ALLIANCE
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VARIABLE PRODUCTS
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SERIES FUND
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ANNUAL REPORT
DECEMBER 31, 1999
The following Annual Report for the Alliance Variable Products Series Fund, Inc.
(the "Fund") includes financial information for the nineteen Portfolios of the
Fund which were active as of December 31, 1999. Not all Portfolios of the Fund
are available through each insurance product offering investments in the Fund.
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LETTER TO SHAREHOLDERS Alliance Variable Products Series Fund
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February 1, 2000
Dear Shareholder:
We are pleased to provide you with an update of Alliance Variable Products
Series Fund, Inc. (the "Fund") for the annual reporting period ended December
31, 1999.
The following pages include a discussion regarding market activity and
investment results for each of the nineteen portfolios that comprise the Fund.
As you will see, each portfolio's respective investment objective, as well as
general market review, investment results and investment outlook are printed on
a separate page within the report. Each portfolio's returns for the six- and
twelve-month periods ended December 31, 1999, located in the commentary section
of the report, reflect unannualized total returns, and are based on each
portfolio's net asset value (NAV). In addition, returns for the same periods are
provided for the relevant benchmarks of each portfolio, as are the returns for
other comparable indices. For additional investment results over the longer
term, please refer to page A-28. A list of all comparable indices and their
respective definitions can be found on page A-32.
We appreciate your investment in the portfolios of Alliance Variable Products
Series Fund and look forward to reporting further investment progress in the
coming period.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman and President
A-1
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CONSERVATIVE INVESTORS PORTFOLIO Alliance Variable Products Series Fund
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INVESTMENT OBJECTIVE
The Conservative Investors Portfolio seeks the highest total return without, in
the view of the Fund's Adviser, undue risk to principal by investing in a
diversified mix of publicly traded equity and fixed-income securities.
MARKET REVIEW
The chief macroeconomic development of 1999 was the re-emergence of global
growth. Last January, much of Asia still seemed within touching distance of
economic crisis while Japan was mired in a deep recession and the newly created
`Euroland' economy was battered by a fall off in exports and turgid domestic
activity in Germany and Italy. On the bright side (in retrospect, at least)
inflation was low and monetary conditions were loose. The roaring U.S. economy,
stoked by a series of rate cuts late in 1998, continued to lag behind in imports
at an extravagant pace.
The relative attractions of U.S. financial assets for overseas investors meant
that, far from being dragged down by an enormous external deficit, the U.S.
dollar actually appreciated against all of the major currencies in the first
half of the year, peaking in July. This enabled a rapid recovery in European
exports. By year's end, German export orders were up 21% year-on-year. With
inflation at its lowest for decades and unemployment falling through most of the
year, European consumer confidence remained high and combined with foreign trade
to drive European growth to an annualized rate of over 3%. While there is a
widespread belief that structural problems prevent European economies from
attaining the levels of growth seen in the United States in recent years, it is
clear that Europe now enjoys the best economic conditions it has seen for
several years. Headline inflation seems unlikely to break the European Central
Bank's ceiling of 2% for long, as last year's commodity price rises push up the
baseline. An improving employment environment will tend to support a bright
consumer sentiment.
The biggest growth surprise of 1999 was in Japan. Massive government expenditure
and growing levels of corporate restructuring reaped a reward in gross domestic
product growth in the first half of the year. This brought surprised equity
investors from overseas. A fall off in the Japanese savings ratio and a steady
improvement in industrial confidence did well for further economic consolidation
in 2000. However, the increase in the strength of the yen will continue to
effect exports while keeping inflation uncomfortably low. The state of consumer
sentiment remains unclear. Spending has yet to record a sustained recovery and
concerns over the labor market are unlikely to be placated very quickly.
INVESTMENT RESULTS
Over the six- and twelve-month periods ended December 31, 1999, the Conservative
Investors Portfolio rose in value by 3.47% and 5.04% respectively, and thus,
also outperformed its benchmark. The Portfolio's benchmark is a blended
composite of 70%/30% Lehman Brothers Government/Corporate Bond Index and S&P 500
Stock Index, respectively. The benchmark rose 2.4% and 4.8% in those two
periods, respectively.
The Portfolio's performance can be contributed to beneficial stock selection and
exposure to non-U.S. stocks, which offset a relatively low weighting in
equities. A preference for U.S. Treasuries within a low duration, fixed-income
portfolio helped to maintain value in a poor bond environment.
INVESTMENT OUTLOOK
Growth in the United States itself has continued to increase, which has added
ammunition to the advocates of the `new paradigm.' Whether there has in fact
been a step up in productivity, which will allow the U.S. a higher rate of
growth without stimulating serious inflationary forces, remains the most
important question for global investors. U.S. unemployment is the lowest it has
been for three decades. The headline inflation rate is growing as are import
prices and employment costs, though all by less than skeptics expected. U.S.
stock valuations are at extreme historical highs. Continued strength in earnings
is essential if the markets are to avoid a considerable correction.
The U.S. has continued to prosper amidst the beginnings of global growth as it
did during global desynchronization. However, the inflationary pressures that
come with global growth will continue. We are clearly not at the end of the
interest rate tightening cycle. The U.S. labor market is extremely tight. If the
U.S. expansion is to continue to progress as serenely as it has over the last
number of years, it will have to be fuelled by the fruits of the `new paradigm'
for there appears to be little left for the old economy to give.
A-2
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GROWTH INVESTORS PORTFOLIO Alliance Variable Products Series Fund
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INVESTMENT OBJECTIVE
The Growth Investors Portfolio seeks the highest total return consistent with
what the Fund's Adviser considers to be reasonable risk by investing in a
diversified mix of publicly traded equity and fixed-income securities.
MARKET REVIEW
The chief macroeconomic development of 1999 was the re-emergence of global
growth. Last January, much of Asia still seemed within touching distance of
economic crisis while Japan was mired in a deep recession and the newly created
`Euroland' economy was battered by a fall off in exports and turgid domestic
activity in Germany and Italy. On the bright side (in retrospect, at least)
inflation was low and monetary conditions were loose. The roaring U.S. economy,
stoked by a series of rate cuts late in 1998, continued to lag behind in imports
at an extravagant pace.
The relative attractions of U.S. financial assets for overseas investors meant
that, far from being dragged down by an enormous external deficit, the U.S.
dollar actually appreciated against all of the major currencies in the first
half of the year, peaking in July. This enabled a rapid recovery in European
exports. By year's end, German export orders were up 21% year-on-year. With
inflation at its lowest for decades and unemployment falling through most of the
year, European consumer confidence remained high and combined with foreign trade
to drive European growth to an annualized rate of over 3%. While there is a
widespread belief that structural problems prevent European economies from
attaining the levels of growth seen in the United States in recent years, it is
clear that Europe now enjoys the best economic conditions it has seen for
several years. Headline inflation seems unlikely to break the European Central
Bank's ceiling of 2% for long, as last year's commodity price rises push up the
baseline. An improving employment environment will tend to support a bright
consumer sentiment.
The biggest growth surprise of 1999 was in Japan. Massive government expenditure
and growing levels of corporate restructuring reaped a reward in gross domestic
product growth in the first half of the year. This brought surprised equity
investors from overseas. A fall off in the Japanese savings ratio and a steady
improvement in industrial confidence did well for further economic consolidation
in 2000. However, the increase in the strength of the yen will continue to
effect exports while keeping inflation uncomfortably low. The state of consumer
sentiment remains unclear. Spending has yet to record a sustained recovery and
concerns over the labor market are unlikely to be placated very quickly.
INVESTMENT RESULTS
Over the six- and twelve- month periods ended December 31, 1999, the Growth
Investors Portfolio rose in value by 10.66% and 16.28%, respectively, and
outperformed its benchmark, a blended composite of 70% S&P 500 Stock Index and
30% Lehman Brothers Government/Corporate Bond Index. The benchmark rose 5.43%
over the final six months of 1999 and 14.08% over the whole year.
The Portfolio's performance can be contributed to the increased exposure to
non-U.S. equities achieved during the course of the year by reducing the
Portfolio's investment in U.S. stocks. This enabled the Portfolio to be in a
position to benefit from superior returns in Japan and certain European markets.
This benefit was compounded by successful stock selection. This compensated for
a below-benchmark position in equities in a year that saw strong equity market
returns. In what was a poor year for the major bond markets, short duration and
a concentration on U.S. Treasuries helped to preserve capital.
INVESTMENT OUTLOOK
Growth in the United States itself has continued to increase, which has added
ammunition to the advocates of the `new paradigm.' Whether there has in fact
been a step up in productivity, which will allow the U.S. a higher rate of
growth without stimulating serious inflationary forces, remains the most
important question for global investors. U.S. unemployment is the lowest it has
been for three decades. The headline inflation rate is growing as are import
prices and employment costs, though all by less than skeptics expected. U.S.
stock valuations are at extreme historical highs. Continued strength in earnings
is essential if the markets are to avoid a considerable correction.
The U.S. has continued to prosper amidst the beginnings of global growth as it
did during global desynchronization. However, the inflationary pressures that
come with global growth will continue. We are clearly not at the end of the
interest rate tightening cycle. The U.S. labor market is extremely tight. If the
U.S. expansion is to continue to progress as serenely as it has over the past
number of years, it will have to be fuelled by the fruits of the `new paradigm'
for there appears to be little left for the old economy to give.
A-3
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TOTAL RETURN PORTFOLIO Alliance Variable Products Series Fund
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INVESTMENT OBJECTIVE
The Total Return Portfolio seeks to achieve a high return through a combination
of current income and capital appreciation by investing in a diversified
portfolio of common and preferred stocks, senior corporate debt securities, and
U.S. government and agency obligations, bonds and senior debt securities.
MARKET REVIEW
The same pattern seems to remain for growth and value stocks. This is the second
year in a row of extreme outperformance of richly valued growth stocks to the
detriment of value stocks, whose prices are lower relative to their earnings and
book values. While the S&P 500 Stock Index appreciated 21.0% for the year, the
growth half of the market, as represented by the S&P 500 Barra Growth Index,
increased 28.2%, but the value half of the market, as represented by the S&P 500
Barra Value Index, increased only 12.7%. Within the growth category, the only
significant sector to lead the market was technology, with the CS First Boston
Technology Index rising 134.7% for the year and the Pacific Stock Exchange High
Technology Index up 116.4%. Technology accounted for two-thirds of the gain in
the S&P 500.
These performance trends were exemplified within the indices in the second half
of 1999. Within a 7.7% gain in the S&P 500 Stock Index, the growth half
appreciated 15.6% while the value portion was down 1.1%. Additionally, the CS
First Boston Technology Index rose 74.8% and the Pacific Stock Exchange High
Technology Index gained 62.0%. The major explanatory variable in the performance
of any portfolio was the degree of weighting in the technology sector.
INVESTMENT RESULTS
Your Portfolio gained 6.5% for the year, and declined 1.2% for the second half
of 1999. The Portfolio's benchmark, a blended composite of 60% S&P 500 Stock
Index and 40% Lehman Brothers Government/Corporate Bond Index, returned 0.13%
and -2.15% for the same time periods. The Portfolio's outperformance was due to
its relative weighting in technology issues and our bias toward low valuation in
our investments.
INVESTMENT OUTLOOK
Looking forward, we suspect that the recent increase in market volatility will
continue in 2000 and question the sustainability of technology stock
outperformance. We continue to maintain a well-diversified portfolio and rely on
our in-house research staff to drive investment ideas on a stock-by-stock basis.
PORTFOLIO STRATEGY
Your Portfolio seeks to provide income and capital appreciation primarily by
investing in dividend-paying common stocks of good quality, and in fixed-income
and convertible securities. We manage the Portfolio with an eye toward
maintaining a defensive dividend yield and price-to-earnings ratio, a fully
invested posture, and a high degree of sector and industry diversification. We
continue to invest in quality companies that trade at undeserved discounts to
their peers. We do not make sector market timing bets, but instead emphasize
intensive, bottom-up research and careful stock selection.
A-4
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GROWTH & INCOME PORTFOLIO Alliance Variable Products Series Fund
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INVESTMENT OBJECTIVE
The Growth & Income Portfolio seeks to balance the objectives of reasonable
current income and reasonable opportunities for appreciation through investments
primarily in dividend-paying common stocks of good quality.
MARKET REVIEW
This marks the second year in a row of extreme outperformance of richly-valued
growth stocks to the detriment of value stocks, whose prices are lower relative
to their earnings and book values. The growth half of the market, represented by
the S&P 500 Barra Growth Index, increased 28.2%, but the value half of the
market, as represented by the S&P 500 Barra Value Index, only increased by
12.7%. The S&P 500 Stock Index appreciated 21.0% for the year. Within the growth
category, the only significant sector to lead the market was technology, with
the CS First Boston Technology Index rising 134.7% for the year and the Pacific
Stock Exchange High Technology Index up 116.4%. Technology accounted for
two-thirds of the gain in the S&P 500 Stock Index.
These performance trends were apparent in the second half of 1999. Within a 7.7%
gain in the S&P 500 Stock Index, the growth half appreciated 15.6% while the
value portion was down 1.1%. Additionally, the CS First Boston Technology Index
rose 74.8% and the Pacific Stock Exchange High Technology Index gained 62.0%.
Thus, the major explanatory variable in the performance of any portfolio was the
degree of weighting in the technology sector.
INVESTMENT RESULTS
The Growth & Income Portfolio returned 11.4% for the year and declined 2.8% for
the second half of 1999. These returns were below those of the S&P 500 Stock
Index, which posted respective returns of 21.0% and 7.7%.
The Portfolio's performance is primarily due to the Portfolio's relative
underweighting in technology issues and our bias toward low valuation in our
investments. The Portfolio's performance was also below that of the Portfolio's
peer group, the Lipper Growth and Income Funds Average, which can be attributed
to many of the more conservative funds that shifted assets toward higher-priced
technology shares
INVESTMENT OUTLOOK
Looking forward, we suspect that the recent increase in market volatility will
continue in 2000 and question the sustainability of technology stock
outperformance. We continue to maintain a well-diversified portfolio and rely on
our in-house research staff to drive investment ideas on a stock-by-stock basis.
PORTFOLIO STRATEGY
We manage the Portfolio with an eye toward maintaining a defensive dividend
yield and price-to-earnings ratio, a fully invested posture, and a high degree
of sector and industry diversification. We continue to invest in quality
companies that trade at undeserved discounts to their peers. We do not make
sector market timing bets, but instead emphasize intensive, bottom-up research
and careful stock selection.
A-5
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GROWTH PORTFOLIO Alliance Variable Products Series Fund
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INVESTMENT OBJECTIVE
The Growth Portfolio seeks long-term growth of capital by investing primarily in
common stocks and other equity securities.
MARKET REVIEW
The beginning of 1999 was marked by the market recovering strongly from the
steep decline brought on by the Asian economic crisis that occurred in the fall
of 1998. The market continued to rise throughout the first half of the year, and
then fell in the July to October 1999 period as it became clear that the U.S.
Federal Reserve had begun to raise interest rates. In the last quarter, however,
it rose strongly once again to new all-time highs.
The performance of the U.S. economy was extraordinary throughout 1999. Fears of
a recession brought on by the weakness in Asia quickly faded, and it became
increasingly clear that we were enjoying a period of rapid growth with little
inflationary pressure. At mid-year, the Federal Reserve embarked upon a course
of gradually increasing interest rates. They did this with the hope that it
would cool down the rate of growth so that inflation would not rise in an
overheated economy. The stock market's reaction was initially negative, but as
months passed it became apparent that productivity was increasing at such a
strong pace that there was little inflationary pressure despite continuing
strong growth. Apparently accepting the notion that we were experiencing a "new
era" paradigm, the market closed the year with a strong gain.
INVESTMENT RESULTS
During the six- and twelve-month periods ended December 31, 1999, the Portfolio
returned 16.88% and 34.47%, respectively, outperforming the S&P 500 Stock Index
over both periods, and outperforming the Russell 1000 Growth Stock Index over
the twelve-month period. Over the same six- and twelve-month periods, the S&P
500 returned 7.70% and 21.03%, respectively, and the Russell 1000 Growth Stock
Index returned 20.56% and 33.16%, respectively. When the market fell heavily
during the 1998 Asian crisis, we took the view that the decline was more
reflective of a market panic than of the beginning of a bear market. We
therefore became aggressively invested, especially in the technology and
telecommunications sectors. This worked well for the Portfolio, as its
performance after the fall of 1998 low was quite strong. Relative performance
lagged somewhat during the summer sell-off, but then came back strongly through
year-end.
INVESTMENT OUTLOOK
Ideally, we would like to see some easing of the economic growth rate that would
allow the economy to prolong its expansion without inflationary pressures. If
there is no natural deceleration in the economy, we expect that the Federal
Reserve will likely keep tightening until it induces one. If this means much
higher interest rates, we expect that the stock market will no doubt react
negatively. Therefore, we again go forward into a new year balancing strong
economic fundamentals against a richly valued and somewhat speculative stock
market. Last year's outcome was quite good. In our view, however, it may be more
difficult in 2000. From a longer-term point of view, we see no reason to be
concerned about the prospects for the U.S. stock market. We are in an era of
rapid growth in productivity and the U.S. is leading the way in many new
technologies.
AREAS OF OPPORTUNITY
The most rapidly growing area of the economy continues to be telecommunications,
where new digital technologies, deregulation and a wave of merger activity are
changing the landscape worldwide. Notwithstanding the strong performance of this
sector last year, we continue to maintain it as the Portfolio's area of greatest
emphasis. The Portfolio's other area of primary focus in 1999 was financial
services. These stocks were relatively weak performers primarily because of the
adverse change in the trend of interest rates. We view this sector as being
currently undervalued and therefore the Portfolio maintains large holdings in
the financial services industry.
A-6
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INTERNATIONAL PORTFOLIO Alliance Variable Products Series Fund
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INVESTMENT OBJECTIVE
The International Portfolio seeks to obtain a total return on its assets from
long-term growth of capital and from income principally through a broad
portfolio of marketable securities of established non-United States companies
(or United States companies having their principal activities and interests
outside the United States), companies participating in foreign economies with
prospects for growth, and foreign government securities.
MARKET REVIEW
Japan experienced one of the strongest markets in a decade as the government
implemented proposals to prop up the weak economy and as companies announced an
unprecedented number of restructurings. With recovering industries and
technology on fire, defensive stocks such as pharmaceuticals, consumer staples
and tobacco underperformed. In the Pacific ex-Japan area, the Portfolio remained
underweight Australia and slightly overweight Asia ex-Japan for most of the
year.
INVESTMENT RESULTS
For the twelve-month period ended December 31, 1999, the International Portfolio
gained 40.23%, outperforming the Morgan Stanley Capital International ("MSCI")
Europe, Australasia, Far East ("EAFE") Index's return of 27.30% for the same
period. For the six-month period ended December 31, 1999, the Portfolio returned
33.13% versus the MSCI EAFE Index's return of 22.27%. In the fourth quarter of
1999, global markets, as represented by the MSCI World Index, advanced 16.96% --
their strongest quarter all year. Additionally, the MSCI World Index finished up
1999 with a solid 25.34% gain.
