (194,991) (181,535)
Net increase in net assets from
operations 36,288,603 45,765,982 212,943 325,526
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (2,226,956) (1,272,246) (630,815) (412,899)
Net realized gain on investments (28,160,219) (9,150,387) -0- -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 72,164,522 88,128,841 145,054 (535,499)
Total increase (decrease) 78,065,950 123,472,190 (272,818) (622,872)
NET ASSETS
Beginning of year 250,201,595 126,729,405 6,489,432 7,112,304
End of period (including
undistributed net investment
income of $1,772,741,
$2,192,351, $40,935 and
$473,715, respectively) $ 328,267,545 $ 250,201,595 $ 6,216,614 $ 6,489,432
</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
------------------------------------- -------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS
Net investment income $ 1,052,438 $ 1,860,009 $ 633,072 $ 822,012
Net realized gain on investments
and foreign currency
transactions 695,260 242,976 2,663,784 3,789,362
Net change in unrealized
appreciation (depreciation) of
investments and foreign
currency denominated assets
and liabilities (314,303) 558,819 1,213,374 1,754,576
Net increase in net assets from
operations 1,433,395 2,661,804 4,510,230 6,365,950
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (1,873,533) (1,409,036) (828,887) (480,826)
Net realized gain on investments (214,996) (54,796) (3,824,312) (1,019,434)
CAPITAL STOCK TRANSACTIONS
Net increase 7,055,547 5,849,902 10,660,102 12,178,929
Total increase 6,400,413 7,047,874 10,517,133 17,044,619
NET ASSETS
Beginning of year 36,197,778 29,149,904 42,919,969 25,875,350
End of period (including
undistributed net investment
income of $1,039,030,
$1,860,125, $626,577
and $822,392, respectively) $ 42,598,191 $ 36,197,778 $ 53,437,102 $ 42,919,969
</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
------------------------------------- -------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS
Net investment income $ 471,048 $ 478,040 $ 2,017,879 $ 3,452,183
Net realized gain (loss) on
investments and foreign
currency transactions 2,047,997 1,303,323 124 (298)
Net change in unrealized
appreciation of investments
and foreign currency
denominated assets and
liabilities 7,246,966 116,846 -0- -0-
Net increase in net assets from
operations 9,766,011 1,898,209 2,018,003 3,451,885
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (1,367,666) (523,610) (2,017,879) (3,452,183)
Net realized gain on investments (2,040,979) (836,368) -0- -0-
CAPITAL STOCK TRANSACTIONS
Net increase 5,947,077 15,848,071 14,340,114 2,814,828
Total increase 12,304,443 16,386,302 14,340,238 2,814,530
NET ASSETS
Beginning of year 60,710,398 44,324,096 67,583,821 64,769,291
End of period (including
undistributed/(distributions in
excess of net investment income)
net investment income of
$(654,618), $242,000, $1,046
and $1,046, respectively) $ 73,014,841 $ 60,710,398 $ 81,924,059 $ 67,583,821
</TABLE>
See Notes to Financial Statements.
B-54
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
NORTH AMERICAN GOVERNMENT
GLOBAL DOLLAR GOVERNMENT PORTFOLIO INCOME PORTFOLIO
------------------------------------- -------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS
Net investment income $ 678,505 $ 1,020,022 $ 1,466,840 $ 2,088,881
Net realized gain (loss) on
investments and foreign
currency transactions (177,545) 739,413 (228,017) 292,939
Net change in unrealized
appreciation (depreciation) of
investments and foreign
currency denominated assets
and liabilities (1,006,861) (463,672) (628,239) (243,915)
Net increase (decrease) in
net assets from operations (505,901) 1,295,763 610,584 2,137,905
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (1,020,590) (489,948) (2,126,978) (1,103,754)
Net realized gain on investments (745,193) (742,125) (285,326) -0-
CAPITAL STOCK TRANSACTIONS
Net increase 2,318,182 6,467,348 5,548,597 12,776,700
Total increase 46,498 6,531,038 3,746,877 13,810,851
NET ASSETS
Beginning of year 15,378,444 8,847,406 30,506,501 16,695,650
End of period (including
undistributed net investment
income of $670,942,
$1,013,027, $1,422,218 and
$2,082,356, respectively) $ 15,424,942 $ 15,378,444 $ 34,253,378 $ 30,506,501
</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
------------------------------------- -------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCREASE IN NET
ASSETS FROM OPERATIONS
Net investment income $ 252,451 $ 462,850 $ 990,956 $ 687,639
Net realized gain on investments
and foreign currency
transactions 165,848 258,014 20,473,682 15,669,717
Net change in unrealized
appreciation of investments and
foreign currency denominated
assets and liabilities 1,845,020 3,238,860 24,222,724 33,639,619
Net increase in net assets from
operations 2,263,319 3,959,724 45,687,362 49,996,975
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (467,584) (289,532) (667,879) (265,892)
Net realized gain on investments (217,903) -0- (15,606,121) (6,564,799)
CAPITAL STOCK TRANSACTIONS
Net increase 4,261,328 1,820,021 32,940,517 54,020,810
Total increase 5,839,160 5,490,213 62,353,879 97,187,094
NET ASSETS
Beginning of year 20,347,006 14,856,793 235,874,985 138,687,891
End of period (including
undistributed net investment
income of $246,306,
$461,439, $1,007,361 and
$684,284, respectively) $ 26,186,166 $ 20,347,006 $ 298,228,864 $ 235,874,985
</TABLE>
See Notes to Financial Statements.
