<PAGE>
This Prospectus is filed pursuant to Rule 497(e).
File Nos. 33-18647 and 811-05398.
<PAGE>
ALLIANCE CAPITAL LOGO ALLIANCE VARIABLE PRODUCTS
SERIES FUND, INC.
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P.O. BOX 1520, SECAUCUS, NEW JERSEY 07096-1520
TOLL FREE (800) 221-5672
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Alliance Variable Products Series Fund, Inc. (the "Fund") is an open-end se-
ries investment company designed to fund variable annuity contracts and vari-
able life insurance policies to be offered by the separate accounts of certain
life insurance companies. The Fund currently offers an opportunity to choose
among the separately managed pools of assets (the "Portfolios"), one of which
is described below. The Portfolios have differing investment objectives and
policies.
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A DIVERSIFIED SELECTION OF INVESTMENT ALTERNATIVES
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QUASAR PORTFOLIO -- seeks growth of capital by pursuing aggressive investment
policies. The Portfolio invests principally in a diversified portfolio of eq-
uity securities of any company and industry and in any type of security which
is believed to offer possibilities for capital appreciation.
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PURCHASE INFORMATION
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The Fund will offer and sell its shares only to separate accounts of certain
life insurance companies, for the purpose of funding variable annuity con-
tracts and variable life insurance policies. Sales will be made without sales
charge at the Portfolio's per share net asset value. Further information can
be obtained from Alliance Fund Services, Inc. at the address or telephone num-
ber shown above.
An investment in the Fund is not a deposit or obligation of, or guaranteed or
endorsed by, any bank and is not federally insured by the Federal Deposit In-
surance Corporation, the Federal Reserve Board or any other agency.
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ADDITIONAL INFORMATION
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This Prospectus sets forth concisely the information which a prospective in-
vestor should know about the Fund and the Portfolio before applying for cer-
tain variable annuity contracts and variable life insurance policies offered
by participating insurance companies. It should be read in conjunction with
the Prospectus of the separate account of the specific insurance product which
accompanies this Prospectus. A "Statement of Additional Information" dated May
1, 1998, which provides a further discussion of certain areas in this Prospec-
tus and other matters which may be of interest to some investors, has been
filed with the Securities and Exchange Commission and is incorporated herein
by reference. For a free copy, call or write Alliance Fund Services, Inc. at
the address or telephone number shown above.
(R) :This is a registered mark used under license from the owner, Alliance
Capital Management L.P.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PROSPECTUS/May 1, 1998
Investors are advised to carefully read this Prospectus and to retain it for
future reference.
<PAGE>
EXPENSE INFORMATION
SHAREHOLDER TRANSACTION EXPENSES
The Fund has no sales load on purchases or reinvested dividends, deferred
sales load, redemption fee or exchange fee.
<TABLE>
<CAPTION>
QUASAR
PORTFOLIO+
----------
<S> <C>
ANNUAL PORTFOLIO OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees.................................................. .58%
Other Expenses................................................... .37%
---
Total Portfolio Operating Expenses............................... .95%
===
</TABLE>
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+ Shareholder transaction expenses shown are net of expense reimbursement.
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return (cumulatively through the end of each time period).
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Quasar Portfolio................................ $10 $30 $53 $117
</TABLE>
The purpose of the foregoing table is to assist the investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
and indirectly. The expenses listed in the table are net of voluntary expense
reimbursements, which are not required to be continued indefinitely; however,
the Adviser intends to continue such reimbursements for the foreseeable future.
The expenses (as a percentage of average net assets) of the Quasar Portfolio,
before expense reimbursements, would be: Management Fees -- 1.00%, Other Ex-
penses -- .37% and Total Operating Expenses -- 1.37%. The example should not be
considered representative of future expenses; actual expenses may be greater or
less than those shown.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The following information as to net asset value, ratios and certain supple-
mental data for each of the periods shown below has been audited by Ernst &
Young LLP, the Fund's independent auditors, whose unqualified report thereon
(referring to Financial Highlights) appears in the Statement of Additional In-
formation. The following information should be read in conjunction with the
financial statements and related notes included in the Statement of Additional
Information. Further information about the Fund's performance is contained in
the Fund's annual report, which is available without charge upon request.
<TABLE>
<CAPTION>
QUASAR PORTFOLIO
-------------------------
AUGUST 5,
YEAR ENDED 1996(e) TO
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Net asset value, beginning of period................ $ 10.64 $10.00
------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a)(b)........................ .02 .04
Net realized and unrealized gain (loss) on
investments and foreign currency transactions..... 1.96 .60
------- ------
Net increase (decrease) in net asset value from
operations........................................ 1.98 .64
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LESS: DISTRIBUTIONS
Dividends from net investment income............... (.01) -0-
------- ------
Net asset value, end of period..................... $ 12.61 $10.64
======= ======
TOTAL RETURN
Total investment return based on net asset
value(c).......................................... 18.60% 6.40%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted).......... $59,277 $8,842
Ratio to average net assets of:
Expenses, net of waivers and reimbursements........ .95% .95%(f)
Expenses, before waivers and reimbursements........ 1.37% 4.44%(f)
Net investment income(a)........................... .17% .93%(f)
Portfolio turnover rate............................ 210% 40%
Average commission rate paid(d).................... $.0521 $.0511
</TABLE>
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(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 re-
demption on the last day of the period. Total investment return calculated
for a period of less than one year is not annualized.