The Portfolio outperformed the MSCI EAFE benchmark due to the Portfolio's
overweight positions in the successful technology, telecommunications and media
sectors. Despite higher valuations, the fundamentals of the mobile phone space
continues to improve as subscriber penetration increases and the world of data
brings new opportunities. United Pan-Europe Communications NV, the only pure
cable play across Europe, contributed greatly to performance as the company
succeeded in acquisitions and also found Liberty Media as an important new
investor. On the negative side, U.K. bank stocks fell in a rising rate
environment, as did global insurance companies. European tobacco stocks also
underperformed with pricing pressures and litigation concerns emerging for the
first time in Europe.
INVESTMENT OUTLOOK
The Portfolio continues to hold large positions in the three areas of
technology, telecommunications and media. The Portfolio has been broadened
slightly over the last few months with increases in positions in a few European
bank stocks and semi-cyclical names.
A-7
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PREMIER GROWTH PORTFOLIO Alliance Variable Products Series Fund
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INVESTMENT OBJECTIVE
The Premier Growth Portfolio seeks growth of capital rather than current income.
In pursuing its investment objective, the Portfolio will employ aggressive
investment policies. Since investments will be made based upon their potential
for capital appreciation, current income will be incidental to the objective of
capital growth. The Portfolio is not intended for investors whose principal
objective is assured income or preservation of capital.
MARKET REVIEW
Throughout 1999, many investors experienced extremely strong returns from U.S.
equity markets. Yet, the market on a whole did not benefit from this
performance. Rather, the driver of much of this performance was a very narrow
grouping of stocks, largely centered in the growing technology sector. In a few
years, when investors look back to January 1, 2000, it is interesting to
contemplate whether or not they will consider this a beneficial investment
environment.
For the last decade, the United States has enjoyed what some have called a
"Goldilocks" environment, incorporating excellent sales and earnings growth yet
with low inflation. Now, as we move into the next century, there seems to be
every prospect that the term might also be applied to other key parts of the
world. In particular, Asia and Europe may very well benefit from this scenario
as they witness better gross domestic product ("GDP") growth, along with similar
technological advances and competition, which serve to keep inflation at bay.
By contrast, while we live in a world of exciting technological change and enjoy
excellent growth prospects, many U.S. investors (both individual and
institutional) seem to have gone a little crazy. Too many investors keep piling
into the same narrow list of technology and high-multiple stocks at any price
given their "momentum." In our view, these investors are stretching a rubber
band which, if continued, must eventually snap and perhaps take more reasonably
priced stocks along with it. Those buying into this new world of investing seem
to be ignoring the time-tested maxims of buying real companies with real
earnings at reasonable prices. Using history as our guide, it is readily
apparent that very few technology companies have been able to put together a
string of strongly rising earnings on a consistent five- to ten-year basis. At a
minimum, this group has historically been susceptible to severe interim shocks
along the way, such as in October 1987, October 1997 and the Long Term
Capital/Russia episode of just over a year ago.
Therefore, it is in this sense -- from the view of the money manager faced with
this difficult decision -- that the investment environment today could be
considered as less than ideal. In the short run, relative performance could
suffer if a manager failed to join the crowd. However, if that manager does so
at some unknown point, then the manager could be punished harshly for ignoring
all of the warning signs that currently exist.
INVESTMENT RESULTS
For both the six- and twelve-month periods ended December 31, 1999, your
Portfolio has provided a return well in excess of that of its S&P 500 Stock
Index benchmark. During the six- and twelve-month periods, the Portfolio
returned 16.97% and 32.32%, respectively, as compared to 7.70% and 21.03%,
respectively, for the S&P 500 Stock Index. For the most recent six months, the
Portfolio modestly underperformed the Russell 1000 Growth Stock Index, which
returned 20.56% over this period. For the twelve-month period, however, the
Portfolio's return was in line with the 33.16% return of the Russell 1000 Growth
Stock Index.
Strong performance for the year overall was attributable to appreciation in
selected technology stocks, high-growth telecommunication suppliers and service
companies, media and broadcasting firms, and brokerage stocks. Performance in
the most recent six months was tempered by declines in pharmaceutical stocks and
your Portfolio's underweight position in technology stocks relative to the
Russell 1000 Growth Stock Index.
INVESTMENT OUTLOOK
Accordingly, we look forward to 2000 with an enormous sense of excitement
regarding the technological changes around us. We are eager to face the daily
challenge of trying to keep the Portfolio optimally structured for success based
on the marriage of our fundamental analysis and price considerations -- a
management creed we have followed to our advantage for the last two decades.
PORTFOLIO STRATEGY
Most of the leading technology stocks that we hold (and those that have real
earnings) seem to be priced at a price-to-earnings ("P/E") multiple that assumes
they will not disappoint over the next few years. We are optimistic on this
score, yet still skeptical enough (based on history) not to carry anything
equivalent to a full benchmark weighting as is incorporated in the Russell 1000
Growth Stock Index. By our calculations, this index now has a technology weight
of well over 40%. In contrast, we are prepared to stay with very active
positions versus growth benchmarks with our holdings of financial stocks. We
A-8
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Alliance Variable Products Series Fund
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know that in doing this we continue to fight current investor psychology
concerning possible rising interest rates in a stronger world GDP environment.
However, we believe that these leading stocks will deliver mid-teen earnings
growth and their relative P/Es at 50% to 70% of the market multiple are
attractive. This contrary stance might seem slightly at odds to our increasing
interest at the same time in one or two industrial/economically sensitive stocks
that we believe will benefit in this stronger world climate. For both groups,
however, we are placing our faith in the individual companies meeting or
exceeding Wall Street earnings expectations.
Over time, the stock market has proven to be fairly rational in valuing
companies based on their actual relative earnings and the confidence that can be
applied to a continuation of such earnings streams. Management, industry
position and product leadership have all been factors that have influenced this
decision. We have no doubt that within the new areas of technology, the Internet
and biotechnology, certain companies will excel and begin to portray these
characteristics. In our view, however, the majority will probably fall by the
wayside. It is questionable as to whether a package approach from today's
starting prices would provide an overall winning return. In saying this, we do
not want to preclude our purchasing the occasional high multiple stock when the
fundamentals seem compelling. We will not, however, weight the Portfolio based
more on wishful thinking than on earnings.
A-9
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QUASAR PORTFOLIO Alliance Variable Products Series Fund
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INVESTMENT OBJECTIVE
The Quasar Portfolio seeks growth of capital by pursuing aggressive investment
policies. While it invests primarily in the equity securities of
small-capitalization companies, it may invest in any type of securities issues,
by any company, in any industry that we believe to offer possibilities for
capital appreciation. The Portfolio may also pursue investment opportunities
outside of the United States.
INVESTMENT DISCUSSION
We strongly feel that there are major opportunities to invest in the U.S. in
literally thousands of small-cap stocks that offer much better risk reward
trade-offs than large-cap stocks. While it is quite difficult to determine
exactly when this psychology will change, we do hope there is a close turn in
the cycle.
This Portfolio is positioned to do well when the market broadens out and
small-cap stocks start to participate. For example, we have several positions in
the retail and apparel sectors. The companies in these sectors typically have
strong franchises, dominant market share positions, earnings-per-share growth
between 20% and 30% and price-to-earnings ratios between 10 and 20 times
earnings.
Within the leisure category, we are looking for professionally managed
consolidators of fragmented industries who are able to leverage their strengths
in building dominant, national franchises.
Health care continues to be an area of focus for the Portfolio. The
congressional balancing of the federal budget and various managed care concerns
have put a lot of pressure on the health care service sector, which in turn has
depressed stock prices in this sector. Nevertheless, we have used this as an
opportunity to add to the Portfolio's holdings.
In the turnaround category, we believe that the sports retailing industry has
seen its worst days and that Venator Group Inc., the parent company of both Foot
Locker and Champs, should benefit. As the industry becomes more rational, the
aggressive expansion in square footage seen over the last five years has
essentially come to a halt. In addition, Nike Inc. is seeing its business
turning. These factors, as well as the Olympics being less than a year away,
should help retailers.
Within the real estate sector, we believe that the stocks of real estate
investment trusts ("REITs") have come under a lot of pressure as investors focus
more on momentum growth and less on yield. There are several well-run companies
yielding over 10% with internal growth of 10% to 20%. Therefore, we have about
6% of the Portfolio invested in REITs.
In addition, we also like the rental car industry. This industry has gone
through a major change in ownership from the auto manufacturers to financial
entrepreneurs. We are now seeing real pricing power, better yield management,
greater inventory efficiencies, and as a result, a higher level of
profitability. We believe these companies have strong fundamentals that are not
yet recognized in the marketplace.
INVESTMENT RESULTS
Over the six- and twelve-month periods ended December 31, 1999, the Portfolio
returned 9.89% and 17.08%, versus the Russell 2000 Index returns of 10.95% and
21.26% for the same periods. The Portfolio trailed its benchmark primarily
because the Portfolio was underweighted in technology and had exposure to
various other industries such as health care, retail and transportation. These
areas we feel offer much better investments on a risk/reward basis with much
less volatility. Other than technology stocks, most other areas of the market
have shown little investor interest, which is why we believe this is where the
greatest opportunities lie.
PORTFOLIO STRATEGY
We continue to adjust the Portfolio's composition to reflect our perception of
those smaller, highly competitive companies that will, in our judgement, exhibit
long-term price appreciation through superior earnings growth.
We remain adverse to establishing an overweight position in the technology
sector and, more specifically, in Internet stocks. We still believe that a broad
majority of these stocks have yet to demonstrate the ability to produce
significant earnings and, in some cases, we believe that they probably never
will. In our opinion, these stocks remain overpriced, and we therefore maintain
low weighting in these sectors.
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REAL ESTATE INVESTMENT PORTFOLIO Alliance Variable Products Series Fund
================================================================================
INVESTMENT OBJECTIVE
The Real Estate Investment Portfolio seeks a total return on its assets from
long-term growth of capital and income primarily by investing in the equity
securities of companies primarily engaged in, or related to, the real estate
industry.
MARKET REVIEW
We made it into the year 2000. Contrary to what some thought, the world did not
end at the stroke of midnight on the not-quite-millennium eve, and the Y2K bug
turned out to be almost as much hype as your average dot.com IPO. In addition,
Real Estate Investment Trusts ("REITs") staged a rally in the closing weeks of
December. Granted, the positive performance at year-end was not enough to
salvage an otherwise dismal year, but it felt good, nonetheless. The pertinent
question, of course, is whether this rally portends good tidings for 2000 or is
just another brief respite in an ongoing downturn. We will attempt to answer
this question later in this letter. But first, we will look back over the past
year.
1999 was the year of the Internet on Wall Street -- that is unquestionable. For
example, the Inter@ctive Week Internet Index of Internet-related companies
soared 168% during the calendar year 1999. This sector drove the NASDAQ
Composite index to an 86% increase during the twelve months in spite of the fact
that the average company saw its share price decline in 1999. In fact, this was
the best performance of any U.S. equity index in history. The mania for Internet
and related technology stocks drove every other major index as well. It was
truly a great year for those investors who had the foresight to overweight their
portfolio in the technology sector. For others, however, such returns were
elusive. The National Association of Real Estate Investment Trusts ("NAREIT")
Equity Index suffered a price decline of 12.2% during 1999. An average income
return of 7.6% brought the total return for the NAREIT Equity Index to -4.6% for
the year.
The vast majority of all REITs saw the price of their shares decline in 1999. Of
the 164 companies we track on a daily basis, 80% had price declines last year.
Only apartment companies managed to buck this downtrend. These owners of
multi-family dwellings saw their share prices rise by 2.5% in 1999. They
indirectly benefit from rising interest rates because single-family home sales
are hurt by rising mortgage rates. Office companies with exposure to urban
downtown markets also did relatively well. Share prices declined by less than 1%
in this group. These markets exhibit strong demand that is tied to the
burgeoning white collar economy, and new supply remains well under control. On
the other end of the spectrum, regional mall companies suffered heavily from
Internet mania since we all "know" that no one will ever shop in a regional mall
again. The average mall company saw its price decline by 21%. In reality,
however, "brick and mortar" retail had a great holiday season. It was the
misplaced fear of Internet sales that caused the stocks to suffer. Even worse
(although, in our view, clearly more justified), health care REITs suffered
through a 40% price decline in 1999. The destruction of the nursing home
industry by shifting federal reimbursement regulations clearly called into
question the credit quality of the leases held by the REITs.
Legendary value investor Warren Buffet made the news twice during 1999 for
favoring the REIT sector. In both April and December, Buffet's nod led to
rallies for REIT stocks. The April surge quickly decelerated as investors
relentlessly allocated capital into technology and seemingly out of everything
else. We do not yet know if the December rally will fade as well. We do know,
however, that Mr. Buffet has become a legendary value investor by looking at the
world differently from most investors. Today, he is on record as not
understanding valuations in the market as a whole, and in the technology sector
specifically (not coincidentally, 1999 was one of the few years in which Mr.
Buffet's returns lagged those of the market). In the past, he has sought to buy
companies whose assets had value that was misperceived by other investors. These
have included traditional asset plays such as U.S. Airways, and non-traditional
ones such as Coca-Cola. Mr. Buffet has dabbled in REITs in the past --
especially those that have pursued a course of total liquidation. Today, he is
involved with several REITs that have been particularly depressed.
Following along with this theme, we believe it is valuable to evaluate the
perceptions and misperceptions of both real estate and the overall equity market
that could change in the coming months. Most importantly, real estate remains in
equilibrium. Construction activity has actually moderated in most property types
in most markets over the past year. Excess building has been expected for over
two years now, yet it has not materialized. Construction financing is difficult
to come by without substantial pre-leasing of the anticipated space and
significant cash equity on the part of developers, and equity capital is scarce.
As a result, REIT investors appear to have escaped the boom/bust cycle that has
plagued real estate for the past two decades. In addition, the strength of the
economy has surprised most observers. This has allowed landlords to raise rents
and keep buildings fully occupied without driving rents through the roof and
spurring renewed construction. The
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REAL ESTATE INVESTMENT PORTFOLIO
(continued) Alliance Variable Products Series Fund
================================================================================
ensuing stability and growth of cash flows should be more highly valued by
investors. Although we doubt REIT earnings growth will accelerate this year or
next, we also do not anticipate much of a deceleration either.
REIT shares are cheap by any measure. The NAREIT Equity Index has seen its price
decline by approximately 32% over the past two years. Over this timeframe, cash
flows have grown by approximately 25%. Clearly, multiples have condensed
dramatically. An alternative method of identifying value is relative to the
theoretical net price for which all of a company's assets could be sold. The
aforementioned two-year price decline has taken the average REIT from a 20%
premium to net asset value ("NAV") to a 20% discount in spite of about 3% annual
growth in the per share value of net assets. Whether viewed in terms of income
generation or assets, REITs have gone from historically rich valuations to
historically cheap ones over the past two years. More importantly, we do not
believe REITs are likely to get much cheaper than the value at which they
currently trade. Prior to the December rally, management teams appeared to be
actively stepping up share buybacks, and a handful of REITs announced that they
were seeking strategic alternatives. We believe that if prices were to decline
again, we would see a resurgence of such activity. Effectively, this limits the
risk of declining share prices.
Unfortunately, it does not provide any real lift to current price levels. Only
new investors can provide capital to bid up share prices. However, we cannot
predict whether or not this will happen, as it is an issue of investor
psychology. It is tied into expectations for the market as a whole, as well as
sector allocation and relative valuation. On one level, we view investor
behavior as the outcome of a clash between fear and greed. Investors become more
risk tolerant when greed overwhelms fear and more risk averse when fear
triumphs. Over the past few years, we have seen that investors have had nothing
to fear except fear itself. As long as investors believe that they will be
rewarded for being extremely risk tolerant, we expect that REITs will have a
difficult time garnering investor interest.
INVESTMENT RESULTS
During the six- and twelve-month periods ended December 31, 1999, your Portfolio
and its benchmark, the NAREIT Equity Index, produced negative returns. Over the
six- and 12-month periods ended December 31, 1999, the Real Estate Investment
Portfolio lost 10.50% and 5.11%, respectively, while the NAREIT Equity Index
declined 8.97% and 4.62%, respectively, for the same periods. Over the same six-
and twelve-month periods, the S&P 500 Stock Index returned 7.70% and 21.03%,
respectively.
The Portfolio held up fairly well given the environment. It modestly
underperformed its benchmark, declining 5.1% versus the 4.6% decline in the
NAREIT Equity Index. In fact, the Portfolio's investments did reasonably well.
The Portfolio's sector selections were also relatively good. It had large
exposure throughout the year in downtown office properties and had little or no
exposure to regional mall or health care properties. Unfortunately, too little
of the Portfolio was invested in apartments. However, the Portfolio made up for
that deficiency with good stock selection within that particular group. The
Portfolio's largest liability during the year was having too much invested in
specialty REITs. These companies, which own properties such as movie theaters,
golf courses or prisons, performed poorly in terms of share price in spite of
having solid operations. In any event, the modest positives of the Portfolio's
investment selections were not enough to offset its fees and expenses, and the
net result was that it ended up moderately underperforming its benchmark.
MARKET OUTLOOK
Under a scenario in which REITs can not attract investor interest, we think
earnings multiples could trend back down to where they were in early December
(i.e., the lowest point in eight years). This would provide investors with
approximately 5% returns this year. If, on the other hand, investors bid
earnings multiples up 100 basis points (a level that would still be one third
below the 1997 peak), this sector could produce 30% returns in the next 12
months (REITs would only trade in line with net asset value at that point). We
believe the latter case is more likely than the former scenario.
If our analysis turns out to be correct, then we believe that REITs should be an
attractive investment alternative this year. Few, if any, pundits expect the
overall market to produce 30% returns this year. Even fewer would say that the
worst case scenario for the market is in positive territory. As the year
progresses, we expect more and more investors to appreciate the differential
potential of REITs. We look forward to reporting our results to you as this
potentially improving picture emerges.
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<PAGE>
TECHNOLOGY PORTFOLIO Alliance Variable Products Series Fund
================================================================================
INVESTMENT OBJECTIVE
The Technology Portfolio is a diversified investment portfolio that seeks growth
of capital. The Portfolio invests principally in securities of companies that
use technology extensively in the development of new or improved products or
processes.
MARKET COMMENTARY
1999 was an unusual year for technology companies and a highly rewarding year
for technology stocks. Several things marked the landscape last year, most
having to do with the Internet. One was the large number of tech companies that
went public, many of which saw substantial premiums to their initial offering
prices on the first day. With the Internet still in its early stages of
development, and with capital so readily available, this isn't too surprising.
Nevertheless, some of this first day activity reflects a demand frenzy that
concerns us. Another was the emergence during the holidays of a serious
e-tailing season, with more people doing more of their holiday shopping on the
Internet. Many of the so-called e-tailers will be seasonal operations with a
narrow focus, but some will emerge with the brand name, distribution strengths
and consumer appeal to become substantial companies in the so-called new
economy. Business-to-business concepts based on the Web was another development
last year and something that will eventually be much larger than the
business-to-consumer opportunities that we have witnessed to date. Most
corporations have major projects in this area, although almost all are in the
evaluation or pilot stage. Another issue on everyone's mind last year was the
Y2K challenge. As we had hoped and expected, it was much ado about very little
- -- lots of preparation in time and dollars reduced the impact of this one-time
event to little more than an annoyance.