B-56
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
WORLDWIDE PRIVATIZATION PORTFOLIO CONSERVATIVE INVESTORS PORTFOLIO
------------------------------------- -------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS
Net investment income $ 668,819 $ 569,265 $ 627,400 $ 983,136
Net realized gain on investments
and foreign currency
transactions 2,305,542 2,030,990 418,031 1,295,033
Net change in unrealized
appreciation (depreciation) of
investments and foreign
currency denominated assets
and liabilities 2,669,544 (439,024) 1,522,933 469,660
Net increase in net assets from
operations 5,643,905 2,161,231 2,568,364 2,747,829
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (602,038) (348,486) (983,527) (608,412)
Net realized gain on investments (2,230,552) (421,270) (1,277,810) -0-
CAPITAL STOCK TRANSACTIONS
Net increase 3,880,717 21,619,677 6,054,518 6,327,771
Total increase 6,692,032 23,011,152 6,361,545 8,467,188
NET ASSETS
Beginning of year 41,817,965 18,806,813 30,196,381 21,729,193
End of period (including
undistributed net investment
income of $569,091,
$502,310, $616,895 and
$973,022, respectively) $ 48,509,997 $ 41,817,965 $ 36,557,926 $ 30,196,381
</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
------------------------------------- -------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS FROM
OPERATIONS
Net investment income (loss) $ 159,795 $ 226,698 $ (113,067) $ 84,919
Net realized gain (loss) on
investments and foreign
currency transactions 383,388 1,347,406 3,204,514 (2,186,460)
Net change in unrealized
appreciation of investments and
foreign currency denominated
assets and liabilities 1,858,390 334,892 16,841,420 3,331,455
Net increase in net assets from
operations 2,401,573 1,908,996 19,932,867 1,229,914
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (214,940) (180,480) (121,060) (141,660)
Net realized gain on investments (1,371,580) (200,739) -0- -0-
CAPITAL STOCK TRANSACTIONS
Net increase 2,090,501 4,362,797 3,079,071 40,068,148
Total increase 2,905,554 5,890,574 22,890,878 41,156,402
NET ASSETS
Beginning of year 16,599,910 10,709,336 69,239,833 28,083,431
End of period (including
undistributed net investment
income/(distributions in excess
of net investment income, of
$147,020, $202,165, $(147,857)
and $86,270, respectively) $ 19,505,464 $ 16,599,910 $ 92,130,711 $ 69,239,833
</TABLE>
See Notes to Financial Statements.
B-58
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
QUASAR PORTFOLIO REAL ESTATE INVESTMENT PORTFOLIO
------------------------------------- -------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997 (A)
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS
Net investment income $ 149,540 $ 59,268 $ 403,529 $ 287,942
Net realized gain on investment
transactions 3,856,466 5,195,196 152,603 79,169
Net change in unrealized
appreciation (depreciation) of
investments and foreign
currency denominated assets
and liabilities 4,973,491 79,213 (1,589,967) 1,032,461
Net increase (decrease) in net
assets from operations 8,979,497 5,333,677 (1,033,835) 1,399,572
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (58,060) (22,104) (240,978) -0-
Net realized gain on investments (6,038,261) -0- (104,773) -0-
CAPITAL STOCK TRANSACTIONS
Net increase 22,097,620 45,123,778 5,006,951 12,294,485
Total increase 24,980,796 50,435,351 3,627,365 13,694,057
NET ASSETS
Beginning of period 59,277,168 8,841,817 13,694,057 -0-
End of period (including
undistributed net investment
income of $137,000,
$45,520, $450,493 and
$287,942, respectively) $ 84,257,964 $ 59,277,168 $ 17,321,422 $ 13,694,057
</TABLE>
(a) Commencement of operations, January 9, 1997.
See Notes to Financial Statements.
B-59
STATEMENTS OF CHANGES
IN NET ASSETS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
HIGH-YIELD PORTFOLIO
-------------------------------------
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (A)
----------------- -----------------
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS
Net investment income $ 289,196 $ 7,694
Net realized gain on
investment transactions 176,910 244
Net change in unrealized
appreciation (depreciation) of
investments and foreign
currency denominated assets
and liabilities (108,768) 11,558
Net increase in net assets
from operations 357,338 19,496
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (11,475) -0-
Net realized gain on investments -0- -0-
CAPITAL STOCK TRANSACTIONS
Net increase 11,845,168 1,121,859
Total increase 12,191,031 1,141,355
NET ASSETS
Beginning of period 1,141,355 -0-
End of period (including
undistributed net investment
income of $285,415 and
$7,694, respectively) $ 13,332,386 $ 1,141,355
(a) Commencement of operations, October 27, 1997.
See Notes to Financial Statements.
B-60
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 (UNAUDITED) 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 rather than current income.
In pursuing its investment objective, the Premier Growth Portfolio will employ
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 and from income principally through a broad
portfolio of marketable securities of established non-United States companies,
(or United States companies having their principal activities and interests
outside the United States), 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 substantially all of the Portfolios'
assets will be invested in high yield, high risk securities that are low-rated
(i.e. below investment grade), or of comparable quality and unrated, and that
are considered to be predominantly speculative as regards the issuer capacity
to pay interest and repay principal.
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. The utilities industry consists of companies
B-61
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
engaged in the manufacture, production, generation, provision, transmission,
sale and distribution of gas, electric energy, and communication equipment and
services, and in the provision of other utility-related goods and services.
GROWTH PORTFOLIO--seeks long-term growth of capital by investing primarily in
common stocks and other equity securities.
WORLDWIDE PRIVATIZATION PORTFOLIO--seeks long-term capital appreciation by
investing principally in equity securities issued by enterprises that are
undergoing, or have undergone, privatization. The balance of the Portfolio's
investment portfolio will include equity securities of companies that are
believed by the Fund's Adviser to be beneficiaries of the privatization process.
CONSERVATIVE INVESTORS PORTFOLIO--seeks the highest total return without, in
the view of the Fund's Adviser, undue risk to principal by investing in a
diversified mix of publicly traded equity and fixed-income securities.
GROWTH INVESTORS PORTFOLIO--seeks the highest total return consistent with what
the Fund's Adviser considers to be reasonable risk by investing in a
diversified mix of publicly traded equity and fixed-income securities.
TECHNOLOGY PORTFOLIO--seeks growth of capital through investment in companies
expected to benefit from advances in technology. The Portfolio invests
principally in a diversified portfolio of securities of companies which use
technology extensively in the development of new or improved products or
processes.
QUASAR PORTFOLIO--seeks growth of capital by pursuing aggressive investment
policies. The Portfolio invests principally in a diversified portfolio of
equity securities of any company and industry and in any type of security which
is believed to offer possibilities for capital appreciation.
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. As a secondary objective this Portfolio seeks capital
appreciation where consistent with its primary objective. Many of the
high-yielding securities in which the High-Yield Portfolio invests are rated in
the lower rating categories (i.e. below investment grade) by the nationally
recognized rating service. These securities, which are often referred to as
"junk bonds", are subject to greater risk of loss of principle and interest
than higher rated securities and are considered to be predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal.
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 generally
valued at the last reported sales 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.
B-62
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated into U.S.
dollars at the rates of exchange prevailing when such securities were acquired
or sold. Income and expenses are translated into U.S. dollars at rates of
exchange prevailing when accrued.
The Portfolios isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuations arising
from changes in market prices of securities held.
Net realized foreign currency gains and losses represent foreign exchange gains
and losses from sales and maturities of debt securities, closed forward
exchange currency contracts, holding of foreign currencies, options on foreign
currencies, currency 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 amounts actually received or paid. 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: 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. Income dividends and capital gains
distributions to shareholders are recorded on the ex-dividend date.
Income dividends and capital gains distributions are determined in accordance
with federal tax regulations and may differ from those determined in accordance
with 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.
