<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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GROWTH AND INCOME PORTFOLIO -- seeks to balance the objectives of reasonable
current income and reasonable opportunities for appreciation through invest-
ments primarily in dividend-paying common stocks of good quality.
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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>
GROWTH
AND
INCOME
PORTFOLIO
---------
<S> <C>
ANNUAL PORTFOLIO OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees................................................... .63%
Other Expenses.................................................... .09%
---
Total Portfolio Operating Expenses................................ .72%
===
</TABLE>
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>
Growth and Income Portfolio..................... $ 7 $23 $40 $89
</TABLE>
The purpose of the foregoing table is to assist the investor in understand-
ing the various costs and expenses that an investor in the Fund will bear di-
rectly 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 foresee-
able future. The example should not be considered representative of future ex-
penses; 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>
GROWTH AND INCOME PORTFOLIO
----------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------
1997 1996 1995 1994 1993
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year.......................... $ 16.40 $ 15.79 $ 11.85 $ 12.18 $ 10.99
-------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERA-
TIONS
Net investment income(a)(b)... .21 .24 .27 .10 .01
Net realized and unrealized
gain (loss) on investments... 4.39 3.18 3.94 (.16) 1.27
-------- -------- ------- ------- -------
Net increase (decrease) in net
asset value from operations.. 4.60 3.42 4.21 (.06) 1.28
-------- -------- ------- ------- -------
LESS: DIVIDENDS AND DISTRIBU-
TIONS
Dividends from net investment
income....................... (.13) (.25) (.13) (.10) (.06)
Distributions from net real-
ized gains................... (.94) (2.56) (.14) (.17) (.03)
-------- -------- ------- ------- -------
Total dividends and distribu-
tions........................ (1.07) (2.81) (.27) (.27) (.09)
-------- -------- ------- ------- -------
Net asset value, end of year.. $ 19.93 $ 16.40 $ 15.79 $ 11.85 $ 12.18
======== ======== ======= ======= =======
TOTAL RETURN
Total investment return based
on net asset value(c)........ 28.80% 24.09% 35.76% (.35)% 11.69%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's
omitted)..................... $250,202 $126,729 $41,993 $41,702 $22,756
Ratio to average net assets
of:
Expenses, net of waivers and
reimbursements............... .72% .82% .79% .90% 1.18%
Expenses, before waivers and
reimbursements............... .72% .82% .79% .91% 1.28%
Net investment income(a)...... 1.16% 1.58% 1.95% 1.71% 1.76%
Portfolio turnover rate....... 86% 87% 150% 95% 69%
Average commission rate
paid(d)...................... $ .0581 $ .0602 -0- -0- -0-
</TABLE>
- -------
(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.
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 Growth and Income
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
4
<PAGE>
may invest are described in greater detail below.
GROWTH AND INCOME PORTFOLIO
The Growth and Income Portfolio's investment objective is to seek reasonable
cur-rent income and reasonable opportunity for appreciation through investments
primarily in dividend-paying common stocks of good quality. Whenever the eco-
nomic outlook is unfavorable for investment in common stock, investments in
other types of securities, such as bonds, convertible bonds, preferred stock
and convertible preferred stocks may be made by the Portfolio. Purchases and
sales of portfolio securities are made at such times and in such amounts as are
deemed advisable in light of market, economic and other conditions.
OTHER INVESTMENT POLICIES AND TECHNIQUES
REPURCHASE AGREEMENTS
The Portfolio may enter into agreements pertaining to U.S. Government Securi-
ties with member banks of the Federal Reserve System or "primary dealers" (as
designated by the Federal Reserve Bank of New York).
A repurchase agreement arises when a buyer purchases a security and simultane-
ously agrees to resell it to the vendor at an agreed-upon future date, normally
one day or a few days later. The resale price is greater than the purchase
price, reflecting an agreed-upon interest rate. Such agreements permit the
Portfolio to keep all of its assets at work while retaining "overnight" flexi-
bility in pursuit of investment of a longer-term nature. If a vendor defaults
on its repurchase obligation, the Portfolio would suffer a loss to the extent
that the proceeds from the sale of the collateral were less than the repurchase
price. If a vendor goes bankrupt, the Portfolio might be delayed in, or pre-
vented from, selling the collateral for its benefit. The Fund's Board of Direc-
tors has established procedures, which are periodically reviewed by the Board,
pursuant to which Alliance Capital Management L.P. (the "Adviser") monitors the
creditworthiness of the vendors with which the Portfolio enters into repurchase
agreement transactions.