(d) For fiscal years beginning on or after September 1, 1995, a fund is re-
quired to disclose its average commission rate per share for trades on
which commissions are charged.
(e) Commencement of operations.
(f) Annualized.
3
<PAGE>
DESCRIPTION OF THE PORTFOLIO
INTRODUCTION TO THE FUND
The Fund was established as a corporation in Maryland. The Fund is an open-end
management investment company commonly known as a "mutual fund" whose shares
are offered in separate series each referred to as a "Portfolio." Because the
Fund offers multiple Portfolios, it is known as a "series fund." Each Portfo-
lio is a separate pool of assets constituting, in effect, a separate fund with
its own investment objectives and policies.
A shareholder in a Portfolio will be entitled to his or her pro rata share of
all dividends and distributions arising from that Portfolio's assets and, upon
redeeming shares of that Portfolio, the shareholder will receive the then cur-
rent net asset value of that Portfolio represented by the redeemed shares.
(See "Purchase and Redemption of Shares"). While the Fund has no present in-
tention of doing so, the Fund is empowered to establish, without shareholder
approval, additional portfolios which may have different investment objec-
tives.
The Fund currently has 19 Portfolios, one of which, the Quasar Portfolio, is
offered by this prospectus.
The Fund is intended to serve as the investment medium for variable annuity
contracts and variable life insurance policies to be offered by the separate
accounts of certain life insurance companies.
It is conceivable that in the future it may be disadvantageous for variable
annuity and variable life insurance separate accounts to invest simultaneously
in the Fund. Currently, however, the Fund does not foresee any disadvantage to
the holders of variable annuity contracts and variable life insurance policies
arising from the fact that the interests of the holders of such contracts and
policies may differ. Nevertheless, the Fund's Directors intend to monitor
events in order to identify any material irreconcilable conflicts which may
possibly arise and to determine what action, if any, should be taken in re-
sponse thereto.
The investment objectives and policies of the Portfolio are set forth below.
There can be, of course, no assurance that the Portfolio will achieve its in-
vestment objectives.
INVESTMENT OBJECTIVES AND POLICIES
GENERAL
The investment objectives and policies determine the types of portfolio secu-
rities in which the Portfolio invests, and can be expected to affect the de-
gree of risk to which the Portfolio is subject and the Portfolio's yield or
return. The Portfolio's investment objectives cannot be changed without ap-
proval by the holders of a majority of the Portfolio's outstanding voting se-
curities, as defined in the Investment Company Act of 1940, as amended (the
"Act"). The Fund may change the Portfolio's investment policies that are not
designated "fundamental policies" within the meaning of the Act upon notice to
shareholders of the Portfolio, but without their approval. The types of port-
folio securities in which the Portfolio may invest are described in greater
detail below.
4
<PAGE>
QUASAR PORTFOLIO
The Quasar Portfolio is a diversified investment company that seeks growth of
capital by pursuing aggressive investment policies. It invests for capital ap-
preciation and only incidentally for current income. The selection of securi-
ties based on the possibility of appreciation cannot prevent loss in value.
Moreover, because the Portfolio's investment policies are aggressive, an in-
vestment in the Portfolio is risky and investors who want assured income or
preservation of capital should not invest in the Portfolio.
The Portfolio invests in any company and industry and in any type of security
with potential for capital appreciation. It invests in well-known and estab-
lished companies and in new and unseasoned companies. When selecting securi-
ties, Alliance Capital Management L.P. (the "Adviser") considers economic and
political outlook, the values of specific securities relative to other invest-
ments, trends in the determinants of corporate profits and management capabil-
ity and practices.
The Portfolio invests principally in equity securities, but it also invests to
a limited degree in non-convertible bonds and preferred stock. The Portfolio
invests in listed and unlisted U.S. and foreign securities. The Portfolio pe-
riodically invests in special situations, which occur when the securities of a
company are expected to appreciate due to a development particularly or
uniquely applicable to that company and regardless of general business condi-
tions or movements of the market as a whole.
The Portfolio may also: (i) invest up to 15% of its total assets in securities
for which there is no ready market; (ii) make short sales of securities
"against the box," but not more than 15% of its net assets may be deposited on
short sales; and (iii) write call options and purchase and sell put and call
options written by others. For additional information on the use, risks and
costs of the Policies and practices, see "Other Investment Policies and Tech-
niques," below.
The Portfolio's investment objective cannot be changed without approval by the
holders of a majority of the Portfolio's outstanding voting securities, as de-
fined in the Act. Except as otherwise indicated, the investment policies of
the Portfolio are not "fundamental policies" and may, therefore, be changed by
the Board of Directors without shareholder approval.