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 of 1%; and High-Yield
Portfolio, .75 of 1%. The fee is accrued daily and paid monthly. For the Global
Bond Portfolio, the Adviser has retained, under a sub-advisory
B-63
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
agreement, a sub-adviser, AIGAM International Limited, an affiliate of American
International Group, Inc.
Pursuant to the Advisory Agreement the Growth & Income, Growth, and Money
Market portfolios paid $21,811, $21,799 and $12,190 respectively to the Adviser
representing the cost of certain legal and accounting services provided to the
Funds by the Adviser for the period ended June 30, 1998.
The Fund compensates Alliance Fund Services, Inc., a wholly-owned subsidiary of
the Adviser, under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. For the six
months ended June 30, 1998, the Fund paid a total of $9,000 which was allocated
evenly among the portfolios.
During the six months ended June 30, 1998, the Adviser voluntarily agreed to
waive its fee and to reimburse the additional operating expenses of each
Portfolio, except for the Premier Growth 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 six months ended June 30, 1998, such
waivers/reimbursements amounted to $3,662, $23,485, $103,073, $19,330, $39,141,
$10,892, $118,794, $43,350, $67,112, $70,194, $93,544, $42,229 and $12,301 for
the Global Bond Portfolio, the Short-Term Multi-Market 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. In
addition, for the period from January 1, 1998 to April 30, 1998, the Advisor
agreed to waive/reimburse the Premier Growth Portfolio expenses in the amount
of $240,762.
Brokerage commissions paid for the six months ended June 30, 1998, on
investment transactions amounted to $211,359, $260,713, $27,339, $164,611,
$7,365, $180,007, $79,617, $15,592, $17,435, $36,911, $94,869 and $17,601 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 $5,910 was paid by the Premier Growth Portfolio and $65 was paid by the
Quasar Portfolio to Donaldson, Lufkin & Jenrette Securities Corp., an affiliate
of the Adviser.
NOTE C: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
for the six months ended June 30, 1998, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------------------------------ ------------------------------------
STOCKS AND U.S. GOVERNMENT STOCKS AND U.S. GOVERNMENT
PORTFOLIO DEBT OBLIGATIONS AND AGENCIES DEBT OBLIGATIONS AND AGENCIES
- -------------------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Premier Growth $ 245,386,335 $ -0- $ 78,664,120 $ -0-
Global Bond 7,150,616 1,943,461 5,873,670 627,250
Growth and Income 156,211,785 3,739,620 126,603,951 -0-
Short-Term Multi-Market 670,811 -0- 870,222 -0-
U.S. Government/High Grade
Securities 10,118,831 51,522,680 10,157,759 43,338,073
Total Return 16,600,623 1,900,063 13,489,568 -0-
International 36,422,462 -0- 32,655,012 -0-
Global Dollar Government 13,374,564 -0- 12,566,836 -0-
North American Government
Income 1,776,582 -0- -0- -0-
Utility Income 4,507,148 -0- 1,643,611 -0-
Growth 88,472,861 -0- 81,338,195 -0-
Worldwide Privatization 18,042,157 -0- 14,628,033 -0-
Conservative Investors 7,155,458 8,681,642 5,436,956 5,957,244
Growth Investors 5,551,733 1,952,183 6,555,329 1,755,924
Technology 30,864,236 -0- 24,579,331 -0-
</TABLE>
B-64
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
<TABLE>
<CAPTION>
PURCHASES SALES
------------------------------------ ------------------------------------
STOCKS AND U.S. GOVERNMENT STOCKS AND U.S. GOVERNMENT
PORTFOLIO DEBT OBLIGATIONS AND AGENCIES DEBT OBLIGATIONS AND AGENCIES
- -------------------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Quasar 40,714,534 -0- 39,657,820 -0-
Real Estate Investment 7,043,478 -0- 2,055,569 -0-
High-Yield 28,162,279 -0- 16,334,707 -0-
</TABLE>
At June 30, 1998, 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 $ 591,903,686 $ 226,646,400 $ (3,587,087) $ 223,059,313
Global Bond 24,542,635 230,283 (169,093) 61,190
Growth and Income 289,758,438 47,842,160 (9,579,596) 38,262,564
Short-Term Multi-Market 6,391,416 3,648 (290,101) (286,453)
U.S. Government/High Grade
Securities 41,815,797 416,167 (68,825) 347,342
Total Return 48,673,911 5,739,058 (1,016,605) 4,722,453
International 63,975,668 11,008,587 (2,232,341) 8,776,246
Global Dollar Government 15,700,445 127,012 (1,232,236) (1,105,224)
North American Government
Income 33,684,893 991,194 (705,657) 285,537
Utility Income 19,936,859 6,595,992 (412,889) 6,183,103
Growth 220,635,019 84,443,717 (6,364,172) 78,079,545
Worldwide Privatization 44,655,473 8,466,161 (4,902,741) 3,563,420
Conservative Investors 33,551,744 2,890,355 (174,597) 2,715,758
Growth Investors 16,638,054 3,138,223 (203,742) 2,934,481
Technology 70,133,880 25,336,988 (3,104,319) 22,232,669
Quasar 78,356,871 9,677,387 (4,476,542) 5,200,845
Real Estate Investment 17,986,282 269,182 (826,688) (557,506)
High-Yield 13,141,253 109,458 (210,821) (101,363)
</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 exposure to changes in foreign currency exchange rates on
foreign portfolio holdings. A forward exchange currency contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. The Portfolios may enter into contracts to deliver or
receive foreign currency it will receive from or require for its normal
investment activities. It may also use contracts in a manner intended to
protect foreign currency denominated securities from declines in value due to
unfavorable exchange rate movements. The gain or loss arising from the
difference between the original contracts and the closing of such contracts is
included in realized gain or loss on foreign currency transactions.
B-65
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
Fluctuations in the value of forward exchange currency contracts held are
recorded for financial reporting purposes as unrealized gains or losses by the
Portfolio.
Each Portfolio's custodian will place and maintain cash not available for
investment or other liquid assets in a separate account of the 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. The face or contract amount, in U.S.
dollars, reflects the total exposure each Portfolio has in that particular
currency contract.