WRITING COVERED CALL OPTIONS
The Growth and Income Portfolio may write covered call options listed on one or
more national securities exchanges. A call option gives the purchaser of the
option, upon payment of a premium to the writer of the option, the right to
purchase from the writer of the option a specified number of shares of a speci-
fied security on or before a fixed date, at a predetermined price. The Portfo-
lio is permitted to write call options but may not do so unless it at all times
during the option period owns the optioned securities, or securities convert-
ible or carrying rights to acquire the optioned securities at no additional
cost. The Portfolio may not write covered call options in excess of 25% of the
Portfolio's assets.
The Portfolio may terminate its obligation to the holder of an option written
by the Portfolio through a "closing purchase transaction." The Portfolio may
not, however, effect a closing purchase transaction with respect to such an op-
tion after it has been notified of the exercise of such option. The Portfolio
realizes a profit or loss from a closing purchase transaction if the cost of
the transaction is more or less than the premium received by the Portfolio from
writing the option. Although the writing of
5
<PAGE>
covered call options only on national securities exchanges increases the like-
lihood of the Portfolio being able to make closing purchase transactions,
there is no assurance that the Portfolio will be able to effect closing pur-
chase transactions at any particular time or at an acceptable price. The writ-
ing of covered call options could result in increases in the portfolio turn-
over of the Portfolio, especially during periods when market prices of the un-
derlying securities appreciate.
LOANS OF PORTFOLIO SECURITIES
The Portfolio may make secured loans of its portfolio securities to brokers,
dealers and financial institutions provided that cash, U.S. Government securi-
ties, other liquid high-quality debt securities or bank letters of credit
equal to at least 100% of the market value of the securities loaned is depos-
ited and maintained by the borrower with the Portfolio.
The risk in lending portfolio securities, as with other extensions of credit,
consists of the possible loss of rights in the collateral should the borrower
fail financially. In determining whether to lend securities to a particular
borrower, the Adviser will consider all relevant facts and circumstances, in-
cluding the creditworthiness of the borrower. While securities are on loan,
the borrower will pay the Portfolio any income earned thereon and the Portfo-
lio may invest any cash collateral in portfolio securities, thereby earning
additional income, or receive an agreed upon amount of income from a borrower
who has delivered equivalent collateral. The Portfolio will have the right to
regain record ownership of loaned securities to exercise beneficial rights
such as voting rights, subscription rights and rights to dividends, interest
or other distributions. The Portfolio may pay reasonable finders', administra-
tive and custodial fees in connection with a loan. No more than 30% of the
value of the assets of the Growth and Income Portfolio may be loaned at any
time, nor will the Portfolio lend its portfolio securities to any officer, di-
rector, employee or affiliate of either the Fund or the Adviser.
FOREIGN SECURITIES
The Portfolio may invest in listed and unlisted foreign securities although it
intends to restrict its investment in foreign securities to issues of high
quality. The Portfolio may convert U.S. Dollars into foreign currency, but
only to effect securities transactions on a foreign securities exchange and
not to hold such currency as an investment. The Portfolio may enter into for-
ward foreign currency exchange contracts in order to protect against uncer-
tainty in the level of future foreign exchange rates.
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
6
<PAGE>
by the Portfolio. In addition, there may be substantially less publicly avail-
able information about foreign issuers than about domestic issuers, and for-
eign issuers may not be subject to accounting, auditing and financial report-
ing standards and requirements comparable 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 applica-
ble to U.S. issuers. In particular, the assets and profits appearing on the
financial statements of a foreign issuer may not reflect its financial posi-
tion or results of operations in the way they would be reflected had the fi-
nancial statements been prepared in accordance with U.S. generally accepted
accounting principles. In addition, for an issuer that keeps accounting rec-
ords in local currency, inflation accounting 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 affected 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 domestic issuers, and foreign brokerage commis-
sions are generally higher than in the United States. Foreign securities mar-
kets 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 ex-
propriation, confiscatory taxation, lack of uniform accounting and auditing
standards and potential difficulties 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
7
<PAGE>
fluctuates. During periods of falling interest rates, the values of these secu-
rities 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 conditions.
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.