Options. The Portfolio may write call options and purchase and sell put and
call options written by others. An option gives the purchaser of the option,
upon payment of a premium, the right to deliver to (in the case of a put) or
receive from (in the case of a call) the writer a specified amount of a secu-
rity on or before a fixed date at a predetermined price. A call option written
by the Portfolio is "covered" if the Portfolio owns the underlying security,
has an absolute and immediate right to acquire that security upon conversion
or exchange of another security it holds, or holds a call option on the under-
lying security with an exercise price equal to or less than that of the call
option it has written. A put option written by the Portfolio is "covered" if
the Portfolio holds a put option on the underlying securities with an exercise
price equal to or greater than that of the put option it has written.
In purchasing an option, the Portfolio would be in a position to realize a
gain, if, during
5
<PAGE>
the option period, the price of the underlying security increased (in the case
of a call) or decreased (in the case of a put) by an amount in excess of the
premium paid; otherwise the Portfolio would experience a loss equal to the
premium paid for the option.
If an option written by the Portfolio were exercised, the Portfolio would be
obligated to purchase (in the case of a put) or sell (in the case of a call)
the underlying security at the exercise price. The risk involved in writing an
option is that, if the option were exercised, the underlying security would
then be purchased or sold by the Portfolio at a disadvantageous price. These
risks could be reduced by entering into a closing transaction (i.e., by dis-
posing of the option prior to its exercise). The Portfolio retains the premium
received from writing a call option whether or not the option is exercised.
The writing of covered call options could result in increases in the Portfo-
lio's portfolio turnover rate, especially during periods when market prices of
the underlying securities appreciate.
The Portfolio will not write a call option if, as a result, the aggregate of
the Portfolio's securities subject to outstanding call options (valued at the
lower of the option price or market value of such securities) would exceed 15%
of the Portfolio's total assets or more than 10% of the Portfolio's assets
would be committed to all options that at time of sale have a remaining term
of more than 100 days. The aggregate cost of all outstanding options purchased
and held by the Portfolio will at no time exceed 10% of the Portfolio's total
assets.
Short Sales. The Portfolio may only make short sales of securities "against
the box". A short sale is effected by selling a security that the Portfolio
does not own, or if the Portfolio does own such security, it is not to be de-
livered upon consummation of the sale. A short sale is "against the box" to
the extent that the Portfolio contemporaneously owns or has the right to ob-
tain securities identical to those sold short without payment. If the price of
the security sold short increases between the time of the short sale and the
time the Portfolio replaces the borrowed security, the Portfolio will incur a
loss; conversely, if the price declines, the Portfolio will realize a capital
gain. Certain special federal income tax considerations may apply to short
sales entered into by the Portfolio. See "Dividends, Distributions and Taxes"
in the Statement of Additional Information.
Foreign Securities. The Portfolio may invest in foreign securities. To the ex-
tent the Portfolio invests in foreign securities, consideration is given to
certain factors comprising both risk and opportunity. The values of foreign
securities investments are affected by changes in currency rates or exchange
control regulations, application of foreign tax laws, including withholding
taxes, changes in governmental administration or economic, taxation or mone-
tary policy (in the United States and abroad) or changed circumstances in
dealings between nations. Foreign securities markets may also be less liquid,
more volatile, and less subject to governmental supervision than in the United
States. Investments in foreign countries could be affected by other factors
not present in the United States, including expropriation, confiscatory taxa-
tion, lack of uniform accounting and auditing standards and potential diffi-
culties in enforcing contractual
6
<PAGE>
obligations and could be subject to extended settlement periods.
OTHER INVESTMENT POLICIES AND TECHNIQUES
OPTIONS
The purchaser of an option, upon payment of a premium, obtains, in the case of
a put option the right to deliver to the writer of the option, and in the case
of a call option, the right to call upon the writer to deliver, a specified
amount of a security on or before a fixed date at a predetermined price. A
call option written by the Portfolio is "covered" if the Portfolio (i) owns
the underlying security covered by the call (ii) has an absolute and immediate
right to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by the Fund's Cus-
todian) upon conversion or exchange of other portfolio securities, or (iii)
holds a call on the same security in the same principal amount as the call
written where the exercise price of the call held (i) is equal to or less than
the exercise price of the call written or (ii) is greater than the exercise
price of the call written if the difference is maintained by the Portfolio in
cash and liquid high-grade debt securities in a segregated account with the
Fund's Custodian. A put option written by the Portfolio is "covered" if the
Portfolio maintains liquid assets with a value equal to the exercise price in
a segregated account with the Fund's Custodian, or else holds a put on the
same security in the same principal amount as the put written where the exer-
cise price of the put held is equal to or greater than the exercise price of
the put written. The premium paid by the purchaser of an option will reflect,
among other things, the relationship of the exercise price to the market price
and volatility of the underlying security, the remaining term of the option,
supply and demand and interest rates.
A call option is written for cross-hedging purposes if the Portfolio does not
own the underlying security, but seeks to provide a hedge against a decline in
value in another security which the Portfolio owns or has the right to ac-
quire. In such circumstances, the Portfolio collateralizes its obligation un-
der the option (which is not covered) by maintaining in a segregated account
with the Fund's Custodian liquid assets in an amount not less than the market
value of the underlying security, marked to market daily.