At June 30, 1998, the outstanding forward exchange currency contracts were as
follows:
GLOBAL BOND PORTFOLIO:
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION/
(000) DATE VALUE DEPRECIATION
--------- ----------- -------------- -------------
FOREIGN CURRENCY
SALE CONTRACTS
Australian Dollar,
settling 7/29/98 1,550 $ 936,309 $ 962,583 $ (26,274)
Japanese Yen,
settling 7/22/98 250,000 1,839,588 1,814,020 25,568
$ (706)
SHORT-TERM MULTI-MARKET PORTFOLIO:
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION/
(000) DATE VALUE DEPRECIATION
--------- ----------- -------------- -------------
FOREIGN CURRENCY
SALE CONTRACTS
Deutsche Mark,
settling 8/20/98 2,979 $1,664,624 $1,657,091 $ 7,533
French Franc,
settling 7/15/98 1,769 291,231 292,814 (1,583)
Italian Lira,
settling 7/27/98 1,004 565,053 565,051 2
New Zealand Dollar,
settling 9/17/98 1,303 638,568 674,710 (36,142)
Spanish Peseta,
settling 7/14/98 3,000 19,534 19,573 (39)
Swedish Krona,
settling 8/17/98 3,438 430,720 431,867 (1,147)
$ (31,376)
INTERNATIONAL PORTFOLIO:
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION/
(000) DATE VALUE DEPRECIATION
--------- ----------- -------------- -------------
FOREIGN CURRENCY
SALE CONTRACTS
Japanese Yen,
settling 9/24/98 360,605 $2,648,000 $2,640,641 $ 7,359
2. OPTION TRANSACTIONS
For hedging and investment purposes, the Portfolios purchase and write (sell)
put and call options on U.S. securities that are traded on U.S. securities
exchanges and over-the-counter markets.
The risk associated with purchasing an option is that the Portfolio pays a
premium whether or not the option is exercised. Additionally, the Portfolio
bears the risk of loss of premium and change in market value should the
counterparty not perform under the contract. Put and call options purchased are
accounted for in the same manner as portfolio securities. The cost of
securities acquired through the exercise of call options is increased by
premiums paid. The proceeds from securities sold through the exercise of put
options are decreased by the premiums paid.
When the Portfolio writes an option, the premium received by the Portfolio is
recorded as a liability and is subsequently adjusted to the current market
value of the option written. Premiums received from writing options
B-66
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
which expire unexercised are recorded by the Portfolio on the expiration date
as realized gains from option transactions. The difference between the premium
received and the amount paid on effecting a closing purchase transaction,
including brokerage commissions, is also treated as a realized gain, or if the
premium received is less than the amount paid for the closing purchase
transaction, as a realized loss. If a call option is exercised, the premium
received is added to the proceeds from the sale of the underlying security or
currency in determining whether the Portfolio has realized a gain or loss. If a
put option is exercised, the premium received reduces the cost basis of the
security or currency purchased by the Portfolio. The risk involved in writing
an option is that, if the option was exercised the underlying security could
then be purchased or sold by the Portfolio at a disadvantageous price.
For the six months ended June 30, 1998, the Portfolio did not engage in any
option transactions.
NOTE D: CAPITAL STOCK
There are 10,000,000,000 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
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 9,151,166 18,381,290 $223,088,818 $348,392,336
Shares issued in
reinvestment of
dividends and
distributions 27,956 17,344 748,382 324,686
Shares redeemed (1,427,796) (2,038,212) (35,263,030) (39,095,179)
Net increase 7,751,326 16,360,422 $188,574,170 $309,621,843
GLOBAL BOND PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 406,526 615,554 $ 4,592,796 $ 6,854,237
Shares issued in
reinvestment of
dividends and
distributions 43,327 107,060 485,698 1,165,881
Shares redeemed (214,015) (266,344) (2,417,817) (2,972,887)
Net increase 235,838 456,270 $ 2,660,677 $ 5,047,231
GROWTH AND INCOME PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 2,296,243 4,651,201 $ 49,589,344 $ 85,220,780
Shares issued in
reinvestment of
dividends and
distributions 1,482,301 585,541 30,387,175 10,422,633
Shares redeemed (358,784) (411,208) (7,811,997) (7,514,572)
Net increase 3,419,760 4,825,534 $ 72,164,522 $ 88,128,841
B-67
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SHORT-TERM MULTI-MARKET PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 132,952 366,280 $ 1,428,543 $ 3,882,391
Shares issued in
reinvestment of
dividends 64,303 40,165 630,815 412,899
Shares redeemed (177,998) (455,606) (1,914,304) (4,830,789)
Net increase (decrease) 19,257 (49,161) $ 145,054 $ (535,499)
U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 735,504 870,507 $ 8,898,670 $ 10,135,743
Shares issued in
reinvestment of
dividends and
distributions 178,050 129,085 2,088,529 1,463,832
Shares redeemed (324,515) (497,164) (3,931,652) (5,749,673)
Net increase 589,039 502,428 $ 7,055,547 $ 5,849,902
TOTAL RETURN PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 514,670 880,572 $ 9,239,833 $ 14,008,071
Shares issued in
reinvestment of
dividends and
distributions 274,525 97,356 4,653,200 1,500,260
Shares redeemed (178,953) (210,529) (3,232,931) (3,329,402)
Net increase 610,242 767,399 $ 10,660,102 $ 12,178,929
INTERNATIONAL PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 4,940,837 5,433,762 $ 82,857,939 $ 83,558,930
Shares issued in
reinvestment of
dividends and
distributions 209,505 85,533 3,408,645 1,359,978
Shares redeemed (4,789,200) (4,454,018) (80,319,507) (69,070,837)
Net increase 361,142 1,065,277 $ 5,947,077 $ 15,848,071
B-68
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
MONEY MARKET PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 224,306,095 260,121,111 $224,306,095 $260,121,111
Shares issued in
reinvestment of
dividends 2,017,879 3,452,183 2,017,879 3,452,183
Shares redeemed (211,983,860) (260,758,466) (211,983,860) (260,758,466)
Net increase 14,340,114 2,814,828 $ 14,340,114 $ 2,814,828
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 155,611 567,148 $ 2,288,484 $ 8,477,375
Shares issued in
reinvestment of
dividends and
distributions 136,882 90,285 1,765,784 1,232,073
Shares redeemed (116,158) (225,116) (1,736,086) (3,242,100)