INVESTMENT RESULTS
The Technology Portfolio has underperformed its benchmark, the Pacific Stock
Exchange ("PSE") High Technology Index, for the reporting period ended December
31, 1999. For the six- and twelve-month periods, your Portfolio gained 52.22%
and 75.71%, respectively, while the PSE High Technology Index advanced 62.04%
and 116.40%, respectively.
The Portfolio was up significantly in its fiscal year ended December 31, 1999.
The fact that it increased less than the PSE High Technology Index reflects our
view that in this time of stock market exuberance, it is more important than
ever to own a diversified list of companies with solid track records and proven
business models. In contrast, 1999 was a year when many less-mature technology
companies received valuations much richer than their established competitors.
OUTLOOK
Fourth quarter reports from a large number of tech companies are very upbeat and
they set the stage for what should be a strong business environment in 2000.
Heading the list of positive factors this year is the Y2K dividend. This "tax"
is finally over and its passing will spur many new applications projects.
Another driver will be the final introduction of Microsoft's Windows 2000, a
much delayed operating system targeted at corporations. The surveys that we have
seen suggest a rapid take-up of this new software in the second half of the
year. Wireless data is finally beginning to emerge as another growth driver and
it will introduce new kinds of Internet access appliances into our lives. It
will also help the cellular handset infrastructure companies to continue their
rapid growth, as telephony and data applications begin to merge. We believe that
we are still in the earlier phases of a semiconductor recovery, driven by a
shortage of production capacity, process changes and strong demand in most end
markets. Finally, and as mentioned, the Internet is a major new force in
corporate spending plans, as significant a change as we have seen in decades. It
will change how commerce is conducted and be a catalyst for software, hardware
and serious budgets in hundreds of industries. Our portfolio exposure to all of
these trends -- PCs, semiconductors, cellular companies and several Internet
plays -- will help us participate in all this change this year.
The issues we worry about and will monitor closely include the pattern of
interest rates, the narrowness of the stock market as more and more emphasis is
given to technology stocks and large-capitalization companies and the ongoing
challenge of valuation. On the latter point, some tech stocks are too expensive
and we will do our best to avoid any company with questionable or eroding
fundamentals. Longer term, however, we are as convinced as ever that investing
in tomorrow's technology winners will continue to be a very rewarding
experience.
A-13
<PAGE>
UTILITY INCOME PORTFOLIO Alliance Variable Products Series Fund
================================================================================
INVESTMENT OBJECTIVE
The Utility Income Portfolio seeks current income and capital appreciation by
investing primarily in the equity and fixed-income securities of companies in
the utilities industry. The Portfolio's investment objective and policies are
designed to take advantage of the characteristics and historical performance of
securities of utilities companies engaged in the manufacture, production,
generation, provision, transmission, sale and distribution of gas, electric
energy, and communications equipment and services, and the provision of other
utility or utility-related goods and services.
MARKET REVIEW
1999 marked the second year in a row of extreme outperformance of richly valued
growth stocks to the detriment of value stocks, whose prices are lower relative
to their earnings and book values. While the S&P 500 Stock Index appreciated
21.0% for the year, the growth half of the market, represented by the S&P 500
Barra Growth Index, increased 28.2%, but the value half of the market, as
represented by the S&P 500 Barra Value Index, increased only 12.7%. Within the
growth category, the only significant sector to lead the market was technology,
with the CS First Boston Technology Index rising 134.7% for the year and the
Pacific High Technology Index up 116.4%. Technology accounted for two-thirds of
the gain in the S&P 500.
The second half of 1999 epitomized these performance trends. Within a 7.7% gain
in the S&P 500, the growth half appreciated 15.6% while the value portion was
down 1.1%. Additionally, the CS First Boston Technology Index rose 74.8% and the
Pacific Stock Exchange High Technology Index gained 62.0%. Thus, the major
explanatory variable in the performance of any portfolio was the degree of
weighting in the technology sector.
INVESTMENT RESULTS
The Utility Income Portfolio returned 19.4% for 1999 and 5.7% for the second
half, comfortably ahead of its benchmarks. The Dow Jones Utility Index declined
6.0% over the year and declined 8.9% over the past six months. The New York
Stock Exchange Utility Index, which includes telecommunications and technology
stocks in addition to electric and gas utilities, had a gain of 14.6% for the
year and 2.5% over the past six months. The Portfolio's relative outperformance
can be contributed to the superior stock selection in the telecommunications
industry.
INVESTMENT OUTLOOK
Looking forward, we feel that despite the prospect of tightening by the U.S.
Federal Reserve, the electric utility sector is quite undervalued in the
marketplace. We continue to invest in income-producing securities of
higher-growth telecom companies to improve the growth characteristics of the
Portfolio and above all, search for attractive investment opportunities on a
stock-by-stock basis.
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<PAGE>
WORLDWIDE PRIVATIZATION PORTFOLIO Alliance Variable Products Series Fund
================================================================================
INVESTMENT OBJECTIVE
The Worldwide Privatization Portfolio (the "Portfolio") seeks long-term capital
appreciation by investing principally in equity securities issued by enterprises
that are undergoing, or have undergone, privatization. The balance of the
investment portfolio will include equity securities of companies that are
believed by the Fund's Adviser to be beneficiaries of the privatization process.
MARKET REVIEW
During the annual reporting period, equity returns were impressive across all
regional markets. These strong returns were driven by a variety of factors.
Markets were boosted by telecommunications, technology and media stocks as
investors bought into the idea of a "new paradigm" in which technologies, such
as the Internet, wireless application protocol and broadband, change the way in
which companies and economies operate.
The recovery in global growth was an additional factor that enhanced equity
returns. In our view, the world economy is clearly on a growth track. The United
States remained buoyant, European countries saw accelerating gross domestic
product growth and Japan finally lifted itself out of recession. The outlook for
the emerging economies also became increasingly positive. Asia recovered from
its earlier financial catastrophe and witnessed renewed strength, while Brazil's
implementation of reformist policies following the currency devaluation in the
early part of 1999, averted a full-scale crisis in Latin America.
INVESTMENT RESULTS
We recently changed the Portfolio's benchmarks from the Morgan Stanley Capital
International ("MSCI") Europe, Australasia and Far East ("EAFE") Index to the
MSCI World ex-USA Index. As the country allocations in the MSCI World ex-USA
Index more closely match those maintained over time by the Portfolio, we have
determined that it is a more appropriate and accurate gauge of the Portfolio's
performance. As you can see, this report shows your Portfolio's investment
results as compared to both indices. The Portfolio's next report (for the period
ended December 31, 2000) will no longer show results for the MSCI EAFE Index.
During the six-month period ended December 31, 1999, the Portfolio returned
37.51%, significantly outperforming the MSCI World ex-USA Index, which returned
22.57% and the MSCI EAFE Index, which gained 22.27%. The Portfolio's stock
selection was the principal reason for the strong investment results. The
Portfolio's high relative weighting in telecommunication and cable stocks were
major positive factors, as was its exposure to European and Asian technology
companies. Investments in Japanese financial companies and emerging market metal
and mining stocks also contributed to the Portfolio's outperformance versus its
benchmarks. The Portfolio's holdings in utility and tobacco stocks were the only
notable negatives impacting the Portfolio's overall stock selection. Asset
allocation had a marginally negative impact on performance during the six months
ended December 31, 1999. Although we raised the Portfolio's weight in Japanese
equity throughout the year, its relative underweight exposure to this market was
a mildly negative contributor to returns.
Over the twelve-month period ended December 31, 1999, the Portfolio returned
58.83%, strongly outperforming the MSCI World ex-USA Index benchmark, which
returned 28.27%, as well as the MSCI EAFE Index, which returned 27.30%. The
Portfolio's high relative weighting in emerging market equities and strong stock
selection in the major markets were the major reasons for its outperformance
against the MSCI World ex-USA Index and the MSCI EAFE Index.
OUTLOOK
Going forward, we expect that continued economic strength will translate into
corporate earnings recovery, upgrades and positive equity market returns. One
concern we have is the possibility that global interest rates will continue to
rise. Such an increase in interest rates could negatively impact both liquidity
and equity markets. However, although the potential for inflationary pressure to
creep into the system is an issue, we believe the effects of new technologies
(for instance, the Internet and broadband access) will continue to restrain such
pressure. We reiterate our view that global economies must continue to
liberalize and implement reform policies such as privatization to ensure that
the recovery we have seen is not hindered. In particular, we anticipate that the
Japanese and emerging market economies have large restructuring efforts ahead.
In our view, the signs for privatization are excellent. Global privatization
activity during 1999 was very strong, with global proceeds amounting to 1998
levels of $145 billion. Western European countries continued to dominate the
process and accounted for 45% of the 1999 total, while Asia accounted for 25%.
One noticeable trend was the increase in emerging market privatization deals. We
expect this trend to continue in 2000 as the world's developing economies
restructure and embrace privatization. At the industry level, telecommunication
and utility transactions led the way. However, the expansion of industry
representation is noticeable as gov-
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<PAGE>
WORLDWIDE PRIVATIZATION PORTFOLIO
(continued) Alliance Variable Products Series Fund
================================================================================
ernments extend their privatization programs. In 2000, we forecast that global
privatization revenues will amount to approximately $145 billion.
We expect the Portfolio will be a beneficiary of the continued strength in
privatization activity and we look forward to participating in the most
attractive deals the market offers. We maintain our aim of providing a
well-diversified core international Portfolio with exposure to the most exciting
and rapidly growing area of the financial markets. Presently, the Portfolio
maintains positions in approximately 40 countries with close to 100 different
issues and representation in over 40 different industries.
A-16
<PAGE>
GLOBAL BOND PORTFOLIO Alliance Variable Products Series Fund
================================================================================
INVESTMENT OBJECTIVE
The Global Bond Portfolio seeks a high level of return from a combination of
current income and capital appreciation by investing in a globally diversified
portfolio of high-quality debt securities denominated in the U.S. dollar and a
range of foreign currencies.
MARKET REVIEW
The global economy is on the mend, and the United States deserves much of the
credit. U.S. growth was up 5.8% during the fourth quarter of 1999, and up 4% for
the calendar year. Two-and-a-half million new jobs were created during 1999,
with unemployment at a thirty-year low of 4.1%. U.S. consumers are confident and
it shows in their spending, which grew at a 5% rate during the fourth quarter.
Private demand is increasing in Europe, a development that will support
export-led recoveries in East Asia (including Japan) and Latin America. The rise
in commodity prices, led by oil, has started to flow through to U.S. inflation.
Consumer Price Index ("CPI") moved above 2.5% on a year-over-year basis during
the fourth quarter versus 2% during the first nine-months of 1999. These
developments, together with continuing economic strength, have sparked inflation
concerns in the United States, pushed-up bond yields and triggered three 25
basis-point (bp) interest rate hikes by the U.S. Federal Reserve during 1999.
The weakness in U.S. bond prices spread throughout much of the industrialized
world this year, although not always with the same inflationary justification.
The non-U.S. dollar government bond sector returned 2.48% for 1999. The two
biggest stories during 1999 in the non-U.S. dollar government bond sector, were
the unexpected strength of the European economic recovery and the stubborn
economic weakness in Japan. In local currency terms, European government bonds
returned -2.36%, which underperformed U.S. governments returns of -2.23% during
1999. Positive non-U.S. dollar returns were attributable to the positive cost of
hedging. The results for Japanese government bonds ("JGBs") were very much the
exception. With a recovery dependent on public spending, with official agencies
pressured into buying bonds to support that spending, and with banks, seeing no
private credit demand, investing all their surplus funds in JGBs, Japanese
government bonds rallied. In local currency terms, JGBs were up 5.01% for the
year; the fourth quarter prices were more stable and the total return was only
0.38%. However, with short-term interest rates near zero, hedging gains were
sizable. Hedged JGBs produced a strong 10.59% gain for the calendar year.
Emerging market debt was the standout best performer among the fixed-income
sectors during 1999. With a total return for the year of 25.97%, (19.70%
excluding Russia) and a fourth-quarter gain of 12.58% (9.60% excluding Russia),
emerging-market debt far outdistanced its fixed-income competition and rivaled
U.S. equity benchmarks (Dow Jones Industrial Average, 25.22%; S&P 500, 19.52%).
The annual results for 1999 were in part, generated by the low-end 1998 starting
point. The JP Morgan Emerging Markets Bond Index-Plus did not regain its high of
May 1998 until the middle of December 1999. The big three Latin markets of
Argentina, Brazil, and Mexico, which together account for roughly two-third's of
the index, scored impressive results of 12.97%, 40.68%, and 15.30%, respectively
for the year. While the diversity of countries within the emerging-market
universe is considerable and the asset-class continues to grow and evolve, we
believe that ongoing reforms and a favorable global economic backdrop will make
this sector the best performing sector of dollar-denominated, fixed-income
securities for many months to come.
INVESTMENT RESULTS
The Portfolio's total return for the twelve-month period ended December 31, 1999
was -6.11% compared to the Salomon Smith Barney World Government Bond Index
(unhedged) return of -4.27%. The Portfolio underperformed its benchmark over the
twelve-month period ended December 31, 1999 as a result of our underweighting of
the Japanese market. Japan was the top performing developed government bond
market during the twelve-month period. Bond prices in Japan rose as the Japanese
central bank maintained a loose monetary policy in order to lift the Japanese
economy out of its worst recession in its postwar history.
INVESTMENT OUTLOOK
Looking ahead to the next twelve months, we foresee continued good growth in the
United States, 3.5% growth in Europe, and another disappointing year for Japan
with positive growth dependent on public spending. U.S. trend growth is now
approaching a productivity-led 4% and Euroland has started down that same path.
Despite wishful thinking to the contrary, necessary corporate and financial
restructuring in Japan is far from complete and growth will be restrained
accordingly.
The Federal Reserve has signaled its inflationary concerns and we expect
additional tightenings in 2000. Although the inflation risks are clearly smaller
in Euroland, the European Central Bank ("ECB") appears intent on making a
similar rate statement within the next three to six months.
A-17
<PAGE>
GLOBAL BOND PORTFOLIO
(continued) Alliance Variable Products Series Fund
================================================================================
We believe that the near-term risks for global bond yields remain tilted in an
upward direction. However, much of the economic good news has been discounted
and we expect most bond markets to slightly outperform cash on a local-currency
basis during the next six months. In the United States, and in Germany and Japan
on a currency-hedged basis, we look for annualized returns on government bonds
in the vicinity of 6%.
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<PAGE>
GLOBAL DOLLAR GOVERNMENT PORTFOLIO Alliance Variable Products Series Fund
================================================================================
INVESTMENT OBJECTIVE
The Global Dollar Government Portfolio seeks a high level of current income
through investing its assets in U.S. and non-U.S. fixed-income securities
denominated only in U.S. dollars. As a secondary objective, the Portfolio seeks
capital appreciation. Substantially all of the Portfolio's assets will be
invested in high-yield, high-risk securities that are low-rated (i.e., below
investment grade), or of comparable quality and unrated, and that are considered
to be predominantly speculative as regards to the issuer's capacity to pay
interest and repay principal.
MARKET REVIEW
The global economy is on the mend, and the United States deserves much of the
credit. U.S. growth was 5.8% during the fourth quarter of 1999, and 4% for the
calendar year. Two-and-a-half million new jobs were created during 1999, and
unemployment is at 4.1%, a thirty-year low. U.S. consumers are confident and it
shows in their spending, which grew at a 5% rate during the fourth quarter.
Private demand is increasing in Europe, a development that will support
export-led recoveries in East Asia (including Japan) and Latin America. The rise
in commodity prices, led by oil, has started to flow through to U.S. inflation.
The Consumer Price Index moved above 2.5% on a year-over-year basis during the
fourth quarter versus 2% during the first nine months of 1999. These
developments, together with continuing economic strength, have sparked inflation
concerns in the United States, pushed-up bond yields and triggered three 25
basis-point (bp) interest rate hikes by the U.S. Federal Reserve during 1999.
The weakness in U.S. bond prices spread throughout much of the industrialized
world this year, although not always with the same inflationary justification.
Emerging market debt was the standout best performer among the fixed-income
sectors during 1999. With a total return for the year of 25.97%, (19.70%
excluding Russia) and a fourth-quarter gain of 12.58% (9.60% excluding Russia),
emerging-market debt far outdistanced its fixed-income competition and rivaled
U.S. equity benchmarks (Dow Jones Industrial Average, 25.22%; S&P 500 Stock
Index, 19.52%). The annual results for 1999 were in part, generated by the low,
end-1998 starting point; the JP Morgan Emerging Markets Bond Index-Plus (the
"JPM EMBI+") did not regain its high of May 1998 until the middle of December
1999. The big three Latin markets of Argentina, Brazil, and Mexico -- which
together account for roughly two-third's of the index -- scored impressive
results of 12.97%, 40.68%, and 15.30% respectively for the year. While the
diversity of countries within the emerging market universe is considerable and
the asset class continues to grow and evolve, we believe that ongoing reforms
and a favorable global economic backdrop will make this sector the best
performing sector of dollar-denominated fixed-income securities for many months
to come.
INVESTMENT RESULTS
Over the twelve-month period ended December 31, 1999, your Portfolio returned
26.08% as compared to the JPM EMBI+ return of 25.97%. Overall, emerging market
debt performed well in 1999 as global economic growth improved and commodity
prices firmed. Our security selection within this sector helped your Portfolio
outperform its benchmark. In particular, our holdings in Russia, Brazil,
Bulgaria, Turkey and Mexico enhanced performance for the year.
Overall, emerging market debt performed well in 1999 as global economic growth
improved and commodity prices firmed. The emerging market debt sector
outperformed all other bond market sectors with most individual countries
posting positive returns during the twelve-month period. Russia posted the
highest returns at 162.3% due to progress made in the restructuring of default
debt and rising oil prices. Brazil posted a 40.7% return as a result of the cut
in interest rates and the devaluing of the real by the Central Bank. Bulgaria
returned 27.3%, also outperforming the index, adhering to strict International
Monetary Fund ("IMF") reform guidelines and aggressive economic reforms. Fiscal
reforms, an IMF package, and the growing probability of membership in the
European Union have caused Turkish bonds to perform well, gaining 21.8%, as
represented within the JP Morgan Global Bond Index ("JPM GBI").
Other emerging market countries represented within the JPM GBI that have
demonstrated positive returns are Mexico with returns of 15.3%, Argentina at
12.8% and the Philippines at 10.3%. Ecuador was the worst performing country,
posting a -28.4% return due to the government's debt default in August.