In purchasing a call option, the Portfolio would be in a position to realize a
gain if, during the option period, the price of the underlying security in-
creased by an amount in excess of the premium paid. It would realize a loss if
the price of the underlying security declined or remained the same or did not
increase during the period by more than the amount of the premium. In purchas-
ing a put option, the Portfolio would be in a position to realize a gain if,
during the option period, the price of the underlying security declined by an
amount in excess of the premium paid. It would realize a loss if the price of
the underlying security increased or remained the same or did not decrease
during that period by more than the amount of the premium. If a put or call
option purchased by the Portfolio were permitted to expire without being sold
or exercised, its premium would be lost by the Portfolio.
The risk involved in writing a put option is that there could be a decrease in
the mar-
7
<PAGE>
ket value of the underlying security. If this occurred, the option could be
exercised and the underlying security would then be sold by the option holder
to the Portfolio at a higher price than its current market value. The risk in-
volved in writing a call option is that there could be an increase in the mar-
ket value of the underlying security. If this occurred, the option could be
exercised and the underlying security would then be sold by the Portfolio at a
lower price than its current market value. These risks could be reduced by en-
tering into a closing transaction. See Appendix C to the Statement of Addi-
tional Information. The Portfolio retains the premium received from writing a
put or call option whether or not the option is exercised.
The Portfolio may purchase or write options on securities of the types in
which it is permitted to invest in privately negotiated transactions. The
Portfolio will effect such transactions only with investment dealers and other
financial institutions (such as commercial banks or savings and loan institu-
tions) deemed creditworthy by the Adviser, and the Adviser has adopted proce-
dures for monitoring the creditworthiness of such entities. Options purchased
or written by the Portfolio in negotiated transactions are illiquid and it may
not be possible for the Portfolio to effect a closing transaction at a time
when the Adviser believes it would be advantageous to do so. See "Illiquid Se-
curities." See Appendix C to the Statement of Additional Information for a
further discussion of the use, risks and costs of option trading.
FOREIGN SECURITIES
For a description of the investment policies of the Portfolio with respect to
foreign securities, see above.
To the extent the Portfolio invests in foreign securities, consideration is
given to certain factors comprising both risk and opportunity. The values of
foreign securities investments are affected by changes in currency rates or
exchange control regulations, application of foreign tax laws, including with-
holding taxes, changes in governmental administration or economic, taxation or
monetary policy (in the United States and abroad) or changed circumstances in
dealings between nations. Currency exchange rate movements will increase or
reduce the U.S. dollar value of the Portfolio's net assets and income attrib-
utable to foreign securities. Costs are incurred in connection with conver-
sions between various currencies held by the Portfolio. In addition, there may
be substantially less publicly available information about foreign issuers
than about domestic issuers, and foreign issuers may not be subject to ac-
counting, auditing and financial reporting standards and requirements compara-
ble to those of domestic issuers. Foreign issuers are subject to accounting,
auditing and financial standards and requirements that differ, in some cases
significantly, from those applicable to U.S. issuers. In particular, the as-
sets and profits appearing on the financial statements of a foreign issuer may
not reflect its financial position or results of operations in the way they
would be reflected had the financial statements been prepared in accordance
with U.S. generally accepted accounting principles. In addition, for an issuer
that keeps accounting records in local currency, inflation account-
8
<PAGE>
ing rules in some of the countries in which the Portfolio will invest require,
for both tax and accounting purposes, that certain assets and liabilities be
restated on the issuer's balance sheet in order to express items in terms of
currency of constant purchasing power. Inflation accounting may indirectly
generate losses or profits. Consequently, financial data may be materially af-
fected by restatements for inflation and may not accurately reflect the real
condition of those issuers and securities markets. Securities of some foreign
issuers are less liquid and more volatile than securities of comparable domes-
tic issuers, and foreign brokerage commissions are generally higher than in
the United States. Foreign securities markets may also be less liquid, more
volatile, and less subject to governmental supervision than in the United
States. Investments in foreign countries could be affected by other factors
not present in the United States, including expropriation, confiscatory taxa-
tion, lack of uniform accounting and auditing standards and potential diffi-
culties in enforcing contractual obligations and could be subject to extended
settlement periods.
ILLIQUID SECURITIES
Subject to any more restrictive applicable investment policies, the Portfolio
does not maintain more than 15% of its net assets in illiquid securities. For
purposes of the Portfolio's investment objectives and policies and investment
restrictions, illiquid securities include, among others, (a) direct placements
or other securities which are subject to legal or contractual restrictions on
resale or for which there is no readily available market (e.g., trading in the
security is suspended or, in the case of unlisted securities, market makers do
not exist or will not entertain bids or offers), (b) options purchased by the
Portfolio over-the-counter and the cover for options written by the Portfolio
over-the-counter, and (c) repurchase agreements not terminable within seven
days. Securities eligible for resale under Rule 144A under the Securities Act
of 1933, as amended, that have legal or contractual restrictions on resale but
have a readily available market are not deemed illiquid for purposes of this
limitation. The Adviser monitors the liquidity of such securities under the
supervision of the Board of Directors. See "Certain Fundamental Investment
Policies." See the Statement of Additional Information for further discussion
of illiquid securities.