Net increase 176,335 432,317 $ 2,318,182 $ 6,467,348
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 545,226 1,306,695 $ 7,187,988 $ 16,666,170
Shares issued in
reinvestment of
dividends and
distributions 195,804 88,019 2,412,304 1,103,754
Shares redeemed (306,827) (391,062) (4,051,695) (4,993,224)
Net increase 434,203 1,003,652 $ 5,548,597 $ 12,776,700
UTILITY INCOME PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 280,560 353,259 $ 4,570,216 $ 4,795,124
Shares issued in
reinvestment of
dividends and
distributions 41,319 22,136 685,488 289,532
Shares redeemed (60,205) (247,410) (994,376) (3,264,635)
Net increase 261,674 127,985 $ 4,261,328 $ 1,820,021
B-69
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
GROWTH PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 1,029,886 3,011,243 $ 25,345,483 $ 58,667,838
Shares issued in
reinvestment of
dividends and
distributions 657,801 359,699 16,274,000 6,830,691
Shares redeemed (350,366) (589,726) (8,678,966) (11,477,719)
Net increase 1,337,321 2,781,216 $ 32,940,517 $ 54,020,810
WORLDWIDE PRIVATIZATION PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 296,934 1,621,182 $ 4,755,788 $ 23,165,163
Shares issued in
reinvestment of
dividends and
distributions 188,588 53,013 2,832,590 769,756
Shares redeemed (237,761) (162,366) (3,707,661) (2,315,242)
Net increase 247,761 1,511,829 $ 3,880,717 $ 21,619,677
CONSERVATIVE INVESTORS PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 447,275 780,780 $ 6,069,403 $ 9,838,439
Shares issued in
reinvestment of
dividends and
distributions 171,184 48,986 2,261,337 608,412
Shares redeemed (167,675) (325,161) (2,276,222) (4,119,080)
Net increase 450,784 504,605 $ 6,054,518 $ 6,327,771
GROWTH INVESTORS PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 105,805 436,739 $ 1,631,237 $ 6,003,204
Shares issued in
reinvestment of
dividends and
distributions 105,839 28,259 1,586,520 381,219
Shares redeemed (72,278) (150,934) (1,127,256) (2,021,626)
Net increase 139,366 314,064 $ 2,090,501 $ 4,362,797
B-70
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
TECHNOLOGY PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 916,892 3,792,319 $ 12,402,287 $ 45,101,686
Shares issued in
reinvestment of
dividends 8,130 12,276 121,060 141,660
Shares redeemed (703,520) (437,863) (9,444,276) (5,175,198)
Net increase 221,502 3,366,732 $ 3,079,071 $ 40,068,148
QUASAR PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
Shares sold 1,373,827 4,114,230 $ 18,999,746 $ 48,077,255
Shares issued in
reinvestment of
dividends and
distributions 471,122 1,959 6,096,321 22,104
Shares redeemed (217,788) (246,062) (2,998,447) (2,975,581)
Net increase 1,627,161 3,870,127 $ 22,097,620 $ 45,123,778
REAL ESTATE INVESTMENT PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED PERIOD ENDED SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997(A) (UNAUDITED) 1997(A)
------------ ------------ -------------- --------------
Shares sold 599,924 1,182,129 $ 7,127,944 $ 13,064,224
Shares issued in
reinvestment of
dividends and
distributions 31,720 -0- 345,750 -0-
Shares redeemed (208,476) (71,998) (2,466,743) (769,739)
Net increase 423,168 1,110,131 $ 5,006,951 $ 12,294,485
HIGH-YIELD PORTFOLIO
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED PERIOD ENDED SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997(B) (UNAUDITED) 1997(B)
------------ ------------ -------------- --------------
Shares sold 1,211,343 110,513 $ 13,248,298 $ 1,122,331
Shares issued in
reinvestment of
dividends 1,032 -0- 11,475 -0-
Shares redeemed (127,729) (47) (1,414,605) (472)
Net increase 1,084,646 110,466 $ 11,845,168 $ 1,121,859
(a) Commencement of operations, January 9, 1997.
(b) Commencement of operations, October 27, 1997.
B-71
FINANCIAL HIGHLIGHTS ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
PREMIER GROWTH PORTFOLIO
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ---------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $20.99 $15.70 $17.80 $12.37 $12.79 $11.38
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .01 .04 .08 .09 .03 -0-
Net realized and unrealized gain (loss)
on investment transactions 5.95 5.27 3.29 5.44 (.41) 1.43
Net increase (decrease) in net asset
value from operations 5.96 5.31 3.37 5.53 (.38) 1.43
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.03) (.02) (.10) (.03) (.01) (.01)
Distributions from net realized gains -0- -0- (5.37) (.07) (.03) (.01)
Total dividends and distributions (.03) (.02) (5.47) (.10) (.04) (.02)
Net asset value, end of period $26.92 $20.99 $15.70 $17.80 $12.37 $12.79
TOTAL RETURN
Total investment return based on
net asset value (c) 28.37% 33.86% 22.70% 44.85% (2.96)% 12.63%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $814,426 $472,326 $96,434 $29,278 $37,669 $13,659
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .99%(d) .95% .95% .95% .95% 1.18%
Expenses, before waivers and
reimbursements 1.07%(d) 1.10% 1.23% 1.19% 1.40% 2.05%
Net investment income (a) .11%(d) .21% .52% .55% .42% .22%
Portfolio turnover rate .13% 27% 32% 97% 38% 42%
</TABLE>
<TABLE>
<CAPTION>
GLOBAL BOND PORTFOLIO
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ---------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.10 $11.74 $12.15 $ 9.82 $11.33 $11.24
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .25 .54 .67 .69 .57 .77
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .09 (.48) .01 1.73 (1.16) .43
Net increase (decrease) in net asset
value from operations .34 .06 .68 2.42 (.59) 1.20
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.17) (.57) (.84) (.09) (.62) (.85)
Distributions from net realized gains (.06) (.13) (.25) -0- (.30) (.26)
Total dividends and distributions (.23) (.70) (1.09) (.09) (.92) (1.11)
Net asset value, end of period $11.21 $11.10 $11.74 $12.15 $ 9.82 $11.33
TOTAL RETURN
Total investment return based on
net asset value (c) 3.00% .67% 6.21% 24.73% (5.16)% 11.15%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $25,065 $22,194 $18,117 $11,553 $7,298 $6,748
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .94%(d) .94% .94% .95% .95% 1.50%
Expenses, before waivers and
reimbursements .97%(d) 1.03% 1.15% 1.77% 2.05% 1.50%
Net investment income (a) 4.44%(d) 4.81% 5.76% 6.22% 6.01% 4.85%
Portfolio turnover rate 29% 257% 191% 262% 102% 125%
</TABLE>
See footnote summary on page B-80.