OUTLOOK
We expect the U.S. economy to remain relatively strong and the global economy to
continue to recover. We expect long-term interest rates will trend up modestly
from current levels in this environment. Emerging European countries are
enjoying healthy recoveries in the aftermath of the Russian economic turmoil and
the Asian crisis. We forecast 3.5% growth for this region in 2000. Even though
inflation risk is smaller than that of the U.S., we believe that the European
Central Bank is intent on making a similar rate statement within the next three
to six months.
A-19
<PAGE>
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
(continued) Alliance Variable Products Series Fund
================================================================================
With improving global growth and liquidity conditions, East Asia we expect
growth to reach 6.5% in 2000 following similar pace in 1999. Labor markets
conditions are improving, boosting consumer spending, while export earnings are
driving investment expenditures. The Latin American region will continue its
recovery momentum into 2000 as we look for this region to head toward 4.0%
growth with moderate inflation over the next twelve months.
A-20
<PAGE>
HIGH YIELD PORTFOLIO Alliance Variable Products Series Fund
================================================================================
INVESTMENT OBJECTIVE
The High Yield Portfolio seeks the highest level of current income available
without assuming undue risk by investing principally in high-yield, fixed-income
securities. The Portfolio invests substantially all of its assets in higher
yielding, higher-risk, fixed-income securities (commonly known as "junk bonds")
that are rated below investment grade and are considered to have predominantly
speculative characteristics.
MARKET REVIEW
During 1999, the high-yield market, as represented by the CS First Boston High
Yield Index, recorded its second consecutive year of weak performance, returning
3.28%. However, the high-yield sector outperformed all other domestic
fixed-income sectors. The chief reason for the poor performance of fixed-income
securities was the recovery of global economic growth and the related world-wide
central bank policy shift from monetary easing to monetary tightening. In 1999,
the U.S. Federal Reserve led the shift in policy by fully reversing the 75 basis
points of easing it enacted in 1998 in response to the global liquidity crisis.
Along with rising interest rates, liquidity concerns related to Y2K and large
corporate debt issuance in the summer months hurt the performance of all
non-Treasury securities. In addition, the high-yield sector was hurt by rising
default rates and mutual fund outflows. New issuance fell 30% from 1998's record
level and default rates (above 4%) reached heights never seen in an expansionary
economic environment. Most of the defaults were concentrated in the energy and
health care sectors. Low oil prices at the beginning of the year hurt energy
companies, while government cuts to medicare reimbursement rates hurt health
care companies.
The best performing industry sectors included paper and packaging, utilities and
cable, while health care, refining and consumer manufacturing were among the
worst performing. For the year, double-B-rated securities outperformed
single-B-rated securities, as excess supply and reduced liquidity caused
investors to focus on larger, more liquid securities.
INVESTMENT RESULTS
The Portfolio returned -2.58% for the twelve-month period ended December 31,
1999, underperforming the 3.28% return of its benchmark as represented by the CS
First Boston High Yield Index.
Our style of investing, which has emphasized higher-yielding, single-B-rated
securities, negatively impacted performance in 1999. Supply and reduced
liquidity have caused investors to focus on larger, more liquid issues. Many
small- to medium-size companies that the Portfolio owns have been overlooked and
are just beginning to again attract attention. New single-B issues have been
priced to yield 2% to 4% more than mid-1998 levels, slowly repricing the
secondary market. Negative credit events have also had a negative impact on the
portfolio. We have had a number of companies report "down" or "poor" operating
results. The market's reaction has been devastating as sellers appear and no
buyers surface, driving down security prices to default or near default levels.
OUTLOOK
The underlying fundamentals of a growing economy low inflation and relatively
low (though trending upwards) interest rates remain supportive of high yield.
Another strong year in the equity markets could engender some re-balancing of
portfolios in 2000 toward fixed income, and high yield in particular, thereby
improving demand. High-yield structured products such as collateralized debt
obligations will continue to increase their market share and we can expect those
cash inflows to add strength to the market. Issuance may be strong; though it is
still a little early to tell. We expect that most of the calendar will consist
of large, liquid deals, as smaller companies trying to tap the market are having
a difficult time. Europe will also be a focal point in 2000 as the market's
rapid growth continues. The entry of new investors and more cash are also
favorable for demand.
A-21
<PAGE>
NORTH AMERICAN GOVERNMENT
INCOME PORTFOLIO Alliance Variable Products Series Fund
================================================================================
INVESTMENT OBJECTIVE
The North American Government Income Portfolio seeks the highest level of
current income, consistent with what the Fund's Adviser considers to be prudent
investment risk, that is available from a portfolio of debt securities issues or
guaranteed by the governments of the United States, Canada and Mexico, their
political subdivisions (including Canadian Provinces but excluding the States of
the United States), agencies, instrumentalities or authorities. The Portfolio
seeks high current yields by investing in government securities denominated in
local currency and U.S. dollars. Normally, the Portfolio expects to maintain at
least 25% of its assets in securities denominated in the U.S. dollar.
MARKET REVIEW
The global economy is on the mend, and the United States deserves much of the
credit. U.S. growth was 5.8% during the fourth quarter of 1999, and 4% for the
calendar year. Two-and-a-half million new jobs were created during 1999, and
unemployment is at 4.1%, a thirty-year low. U.S. consumers are confident and it
shows in their spending, which grew at a 5% rate during the fourth quarter.
Private demand is increasing in Europe, a development that will support
export-led recoveries in East Asia (including Japan) and Latin America. The rise
in commodity prices, led by oil, has started to flow through to U.S. inflation.
The Consumer Price Index ("CPI") moved above 2.5% on a year-over-year basis
during the fourth quarter versus 2% during the first nine months of 1999. These
developments, together with continuing economic strength, have sparked inflation
concerns in the United States, pushed-up bond yields and triggered three 25
basis-point (bp) interest rate hikes by the U.S. Federal Reserve during 1999.
The weakness in U.S. bond prices spread throughout much of the industrialized
world this year, although not always with the same inflationary justification.
With the notable exception of emerging-market debt, 1999 was a poor year for
U.S. dollar-denominated fixed income. Among the traditional sectors,
mortgage-backed securities, commercial mortgage-backed securities, and
asset-backed securities posted the best returns during the fourth quarter and
the year. The prepayment risk embedded in many of these securities, as well as
their generally shorter durations, helped cushion their price declines in the
rising interest rate environment. U.S. government bonds posted the worst returns
during the fourth quarter and the year. The investment-grade corporate sector
also posted an unusual loss of -1.96% for the year. Among the non-traditional
sectors, non-U.S. dollar government bonds hedged into U.S. dollars managed 2.48%
gain for the year and almost half of that (1.13%) came during the fourth
quarter, but that return was more than accounted for by the hedged performance
of Japanese government bonds ("JGBs"). Canadian government bonds performed
poorly (-1.44%) in 1999, as economic growth was stronger than anticipated and
the Bank of Canada raised official interest rates.
Emerging market debt was the standout best performer among the fixed-income
sectors during 1999. With a total return for the year of 25.97%, (19.70%
excluding Russia) and a fourth-quarter gain of 12.58% (9.60% excluding Russia),
emerging-market debt far outdistanced its fixed-income competition and rivaled
U.S. equity benchmarks (Dow Jones Industrial Average, 25.22%; S&P 500 Stock
Index, 19.52%). However, these annual results for 1999 were partially attributed
to the low, end-1998 starting point. In particular, the JP Morgan Emerging
Markets Bond Index-Plus (the "JPM EMBI+") did not regain its high of May 1998
until the middle of December 1999. The big three Latin markets of Argentina,
Brazil, and Mexico, which together account for roughly two-thirds of the JPM
EMBI+, scored impressive results of 12.97%, 40.68%, and 15.30%, respectively,
for 1999. While the diversity of countries within the emerging-market universe
is considerable and the asset class continues to grow and evolve, we believe
that ongoing reforms and a favorable global economic backdrop will make this
sector the best performing sector of dollar-denominated fixed-income securities
for many months to come.
In the emerging markets, recovery took hold in Latin America during the fourth
quarter of 1999. Growth in this region appeared to have surpassed the 5.0%
annualized rate, with the largest jumps seen in Chile and Peru, as these two
countries have the greatest exposure to Asia's growth. The Brazilian economy
appeared to have hit bottom in the second quarter of 1999, while weakness in
Argentina lingered into the third quarter. Nevertheless, both economies showed
strong improvements during the final months of 1999. Mexico continued to coast
along at 3.0%-plus growth, avoiding the painful sting of a recession.
In Mexico, exports were boosted by the booming U.S. economy and by the sharp
increase in international oil prices. The tight labor market coupled with recent
expansion manifested in the form of lower unemployment figures and higher wages.
The rapid decline in the rate of inflation along with diminishing fear of
expected inflation encouraged consumer spending. Argentinean bonds ended the
year with a 12.97% return as the economic recovery picked up in the fourth
quarter. Argentina
A-22
<PAGE>
Alliance Variable Products Series Fund
================================================================================
entered 1999 in the midst of a recession and further deteriorated with Brazil's
devaluation in January. Market sentiment did improve prior to the presidential
election in late October, which resulted in the victory of Fernando De La Rua,
leader of the opposition party, the Alianza, with 48.50% of the vote. The
Alianza victory in the presidential election represented a turning point in
local politics and marked the return to power of middle-class parties.
Nonetheless, the new administration now faces the arduous task of setting into
motion the initiatives for labor and fiscal reforms, measures against tax
evasion and other structural reforms that have been inherited from the previous
Menem administration.
INVESTMENT RESULTS
We compare your Portfolio's performance to the Lehman Brothers Aggregate Bond
Index, a standard measure of the performance of the overall U.S. bond market,
and the Lehman Brothers Intermediate-Term Government Bond Index, which measures
the performance of U.S. bonds in the one-to-ten-year maturity range.
During the twelve-month period ended December 31, 1999, your Portfolio
substantially outperformed both benchmarks, returning 8.90% versus -0.82% for
Lehman Brothers Aggregate Bond Index and 0.49% for the Lehman Brothers
Intermediate-Term Government Bond Index. Your Portfolio's increased exposure to
Argentina and Mexico boosted performance, as emerging market debt was the
standout performer among the fixed-income sectors during 1999. The overall
outperformance of your Portfolio is attributable to the fact that both Lehman
indices reflect U.S.-based government securities, which performed poorly in
comparison to the global bond markets. As mentioned previously, Argentina,
Brazil and Mexico, which together account for roughly two-thirds of the JPM
EMBI+, returned 12.97%, 40.68% and 15.30%, respectively, for the year.
OUTLOOK
Our near-term outlook for financial markets assumes that the U.S. economy will
stay relatively strong and that the global economy will continue to recover. The
risk of tighter monetary policy in the U.S. remains. Stronger global growth
coupled with firm commodity prices will continue to provide the environment
necessary for emerging countries to gradually improve their credit profiles. The
regional momentum is carrying into 2000 and we look for Latin America to head
toward 4.0% growth with moderate inflation over the next twelve months.
Higher bond yields are cooling overheated U.S. domestic demand and we believe
further rate increases will help to restore a more balanced domestic/foreign mix
over the next six months. Canada's strong economy will also build up pressure
for the Bank of Canada to implement stricter monetary policy measures in order
to keep inflation in check and in the process, improving the prospect for the
Canadian dollar.
On-going reforms within the emerging markets and favorable economic conditions
will keep this sector the best performing sector of dollar-denominated
fixed-income securities for many months to come. In Latin America, Brazil
continues to exceed expectations for fiscal reform, while Mexico is expected to
move to investment-grade status in the year 2000. Argentina's new government
faces the daunting task to get Argentina's economy on track with the rest of the
region. Mr. De La Rua's administration is expected to implement new initiatives
to increase competition by further deregulating the labor market. Negotiations
with the International Monetary Fund will be necessary to set in motion economic
reform measures remaining from the previous administration, gaining credibility
with the international capital markets. We remain positive in our view on Mexico
and Argentina as economic policy in each country remains strong and their
long-term trend toward improving credit fundamentals remain in tact.
A-23
<PAGE>
SHORT-TERM MULTI-MARKET PORTFOLIO Alliance Variable Products Series Fund
================================================================================
INVESTMENT OBJECTIVE
The Short-Term Multi-Market Portfolio seeks the highest level of current income
consistent with what the Fund's Adviser considers to be prudent investment risk,
that is available from a portfolio of high-quality debt securities having
remaining maturities of not more than three years.
MARKET REVIEW
The global economy is on the mend, and the United States deserves much of the
credit. U.S. growth was 5.8% during the fourth quarter of 1999, and 4% for the
calendar year. Two-and-a-half million new jobs were created during 1999, and
unemployment is at 4.1%, a thirty-year low. U.S. consumers are confident and it
shows in their spending, which grew at a 5% rate during the fourth quarter.
Private demand is increasing in Europe, a development that will support
export-led recoveries in East Asia (including Japan) and Latin America. The rise
in commodity prices, led by oil, has started to flow through to U.S. inflation.
The Consumer Price Index ("CPI") moved above 2.5% on a year-over-year basis
during the fourth quarter versus 2% during the first nine months of 1999. These
developments, together with continuing economic strength, have sparked inflation
concerns in the United States, pushed-up bond yields and triggered three 25
basis-point (bp) interest rate hikes by the U.S. Federal Reserve during 1999.
The weakness in U.S. bond prices spread throughout much of the industrialized
world this year, although not always with the same inflationary justification.
The non-U.S. dollar government bond sector returned 2.48% for 1999. The two
biggest stories during 1999 in the non-U.S. dollar government bond sector were
the unexpected strength of the European economic recovery and the stubborn
economic weakness in Japan. In local currency terms, European government bonds
(-2.36%) underperformed U.S. governments (-2.23%) during 1999. Positive non-U.S.
dollar returns were attributable to the positive cost of hedging. The results
for Japanese government bonds ("JGBs") were very much the exception. With a
recovery dependent on public spending, with official agencies pressured into
buying bonds to support that spending, and with banks, seeing no private credit
demand, investing all their surplus funds in JGBs, Japanese government bonds
rallied. In local currency terms, JGBs were up 5.01% for the year; the fourth
quarter prices were more stable and the total return was only 0.38%. However,
with short-term interest rates near zero, the hedging gains were sizable. Hedged
JGBs produced a strong 10.59% gain for the 1999 calendar year.
INVESTMENT RESULTS
The Portfolio's total return for the twelve-month period ended December 31, 1999
was 3.51% compared to the Merrill Lynch 1-3 Year Treasury Index return of 3.06%.
Our use of foreign securities helped your Portfolio outperform its U.S.-only
benchmark. In particular, our holdings in Japan, which was the best performing
developed government bond market in 1999, boosted the Portfolio's relative
returns.
OUTLOOK
Looking ahead to the next twelve months, we foresee continued good growth in the
United States, 3.5% growth in Europe, and another disappointing year for Japan
with positive growth dependent on public spending. U.S. trend growth is now
approaching a productivity-led 4% and Euroland has started down that same path.
Despite wishful thinking to the contrary, necessary corporate and financial
restructuring in Japan is far from complete and growth will be restrained
accordingly.
We believe that the near-term risks for global bond yields remain tilted in an
upward direction. However, much of the economic good news (bad news for bonds)
has been discounted and we expect most bond markets to slightly outperform cash
on a local-currency basis during the next six months. In the United States, and
in Germany and Japan on a currency-hedged basis, we look for annualized returns
on government bonds in the vicinity of 6%.
A-24
<PAGE>
U.S. GOVERNMENT/HIGH GRADE
SECURITIES PORTFOLIO Alliance Variable Products Series Fund
================================================================================
INVESTMENT OBJECTIVE
The U.S. Government/High Grade Securities Portfolio seeks a high level of
current income consistent with preservation of capital by investing principally
in a portfolio of U.S. government securities and other high-grade debt
securities.
MARKET REVIEW
The global economy is on the mend, and the United States deserves much of the
credit. U.S. growth was 5.8% during the fourth quarter of 1999, and 4% for the
calendar year. Two-and-a-half million new jobs were created during 1999, and
unemployment is at a thirty-year low of 4.1%. U.S. consumers are confident and
it shows in their spending, which grew at a 5% rate during the fourth quarter.
Private demand is increasing in Europe, a development that will support
export-led recoveries in East Asia (including Japan) and Latin America. The rise
in commodity prices, led by oil, has started to flow through to U.S. inflation:
Consumer Price Index ("CPI") moved above 2.5% on a year-over-year basis during
the fourth quarter versus 2% during the first nine-months of 1999. These
developments, together with continuing economic strength, have sparked inflation
concerns in the United States, pushed-up bond yields and triggered three 25
basis-point (bp) interest rate hikes by the U.S. Federal Reserve during 1999.
The weakness in U.S. bond prices spread throughout much of the industrialized
world this year, although not always with the same inflationary justification.
1999 was a poor year for U.S. dollar-denominated fixed income. Among the
traditional sectors, mortgage-backed securities, commercial mortgage-backed
securities, and asset-backed securities posted the best returns during the
fourth quarter and the year. The prepayment risk embedded in many of these
securities, as well as their generally shorter durations, helped cushion their
price declines in the rising interest rate environment. U.S. government bonds
posted the worst returns during the fourth quarter and the year. The
investment-grade corporate sector also posted an unusual loss of -1.96% for the
year.
Corporate bond volatility moderated in the fourth quarter as continued economic
growth, ebullient equity markets and moderate new issue supply underpinned
demand, allowing for an impressive spread rally. BBB-rated corporate bonds and
Yankee corporate bonds fared best in 1999, outperforming Treasuries by 174 basis
points (bps) and 157 bps, respectively, in 1999. The industrial sector fared
worst during the year, lagging utilities and finance. Ten-year swap spreads (the
difference in yield between credit sensitive and risk free assets) closed the
year at 80 bps, well inside their summer highs of 110 bps, evidencing lower
investor concern with credit.
INVESTMENT RESULTS
For the twelve-month period ended December 31, 1999, the Portfolio returned
- -2.45% compared with -2.14% for its benchmark, a blend of 67% Lehman Brothers
Government Bond Index and 33% Lehman Brothers Corporate Bond Index. While the
Portfolio was correctly positioned for higher interest rates throughout the
year, wider spreads in the summer caused by Y2K concerns contributed negatively
to performance in 1999. Most of this underperformance was recaptured by late in
the year, and we are confident that this strategy will, over the long run, prove
benefical to long-term performance.
OUTLOOK
Our near-term outlook for financial markets assumes that the U.S. economy will
stay relatively strong and that the global economy will continue to recover.
Higher bond yields are cooling overheated U.S. domestic demand, and we believe
further increases will help to restore a more balanced domestic/foreign mix over
the next six months. While the U.S. Federal Reserve left the Federal Funds Rate
target at 5.50% and monetary policy bias unchanged in December, its accompanying
statement stressing "inflationary imbalances" and the possibility that
"increases in demand will continue to exceed the growth in potential supply,"
was hardly conciliatory. Improving conditions outside the United States should
eventually ease the pressure on our external accounts.
With economic growth strong and temporary upward pressure on inflation, we
expect long-term interest rates will trend up modestly from current levels in
this environment. After widening dramatically during the third quarter of 1999,
yield premiums in non-Treasury sectors have narrowed, although not to the levels
that were seen in mid-1997. We expect these premiums to narrow somewhat from
current levels, but not to return to the previous tight levels of early 1997. As
we have stated previously, corporate security selection will become increasingly
important.