FIXED-INCOME SECURITIES
The value of fixed-income securities will fluctuate as the general level of
interest rates fluctuates. During periods of falling interest rates, the val-
ues of these securities generally rise. Conversely, during periods of rising
interest rates, the values of these securities generally decline.
In seeking to achieve the Portfolio's investment objective, there will be
times, such as during periods of rising interest rates, when depreciation and
realization of capital losses on securities in the Portfolio's portfolio will
be unavoidable. Moreover, medium- and lower-rated securities and non-rated se-
curities of comparable quality may be subject to wider fluctuations in yield
and market values than higher-rated securities under certain market condi-
tions. Such fluctuations after a security is acquired do not affect the cash
income received from that security but are reflected in the net asset value of
the Portfolio.
9
<PAGE>
SECURITIES RATINGS
The ratings of fixed-income securities by Standard & Poor's Corporation
("S&P"), Moody's Investors Service, Inc. ("Moody's"),
Duff & Phelps Credit Rating Co. ("Duff & Phelps") and Fitch IBCA, Inc.
("Fitch") are a generally accepted barometer of credit risk. They are, howev-
er, subject to certain limitations from an investor's standpoint. The rating
of an issuer is heavily weighted by past developments and does not necessarily
reflect probable future conditions. There is frequently a lag between the time
a rating is assigned and the time it is updated. In addition, there may be va-
rying degrees of difference in credit risk of securities within each rating
category.
PORTFOLIO TURNOVER
Portfolio turnover rates are set forth under "Financial Highlights." These
portfolio turnover rates are greater than those of most other investment com-
panies. A high rate of portfolio turnover involves correspondingly greater
brokerage and other expenses than a lower rate, which must be borne by the
Portfolio and its shareholders. High portfolio turnover also may result in the
realization of substantial net short-term capital gains.
YEAR 2000
Many computer software systems in use today cannot properly process date-re-
lated information from and after January 1, 2000. Should any of the computer
systems employed by the Fund's major service providers fail to process this
type of information properly, that could have a negative impact on the Fund's
operations and the services that are provided to the Fund's shareholders. The
Adviser, as well as Alliance Fund Distributors, Inc., the principal under-
writer of the Fund's shares, and Alliance Fund Services, Inc., the Fund's reg-
istrar, dividend disbursing agent, and transfer agent, have advised the Fund
that they are reviewing all of their computer systems with the goal of modify-
ing or replacing such systems prior to January 1, 2000, to the extent neces-
sary to foreclose any such negative impact. In addition, the Adviser has been
advised by the Fund's custodian that it is also in the process of reviewing
its systems with the same goal. As of the date of this Prospectus, the Fund
and the Adviser have no reason to believe that these goals will not be
achieved. Similarly, the values of certain of the portfolio securities held by
the Fund may be adversely affected by the inability of the securities' issuers
or of third parties to process this type of information properly.
CERTAIN FUNDAMENTAL INVESTMENT POLICIES
The Fund has adopted certain fundamental investment policies applicable to the
Quasar Portfolio which may not be changed with respect to the Portfolio with-
out the approval of the shareholders of the Portfolio. Certain of those funda-
mental investment policies are set forth below. For a complete listing of such
fundamental investment policies, see the Statement of Additional Information.
These fundamental policies provide that the Portfolio may not: (i) purchase
the securities of any one issuer, other than the U.S. Government or any of its
agencies or instrumentalities, if as a result more than 5% of
10
<PAGE>
its total assets would be invested in such issuer or the Portfolio would own
more than 10% of the outstanding voting securities of such issuer, except that
up to 25% of its total asset may be invested without regard to these 5% and 10%
limitations; (ii) invest more than 25% of its total assets in any particular
industry; and (iii) borrow money except for temporary or emergency purposes in
an amount not exceeding 5% of its total assets at the time the borrowing is
made.
In addition, the Fund has adopted an investment policy, which is not designated
a "fundamental policy" within the meaning of the Act, of intending to have the
Portfolio comply at all times with the diversification requirements prescribed
in Section 817(h) of the Internal Revenue Code or any successor thereto and the
applicable Treasury Regulations thereunder. This policy may be changed upon no-
tice to shareholders of the Fund, but without their approval.
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
DIRECTORS
John D. Carifa, Chairman and President, is President and Chief Operating Offi-
cer and a Director of Alliance Capital Management Corporation ("ACMC"), the
sole general partner of the Adviser, with which he has been associated since
prior to 1993.
Ruth Block was formerly an Executive Vice President and the Chief Insurance Of-
ficer of The Equitable Life Assurance Society of the United States since prior
to 1993. She is a Director of Ecolab Incorporated (specialty chemicals) and
Amoco Corporation (oil and gas).
David H. Dievler was formerly a Senior Vice President of ACMC, with which he
had been associated since prior to 1993. He is currently an independent consul-
tant.
John H. Dobkin has been the President of Historic Hudson Valley (historic pres-
ervation) since prior to 1993. Previously, he was Director of the National
Academy of Design.
William H. Foulk, Jr. is an investment advisor and an independent consultant.
He was formerly Senior Manager of Barrett Associates, Inc., a registered in-
vestment adviser, with which he had been associated since prior to 1993.