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 Rat-
ing Co. ("Duff & Phelps") and Fitch IBCA, Inc. ("Fitch") are a generally ac-
cepted barometer of credit risk. They are, however, subject to certain limita-
tions 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 varying degrees of difference
in credit risk of securities within each rating category.
DEFENSIVE POSITION
When business or financial conditions warrant, the Growth and Income Portfolio
may assume a temporary defensive position and invest without limit in high
grade fixed income securities or hold their assets in cash equivalents, includ-
ing (i) short-term obligations of the U.S. Government and its agencies or in-
strumentalities, (ii) certificates of deposit, bankers' acceptances and inter-
est-bearing savings deposits of banks having total assets of more than $1 bil-
lion and which are members of the Federal Deposit Insurance Corporation, and
(iii) commercial paper of prime quality rated A-1 or higher by S&P, D-1 or
higher by Duff & Phelps, F1 or higher by Fitch or Prime-1 by Moody's or, if not
rated, issued by companies which have an outstanding debt issue rated AA or
higher by S&P, Duff & Phelps or Fitch or Aa or higher by Moody's.
PORTFOLIO TURNOVER
Portfolio turnover rates are set forth under "Financial Highlights." These
portfolio turnover rates are greater than those of most other investment compa-
nies. A high rate of portfolio turnover involves correspondingly greater bro-
kerage and other expenses than a lower rate, which must be borne by the Portfo-
lio and its shareholders. High portfolio turnover also may result in the reali-
zation 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 sharehold-
8
<PAGE>
ers. The Adviser, as well as Alliance Fund Distributors, Inc., the principal
underwriter of the Fund's shares, and Alliance Fund Services, Inc., the Fund's
registrar, 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 necessary
to foreclose any such negative impact. In addition, the Adviser has been ad-
vised 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. Simi-
larly, 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
Growth and Income Portfolio which may not be changed with respect to the Port-
folio without the approval of the shareholders of the Portfolio. Certain of
those fundamental investment policies are set forth below. For a complete list-
ing of such fundamental investment policies, see the Statement of Additional
Information.
These fundamental investment policies provide that the Portfolio may not: (i)
invest in securities of any one issuer (including repurchase agreements with
any one entity) other than securities issued or guaranteed by the United States
Government, if immediately after such purchases more than 5% of the value of
its total assets would be invested in such issuer, except that 25% of the value
of the total assets of the Portfolio may be invested without regard to such 5%
limitation; (ii) acquire more than 10% of any class of the outstanding securi-
ties of any issuer (for this purpose, all preferred stock of an issuer shall be
deemed a single class, and all indebtedness of an issuer shall be deemed a sin-
gle class); (iii) invest more than 25% of the value of its total assets at the
time an investment is made in the securities of issuers conducting their prin-
cipal business activities in any one industry, except that there is no such
limitation with respect to U.S. Government securities or certificates of depos-
it, bankers' acceptances and interest-bearing deposits (for purposes of this
investment restriction, the electric, gas, telephone and water business shall
each be considered as a separate industry); (iv) borrow money, except that the
Portfolio may borrow money only for extraordinary or emergency purposes and
then only in amounts not exceeding 15% of its total assets at the time of bor-
rowing; (v) mortgage, pledge or hypothecate any of its assets, except as may be
necessary in connection with permissible borrowings described in paragraph
(iv) above (in an aggregate amount not to exceed 15% of total assets of the
Portfolio); (vi) invest in illiquid securities if immediately after such in-
vestment more than 10% of the Portfolio's total assets (taken at market value)
would be invested in such securities; or (vii) invest more than 10% of the
value of its total assets in repurchase agreements not terminable within seven
days.
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
Portfo-
9
<PAGE>
lio 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
notice 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
Officer 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 con-
sultant.
John H. Dobkin has been the President of Historic Hudson Valley (historic
preservation) 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.