Looking ahead, we expect the yield advantage of corporates to buffer otherwise
negative return expectations from higher Treasury bond yields. That said, we
have modest expectations for generic spread tightening in 2000, reflecting
modest earnings growth. Supply of new corporate debt should parallel economic
growth and be readily absorbed. Disappointments in earnings will con-
A-25
<PAGE>
U.S. GOVERNMENT/HIGH GRADE
SECURITIES PORTFOLIO
(continued) Alliance Variable Products Series Fund
================================================================================
tinue to lead to material spread widening in specific issues, heightening the
importance of superior security selection.
We expect mortgage securities to perform well as demand from banks, insurance
companies and government agencies meets a diminished supply of mortgage-backed
securities. The combination of strong growth, low inflation and improved
liquidity after the passing of Y2K suggests mortgage securities will outperform
other fixed-income investments in 2000.
A-26
<PAGE>
MONEY MARKET PORTFOLIO Alliance Variable Products Series Fund
================================================================================
INVESTMENT OBJECTIVE
The Money Market Portfolio seeks safety of principal, maintenance of liquidity
and maximum current income by investing in a broadly diversified portfolio of
money market securities. An investment in the Portfolio is neither insured nor
guaranteed by the U.S. government.
ECONOMIC COMMENTARY
1999 was marked by a series of interest rate hikes as the U.S. Federal Reserve
changed from its previously neutral stance to a monetary policy centered around
a tightening bias. The first of these 25 basis point (bp) hikes occurred in June
1999, followed by another 25 bp rate hike in August, and a third 25 bp increase
in November. The Federal Reserve has maintained its tightening bias going into
2000, as another 25 bp interest rate hike was introduced on February 2, 2000.
This has now brought the Federal Funds Rate to 5.75%, a full percentage point
higher than at the beginning of 1999. Despite these hikes, however, we believe
that it is important to note that U.S. interest rates still remain low when put
into a historical perspective.
Following a 2.8% rise in gross domestic product ("GDP") in the first half of
1999, continued growth in the second half (including a substantial 5.8%
annualized increase in GDP growth in the fourth quarter) pushed the annualized
GDP growth rate for calendar year 1999 to 4%. Although higher interest rates
curbed domestic spending in the fourth quarter of 1999, consumer spending
remains strong, and America's trade deficit is slowly returning to a better
balance. Given these factors, along with the potential for further interest rate
hikes, we anticipate U.S. economic growth to be around 3.8% year-on-year for
2000.
The headline Consumer Price Index ("CPI") rate rose 2.7% year-on-year for the
period ended December 31, 1999. However, a more significant factor was the sharp
increase in oil prices that took place late in 1999, bringing the cost of oil
from a twelve-year low of $9.55 per barrel (Brent Crude) to over $26 per barrel.
We expect that this will push CPI inflation to above 3% early in 2000, with the
possibility of this index even hitting 4% at some future point. In our view,
however, this potential surge in the CPI rate will be short-lived, and it will
likely decrease with a concurrent relaxation of inflationary tendencies by the
middle of the year.
In the labor sector, U.S. wage growth staged a rally in the second half of 1999
after slowing in late 1998 and early 1999. In addition to this, unemployment
levels have recently reached a thirty-year low, stabilizing at around 4%. We
expect continued strong productivity growth to offset inflationary pressures,
while allowing for faster growth, stable interest rates and increases in profits
and wages. In response to this strong growth scenario, we expect that the
Federal Reserve will likely remain alert until growth tapers off and the
"productivity dividend" becomes apparent.
The recovery from the global economic and financial crisis of 1997/1998
continues to proceed at a rapid pace. Signs of recovery in Asia, and Japan in
particular, are clearly evident, while there are grounds for optimism regarding
Latin America as the reform process there continues amid stabilizing economic
performance.
INVESTMENT RESULTS
For the six- and twelve-month periods ended December 31, 1999, the Portfolio
returned 2.46% and 4.69%, respectively. During the same six- and twelve-month
reporting period, the total returns for the Portfolio's benchmark, the Salomon
Smith Barney 3-month Treasury Bill Index, were 2.44% and 4.74%, respectively.
The Portfolio's seven-day annualized yield for the period was 5.29%.
A-27
<PAGE>
INVESTMENT RESULTS Alliance Variable Products Series Fund
================================================================================
INVESTMENT RESULTS AS OF DECEMBER 31, 1999
Listed below are the Portfolios' average annual total returns for the one-year,
five-year (where applicable) and since-inception periods ended December 31,
1999.
ASSET ALLOCATION PORTFOLIOS
Conservative Investors Portfolio
o One Year 5.04%
o Five Years 10.13%
o Since Inception (10/94) 9.91%
Growth Investors Portfolio
o One Year 16.28%
o Five Years 16.87%
o Since Inception (10/94) 15.92%
Total Return Portfolio
o One Year 6.53%
o Five Years 16.54%
o Since Inception (12/92) 12.40%
COMMON STOCK/EQUITY SECURITIES
PORTFOLIOS
Growth and Income Portfolio
o One Year 11.37%
o Five Years 23.91%
o Since Inception (1/91) 15.48%
Growth Portfolio
o One Year 34.47%
o Five Years 31.35%
o Since Inception (9/94) 30.61%
International Portfolio
o One Year 40.23%
o Five Years 14.05%
o Since Inception (12/92) 13.99%
Premier Growth Portfolio
o One Year 32.32%
o Five Years 36.03%
o Since Inception (6/92) 26.31%
Quasar Portfolio
o One Year 17.08%
o Since Inception (8/96) 10.63%
Real Estate Investment Portfolio
o One Year -5.11%
o Since Inception (1/97) -1.79%
Technology Portfolio
o One Year 75.71%
o Since Inception (1/96) 35.93%
Utility Income Portfolio
o One Year 19.40%
o Five Years 19.50%
o Since Inception (5/94) 16.99%
Worldwide Privatization Portfolio
o One Year 58.83%
o Five Years 20.70%
o Since Inception (9/94) 19.77%
INCOME-ORIENTED PORTFOLIOS
Global Bond Portfolio
o One Year -6.11%
o Five Years 7.40%
o Since Inception (7/91) 6.85%
Global Dollar Government Portfolio
o One Year 26.08%
o Five Years 11.42%
o Since Inception (5/94) 9.69%
High Yield Portfolio
o One Year -2.58%
o Since Inception (10/97) -1.42%
North American Government
Income Portfolio
o One Year 8.90%
o Five Years 12.59%
o Since Inception (5/94) 8.54%
Short-Term Multi-Market Portfolio
o One Year 3.51%
o Five Years 6.13%
o Since Inception (11/90) 4.19%
U.S. Government/High-Grade
Securities Portfolio
o One Year -2.45%
o Five Years 7.01%
o Since Inception (9/92) 5.27%
SHORT-TERM INCOME PORTFOLIOS
Money Market Portfolio
o One Year 4.69%
o Annualized 7-Day Yield 5.29%
- --------------------------------------------------------------------------------
Total returns are based on net asset value performance and reflect investment of
dividends and/or capital gains distributions in additional shares. These figures
do not reflect insurance company separate account or annuity contract charges,
which would reduce total return to a contract owner. Past performance does not
guarantee future results. Investment return and principal value will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost.
The Money Market Portfolio yield is an annualized 7-day compound return as of
December 31, 1999.
A-28
<PAGE>
Alliance Variable Products Series Fund
================================================================================
ALLIANCE VARIABLE PRODUCTS SERIES FUND
GROWTH OF A $10,000 INVESTMENT
[The following tables were depicted as line graphs in the printed material.]
CONSERVATIVE INVESTORS PORTFOLIO
10/31/94* TO 12/31/99
30% S&P 500/70% LB Gov't/Corp Bond Index: $20,560
Conservative Investors Portfolio: $16,312
LB Gov't/Corp Bond Index: $14,496
GROWTH & INCOME PORTFOLIO
10/31/94* TO 12/31/99
S&P 500: $34,320
70% S&P 500/30% LB Gov't/Corp Bond Index: $28,491
Growth Investors Portfolio: $21,500
TOTAL RETURN PORTFOLIO
12/31/92* TO 12/31/99
60% S&P 500/40% LB Gov't/Corp
Bond Index: $29,662
Lipper Flexible Portfolio
Funds Average: $22,838
Total Return Portfolio: $22,695
GROWTH & INCOME PORTFOLIO
1/31/91* TO 12/31/99
S&P 500: $52,625
Lipper Growth & Income Funds Average: $38,243
Growth & Income Portfolio: $36,283
GROWTH PORTFOLIO
9/30/94* TO 12/31/99
Growth Portfolio: $41,094
Russell 1000 Growth: $41,013
S&P 500: $35,089
INTERNATIONAL PORTFOLIO
12/31/92* TO 12/31/99
Lipper International Funds Average: $28,483
MSCI EAFE: $26,647
International Portfolio: $25,034
A-29
<PAGE>
Alliance Variable Products Series Fund
================================================================================
ALLIANCE VARIABLE PRODUCTS SERIES FUND
GROWTH OF A $10,000 INVESTMENT
[The following tables were depicted as line graphs in the printed material.]
PREMIER GROWTH PORTFOLIO
6/30/92* TO 12/31/99
Premier Growth Portfolio: $57,933
Russell 1000 Growth Index: $48,021
S&P 500: $42,397
QUASAR PORTFOLIO
8/31/96* TO 12/31/99
Russell 2000 Index: $15,805
Quasar Portfolio: $14,083
REAL ESTATE INVESTMENT PORTFOLIO
1/31/97* TO 12/31/99
S&P 500: $19,535
Real Estate Investment Portfolio: $9,448
NAREIT Index: $9,358
TECHNOLOGY PORTFOLIO
1/31/96* TO 12/31/99
PSE High-Tech Index: $47,068
Technology Portfolio: $33,627
UTILITY INCOME PORTFOLIO
5/31/94* TO 12/31/99
S&P 500: $35,903
NYSE Utility Index: $24,714
Utility Income Portfolio: $23,609
WORLDWIDE PRIVATIZATION PORTFOLIO
9/30/94* TO 12/31/99
Worldwide Privatization Portfolio: $25,871
MSCI World ex-USA Index: $18,561
MSCI EAFE Index: $18,372
A-30
<PAGE>
Alliance Variable Products Series Fund
================================================================================
ALLIANCE VARIABLE PRODUCTS SERIES FUND
GROWTH OF A $10,000 INVESTMENT
[The following tables were depicted as line graphs in the printed material.]
GLOBAL BOND PORTFOLIO
7/31/91* TO 12/31/99
SSB World Gov't Bond Index: $19,093
Global Bond Portfolio: $17,499
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
5/31/94* TO 12/31/99
JP Morgan Emerging Markets Bond Index Plus: $21,020
Global Dollar Government Portfolio: $16,843
HIGH YIELD PORTFOLIO
10/31/97* TO 12/31/99
CS First Boston High Yield Index: $10,557
High Yield Portfolio: $9,692
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO
5/31/94* TO 12/31/99
North American Government
Income Portfolio: $15,655
LB Aggregate Bond Index: $14,624
LB Intermediate Gov't Bond Index: $14,078
SHORT-TERM MULTI-MARKET PORTFOLIO
11/30/90* TO 12/31/99
ML 1-3 Year Treasury Index: $17,456
Lipper Global Income Funds Average: $15,145
Short-Term Multi-Market Portfolio: $14,527
U.S. GOVERNMENT/HIGH-GRADE
SECURITIES PORTFOLIO
9/30/92* TO 12/31/98
67% LB Gov't Bond Index/33% LB Corp.
Bond Index: $15,537
U.S. Gov't/High Grade Securities
Portfolio: $14,542
Past performance is no guarantee of future results.
These charts illustrate the total value of an assumed $10,000 investment in each
Portfolio as compared to the performance of an appropriate broad-based index for
the time frames indicated for each Portfolio. Performance results for each
Portfolio represent the Portfolio's total return at net asset value. An investor
cannot invest directly in an index or average.
* Month-end closest to Portfolio inception. Inception dates for the
Portfolios are: 10/28/94 Conservative Investors; 1/14/91 Growth & Income;
10/28/94 Growth Investors; 9/15/94 Growth; 12/28/92 Total Return; 12/28/92
International; 6/26/92 Premier Growth; 7/15/91 Global Bond; 5/10/94
Utility Income; 5/2/94 Global Dollar Government; 9/23/94 Worldwide
Privatization; 5/3/94 North American Government Income; 9/17/92 U.S.
Government/High-Grade Securities; 11/28/90 Short-Term Multi-Market;
1/11/96 Technology; 8/5/96 Quasar; 1/9/97 RealEstate Investment; 10/27/97
High Yield.
A-31
<PAGE>
THE BENCHMARKS Alliance Variable Products Series Fund
================================================================================
The benchmarks described below represent unmanaged indices; the Lipper Averages
include funds that have generally similar investment objectives to the respec-
tive Alliance portfolio, although some funds included in the averages may have
somewhat different investment policies.
CS First Boston High Yield Index -- Credit Suisse First Boston High Yield Index
is an unmanaged, trader-priced portfolio constructed to mirror the high yield
debt market.
DJ Utility -- The Dow Jones Utility Average is a price-weighted average that
consists of actively traded stocks representing a cross-section of corporations
involved in various phases of the utility industry.
JPM EMBI-Plus -- The JP Morgan Emerging Markets Bond Index-Plus tracks returns
for external-currency-denominated debt instruments of the emerging markets
including Brady bonds, loans, Eurobonds, and U.S. dollar-denominated local
market instruments. Countries covered are Argentina, Brazil, Bulgaria, Ecuador,
Mexico, Morocco, Nigeria, Panama, Peru, the Phillipines, Poland, Russia and
Venezuela.
LB Aggregate -- The Lehman Brothers Aggregate Bond Index is composed of the
Mortgage-Backed and Asset-Backed Securities Indices, and the
Government/Corporate Bond Index.
LB Corp. Bond -- The Lehman Brothers Corporate Bond Index includes all publicly
issued, fixed-rate, non-convertible investment grade corporate debt; the index
is composed of both U.S. and Brady Bonds.
LB Gov't/Corp. Bond -- The Lehman Brothers Government/Corporate Bond Index
represents a combination of the two indices.
LB Gov't Bond -- The Lehman Brothers Government Bond Index is composed of the
Treasury Bond and Agency Bond Indices, the 1-3 year Government Index and the 20+
year Treasury Index.
LB Intermediate-Term Gov't Bond -- The Lehman Brothers Intermediate-Term
Government Bond Index is composed of U.S. Government agency and Treasury
securities with maturities of one to 10 years.
LB Long-Term Gov't Bond -- The Lehman Brothers Long-Term Government Bond Index
is composed of U.S. Government agency and Treasury securities with maturities of
10 years or more.
Lipper Growth and Income Funds Average -- The Lipper Growth and Income Funds
Average reflects performance of 100 mutual funds.
Lipper Flexible Portfolio Funds Average -- The Lipper Flexible Portfolio Funds
Average reflects performance of 208 mutual funds.
Lipper International Funds Average -- The Lipper International Funds Average
reflects performance of 100 mutual funds.
Lipper Global Income Funds Average -- The Lipper Global Income Funds Average
reflects performance of 21 mutual funds.
ML 1-3 Year Treasury -- The Merrill Lynch 1-3 Year Treasury Index is composed of
U.S. Treasury securities with maturities of between one and three years.
MSCI EAFE -- The Morgan Stanley Capital International EAFE Index measures the
overall performance of stock markets in 21 countries within Europe, Australia
and the Far East.
MSCI World ex-USA -- The Morgan Stanley Capital International World ex-USA Index
is an unmanaged, market capitalization-weighted index that measures the
performance of stock markets in 21 countries outside the United States.
NAREIT Index -- The NAREIT Index represents returns for the National Association
of Real Estate Investment Trust Equity Index.
NYSE Utility -- The New York Stock Exchange Utility Index is composed of all
utility issues traded on the Exchange.
PSE High Technology -- The Pacific Stock Exchange High Technology Index is
comprised of technology stocks traded on the Pacific Stock Exchange.
Russell 1000 -- The Russell 1000 Growth Stock Index represents performance of
1000 of the largest U.S. companies by market capitalization.
Russell 2000 -- The Russell 2000 Index consists of 2000 small- and mid-cap
companies. The average market capitalization is approximately $500 million.
SSB 3-Month Treasury Bill Index -- The Salomon Smith Barney 3-Month Treasury
Bill Index represents the average of T-bill rates for each of the prior three
months, adjusted to a bond equivalent basis.
SSB World Gov't Bond -- The Salomon Smith Barney World Government Bond Index
represents performance of government bond markets in 14 countries.
S&P 500 -- The Standard and Poor's 500 Stock Index includes 500 stocks and is a
common measure of the performance of the overall U.S. stock market.