Dr. James M. Hester is President of the Harry Frank Guggenheim Foundation. He
was formerly President of New York University, The New York Botanical Garden
and Rector of the United Nations University.
Clifford L. Michel is a partner in the law firm of Cahill Gordon & Reindel,
with which he has been associated since prior to 1993. He is President, Chief
Executive Officer and a Director of Wenonah Development Company (investments)
and a Director of Placer Dome, Inc. (mining).
Donald J. Robinson was formerly a senior partner and a member of the Executive
Committee in the law firm of Orrick, Herrington & Sutcliffe and is currently
Senior Counsel to that firm.
11
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ADVISER
Alliance Capital Management L.P. (the "Adviser"), a Delaware limited partner-
ship with principal offices at 1345 Avenue of the Americas, New York, New York
10105 has been retained under an investment advisory agreement (the "Investment
Advisory Agreement") to provide investment advice and, in general, to conduct
the management and investment program of each of the Fund's Portfolios subject
to the general supervision and control of the Board of Directors of the Fund.
The employee of the Adviser principally responsible for the Quasar Portfolio's
investment program since its inception is Alden M. Stewart, who is an Executive
Vice President of ACMC, with which he has been associated since prior to 1993.*
The Adviser is a leading international investment manager supervising client
accounts with assets as of December 31, 1997 totaling more than $218 billion
(of which approximately $85 billion represented the assets of investment compa-
nies). The Adviser's clients are primarily major corporate employee benefit
funds, public employee retirement systems, investment companies, foundations
and endowment funds. The 58 registered investment companies managed by the Ad-
viser comprising 122 separate investment portfolios currently have over three
million shareholder accounts. As of December 31, 1997, the Adviser was retained
as an investment manager for employee benefit plan assets of 31 of the Fortune
100 companies.
ACMC, the sole general partner of, and the owner of a 1% general partnership
interest in, the Adviser, is an indirect wholly-owned subsidiary of The Equita-
ble Life Assurance Society of the United States ("Equitable"), one of the larg-
est life insurance companies in the United States and a wholly owned subsidiary
of the Equitable Companies Incorporated, a holding company which is controlled
by AXA-UAP, a French insurance holding company. Certain information concerning
the ownership and control of Equitable by AXA-UAP is set forth in the Statement
of Additional Information under "Management of the Fund."
The Adviser provides investment advisory services and order placement facili-
ties for each of the Fund's Portfolios and pays all compensation of Directors
and officers of the Fund who are affiliated persons of the Adviser. The Adviser
or its affiliates also furnish the Fund, without charge, management supervision
and assistance and office facilities and provide persons satisfactory to the
Fund's Board of Directors to serve as the Fund's officers.
EXPENSES OF THE FUND
In addition to the payments to the Adviser under the Investment Advisory Agree-
ment described above, the Fund pays certain other costs including (a) custody,
transfer and dividend disbursing expenses, (b) fees of Directors who are not
affiliated with the Adviser, (c) legal and auditing expenses, (d) clerical, ac-
counting and other office
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* Prior to July 22, 1993, with Equitable Capital Management Corporation (Equi-
table Capital). On that date, the Adviser acquired the business and substan-
tially all of the assets of Equitable Capital.
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costs, (e) costs of printing the Fund's prospectuses and shareholder reports,
(f) cost of maintaining the Fund's existence, (g) interest charges, taxes,
brokerage fees and commissions, (h) costs of stationery and supplies, (i) ex-
penses and fees related to registration and filing with the Commission and
with state regulatory authorities, and (j) cost of certain personnel of the
Adviser or its affiliates rendering clerical, accounting and other services to
the Fund.
As to the obtaining of clerical and accounting services not required to be
provided to the Fund by the Adviser under the Investment Advisory Agreement,
the Fund may employ its own personnel. For such services, it may also utilize
personnel employed by the Adviser or by its affiliates; in such event, the
services are provided to the Fund at cost and the payments specifically ap-
proved in advance by the Fund's Board of Directors.
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PURCHASE AND REDEMPTION OF SHARES
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PURCHASE OF SHARES
Shares of the Quasar Portfolio are offered on a continuous basis directly by
the Fund and by Alliance Fund Distributors, Inc., the Fund's Principal Under-
writer, to the separate accounts of certain life insurance companies without
any sales or other charge, at the Portfolio's net asset value, as described
below. The separate accounts of insurance companies place orders to purchase
shares of the Portfolio based on, among other things, the amount of premium
payments to be invested and surrendered and transfer requests to be effected
on that day pursuant to variable annuity contracts and variable life insurance
policies which are funded by shares of the Portfolio. The Fund reserves the
right to suspend the sale of the Fund's shares in response to conditions in
the securities markets or for other reasons. Individuals may not place orders
directly with the Fund. See the Prospectus of the separate account of the par-
ticipating insurance company for more information on the purchase of Portfolio
shares.
The public offering price of the Portfolio's shares is their net asset value.
The per share net asset value of the Portfolio is computed in accordance with
the Fund's Articles of Incorporation and By-Laws, at the next close of regular
trading on the New York Stock Exchange (the "Exchange") (currently 4:00 p.m.