B-72
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ---------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $19.93 $16.40 $15.79 $11.85 $12.18 $10.99
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .13 .21 .24 .27 .10 .01
Net realized and unrealized gain (loss)
on investment transactions 2.61 4.39 3.18 3.94 (.16) 1.27
Net increase (decrease) in net asset
value from operations 2.74 4.60 3.42 4.21 (.06) 1.28
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.16) (.13) (.25) (.13) (.10) (.06)
Distributions from net realized gains (1.96) (.94) (2.56) (.14) (.17) (.03)
Total dividends and distributions (2.12) (1.07) (2.81) (.27) (.27) (.09)
Net asset value, end of period $20.55 $19.93 $16.40 $15.79 $11.85 $12.18
TOTAL RETURN
Total investment return based on
net asset value (c) 13.75% 28.80% 24.09% 35.76% (.35)% 11.69%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $328,268 $250,202 $126,729 $41,993 $41,702 $22,756
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .72%(d) .72% .82% .79% .90% 1.18%
Expenses, before waivers and
reimbursements .72%(d) .72% .82% .79% .91% 1.28%
Net investment income (a) 1.25%(d) 1.16% 1.58% 1.95% 1.71% 1.76%
Portfolio turnover rate 45% 86% 87% 150% 95% 69%
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM MULTI-MARKET PORTFOLIO
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ---------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.57 $10.73 $10.58 $ 9.91 $11.07 $10.77
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .32 .59 .64 .82 .47 .28
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .04 (.11) .33 (.15) (1.16) .43
Net increase (decrease) in net asset
value from operations .36 .48 .97 .67 (.69) .71
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (1.11) (.64) (.82) -0- (.46) (.41)
Return of capital -0- -0- -0- -0- (.01) -0-
Total dividends and distributions (1.11) (.64) (.82) -0- (.47) (.41)
Net asset value, end of period $9.82 $10.57 $10.73 $10.58 $ 9.91 $11.07
TOTAL RETURN
Total investment return based on
net asset value (c) 3.37% 4.59% 9.57% 6.76% (6.51)% 6.62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $6,217 $6,489 $7,112 $3,152 $20,921 $23,560
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .93%(d) .94% .95% .95% .94% 1.17%
Expenses, before waivers and
reimbursements 1.66%(d) 1.42% 2.09% 1.30% .99% 1.24%
Net investment income (a) 6.15%(d) 5.50% 6.03% 8.22% 6.52% 6.39%
Portfolio turnover rate 12% 222% 159% 379% 134% 210%
</TABLE>
See footnote summary on page B-80.
B-73
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ---------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.93 $11.52 $11.66 $ 9.94 $10.72 $9.89
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .32 .68 .66 .65 .28 .43
Net realized and unrealized gain (loss)
on investment transactions .12 .29 (.39) 1.25 (.71) .48
Net increase (decrease) in net asset
value from operations .44 .97 .27 1.90 (.43) .91
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.55) (.54) (.28) (.18) (.21) (.08)
Distributions from net realized gains (.06) (.02) (.13) -0- (.14) -0-
Total dividends and distributions (.61) (.56) (.41) (.18) (.35) (.08)
Net asset value, end of period $11.76 $11.93 $11.52 $11.66 $ 9.94 $10.72
TOTAL RETURN
Total investment return based on
net asset value (c) 3.72% 8.68% 2.55% 19.26% (4.03)% 9.20%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $42,598 $36,198 $29,150 $16,947 $5,101 $1,350
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .79%(d) .84% .92% .95% .95% 1.16%
Expenses, before waivers and
reimbursements .79%(d) .84% .98% 1.58% 3.73% 5.42%
Net investment income (a) 5.39%(d) 5.89% 5.87% 5.96% 5.64% 4.59%
Portfolio turnover rate 152% 114% 137% 68% 32% 177%
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN PORTFOLIO
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ---------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $16.92 $14.63 $12.80 $10.41 $10.97 $10.01
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .23 .39 .27 .36 .15 .15
Net realized and unrealized gain (loss)
on investment transactions 1.46 2.62 1.66 2.10 (.56) .81
Net increase (decrease) in net asset
value from operations 1.69 3.01 1.93 2.46 (.41) .96
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.29) (.23) (.07) (.07) (.09) -0-
Distributions from net realized gains (1.34) (.49) (.03) -0- (.06) -0-
Total dividends and distributions (1.63) (.72) (.10) (.07) (.15) -0-
Net asset value, end of period $16.98 $16.92 $14.63 $12.80 $10.41 $10.97
TOTAL RETURN
Total investment return based on
net asset value (c) 10.00% 21.11% 15.17% 23.67% (3.77)% 9.59%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $53,437 $42,920 $25,875 $8,242 $750 $360
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .81%(d) .88% .95% .95% .95% 1.20%
Expenses, before waivers and
reimbursements .81%(d) .88% 1.12% 4.49% 19.49% 25.96%
Net investment income (a) 2.64%(d) 2.46% 2.76% 3.16% 2.29% 1.45%
Portfolio turnover rate 30% 65% 57% 30% 83% 25%
</TABLE>
See footnote summary on page B-80.
B-74
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ---------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $15.02 $14.89 $14.07 $12.88 $12.16 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .12 .13 .19 .18 .10 .03
Net realized and unrealized gain on
investments and foreign currency
transactions 2.25 .39 .83 1.08 .72 2.13
Net increase in net asset value
from operations 2.37 .52 1.02 1.26 .82 2.16
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.32) (.15) (.08) (.03) (.02) -0-
Distributions from net realized gains (.49) (.24) (.12) (.04) (.08) -0-
Total dividends and distributions (.81) (.39) (.20) (.07) (.10) -0-
Net asset value, end of period $16.58 $15.02 $14.89 $14.07 $12.88 $12.16
TOTAL RETURN
Total investment return based on
net asset value (c) 15.88% 3.33% 7.25% 9.86% 6.70% 21.60%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $73,015 $60,710 $44,324 $16,542 $7,276 $688
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .95%(d) .95% .95% .95% .95% 1.20%
Expenses, before waivers and
reimbursements 1.26%(d) 1.42% 1.91% 2.99% 7.26% 39.28%
Net investment income (a) 1.42%(d) .87% 1.29% 1.41% .90% .26%
Portfolio turnover rate 52% 134% 60% 87% 95% 85%
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1998 ---------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a) .025 .05 .05 .05 .03 .22
LESS: DIVIDENDS
Dividends from net investment income (.025) (.05) (.05) (.05) (.03) (.22)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN
Total investment return based on
net asset value (c) 2.52% 5.11% 4.71% 4.97% 3.27% 2.25%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $81,924 $67,584 $64,769 $28,092 $6,899 $102
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .65%(d) .64% .69% .95% .95% 1.16%
Expenses, before waivers and
reimbursements .65%(d) .64% .69% 1.07% 4.46% 68.14%
Net investment income (a) 5.01%(d) 5.00% 4.64% 4.85% 3.98% 2.15%
</TABLE>
See footnote summary on page B-80.