A-32
<PAGE>
TEN LARGEST HOLDINGS
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Conservative Investors Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Notes $ 12,031,682 38.0%
- -----------------------------------------------------------------------------------------------------------
Federal National Mortgage Assoc., 5.625%, 5/14/04 4,491,414 14.2
- -----------------------------------------------------------------------------------------------------------
U.S. Treasury Bond, 5.50%, 8/15/28 3,837,645 12.1
- -----------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., 5.75%, 6/15/01 3,169,171 10.0
- -----------------------------------------------------------------------------------------------------------
Nortel Networks Corp. 343,400 1.1
- -----------------------------------------------------------------------------------------------------------
Cisco Systems, Inc. 267,734 0.8
- -----------------------------------------------------------------------------------------------------------
Home Depot, Inc. 236,540 0.7
- -----------------------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 207,375 0.7
- -----------------------------------------------------------------------------------------------------------
Microsoft Corp. 198,422 0.6
- -----------------------------------------------------------------------------------------------------------
Intel Corp. 181,019 0.6
- -----------------------------------------------------------------------------------------------------------
$ 24,964,402 78.8%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Growth Investors Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Notes $ 5,839,888 30.9%
- -----------------------------------------------------------------------------------------------------------
U.S. Treasury Bond, 5.50%, 8/15/28 1,023,372 5.4
- -----------------------------------------------------------------------------------------------------------
Nortel Networks Corp. 525,200 2.8
- -----------------------------------------------------------------------------------------------------------
Cisco Systems, Inc. 428,375 2.3
- -----------------------------------------------------------------------------------------------------------
Home Depot, Inc. 359,953 1.9
- -----------------------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 331,800 1.7
- -----------------------------------------------------------------------------------------------------------
Microsoft Corp. 326,813 1.7
- -----------------------------------------------------------------------------------------------------------
Intel Corp. 287,984 1.5
- -----------------------------------------------------------------------------------------------------------
Dell Computer Corp. 275,231 1.4
- -----------------------------------------------------------------------------------------------------------
Procter & Gamble Co. 262,950 1.4
- -----------------------------------------------------------------------------------------------------------
$ 9,661,566 51.0%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Total Return Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Notes $ 12,901,109 17.2%
- -----------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds 3,915,226 5.2
- -----------------------------------------------------------------------------------------------------------
Tyco International, Ltd. 1,920,425 2.6
- -----------------------------------------------------------------------------------------------------------
Kroger Co. 1,698,750 2.3
- -----------------------------------------------------------------------------------------------------------
First Data Corp. 1,558,275 2.1
- -----------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp. 1,555,700 2.1
- -----------------------------------------------------------------------------------------------------------
Household International, Inc. 1,542,150 2.1
- -----------------------------------------------------------------------------------------------------------
BankAmerica Corp. 1,460,457 1.9
- -----------------------------------------------------------------------------------------------------------
Pepsi Bottling Group, Inc. 1,366,406 1.8
- -----------------------------------------------------------------------------------------------------------
Noble Drilling Corp. 1,365,675 1.8
- -----------------------------------------------------------------------------------------------------------
$ 29,284,173 39.1%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
A-33
<PAGE>
TEN LARGEST HOLDINGS (continued) Alliance Variable Products Series Fund
================================================================================
Growth and Income Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Tyco International, Ltd. $ 21,435,675 4.0%
- -----------------------------------------------------------------------------------------------------------
Household International, Inc. 19,686,625 3.7
- -----------------------------------------------------------------------------------------------------------
Citigroup, Inc. 19,510,772 3.7
- -----------------------------------------------------------------------------------------------------------
Kroger Co. 18,029,400 3.4
- -----------------------------------------------------------------------------------------------------------
United Technologies Co. 17,719,000 3.3
- -----------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp. 17,227,850 3.2
- -----------------------------------------------------------------------------------------------------------
First Data Corp. 17,145,956 3.2
- -----------------------------------------------------------------------------------------------------------
Noble Drilling Corp. 15,169,800 2.9
- -----------------------------------------------------------------------------------------------------------
Pepsi Bottling Group, Inc. 14,873,125 2.8
- -----------------------------------------------------------------------------------------------------------
Computer Sciences Corp. 13,152,875 2.5
- -----------------------------------------------------------------------------------------------------------
$ 173,951,078 32.7%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Growth Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mannesmann AG $ 34,618,672 7.5%
- -----------------------------------------------------------------------------------------------------------
AT&T Corp. - Liberty Media Group Cl.A 24,849,577 5.4
- -----------------------------------------------------------------------------------------------------------
Nextel Communications, Inc. Cl.A 23,402,281 5.0
- -----------------------------------------------------------------------------------------------------------
Sanmina Corp. 17,344,712 3.7
- -----------------------------------------------------------------------------------------------------------
American International Group, Inc. 15,953,411 3.4
- -----------------------------------------------------------------------------------------------------------
MCI WorldCom, Inc. 14,579,669 3.2
- -----------------------------------------------------------------------------------------------------------
Global TeleSystems Group, Inc. 13,754,556 3.0
- -----------------------------------------------------------------------------------------------------------
Sprint Corp. 13,731,750 3.0
- -----------------------------------------------------------------------------------------------------------
The CIT Group, Inc. Cl.A 13,160,030 2.9
- -----------------------------------------------------------------------------------------------------------
International Business Machines Corp. 12,852,000 2.8
- -----------------------------------------------------------------------------------------------------------
$ 184,246,658 39.9%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
International Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mannesmann AG $ 5,096,140 6.3%
- -----------------------------------------------------------------------------------------------------------
United Pan-Europe Communications NV 4,192,377 5.1
- -----------------------------------------------------------------------------------------------------------
Nokia Corp. 3,662,723 4.5
- -----------------------------------------------------------------------------------------------------------
NTT Mobile Communications Network, Inc. 3,654,204 4.5
- -----------------------------------------------------------------------------------------------------------
British Sky Broadcasting Group Plc 2,927,085 3.6
- -----------------------------------------------------------------------------------------------------------
Softbank Corp. 2,680,239 3.3
- -----------------------------------------------------------------------------------------------------------
Tokyo Electron, Ltd. 2,603,504 3.2
- -----------------------------------------------------------------------------------------------------------
Equant NV 2,539,606 3.1
- -----------------------------------------------------------------------------------------------------------
Standard Chartered Plc 2,361,037 2.9
- -----------------------------------------------------------------------------------------------------------
Kao Corp. 2,196,878 2.7
- -----------------------------------------------------------------------------------------------------------
$ 31,913,793 39.2%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
A-34
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Premier Growth Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nokia Corp. (ADR) $ 143,488,000 6.0%
- -----------------------------------------------------------------------------------------------------------
Cisco Systems, Inc. 126,799,000 5.3
- -----------------------------------------------------------------------------------------------------------
Dell Computer Corp. 122,075,253 5.1
- -----------------------------------------------------------------------------------------------------------
Home Depot, Inc. 117,889,585 5.0
- -----------------------------------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 98,548,176 4.2
- -----------------------------------------------------------------------------------------------------------
Intel Corp. 69,741,587 2.9
- -----------------------------------------------------------------------------------------------------------
Tyco International, Ltd. 69,322,833 2.9
- -----------------------------------------------------------------------------------------------------------
MediaOne Group, Inc. 66,934,412 2.8
- -----------------------------------------------------------------------------------------------------------
EMC Corp. 65,790,350 2.8
- -----------------------------------------------------------------------------------------------------------
MBNA Corp. 63,930,189 2.7
- -----------------------------------------------------------------------------------------------------------
$ 944,519,385 39.7%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Quasar Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Legg Mason, Inc. $ 7,242,750 4.3%
- -----------------------------------------------------------------------------------------------------------
Health Management Associates, Inc. Cl.A 6,311,663 3.7
- -----------------------------------------------------------------------------------------------------------
Chelsea GCA Realty, Inc. 6,226,675 3.7
- -----------------------------------------------------------------------------------------------------------
Millicom International Cellular, SA 5,851,500 3.4
- -----------------------------------------------------------------------------------------------------------
Premier Parks, Inc. 5,266,800 3.1
- -----------------------------------------------------------------------------------------------------------
Mohawk Industries, Inc. 5,178,732 3.1
- -----------------------------------------------------------------------------------------------------------
Monaco Coach Corp. 4,401,863 2.6
- -----------------------------------------------------------------------------------------------------------
BJ's Wholesale Club, Inc. 3,686,500 2.2
- -----------------------------------------------------------------------------------------------------------
Carey International, Inc. 3,660,062 2.2
- -----------------------------------------------------------------------------------------------------------
Apex, Inc. 3,545,062 2.1
- -----------------------------------------------------------------------------------------------------------
$ 51,371,607 30.4%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Real Estate Investment Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Equity Office Properties Trust $ 1,004,700 5.6%
- -----------------------------------------------------------------------------------------------------------
Apartment Investment & Management Co. 895,781 5.0
- -----------------------------------------------------------------------------------------------------------
Boston Properties, Inc. 887,062 5.0
- -----------------------------------------------------------------------------------------------------------
Vornado Realty Trust 867,750 4.9
- -----------------------------------------------------------------------------------------------------------
ProLogis Trust 806,575 4.5
- -----------------------------------------------------------------------------------------------------------
Cornerstone Properties, Inc. 776,588 4.4
- -----------------------------------------------------------------------------------------------------------
Reckson Associates Realty Corp. 768,750 4.3
- -----------------------------------------------------------------------------------------------------------
Public Storage, Inc. 750,956 4.2
- -----------------------------------------------------------------------------------------------------------
Avalon Bay Communities, Inc. 666,829 3.7
- -----------------------------------------------------------------------------------------------------------
Spieker Properties, Inc. 666,806 3.7
- -----------------------------------------------------------------------------------------------------------
$ 8,091,797 45.3%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
A-35
<PAGE>
TEN LARGEST HOLDINGS (continued) Alliance Variable Products Series Fund
================================================================================
Technology Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cisco Systems, Inc. $ 20,519,162 5.6%
- -----------------------------------------------------------------------------------------------------------
Nokia Corp. (ADR) 16,093,000 4.4
- -----------------------------------------------------------------------------------------------------------
Solectron Corp. 14,354,362 3.9
- -----------------------------------------------------------------------------------------------------------
Dell Computer Corp. 13,858,403 3.8
- -----------------------------------------------------------------------------------------------------------
America Online, Inc. 13,450,506 3.7
- -----------------------------------------------------------------------------------------------------------
Applied Materials, Inc. 12,045,009 3.3
- -----------------------------------------------------------------------------------------------------------
Microsoft Corp. 11,566,828 3.1
- -----------------------------------------------------------------------------------------------------------
DoubleClick, Inc. 11,372,328 3.1
- -----------------------------------------------------------------------------------------------------------
Lexmark International Group, Inc. 10,814,750 2.9
- -----------------------------------------------------------------------------------------------------------
Sanmina Corp. 10,435,719 2.8
- -----------------------------------------------------------------------------------------------------------
$ 134,510,067 36.6%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Utility Income Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
MediaOne Group, Inc. $ 2,311,200 5.0%
- -----------------------------------------------------------------------------------------------------------
Omnipoint Corp. 7.00% cv pfd. 2,168,375 4.7
- -----------------------------------------------------------------------------------------------------------
BellSouth Corp. 2,008,257 4.4
- -----------------------------------------------------------------------------------------------------------
MCI WorldCom, Inc. 1,909,125 4.1
- -----------------------------------------------------------------------------------------------------------
Nokia Corp. (ADR) 1,900,000 4.1
- -----------------------------------------------------------------------------------------------------------
AT&T Corp. 1,845,321 4.0
- -----------------------------------------------------------------------------------------------------------
SBC Communications, Inc. 1,745,006 3.8
- -----------------------------------------------------------------------------------------------------------
FPL Group, Inc. 1,507,000 3.3
- -----------------------------------------------------------------------------------------------------------
BCE, Inc. 1,506,131 3.3
- -----------------------------------------------------------------------------------------------------------
GTE Corp. 1,446,531 3.1
- -----------------------------------------------------------------------------------------------------------
$ 18,346,946 39.8%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Worldwide Privatization Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mannesmann AG $ 3,136,383 4.9%
- -----------------------------------------------------------------------------------------------------------
NTT Mobile Communications Network, Inc. 3,077,224 4.8
- -----------------------------------------------------------------------------------------------------------
United Pan-Europe Communications NV 3,070,402 4.8
- -----------------------------------------------------------------------------------------------------------
Daiwa Securities Group, Inc. 2,504,062 3.9
- -----------------------------------------------------------------------------------------------------------
St. Microelectronics NV 2,462,768 3.8
- -----------------------------------------------------------------------------------------------------------
SK Telecom Co., Ltd. (ADR) 2,358,849 3.7
- -----------------------------------------------------------------------------------------------------------
Amadeus Global Travel Distribution, SA 2,046,683 3.2
- -----------------------------------------------------------------------------------------------------------
Nippon Telegraph & Telephone, Corp. 1,764,216 2.8
- -----------------------------------------------------------------------------------------------------------
Akzo Nobel NV 1,605,312 2.5
- -----------------------------------------------------------------------------------------------------------
Telefonos de Mexico, SA Cl.L (ADR) 1,485,000 2.3
- -----------------------------------------------------------------------------------------------------------
$ 23,510,899 36.7%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
A-36
<PAGE>
SECTOR DIVERSIFICATION
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
International Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aerospace & Defense $ 1,166,933 1.5%
- -----------------------------------------------------------------------------------------------------------
Basic Industries 1,069,463 1.3
- -----------------------------------------------------------------------------------------------------------
Capital Goods 1,516,611 1.9
- -----------------------------------------------------------------------------------------------------------
Consumer Manufacturing 872,949 1.1
- -----------------------------------------------------------------------------------------------------------
Consumer Services 26,789,790 32.9
- -----------------------------------------------------------------------------------------------------------
Consumer Staples 4,581,850 5.6
- -----------------------------------------------------------------------------------------------------------
Energy 2,772,457 3.4
- -----------------------------------------------------------------------------------------------------------
Finance 18,076,435 22.2
- -----------------------------------------------------------------------------------------------------------
Healthcare 4,418,067 5.4
- -----------------------------------------------------------------------------------------------------------
Multi Industry 1,185,798 1.5
- -----------------------------------------------------------------------------------------------------------
Technology 13,836,016 17.0
- -----------------------------------------------------------------------------------------------------------
Utilities 2,539,606 3.1
- -----------------------------------------------------------------------------------------------------------
Total Investments 78,825,975 96.9
- -----------------------------------------------------------------------------------------------------------
Cash and receivables, net of liabilities 2,544,280 3.1
- -----------------------------------------------------------------------------------------------------------
Net Assets $ 81,370,255 100.0%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Worldwide Privatization Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Basic Industries $ 4,741,791 7.4%
- -----------------------------------------------------------------------------------------------------------
Consumer Services 18,232,049 28.5
- -----------------------------------------------------------------------------------------------------------
Consumer Staples 1,645,887 2.6
- -----------------------------------------------------------------------------------------------------------
Energy 3,401,363 5.3
- -----------------------------------------------------------------------------------------------------------
Finance 13,000,540 20.3
- -----------------------------------------------------------------------------------------------------------
Healthcare 1,645,698 2.6
- -----------------------------------------------------------------------------------------------------------
Multi Industry 483,831 0.7
- -----------------------------------------------------------------------------------------------------------
Technology 4,623,408 7.2
- -----------------------------------------------------------------------------------------------------------
Transportation 2,040,753 3.2
- -----------------------------------------------------------------------------------------------------------
Utilities 11,425,531 17.8
- -----------------------------------------------------------------------------------------------------------
Total Investments* 61,240,851 95.6
- -----------------------------------------------------------------------------------------------------------
Cash and receivables, net of liabilities 2,817,876 4.4
- -----------------------------------------------------------------------------------------------------------
Net Assets $ 64,058,727 100.0%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Excludes short-term obligations.
A-37
<PAGE>
CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1998 Alliance Variable Products Series Fund
===============================================================================
Company Shares U.S. $ Value
- -----------------------------------------------------------------------
COMMON STOCKS-21.1%
UNITED STATES
INVESTMENTS-13.3%
TECHNOLOGY-3.6%
COMMUNICATIONS
EQUIPMENT-1.4%
Cisco Systems, Inc. (a) ............ 2,500 $ 267,734
Lucent Technologies, Inc. .......... 2,100 157,106
--------------
424,840
--------------
COMPUTER HARDWARE-1.6%
Dell Computer Corp. (a) ............ 3,500 178,390
Hewlett-Packard Co. ................ 1,300 148,119
Intel Corp. ........................ 2,200 181,019
--------------
507,528
--------------
COMPUTER SOFTWARE-0.6%
Microsoft Corp. (a) ................ 1,700 198,422
--------------
1,130,790
--------------
CONSUMER SERVICES-1.9%
RETAIL-GENERAL
MERCHANDISE-1.9%
Dayton Hudson Corp. ................ 2,100 154,219
Home Depot, Inc. ................... 3,450 236,540
Wal-Mart Stores, Inc. .............. 3,000 207,375
--------------
598,134
--------------
FINANCE-1.6%
BANKING-REGIONAL-0.3%
BankAmerica Corp. .................. 1,899 95,306
--------------
INSURANCE-1.0%
American International Group,
Inc .............................. 1,437 155,376
Citigroup, Inc. .................... 2,800 155,575
--------------
310,951
--------------
MISCELLANEOUS-0.3%
MBNA Corp. ......................... 3,300 89,925
--------------
496,182
--------------
ENERGY-1.2%
INTERNATIONAL-0.5%
Chevron Corp. ...................... 900 77,963
Exxon Mobil Corp. .................. 1,000 80,562
--------------
158,525
--------------
OIL SERVICE-0.7%
Halliburton Co. .................... 2,200 88,550
Noble Drilling Corp. (a) ........... 4,500 147,375
--------------
235,925
--------------
394,450
--------------
BASIC INDUSTRY-1.2%
CHEMICALS-0.6%
Du Pont E.I. de Nemours
& Co. ............................ 1,300 85,638
Union Carbide Corp. ................ 1,600 106,800
--------------
192,438
--------------
MINING & METALS-0.3%
Alcoa, Inc. ........................ 1,400 116,200
--------------
PAPER & FOREST
PRODUCTS-0.3%
International Paper Co. ............ 1,500 84,656
--------------
393,294
--------------
CONSUMER STAPLES-0.8%
HOUSEHOLD PRODUCTS-0.5%
Procter & Gamble Co. ............... 1,600 175,300
--------------
TOBACCO-0.3%
Philip Morris Cos., Inc. ........... 3,600 83,475
--------------
258,775
--------------
CAPITAL GOODS-0.7%
MACHINERY-0.7%
Caterpillar, Inc. .................. 2,200 103,538
Honeywell International, Inc. ...... 2,200 126,912
--------------
230,450
--------------
UTILITIES-0.6%
TELEPHONE UTILITY-0.6%
AT&T Corp. ......................... 1,000 50,750
MCI WorldCom, Inc. (a) ............. 2,400 127,275
--------------
178,025
--------------
CONSUMER
MANUFACTURING-0.5%
AUTO & RELATED-0.5%
Harley-Davidson, Inc. .............. 2,300 147,344
--------------
MULTI INDUSTRY
COMPANY-0.4%
Minnesota Mining &
Manufacturing Co. ................ 1,400 137,025
--------------
HEALTH CARE-0.4%
MEDICAL PRODUCTS-0.4%
Johnson & Johnson Co. 1,400 130,375
--------------
AEROSPACE & DEFENSE-0.4%
AEROSPACE-0.4%
United Technologies Corp. .......... 1,800 117,000
--------------
Total United States Investments
(cost $3,212,276) ................ 4,211,844
--------------
FOREIGN INVESTMENTS-7.8%
AUSTRALIA-0.1%
Telstra Corp., Ltd. ................ 3,700 20,112
Woodside Petroleum, Ltd. ........... 1,700 12,556
--------------
32,668
--------------
CANADA-1.1%
Nortel Networks Corp. .............. 3,400 343,400
--------------
FINLAND-0.4%
Nokia Corp. (b) .................... 500 90,662
Sonera Oyj (b) ..................... 300 20,565
UPM-Kymmene Oyj (b) ................ 600 24,176
--------------
135,403
--------------
B-1
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- -----------------------------------------------------------------------
FRANCE-0.4%
Banque Nationale de Paris (b) ...... 330 $ 30,450
France Telecom, SA (b) ............. 170 22,485
Sanofi Synthelabo, SA (a)(b) ....... 610 25,403
Total Fina (b) ..................... 310 41,377
--------------
119,715
--------------
GERMANY-0.3%
Mannesmann AG (b) ................. 400 96,504
Siemens AG (b) ..................... 90 11,451
--------------
107,955
--------------
HONG KONG-0.2%
China Telecom (Hong Kong),
Ltd. ............................. 8,000 49,913
Television Broadcasts, Ltd. ........ 1,000 6,818
--------------
56,731
--------------
JAPAN-2.3%
Aiful Corp. ........................ 100 12,235
Bank of Tokyo - Mitsubishi ......... 2,000 27,875
Banyu Pharmaceutical Co.,
Ltd .............................. 1,000 15,513
Canon, Inc. ........................ 2,000 79,475
Daiwa Securities Group, Inc. ....... 1,000 15,651
DDI Corp. .......................... 1 13,703
Fanuc, Ltd. ........................ 200 25,467
Fuji Bank, Ltd. .................... 2,000 19,438
Kao Corp. .......................... 1,000 28,531
Nippon Telegraph & Telephone
Corp ............................. 3 51,385
Nippon Television Network
Corp ............................. 30 35,235
NTT Mobile Communications
Network, Inc. .................... 1 38,465
Omron Corp. ........................ 1,000 23,050
Rohm Co., Ltd. ..................... 100 41,108
Shohkoh Fund & Co., Ltd. ........... 50 19,795
SMC Corp. .......................... 100 22,130
Sony Corp. ......................... 300 88,969
Sumitomo Trust & Banking
Co., Ltd. ........................ 2,000 13,507
Tokyo Electron, Ltd. ............... 1,000 137,027
Yamanouchi Pharmaceutical
Co., Ltd. ........................ 1,000 34,942
--------------
743,501
--------------
NETHERLANDS-0.9%
Akzo Nobel NV (b) ................. 400 20,066
Equant NV (a)(b) ................... 300 34,059
Getronics NV (b) ................... 200 15,957
ING Groep NV (b) ................... 500 30,190
Koninklijke Ahold NV (b) ........... 1,000 29,606
Koninklijke (Royal) Philips
Electronics NV (b) ............... 200 27,199
Royal Dutch Petroleum Co. (b) ...... 400 24,519
St. Microelectronics NV (b) ........ 370 56,951
United-Pan Europe
Communications NV (a)(b) ......... 400 51,173
--------------
289,720
--------------
SINGAPORE-0.1%
DBS Group Holdings, Ltd. (a) ....... 2,000 32,783
DBS Land, Ltd. ..................... 5,000 9,847
--------------
42,630
--------------
SPAIN-0.3%
Altadis, SA (b) .................... 4,020 57,504
Repsol, SA (b) ..................... 900 20,870
Telefonica, SA (a)(b) .............. 1,000 24,982
--------------
103,356
--------------
SWEDEN-0.1%
Securitas AB Series B .............. 1,800 32,577
--------------
SWITZERLAND-0.2%
ABB AG (a) ......................... 414 50,635
--------------
UNITED KINGDOM-1.4%
Bank of Scotland ................... 3,500 40,649
Billiton Plc ....................... 4,100 24,306
BP Amoco Plc ....................... 2,000 20,189
British Aerospace Plc .............. 1,600 10,519
British Airways Plc ................ 3,300 21,535
British Sky Broadcast Group
Plc .............................. 3,100 50,074
British Telecommunications
Plc .............................. 1,000 24,230
Dixons Group Plc ................... 1,000 24,068
HSBC Holdings Plc .................. 2,300 31,876
Invensys Plc ....................... 2,300 12,160
Rio Tinto Plc ...................... 1,000 24,003
Royal Bank of Scotland Group
Plc .............................. 1,091 19,315
SmithKline Beecham Plc ............. 2,800 35,504
Standard Chartered Plc ............. 2,200 35,004
United News & Media Plc ............ 1,700 21,432
Vodafone AirTouch Plc .............. 6,855 34,170
--------------
429,034
--------------
Total Foreign Investments
(cost $1,950,033) ................ 2,487,325
--------------
Total Common Stocks
(cost $5,162,309) ................ 6,699,169
--------------
B-2
<PAGE>
CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
(continued) Alliance Variable Products Series Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
- -----------------------------------------------------------------------
DEBT OBLIGATIONS-74.3%
U.S. GOVERNMENT & AGENCY
OBLIGATIONS-74.3%
Federal Home Loan Mortgage
Corp
5.75%, 6/15/01 ................... $ 3,200 $ 3,169,171
Federal National Mortgage
Assoc
5.625%, 5/14/04 .................. 4,700 4,491,414
U.S. Treasury Bond
5.50%, 8/15/28 ................... 4,500 3,837,645
U.S. Treasury Notes
3.875%, 1/15/09 (c) .............. 1,743 1,684,594
4.75%, 2/15/04 ................... 1,300 1,226,264
4.75%, 11/15/08 ................. 2,100 1,852,263
6.50%, 8/31/01 ................... 4,139 4,154,521
6.875%, 5/15/06 ................. 3,060 3,114,040
--------------
Total Debt Obligations
(cost $24,234,063) ............... 23,529,912
--------------
SHORT-TERM
INVESTMENT-0.7%
TIME DEPOSIT-0.7%
State Street Euro Dollar
3.00%, 1/03/00
(amortized cost $208,000) ........ $ 208 $ 208,000
--------------
TOTAL INVESTMENTS-96.1%
(cost $29,604,372) ............... 30,437,081
Other assets less
liabilities-3.9% ................. 1,248,636
--------------
NET ASSETS-100% ................... $ 31,685,717
==============
- ----------
(a) Non-income producing security.