Eastern time), following receipt of a purchase or redemption order by the
Fund, on each Fund business day on which such an order is received and trading
in the types of securities in which the Fund invests might materially affect
the value of Fund shares. The Fund's per share net asset value is computed by
dividing the value of the Fund's total assets, less its liabilities, by the
total number of its shares then outstanding. A Fund business day is any
weekday exclusive of days on which the Exchange is closed (most national holi-
days and Good Friday). For purposes of this computation, the securities in the
Portfolio are valued at their current market value determined on the basis of
market quotations or, if such quotations are not readily available, such other
methods as the Directors believe would accurately reflect fair market value.
Portfolio securities may also be valued on the basis of prices provided by a
pricing service when such prices
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are believed by the Adviser to reflect the fair market value of such
securities.
REDEMPTION OF SHARES
An insurance company separate account may redeem all or any portion of the
shares of the Portfolio in its account at any time at the net asset value per
share of the Portfolio next determined after a redemption request in proper
form is furnished to the Fund or the Principal Underwriter. Any certificates
representing shares being redeemed must be submitted with the redemption re-
quest. Shares redeemed are entitled to earn dividends, if any, up to and in-
cluding the day redemption is effected. There is no redemption charge. Payment
of the redemption price will normally be made within seven days after receipt
of such tender for redemption.
The right of redemption may be suspended or the date of payment may be post-
poned for any period during which the Exchange is closed (other than customary
weekend and holiday closings) or during which the Commission determines that
trading thereon is restricted, or for any period during which an emergency (as
determined by the Commission) exists as a result of which disposal by the Fund
of securities owned by the Portfolio is not reasonably practicable or as a re-
sult of which it is not reasonably practicable for the Fund fairly to determine
the value of the Portfolio's net assets, or for such other periods as the Com-
mission may by order permit for the protection of security holders of the Fund.
For information regarding how to redeem shares in the Fund please see your in-
surance company separate account prospectus.
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DIVIDENDS, DISTRIBUTIONS AND TAXES
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The Quasar Portfolio will declare and distribute dividends from net investment
income and will distribute its net capital gains, if any, at least annually.
Such income and capital gains distributions will be made in shares of the Port-
folio.
The Portfolio qualified and intends to continue to qualify to be taxed as a
regulated investment company under Subchapter M of the Internal Revenue Code
(the "Code"). If so qualified, the Portfolio will not be subject to Federal in-
come or excise taxes on its investment company taxable income and net capital
gains to the extent such investment company taxable income and net capital
gains are distributed to the separate accounts of insurance companies
which hold its shares. Under current tax law, capital gains or dividends from
the Portfolio are not currently taxable when left to accumulate within a vari-
able annuity (other than an annuity interest owned by a person who is not a
natural person) or variable life insurance contract. Distributions of net in-
vestment income and net short-term capital gain will be treated as ordinary in-
come and distributions of net long-term capital gain will be treated as long-
term capital gain in the hands of the insurance companies.
Investment income received by the Portfolio from sources within foreign coun-
tries may be subject to foreign income taxes withheld at the source. Provided
that certain Code requirements are met, the Portfolio may "pass
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through" to its shareholders credits or deductions for foreign income taxes
paid.
Section 817(h) of the Code requires that the investments of a segregated asset
ac-count of an insurance company be "adequately diversified," in accordance
with Treasury Regulations promulgated thereunder, in order for the holders of
the variable annuity contracts or variable life insurance policies underlying
the account to receive the tax-deferred or tax-free treatment generally af-
forded holders of annuities or life insurance policies under the Code. The De-
partment of the Treasury has issued Regulations under section 817(h) which,
among other things, provide the manner in which a segregated asset account
will treat investments in a regulated investment company for purposes of the
applicable diversification requirements. Under the Regulations, if a regulated
investment company satisfies certain conditions, a segregated asset account
owning shares of the regulated investment company will not be treated as a
single investment for these purposes, but rather the account will be treated
as owning its proportionate share of each of the assets of the regulated in-
vestment company. The Portfolio plans to satisfy these conditions at all times
so that the shares of the Portfolio owned by a segregated asset account of a
life insurance company will be subject to this treatment under the Code.
For information concerning federal income tax consequences for the holders of
variable annuity contracts and variable rate insurance policies, such holders
should consult the prospectus used in connection with the issuance of their
particular contracts or policies.
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GENERAL INFORMATION
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PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board of Directors of the Fund, the
Adviser is responsible for the investment decisions and the placing of the or-
ders for portfolio transactions for the Fund. Transactions for the Quasar
Portfolio are normally effected by brokers.
The Fund has no obligation to enter into transactions in portfolio securities
with any broker, dealer, issuer, underwriter or other entity. In placing or-
ders, it is the policy of the Fund to obtain the best price and execution for
its transactions. Consistent with the objective of obtaining best execution,
the Fund may use brokers and dealers who provide research, statistical and
other information to the Adviser.