B-75
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
-----------------------------------------------------------------
SIX MONTHS MAY 2, 1994(E)
ENDED YEAR ENDED DECEMBER 31, TO
JUNE 30, 1998 ------------------------------------- DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.65 $14.32 $11.95 $ 9.84 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .61 1.17 1.10 .92 .36
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (1.04) .70 1.78 1.32 (.52)
Net increase (decrease) in net asset
value from operations (.43) 1.87 2.88 2.24 (.16)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.95) (.61) (.48) (.13) -0-
Distributions from net realized gains (.69) (.93) (.03) -0- -0-
Total dividends and distributions (1.64) (1.54) (.51) (.13) -0-
Net asset value, end of period $12.58 $14.65 $14.32 $11.95 $ 9.84
TOTAL RETURN
Total investment return based on
net asset value (c) (3.25)% 13.23% 24.90% 22.98% (1.60)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $15,425 $15,378 $8,847 $3,778 $1,146
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .95%(d) .95% .95% .95% .95%(d)
Expenses, before waivers and
reimbursements 1.19%(d) 1.29% 1.97% 4.82% 15.00%(d)
Net investment income (a) 8.43%(d) 7.87% 8.53% 8.65% 6.02%(d)
Portfolio turnover rate 81% 214% 155% 13% 9%
</TABLE>
<TABLE>
<CAPTION>
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO
-----------------------------------------------------------------
SIX MONTHS MAY 3, 1994(E)
ENDED YEAR ENDED DECEMBER 31, TO
JUNE 30, 1998 ------------------------------------- DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.97 $12.38 $10.48 $ 8.79 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .58 1.07 1.26 1.13 .50
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.33) .10 .69 .83 (1.71)
Net increase (decrease) in net asset
value from operations .25 1.17 1.95 1.96 (1.21)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.82) (.58) (.05) (.27) -0-
Distributions from net realized gains (.11) -0- -0- -0- -0-
Total dividends and distributions (.93) (.58) (.05) (.27) -0-
Net asset value, end of period $12.29 $12.97 $12.38 $10.48 $ 8.79
TOTAL RETURN
Total investment return based on
net asset value (c) 1.91% 9.62% 18.70% 22.71% (12.10)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $34,253 $30,507 $16,696 $7,278 $3,848
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .87%(d) .95% .95% .95% .95%(d)
Expenses, before waivers and
reimbursements 1.11%(d) 1.04% 1.41% 2.57% 4.43%(d)
Net investment income (a) 8.89%(d) 8.34% 11.04% 12.24% 8.49%(d)
Portfolio turnover rate -0-% 20% 4% 35% 15%
</TABLE>
See footnote summary on page B-80.
B-76
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
UTILITY INCOME PORTFOLIO
-----------------------------------------------------------------
SIX MONTHS MAY 10, 1994(E)
ENDED YEAR ENDED DECEMBER 31, TO
JUNE 30, 1998 ------------------------------------- DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.67 $12.69 $12.01 $ 9.96 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .18 .38 .31 .30 .28
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.39 2.84 .62 1.83 (.32)
Net increase (decrease) in net asset
value from operations 1.57 3.22 .93 2.13 (.04)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.31) (.24) (.09) (.08) -0-
Distributions from net realized gains (.14) -0- (.16) -0- -0-
Total dividends and distributions (.45) (.24) (.25) (.08) -0-
Net asset value, end of period $16.79 $15.67 $12.69 $12.01 $ 9.96
TOTAL RETURN
Total investment return based on
net asset value (c) 10.07% 25.71% 7.88% 21.45% (.40)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $26,186 $20,347 $14,857 $6,251 $1,254
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .95%(d) .95% .95% .95% .95%(d)
Expenses, before waivers and
reimbursements 1.04%(d) 1.08% 1.51% 3.79% 15.98%(d)
Net investment income (a) 2.19%(d) 2.83% 2.61% 2.73% 4.62%(d)
Portfolio turnover rate 8% 30% 75% 138% 31%
</TABLE>
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
-----------------------------------------------------------------
SEPTEMBER 15,
SIX MONTHS 1994(E)
ENDED YEAR ENDED DECEMBER 31, TO
JUNE 30, 1998 ------------------------------------- DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $22.42 $17.92 $14.23 $10.53 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .09 .07 .06 .17 .03
Net realized and unrealized gain
on investment transactions 4.10 5.18 3.95 3.54 .50
Net increase in net asset value
from operations 4.19 5.25 4.01 3.71 .53
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.06) (.03) (.04) (.01) -0-
Distributions from net realized gains (1.40) (.72) (.28) -0- -0-
Total dividends and distributions (1.46) (.75) (.32) (.01) -0-
Net asset value, end of period $25.15 $22.42 $17.92 $14.23 $10.53
TOTAL RETURN
Total investment return based on
net asset value (c) 18.81% 30.02% 28.49% 35.23% 5.30%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $298,229 $235,875 $138,688 $45,220 $5,492
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .84%(d) .84% .93% .95% .95%(d)
Expenses, before waivers and
reimbursements .84%(d) .84% .93% 1.27% 4.19%(d)
Net investment income (a) .75%(d) .37% .35% 1.31% 1.17%(d)
Portfolio turnover rate 32% 62% 98% 86% 25%
</TABLE>
See footnote summary on page B-80.
B-77
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
WORLDWIDE PRIVATIZATION PORTFOLIO
-----------------------------------------------------------------
SEPTEMBER 23,
SIX MONTHS 1994(E)
ENDED YEAR ENDED DECEMBER 31, TO
JUNE 30, 1998 ------------------------------------- DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.20 $13.13 $11.17 $10.10 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .23 .25 .28 .32 .10
Net realized and unrealized gain
on investments and foreign
currency transactions 1.71 1.17 1.78 .78 -0-
Net increase in net asset value
from operations 1.94 1.42 2.06 1.10 .10
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.20) (.16) (.10) (.03) -0-
Distributions from net realized gains (.74) (.19) -0- -0- -0-
Total dividends and distributions (.94) (.35) (.10) (.03) -0-
Net asset value, end of period $15.20 $14.20 $13.13 $11.17 $10.10
TOTAL RETURN
Total investment return based on
net asset value (c) 13.75% 10.75% 18.51% 10.87% 1.00%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $48,510 $41,818 $18,807 $5,947 $1,127
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .95%(d) .95% .95% .95% .95%(d)
Expenses, before waivers and
reimbursements 1.47%(d) 1.55% 1.85% 4.17% 18.47%(d)
Net investment income (a) 2.92%(d) 1.76% 2.26% 2.96% 4.27%(d)
Portfolio turnover rate 34% 58% 47% 23% 0%
</TABLE>
<TABLE>
<CAPTION>
CONSERVATIVE INVESTORS PORTFOLIO
-----------------------------------------------------------------
OCTOBER 28,
SIX MONTHS 1994(E)
ENDED YEAR ENDED DECEMBER 31, TO
JUNE 30, 1998 ------------------------------------- DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.10 $12.07 $11.76 $10.07 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .25 .48 .45 .51 .06
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .80 .86 (.01) 1.20 .01
Net increase in net asset value from
operations 1.05 1.34 .44 1.71 .07
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.38) (.31) (.09) (.02) -0-
Distributions from net realized gains (.50) -0- (.04) -0- -0-
Total dividends and distributions (.88) (.31) (.13) (.02) -0-
Net asset value, end of period $13.27 $13.10 $12.07 $11.76 $10.07
TOTAL RETURN
Total investment return based on
net asset value (c) 8.02% 11.22% 3.79% 16.99% .70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $36,558 $30,196 $21,729 $7,420 $701
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .95%(d) .95% .95% .95% .95%(d)
Expenses, before waivers and
reimbursements 1.21%(d) 1.33% 1.40% 4.25% 20.35%(D)
Net investment income (a) 3.75%(d) 3.85% 3.93% 4.65% 3.55%(d)
Portfolio turnover rate 42% 209% 211% 61% 2%
</TABLE>
See footnote summary on page B-80.