(b) Securities, or portion thereof, with an aggregate market value of $756,149
have been segregated to collateralize forward exchange currency contracts.
(c) Treasury Inflation Protection Securities.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-3
<PAGE>
GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 56.3%
UNITED STATES
INVESTMENTS - 35.2%
TECHNOLOGY - 9.5%
COMMUNICATION
EQUIPMENT - 3.5%
Cisco Systems, Inc. (a) ........................... 4,000 $ 428,375
Lucent Technologies, Inc. ......................... 3,200 239,400
--------------
667,775
--------------
COMPUTER HARDWARE - 4.3%
Dell Computer Corp. (a) ........................... 5,400 275,231
Hewlett-Packard Co. ............................... 2,200 250,663
Intel Corp. ....................................... 3,500 287,984
--------------
813,878
--------------
COMPUTER SOFTWARE - 1.7%
Microsoft Corp. (a) ............................... 2,800 326,813
--------------
1,808,466
--------------
CONSUMER SERVICES - 5.0%
RETAIL - GENERAL
MERCHANDISE - 5.0%
Dayton Hudson Corp. ............................... 3,400 249,688
Home Depot, Inc. .................................. 5,250 359,953
Wal-Mart Stores, Inc. ............................. 4,800 331,800
--------------
941,441
--------------
FINANCE - 4.2%
BANKING - REGIONAL - 0.8%
BankAmerica Corp. ................................. 3,100 155,581
--------------
INSURANCE - 2.6%
American International Group,
Inc. ........................................... 2,325 251,391
Citigroup, Inc. ................................... 4,400 244,475
--------------
495,866
--------------
MISCELLANEOUS - 0.8%
MBNA Corp. ........................................ 5,200 141,700
--------------
793,147
--------------
BASIC INDUSTRY - 3.4%
CHEMICALS - 1.6%
Du Pont E.I. de Nemours
& Co. .......................................... 2,000 131,750
Union Carbide Corp. ............................... 2,600 173,550
--------------
305,300
--------------
MINING & METALS - 1.0%
Alcoa, Inc. ....................................... 2,300 190,900
--------------
PAPER & FOREST
PRODUCTS - 0.8%
International Paper Co. ........................... 2,500 141,094
--------------
637,294
--------------
ENERGY - 3.2%
INTERNATIONAL - 1.2%
Chevron Corp. ..................................... 1,300 112,612
Exxon Mobil Corp. ................................. 1,500 120,844
--------------
233,456
--------------
OIL SERVICE - 2.0%
Halliburton Co. ................................... 3,400 136,850
Noble Drilling Corp. (a) .......................... 7,100 232,525
--------------
369,375
--------------
602,831
--------------
CONSUMER STAPLES - 2.0%
HOUSEHOLD PRODUCTS - 1.4%
Procter & Gamble Co. .............................. 2,400 262,950
--------------
TOBACCO - 0.6%
Philip Morris Cos., Inc. .......................... 5,500 127,531
--------------
390,481
--------------
CAPITAL GOODS - 1.9%
MACHINERY - 1.9%
Caterpillar, Inc. ................................. 3,400 160,013
Honeywell International, Inc. ..................... 3,500 201,906
--------------
361,919
--------------
UTILITIES - 1.5%
TELEPHONE - 1.5%
AT&T Corp. ........................................ 1,600 81,200
MCI WorldCom, Inc. (a) ............................ 3,750 198,867
--------------
280,067
--------------
MULTI INDUSTRY
COMPANY - 1.2%
Minnesota Mining &
Manufacturing Co. .............................. 2,300 225,112
--------------
CONSUMER
MANUFACTURING - 1.2%
AUTO & RELATED - 1.2%
Harley-Davidson, Inc. ............................. 3,500 224,219
--------------
HEALTH CARE - 1.1%
MEDICAL PRODUCTS - 1.1%
Johnson & Johnson Co. ............................. 2,300 214,187
--------------
AEROSPACE & DEFENSE - 1.0%
AEROSPACE - 1.0%
United Technologies Corp. ......................... 2,900 188,500
--------------
Total United States Investments
(cost $5,265,980)............................... 6,667,664
--------------
FOREIGN INVESTMENTS - 21.1%
AUSTRALIA - 0.3%
Telstra Corp., Ltd. ............................... 5,900 32,072
Woodside Petroleum, Ltd. .......................... 2,700 19,941
--------------
52,013
--------------
CANADA - 2.8%
Nortel Networks Corp. ............................. 5,200 525,200
--------------
FINLAND - 1.1%
Nokia Corp. ....................................... 800 145,058
Sonera Oyj ........................................ 500 34,275
UPM-Kymmene Oyj ................................... 900 36,265
--------------
215,598
--------------
B-4
<PAGE>
GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
(Continued) Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
FRANCE - 1.1%
Banque Nationale de Paris ......................... 520 $ 47,982
France Telecom, SA ................................ 270 35,712
Sanofi Synthelabo, SA (a) ......................... 940 39,145
Societe Generale .................................. 100 23,270
Total Fina ........................................ 480 64,068
--------------
210,177
--------------
GERMANY - 0.9%
Mannesmann AG ..................................... 640 154,407
Siemens AG ........................................ 140 17,812
--------------
172,219
--------------
HONG KONG - 0.5%
China Telecom (Hong Kong),
Ltd ............................................ 13,000 81,109
Television Broadcasts, Ltd. ....................... 2,000 13,636
--------------
94,745
--------------
JAPAN - 6.7%
Aiful Corp. ....................................... 100 12,234
Bank of Tokyo - Mitsubishi ........................ 4,000 55,750
Banyu Pharmaceutical Co.,
Ltd ............................................ 1,000 15,513
Canon, Inc. ....................................... 3,000 119,213
Daiwa Securities Group, Inc. ...................... 2,000 31,301
DDI Corp. ......................................... 2 27,405
Fanuc, Ltd. ....................................... 400 50,935
Fuji Bank, Ltd. ................................... 4,000 38,877
Kao Corp. ......................................... 1,000 28,531
Nippon Telegraph &
Telephone Corp. ................................ 4 68,513
Nippon Television Network
Corp ........................................... 50 58,726
NTT Mobile Communications
Network, Inc. .................................. 2 76,931
Omron Corp. ....................................... 2,000 46,099
Rohm Co., Ltd. .................................... 200 82,216
Sankyo Co., Ltd. .................................. 1,000 74,875
Shohkoh Fund & Co., Ltd. .......................... 80 31,673
SMC Corp. ......................................... 200 44,260
Softbank Corp. .................................... 100 95,723
Sony Corp. ........................................ 400 118,626
Sumitomo Trust & Banking
Co., Ltd. ...................................... 3,000 20,260
Tokyo Electron, Ltd. .............................. 1,000 137,026
Yamanouchi Pharmaceutical
Co., Ltd. ...................................... 1,000 34,942
--------------
1,269,629
--------------
NETHERLANDS - 2.5%
Akzo Nobel NV ..................................... 600 30,100
Equant NV (a) ..................................... 470 53,358
Getronics NV ...................................... 300 23,935
ING Groep NV ...................................... 800 48,304
Koninklijke Ahold NV .............................. 1,600 47,369
Koninklijke (Royal) Philips
Electronics NV .................................... 300 40,798
Royal Dutch Petroleum Co. ......................... 700 42,908
St. Microelectronics NV ........................... 580 89,275
United Pan-Europe
Communications NV (a) ......................... 700 89,553
--------------
465,600
--------------
SINGAPORE - 0.2%
DBS Group Holdings, Ltd. (a) ...................... 2,000 32,783
DBS Land, Ltd. .................................... 8,000 15,755
--------------
48,538
--------------
SPAIN - 0.8%
Altadis, SA ....................................... 5,099 72,938
Repsol, SA ........................................ 1,500 34,784
Telefonica, SA (a) ................................ 1,600 39,971
--------------
147,693
--------------
SWEDEN - 0.3%
Securitas AB Series B ............................. 2,900 52,486
--------------
SWITZERLAND - 0.4%
ABB AG (a) ........................................ 654 79,989
--------------
UNITED KINGDOM - 3.5%
Bank of Scotland .................................. 5,500 63,877
Billiton Plc ...................................... 6,500 38,533
BP Amoco Plc ...................................... 3,200 32,302
British Aerospace Plc ............................. 2,500 16,436
British Airways Plc ............................... 5,200 33,934
British Sky Broadcast Group
Plc ............................................ 4,900 79,150
British Telecommunications
Plc ............................................ 1,200 29,075
Dixons Group Plc .................................. 1,600 38,509
HSBC Holdings Plc ................................. 3,600 49,893
Invensys Plc ...................................... 3,600 19,033
Rio Tinto Plc ..................................... 1,400 33,605
Royal Bank of Scotland
Group .......................................... 1,718 30,415
SmithKline Beecham Plc ............................ 4,400 55,792
Standard Chartered Plc ............................ 3,500 55,688
United News & Media Plc ........................... 2,600 32,779
Vodafone AirTouch Plc ............................. 10,690 53,286
--------------
662,307
--------------
Total Foreign Investments
(cost $3,073,687)............................... 3,996,194
--------------
Total Common Stocks
(cost $8,339,667)............................... 10,663,858
--------------
B-5
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Principal
Amount (000) U.S. $ Value
- --------------------------------------------------------------------------------
DEBT OBLIGATIONS - 36.3%
U.S. GOVERNMENT
OBLIGATIONS - 36.3%
U.S. Treasury Bond
5.50%, 8/15/28 ................................. $ 1,200 $ 1,023,372
U.S. Treasury Notes
3.875%, 1/15/09 (b) ........................... 1,949 1,882,781
4.75%, 2/15/04 ................................. 1,300 1,226,264
4.75%, 11/15/08 ................................ 400 352,812
6.50%, 8/31/01 ................................. 1,700 1,706,375
6.875%, 5/15/06 ................................ 660 671,656
--------------
Total Debt Obligations
(cost $7,065,161)............................... 6,863,260
--------------
SHORT-TERM
INVESTMENTS - 2.9%
U.S. GOVERNMENT AGENCY
OBLIGATION - 2.0%
Federal Home Loan Bank
5.79%, 3/17/00 ................................. 380 375,371
--------------
TIME DEPOSIT - 0.9%
State Street Euro Dollar
3.00%, 1/03/00 ................................. 167 167,000
--------------
Total Short-Term Investments
(amortized cost $542,371)....................... 542,371
--------------
TOTAL INVESTMENTS - 95.5%
(cost $15,947,199).............................. 18,069,489
Other assets less
liabilities - 4.5%.............................. 859,537
--------------
NET ASSETS - 100%.................................. $ 18,929,026
==============
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Treasury Inflation Protection Securities.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-6
<PAGE>
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 57.3%
TECHNOLOGY - 10.8%
COMMUNICATIONS
EQUIPMENT - 1.9%
Motorola, Inc. .................................... 7,600 $ 1,119,100
Tellabs, Inc. (a) ................................. 4,200 269,456
--------------
1,388,556
--------------
COMPUTER HARDWARE - 0.3%
Compaq Computer Corp. ............................. 8,600 232,738
--------------
COMPUTER SERVICES - 4.9%
Computer Sciences Corp. (a) ....................... 14,000 1,324,750
Electronic Data Systems
Corp. .......................................... 11,500 769,781
First Data Corp. .................................. 31,600 1,558,275
--------------
3,652,806
--------------
NETWORKING SOFTWARE - 0.3%
3Com Corp. (a) .................................... 5,500 258,328
--------------
SEMI-CONDUCTOR
COMPONENTS - 1.4%
Altera Corp. (a) .................................. 10,600 525,363
Atmel Corp. (a) ................................... 18,200 538,606
--------------
1,063,969
--------------
MISCELLANEOUS - 2.0%
Sanmina Corp. (a) ................................. 6,000 597,750
Solectron Corp. (a) ............................... 9,400 894,175
--------------
1,491,925
--------------
8,088,322
--------------
FINANCE - 10.3%
BANKING - MONEY
CENTERS - 4.0%
BankAmerica Corp. ................................. 29,100 1,460,457
Bank One Corp. .................................... 13,300 426,431
Chase Manhattan Corp. ............................. 13,900 1,079,856
--------------
2,966,744
--------------
INSURANCE - 2.5%
Citigroup, Inc. ................................... 20,200 1,122,362
PMI Group, Inc. ................................... 8,400 410,025
Travelers Property Casualty
Corp. Cl.A ..................................... 10,400 356,200
--------------
1,888,587
--------------
MISCELLANEOUS - 3.8%
Associates First Capital Corp.
Cl.A ........................................... 25,400 696,912
Household International, Inc. ..................... 41,400 1,542,150
MBNA Corp. ........................................ 14,250 388,313
The CIT Group, Inc. Cl. A ......................... 11,430 241,459
--------------
2,868,834
--------------
7,724,165
--------------
CONSUMER STAPLES - 7.5%
BEVERAGES - 2.0%
Coca-Cola Enterprises, Inc. ....................... 8,900 179,113
Pepsi Bottling Group, Inc. ........................ 82,500 1,366,406
--------------
1,545,519
--------------
COSMETICS - 0.4%
Avon Products, Inc. ............................... 9,300 $ 306,900
--------------
FOOD - 1.3%
General Mills, Inc. ............................... 8,400 300,300
Heinz (H.J.) Co. .................................. 4,100 163,231
Nabisco Group Holding
Corp ........................................... 19,100 202,938
Tyson Foods, Inc. Cl.A ............................ 17,500 284,375
--------------
950,844
--------------
HOUSEHOLD PRODUCTS - 1.1%
Colgate-Palmolive Co. ............................. 13,400 871,000
--------------
RETAIL - FOOD & DRUG - 2.3%
Kroger Co. (a) .................................... 90,000 1,698,750
--------------
TOBACCO - 0.4%
Philip Morris Cos., Inc. .......................... 12,600 292,162
--------------
5,665,175
--------------
ENERGY - 6.1%
DOMESTIC INTEGRATED - 1.8%
Kerr-McGee Corp. .................................. 8,800 545,600
USX-Marathon Group ................................ 33,800 834,437
--------------
1,380,037
--------------
DOMESTIC PRODUCERS - 0.2%
Murphy Oil Corp. .................................. 2,650 152,044
--------------
INTERNATIONAL - 1.3%
Total Fina, SA (ADR) .............................. 13,600 941,800
--------------
OIL SERVICES - 2.2%
Noble Drilling Corp. (a) .......................... 41,700 1,365,675
Transocean Sedco Forex, Inc. ...................... 8,500 286,344
--------------
1,652,019
--------------
MISCELLANEOUS - 0.6%
AES Corp. (a) ..................................... 6,300 470,925
--------------
4,596,825
--------------
HEALTH CARE - 6.0%
DRUGS - 2.8%
Abbott Laboratories ............................... 17,500 635,469
Bristol-Myers Squibb Co. .......................... 11,900 763,831
Schering-Plough Corp. ............................. 16,600 700,313
--------------
2,099,613
--------------
MEDICAL SERVICES - 3.2%
PacifiCare Health Systems, Inc.