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 "Invest-
ment 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 princi-
10
<PAGE>
pally responsible for the Growth and Income Portfolio's investment program
since its inception is Paul C. Rissman, who is a Senior 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 com-
panies). 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 re-
tained 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 Equi-
table Life Assurance Society of the United States ("Equitable"), one of the
largest life insurance companies in the United States and a wholly owned sub-
sidiary 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 Ad-
viser or its affiliates also furnish the Fund, without charge, management su-
pervision and assistance and office facilities and provide persons satisfac-
tory 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
Agreement 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, accounting and other office costs, (e) costs of printing the Fund's
prospectuses and shareholder reports, (f) cost of maintaining the Fund's ex-
istence, (g) interest charges, taxes, brokerage fees and commissions, (h)
costs of stationery and supplies, (i) expenses and fees related to registra-
tion and filing with the Commission and with state regulatory authorities, and
(j) cost of certain personnel of the Adviser or its affiliates rendering cler-
ical, 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
PURCHASE OF SHARES
Shares of the Growth and Income Portfolio are offered on a continuous basis di-
rectly by the Fund and by Alliance Fund Distributors, Inc., the Fund's Princi-
pal Underwriter, to the separate accounts of certain life insurance companies
without any sales or other charge, at the Portfolio's net asset value, as de-
scribed 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 ef-
fected on that day pursuant to variable annuity contracts and variable life in-
surance 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 holidays and Good Friday).
For purposes of this computation, the securities in the Portfolio are valued at
their current market value determined on the basis of market quotations or, if
such quotations are not readily available, such other methods as the Directors
believe would accurately reflect fair market value. Portfolio securities may
also be valued on the basis of prices provided by a pricing service when such
prices are believed by the Adviser to reflect the fair market value of such se-
curities.
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
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for any period during which the Exchange is closed (other than customary week-
end and holiday closings) or during which the Commission determines that trad-
ing thereon is restricted, or for any period during which an emergency (as de-
termined by the Commission) exists as a result of which disposal by the Fund of
securities owned by the Portfolio is not reasonably practicable or as a result
of which it is not reasonably practicable for the Fund fairly to determine the
value of the Portfolio's net assets, or for such other periods as the Commis-
sion 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
- --------------------------------------------------------------------------------
The Growth and Income Portfolio will declare and distribute dividends from net
investment income and will distribute its net capital gains, if any, at least
annually. Such income and capital gains distributions will be made in shares of
the Portfolio.
The Portfolio 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 variable
annuity (other than an annuity interest owned by a person who is not a natural
person) or variable life insurance contract. Distributions of net investment
income and net short-term capital gain will be treated as ordinary income and
distributions of net long-term capital gain will be treated as long-term
capital gain in the hands of the insurance companies.
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 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 appli-
cable diversification requirements. Under the Regulations, if a regulated in-
vestment company satisfies certain conditions, a segregated asset account own-
ing shares of the regulated invest-
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<PAGE>
ment company will not be treated as a single investment for these purposes, but
rather the account will be treated as owning its proportionate share of each of
the assets of the regulated investment company. The Portfolio plans to satisfy
these conditions at all times so that the shares of the Portfolio owned by a
segregated asset account of a life insurance company will be subject to this
treatment under the Code. For information concerning federal income tax conse-
quences for the holders of variable annuity contracts and variable rate insur-
ance 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
- --------------------------------------------------------------------------------
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. Portfolio transactions for the
Growth and Income 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 Associ-
ation of Securities Dealers, Inc., and subject to seeking best price and execu-
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 securi-
ties on an agency basis with Donaldson, Lufkin & Jenrette Securities Corpora-
tion, an affiliate of the Adviser, and with brokers which may have their trans-
actions cleared or settled, or both, by the Pershing Division of Donaldson,
Lufkin and Jenrette Securities Corporation, for which Donaldson, Lufkin and
Jenrette Securities Corporation may receive a portion of the brokerage commis-
sion. 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 Corpo-
ration 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,
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which may, without shareholder 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 election of Directors, that affect all Portfolios in sub-
stantially the same manner. Maryland law does not require a registered invest-
ment company to hold annual meetings of shareholders and it is anticipated
that shareholder meetings will be held only when specifically required by fed-
eral or state law. Shareholders have available certain procedures for the re-
moval of Directors. Shares of each Portfolio are freely transferable, are en-
titled to dividends as determined by the Board of Directors and, in liquida-
tion of the Fund, are entitled to receive the net assets of that Portfolio.
Shareholders have no preference, pre-emptive or conversion rights. In accor-
dance with current law, it is anticipated that an insurance company issuing a
variable annuity contract or variable life insurance policy that participates
in the Fund will request voting instructions from contract or policyholders
and will vote shares in the separate account in accordance with the voting in-
structions 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.
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
15
<PAGE>
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.
16