B-78
ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
GROWTH INVESTORS PORTFOLIO
-----------------------------------------------------------------
OCTOBER 28,
SIX MONTHS 1994(E)
ENDED YEAR ENDED DECEMBER 31, TO
JUNE 30, 1998 ------------------------------------- DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.38 $12.74 $11.87 $ 9.86 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .13 .23 .24 .35 .04
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.91 1.83 .72 1.67 (.18)
Net increase (decrease) in net asset
value from operations 2.04 2.06 .96 2.02 (.14)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.18) (.20) (.07) (.01) -0-
Distributions from net realized gains (1.16) (.22) (.02) -0- -0-
Total dividends and distributions (1.34) (.42) (.09) (.01) -0-
Net asset value, end of period $15.08 $14.38 $12.74 $11.87 $ 9.86
TOTAL RETURN
Total investment return based on
net asset value (c) 14.21% 16.34% 8.18% 20.48% (1.40)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $19,505 $16,600 $10,709 $4,978 $321
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .95%(d) .95% .95% .95% .95%(d)
Expenses, before waivers and
reimbursements 1.69%(d) 1.70% 1.85% 6.17% 41.62%(d)
Net investment income (a) 1.77%(d) 1.72% 2.01% 3.21% 2.29%(d)
Portfolio turnover rate 47% 164% 160% 50% 3%
</TABLE>
<TABLE>
<CAPTION>
TECHNOLOGY PORTFOLIO
----------------------------------------
JANUARY 11,
SIX MONTHS 1996(E)
ENDED YEAR ENDED TO
JUNE 30, 1998 DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period $11.72 $11.04 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (a)(b) (.02) .02 .11
Net realized and unrealized gain on
investment transactions 3.35 .69 .93
Net increase in net asset value from
operations 3.33 .71 1.04
LESS: DIVIDENDS
Dividends from net investment income (.02) (.03) -0-
Net asset value, end of period $15.03 $11.72 $11.04
TOTAL RETURN
Total investment return based on
net asset value (c) 28.42% 6.47% 10.40%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $92,131 $69,240 $28,083
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .95%(d) .95% .95%(d)
Expenses, before waivers and
reimbursements 1.13%(d) 1.19% 1.62%(d)
Net investment income (loss) (a) (.28)%(d) .16% 1.17%(d)
Portfolio turnover rate 33% 46% 22%
</TABLE>
See footnote summary on page B-80.
B-79
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE VARIABLE PRODUCTS SERIES FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
QUASAR PORTFOLIO
----------------------------------------
AUGUST 5,
SIX MONTHS 1996(E)
ENDED YEAR ENDED TO
JUNE 30, 1998 DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period $12.61 $10.64 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .03 .02 .04
Net realized and unrealized gain
on investment transactions 1.73 1.96 .60
Net increase in net asset value
from operations 1.76 1.98 .64
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.01) (.01) -0-
Distributions from net realized gains (1.04) -0- -0-
Total dividends and distributions (1.05) (.01) -0-
Net asset value, end of period $13.32 $12.61 $10.64
TOTAL RETURN
Total investment return based on
net asset value (c) 14.20% 18.60% 6.40%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $84,258 $59,277 $8,842
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .95%(d) .95% .95%(d)
Expenses, before waivers and
reimbursements 1.21%(d) 1.37% 4.44%(d)
Net investment income (a) .42%(d) .17% .93%(d)
Portfolio turnover rate 65% 210% 40%
</TABLE>
<TABLE>
<CAPTION>
REAL ESTATE
INVESTMENT PORTFOLIO HIGH-YIELD PORTFOLIO
-------------------------- ------------------------
SIX MONTHS JANUARY 9, SIX MONTHS OCTOBER 27,
ENDED 1997(E) TO ENDED 1997(E) TO
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.34 $10.00 $10.33 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)(b) .31 .56 .46 .13
Net realized and unrealized gain (loss)
on investment transactions (1.12) 1.78 .38 .20
Net increase (decrease) in net asset
value from operations (.81) 2.34 .84 .33
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.16) -0- (.01) -0-
Distributions from net realized gains (.07) -0- -0- -0-
Total dividends and distributions (.23) -0- (.01) -0-
Net asset value, end of period $11.30 $12.34 $11.16 $10.33
TOTAL RETURN
Total investment return based on
net asset value (c) (6.49)% 23.40% 8.13% 3.30%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $17,321 $13,694 $13,332 $1,141
Ratios to average net assets of:
Expenses, net of waivers and
reimbursements .95%(d) .95%(d) .95%(d) .95%(d)
Expenses, before waivers and
reimbursements 1.51%(d) 2.31%(d) 1.31%(d) 8.26%(d)
Net investment income (a) 5.36%(d) 5.47%(d) 8.37%(d) 7.28%(d)
Portfolio turnover rate 14% 26% 243% 8%
</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) Annualized.
(e) Commencement of operations.
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
RAYMOND J. PAPERA, SENIOR VICE PRESIDENT
ALDEN M. STEWART, SENIOR VICE PRESIDENT
PETER ANASTOS, VICE PRESIDENT
EDWARD BAKER, VICE PRESIDENT
THOMAS J. BARDONG, VICE PRESIDENT
STEVEN BEINHACKER, VICE PRESIDENT
MARK H. BREEDON, VICE PRESIDENT
RUSSELL BRODY, VICE PRESIDENT
NICHOLAS D.P. CARN, VICE PRESIDENT
PAUL J. DENOON, VICE PRESIDENT
DAVID EDGERLY, VICE PRESIDENT
VICKI L. FULLER, VICE PRESIDENT
RANDALL E. HAASE, VICE PRESIDENT
GERALD T. MALONE, VICE PRESIDENT
DANIEL V. PANKER, VICE PRESIDENT
DOUGLAS J. PEEBLES, VICE PRESIDENT
DANIEL G. PINE, VICE PRESIDENT
PAUL C. 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