There may be occasions where the transaction cost charged by a broker may be
greater than that which another broker may charge if the Fund determines in
good faith that the amount of such transaction cost is reasonable in relation
to the value of the brokerage and research and statistical services provided
by the executing broker. Consistent with the Conduct Rules of the National As-
sociation of Securities Dealers, Inc., and subject to seeking best price and
execu-
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tion, the Fund may consider sales of shares of the Fund as a factor in the se-
lection of brokers and dealers to enter into portfolio transactions with the
Fund.
The Fund may from time to time place orders for the purchase or sale of secu-
rities on an agency basis with Donaldson, Lufkin & Jenrette Securities Corpo-
ration, an affiliate of the Adviser, and with brokers which may have their
transactions cleared or settled, or both, by the Pershing Division of Donald-
son, Lufkin and Jenrette Securities Corporation, for which Donaldson, Lufkin
and Jenrette Securities Corporation may receive a portion of the brokerage
commission. In such instances, the placement of orders with such brokers would
be consistent with the Fund's objective of obtaining best execution and would
not be dependent upon the fact that Donaldson, Lufkin & Jenrette Securities
Corporation is an affiliate of the Adviser.
ORGANIZATION
The Fund is a Maryland corporation organized on November 17, 1987. The autho-
rized capital stock of the Fund consists solely of 10,000,000,000 shares of
Common Stock having a par value of $.001 per share, which may, without share-
holder approval, be divided into an unlimited number of series. Such shares
are currently divided into 19 series, one underlying each Portfolio. Shares of
each Portfolio are normally entitled to one vote for all purposes. Generally,
shares of all Portfolios vote as a single series on matters, such as the elec-
tion of Directors, that affect all Portfolios in substantially the same man-
ner. Maryland law does not require a registered investment company to hold an-
nual meetings of shareholders and it is anticipated that shareholder meetings
will be held only when specifically required by federal or state law. Share-
holders have available certain procedures for the removal of Directors. Shares
of each Portfolio are freely transferable, are entitled to dividends as deter-
mined by the Board of Directors and, in liquidation of the Fund, are entitled
to receive the net assets of that Portfolio. Shareholders have no preference,
pre-emptive or conversion rights. In accordance with current law, it is antic-
ipated that an insurance company issuing a variable annuity contract or vari-
able life insurance policy that participates in the Fund will request voting
instructions from contract or policyholders and will vote shares in the sepa-
rate account in accordance with the voting instructions received.
PRINCIPAL UNDERWRITER
Alliance Fund Distributors, Inc., 1345 Avenue of the Americas, New York, New
York 10105, an indirect wholly-owned subsidiary of the Adviser, is the Princi-
pal Underwriter of shares of the Fund.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachu-
setts 02110, acts as Custodian for the securities and cash of the Fund and as
its dividend disbursing agent, but plays no part in deciding on the purchase
or sale of portfolio securities.
REGISTRAR, DIVIDEND-DISBURSING AGENT AND TRANSFER AGENT
Alliance Fund Services, Inc., an indirect wholly-owned subsidiary of the Ad-
viser, located at 500 Plaza Drive, Secaucus, New Jersey, 07094, acts as the
Fund's registrar, dividend-disbursing agent and transfer agent.
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PERFORMANCE INFORMATION
From time to time the Fund advertises its "total return." The Fund's "total
return" is its average annual compounded total return for its most recently
completed one, five, and ten-year periods (or the period since the Fund's in-
ception). The Fund's total return for such a period is computed by finding,
through the use of a formula prescribed by the Commission, the average annual
compounded rate of return over the period that would equate an assumed initial
amount invested to the value of such investment at the end of the period. For
purposes of computing total return, income dividends and capital gains distri-
butions paid on shares of the Fund are assumed to have been reinvested when
paid and the maximum sales charge applicable to purchases of Fund shares is
assumed to have been paid.
The Fund's total return is not fixed and will fluctuate in response to pre-
vailing market conditions or as a function of the type and quality of the se-
curities in the Fund's portfolio and the Fund's expenses. Total return infor-
mation is useful in reviewing the Fund's performance but such information may
not provide a basis for comparison with bank deposits or other investments
which pay a fixed yield for a stated period of time. An investor's principal
invested in the Fund is not fixed and will fluctuate in response to prevailing
market conditions.
Advertisements quoting performance rankings of the Fund as measured by finan-
cial publications or by independent organizations such as Lipper Analytical
Services, Inc. and Morningstar, Inc., and advertisements presenting the his-
torical record of payments of income dividends by the Fund may also from time
to time be sent to investors or placed in newspapers, magazines such as the
Wall Street Journal, The New York Times, Barrons, Investor's Daily, Money Mag-
azine, Changing Times, Business Week and Forbes or other media on behalf of
the Fund.
ADDITIONAL INFORMATION
Any shareholder inquiries may be directed to Alliance Fund Services, Inc. at
the address or telephone number shown on the front cover of this Prospectus.
This Prospectus and the Statement of Additional Information which has been in-
corporated by reference herein, does not contain all the information set forth
in the Registration Statement filed by the Fund with the Commission under the
Securities Act of 1933, as amended. Copies of the Registration Statement may
be obtained at a reasonable charge from the Commission or may be examined,
without charge, at the offices of the Commission in Washington, D.C.
This Prospectus does not constitute an offering in any state in which such of-
fering may not lawfully be made.
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