Cl.B (a) ....................................... 6,000 318,187
Tenet Healthcare Corp. (a) ........................ 66,200 1,555,700
United Healthcare Corp. ........................... 9,800 520,625
--------------
2,394,512
--------------
4,494,125
--------------
CONSUMER SERVICES - 5.5%
AIRLINES - 1.0%
Continental Airlines, Inc.
Cl.B (a) ....................................... 17,200 763,250
--------------
B-7
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
BROADCASTING &
CABLE - 1.0%
A.H. Belo Corp. Series A .......................... 20,900 $ 398,406
MediaOne Group, Inc. (a) .......................... 4,800 368,700
--------------
767,106
--------------
ENTERTAINMENT &
LEISURE - 1.2%
Carnival Corp. Cl.A ............................... 9,500 454,219
Royal Caribbean Cruises,
Ltd ............................................ 9,700 478,331
--------------
932,550
--------------
PRINTING & PUBLISHING - 1.0%
Gannett Co., Inc. ................................. 9,000 734,063
--------------
RETAIL - GENERAL
MERCHANDISE - 1.3%
Saks, Inc. (a) .................................... 45,200 703,425
Tommy Hilfiger Corp. (a) .......................... 11,300 263,431
--------------
966,856
--------------
4,163,825
--------------
UTILITIES - 3.8%
ELECTRIC & GAS
UTILITIES - 2.5%
Allegheny Energy, Inc. ............................ 5,400 145,462
CMS Energy Corp. .................................. 9,200 286,925
Consolidated Edison, Inc. ......................... 2,700 93,150
Duke Energy Corp. ................................. 7,000 350,875
Edison International .............................. 13,300 348,294
FPL Group, Inc. ................................... 10,000 428,125
GPU, Inc. ......................................... 2,500 74,844
Pinnacle West Capital Corp. ....................... 3,800 116,138
--------------
1,843,813
--------------
TELEPHONE UTILITIES - 1.3%
AT&T Corp. ........................................ 12,550 636,912
MCI WorldCom, Inc. (a) ............................ 6,489 344,120
--------------
981,032
--------------
2,824,845
--------------
MULTI-INDUSTRY
COMPANIES - 3.4%
Honeywell International, Inc. ..................... 6,737 388,641
Tyco International, Ltd. .......................... 49,400 1,920,425
U.S. Industries, Inc. ............................. 18,600 260,400
--------------
2,569,466
--------------
BASIC INDUSTRIES - 1.8%
CHEMICALS - 1.8%
Eastman Chemical Co. .............................. 8,400 400,575
Lyondell Chemical Co. ............................. 45,000 573,750
Solutia, Inc. ..................................... 24,700 381,306
--------------
1,355,631
--------------
CAPITAL GOODS - 1.4%
MISCELLANEOUS - 1.4%
United Technologies Corp. ......................... 15,700 1,020,500
--------------
CONSUMER
MANUFACTURING - 0.7%
BUILDING & RELATED - 0.7%
Masco Corp. ....................................... 21,000 $ 532,875
--------------
Total Common Stocks
(cost $38,697,294).............................. 43,035,754
--------------
U.S. GOVERNMENT
OBLIGATIONS - 22.4%
U.S. Treasury Bonds
5.25%, 2/15/29 .................................. $ 800 661,496
5.50%, 8/15/28 .................................. 500 426,405
6.125%, 11/15/27 ................................ 1,400 1,302,868
6.125%, 8/15/29 ................................. 350 333,648
8.125%, 8/15/19 ................................. 1,045 1,190,809
U.S. Treasury Notes
5.50%, 5/15/09 .................................. 150 139,758
6.00%, 8/15/09 .................................. 150 145,312
6.50%, 8/31/01 .................................. 500 501,875
6.50%, 5/31/02 .................................. 5,500 5,526,620
6.50%, 10/15/06 ................................. 250 249,335
6.75%, 4/30/00 .................................. 2,900 2,909,048
6.875%, 5/15/06 ................................. 1,750 1,780,905
7.25%, 5/15/04 .................................. 1,600 1,648,256
--------------
Total U.S. Government
Obligations
(cost $17,710,530).............................. 16,816,335
--------------
CORPORATE DEBT
OBLIGATIONS - 9.7%
AIR TRANSPORTATION - 0.3%
Delta Air Lines, Inc.
8.30%, 12/15/29 (b) ............................ 200 194,258
--------------
AUTOMOTIVE - 0.6%
Federal-Mogul Corp.
7.50%, 1/15/09 ................................. 500 446,080
--------------
BANKING - MONEY
CENTERS - 1.0%
BankAmerica Corp.
8.07%, 12/31/26 ................................ 200 189,299
Bank United Corp.
8.875%, 5/01/07 ................................ 150 139,627
Citicorp
6.375%, 11/15/08 ............................... 500 462,293
--------------
791,219
--------------
CABLE - 0.4%
CSC Holdings, Inc.
7.875%, 12/15/07 .................................. 350 346,500
--------------
CHEMICALS - 0.6%
ICI North America, Inc.
8.875%, 11/15/06 ............................... 150 157,418
Lyondell Chemical Co.
9.875%, 5/01/07 ................................ 150 153,750
Rohm and Haas Co.
7.40%, 7/15/09 ................................. 150 149,120
--------------
460,288
--------------
B-8
<PAGE>
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
(continued) Alliance Variable Products Series Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
COMMUNICATIONS - 0.7%
News America Holdings, Inc.
9.50%, 7/15/24 ................................. $ 250 $ 280,774
Nextel Communications, Inc.
9.375%, 11/15/09 ............................... 100 98,500
Nuevo Grupo Iusacell
SA de CV
14.25%, 12/01/06 (b) ........................... 150 155,625
--------------
534,899
--------------
ELECTRIC & GAS
UTILITY - 0.7%
AES Corp.
9.50%, 6/01/09 ................................. 150 152,063
Arizona Public Service Co.
5.875%, 2/15/04 ................................ 250 236,009
PSEG Energy Holdings, Inc.
10.00%, 10/01/09 ............................... 150 153,989
--------------
542,061
--------------
ENERGY - 0.4%
Conoco, Inc.
5.90%, 4/15/04 ................................. 150 143,154
Union Pacific Resources
Group, Inc.
7.30%, 4/15/09 ................................. 150 143,641
--------------
286,795
--------------
FINANCIAL - 1.6%
First Union Capital II Series A
7.95%, 11/15/29 ................................ 150 144,176
Goldman Sachs Group, Inc.
6.65%, 5/15/09 ................................. 200 186,633
Household Finance Corp.
6.50%, 11/15/08 ................................ 500 462,920
Merrill Lynch & Co., Inc.
6.00%, 2/17/09 ................................. 500 448,934
--------------
1,242,663
--------------
INDUSTRIAL - 0.4%
Delphi Automotive Systems
Corp.
7.125%, 5/01/29 ................................ 100 88,543
Yosemite Security Trust I
8.25%, 11/15/04 ................................ 200 198,000
--------------
286,543
--------------
PAPER / PACKAGING - 0.4%
Kappa Beheer BV
10.625%, 7/15/09 (c) ........................... 100 105,771
Temple-Inland, Inc.
6.75%, 3/01/09 ................................. 250 230,098
--------------
335,869
--------------
PETROLEUM
PRODUCTS - 0.3%
Apache Finance PTY, Ltd.
6.50%, 12/15/07 ................................ $ 250 230,642
--------------
PUBLISHING - 0.3%
Knight-Ridder, Inc.
6.875%, 3/15/29 ................................ 250 219,886
--------------
RETAIL - 0.4%
K Mart Funding Corp.
9.44%, 7/01/18 ................................. 150 142,292
Kohl's Corp.
7.25%, 6/01/29 ................................. 150 136,440
--------------
278,732
--------------
TECHNOLOGY - 0.3%
Exodus Communications, Inc.
10.75%, 12/15/09 (b) ........................... 200 204,500
--------------
TELEPHONE UTILITY - 0.2%
MCI WorldCom, Inc.
6.95%, 8/15/28 ................................. 150 137,219
--------------
TRANSPORTATION - 1.1%
Burlington Northern
Santa Fe Corp.
6.75%, 3/15/29 ................................. 150 130,879
ERAC USA Finance Co.
6.625%, 5/15/06 (b) ............................ 100 93,131
Stagecoach Holdings Plc
8.625%, 11/15/09 ............................... 150 150,938
Union Pacific Corp.
6.625%, 2/01/29 ................................ 500 423,541
--------------
798,489
--------------
Total Corporate Debt
Obligations
(cost $7,806,384)............................... 7,336,643
--------------
YANKEE BONDS - 1.3%
Abbey National Plc
6.70%, 6/29/49 ................................. 150 136,058
Corporacion Andina
De Fomento
7.75%, 3/01/04 ................................. 100 100,124
Deutsche Capital Bank
7.872%, 12/29/49 (b) ........................... 100 96,867
Laidlaw, Inc.
7.65%, 5/15/06 ................................. 150 139,575
Metronet Communications
Corp.
9.95%, 6/15/08 (d) ............................. 150 118,500
Philippine Long Distance
Telephone Co.
10.50%, 4/15/09 ................................ 150 149,600
B-9
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Shares or
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
Quebec Province Canada
7.50%, 9/15/29 ................................. $ 100 $ 97,300
Telewest Communications Plc
11.0%, 10/01/07(d) ............................. 150 140,625
--------------
Total Yankee Bonds
(cost $1,001,796)............................... 978,649
--------------
Preferred Stock - 0.4%
CABLE - 0.4%
CSCHoldings, Inc. Series M
11.125%, 4/10/08 (e)
(cost $286,650) ................................ 2,672 292,618
--------------
SHORT-TERM
INVESTMENT - 8.3%
TIME DEPOSIT - 8.3%
State Street Euro Dollar
3.00%, 1/03/00
(amortized cost
$6,231,000) .................................... $ 6,231 6,231,000
--------------
TOTAL INVESTMENTS - 99.4%
(cost $71,733,654).............................. 74,690,999
Other assets less
liabilities - 0.6%................................. 478,604
--------------
NET ASSETS - 100%.................................. $ 75,169,603
==============
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration normally applied to certain qualified buyers. At December 31,
1999, the aggregate market value of these securities amounted to $744,381
or 1.0% of net assets.
(c) Securities, or portion thereof, with an aggregate market value of $105,771
have been segregated to collateralize forward exchange currency contracts.
(d) Indicates a security that has a zero coupon that remains in effect until a
predetermined date at which time the stated coupon rate becomes effective
until final maturity.
(e) PIK (Paid-in kind) preferred quarterly stock payments.
See Glossary of Terms on page B-40
See Notes to Financial Statements.
B-10
<PAGE>
GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 95.2%
FINANCE - 17.5%
BANKING - MONEY
CENTERS - 6.0%
Chase Manhattan Corp. ............................. 157,300 $ 12,220,244
Citigroup, Inc. ................................... 351,150 19,510,772
--------------
31,731,016
--------------
BANKING - REGIONAL - 3.0%
BankAmerica Corp. ................................. 226,900 11,387,544
Bank One Corp. .................................... 144,100 4,620,206
--------------
16,007,750
--------------
INSURANCE - 1.8%
PMI Group, Inc. ................................... 88,350 4,312,584
The Hartford Financial
Services Group, Inc. ........................... 36,000 1,705,500
Travelers Property Casualty
Corp. Cl.A ..................................... 99,300 3,401,025
--------------
9,419,109
--------------
REAL ESTATE - 0.1%
ProLogis Trust .................................... 37,090 713,982
--------------
MISCELLANEOUS - 6.6%
Associates First Capital Corp.
Cl.A ........................................... 351,800 9,652,512
Household International, Inc. ..................... 528,500 19,686,625
MBNA Corp. ........................................ 113,850 3,102,413
The CIT Group, Inc. Cl.A .......................... 119,600 2,526,550
--------------
34,968,100
--------------
92,839,957
--------------
TECHNOLOGY - 16.7%
COMMUNICATION
EQUIPMENT - 2.8%
Motorola, Inc. .................................... 83,000 12,221,750
Tellabs, Inc. (a) ................................. 42,000 2,694,562
--------------
14,916,312
--------------
COMPUTER HARDWARE - 0.5%
Compaq Computer Corp. ............................. 90,700 2,454,569
COMPUTER SERVICES - 7.2%
Computer Sciences Corp. (a) ....................... 139,000 13,152,875
Electronic Data Systems
Corp ........................................... 115,000 7,697,813
First Data Corp. .................................. 347,700 17,145,956
--------------
37,996,644
--------------
CONTRACT
MANUFACTURING - 3.5%
Sanmina Corp. (a) ................................. 100,500 10,012,312
Solectron Corp. (a) ............................... 90,400 8,599,300
--------------
18,611,612
--------------
NETWORKING SOFTWARE - 0.5%
3Com Corp. ........................................ 61,000 2,865,094
--------------
SEMI-CONDUCTOR
COMPONENTS - 2.2%
Altera Corp. (a) .................................. 112,000 $ 5,551,000
Atmel Corp. (a) ................................... 200,400 5,930,588
--------------
11,481,588
--------------
88,325,819
--------------
CONSUMER STAPLES - 11.0%
BEVERAGES - 3.4%
Coca-Cola Enterprises, Inc. ....................... 168,000 3,381,000
Pepsi Bottling Group, Inc. ........................ 898,000 14,873,125
--------------
18,254,125
--------------
COSMETICS - 0.6%
Avon Products, Inc. ............................... 93,500 3,085,500
--------------
FOOD - 1.7%
General Mills, Inc. ............................... 79,000 2,824,250
Heinz (H.J.) Co. .................................. 43,000 1,711,937
Nabisco Group Holding
Corp ........................................... 181,800 1,931,625
Tyson Foods, Inc. Cl.A ............................ 167,200 2,717,000
--------------
9,184,812
--------------
HOUSEHOLD PRODUCTS - 1.2%
Colgate-Palmolive Co. ............................. 99,000 6,435,000
--------------
RETAIL - FOOD &
DRUG - 3.4%
Kroger Co. (a) .................................... 955,200 18,029,400
--------------
TOBACCO - 0.7%
Philip Morris Cos., Inc. .......................... 149,000 3,454,938
--------------
58,443,775
--------------
ENERGY - 10.6%
DOMESTIC
INTEGRATED - 3.4%
Kerr-McGee Corp. .................................. 108,500 6,727,000
USX-Marathon Group ................................ 470,500 11,615,469
--------------
18,342,469
--------------
DOMESTIC PRODUCERS - 0.3%
Murphy Oil Corp. .................................. 25,550 1,465,931
--------------
INTERNATIONAL - 2.7%
Repsol, SA (ADR) .................................. 169,000 3,929,250
Total Fina, SA (ADR)............................... 148,000 10,249,000
--------------
14,178,250
--------------
OIL SERVICE - 3.4%
Noble Drilling Corp. (a) .......................... 463,200 15,169,800
Transocean Sedco Forex, Inc. ...................... 82,200 2,769,113
--------------
17,938,913
--------------
MISCELLANEOUS - 0.8%
AES Corp. (a) ..................................... 60,300 4,507,425
--------------
56,432,988
--------------
HEALTH CARE - 9.9%
DRUGS - 3.0%
Bristol-Myers Squibb Co. .......................... 132,800 8,524,100
Schering-Plough Corp. ............................. 178,000 7,509,375
--------------
16,033,475
--------------
B-11
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS - 1.3%
Abbott Laboratories ............................... 190,000 $ 6,899,375
--------------
MEDICAL SERVICES - 5.6%
Health Management
Associates (a) ................................. 320,000 4,280,000
PacifiCare Health Systems, Inc.
Cl.B (a) ....................................... 57,400 3,043,994
Tenet Healthcare Corp. (a) ........................ 733,100 17,227,850
United Healthcare Corp. ........................... 93,700 4,977,812
--------------
29,529,656
--------------
52,462,506
--------------
CONSUMER SERVICES - 8.3%
AIRLINES - 1.5%
Continental Airlines, Inc.
Cl.B (a) ....................................... 180,000 7,987,500
--------------
BROADCASTING &
CABLE - 1.5%
A.H. Belo Corp. Series A .......................... 199,000 3,793,438
MediaOne Group, Inc. (a) .......................... 52,000 3,994,250
--------------
7,787,688
--------------
ENTERTAINMENT &
LEISURE - 1.8%
Carnival Corp. .................................... 103,500 4,948,594
Royal Caribbean Cruises,
Ltd ............................................ 92,500 4,561,406
--------------
9,510,000
--------------
PRINTING &
PUBLISHING - 1.5%
Gannett Co., Inc. ................................. 97,000 7,911,562
--------------
RETAIL - GENERAL
MERCHANDISE - 2.0%
Saks, Inc. (a) .................................... 492,600 7,666,087
Tommy Hilfiger Corp. (a) .......................... 125,100 2,916,394
--------------
10,582,481
--------------
43,779,231
--------------
UTILITIES - 7.4%
ELECTRIC & GAS
UTILITIES - 3.5%
Allegheny Energy, Inc. ............................ 51,900 1,398,056
CMS Energy Corp. .................................. 88,400 2,756,975
Consolidated Edison, Inc. ......................... 25,600 883,200
Duke Power Energy Corp. ........................... 20,600 1,032,575
Edison International .............................. 127,200 3,331,050
FPL Group, Inc. ................................... 47,900 2,050,719
GPU, Inc. ......................................... 143,700 4,302,019
Pinnacle West Capital Corp. ....................... 88,600 2,707,837
--------------
18,462,431
--------------
Shares or
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
TELEPHONE UTILITIES - 3.9%
AT&T Corp. ........................................ 148,241 7,523,231
BellSouth Corp. ................................... 215,000 10,064,687
MCI WorldCom, Inc. (a) ............................ 61,752 3,274,786
--------------
20,862,704
--------------
39,325,135
--------------
MULTI-INDUSTRY
COMPANIES - 5.8%
Honeywell International, Inc. ..................... 98,593 5,687,584
Tyco International, Ltd. .......................... 551,400 21,435,675
U.S. Industries, Inc. ............................. 269,100 3,767,400
--------------
30,890,659
--------------
CAPITAL GOODS - 3.3%
MISCELLANEOUS - 3.3%
United Technologies Corp. ......................... 272,600 17,719,000
--------------
BASIC INDUSTRIES - 2.7%
CHEMICALS - 2.7%
Eastman Chemical Co. .............................. 47,000 2,241,313
Lyondell Chemical Co. ............................. 605,000 7,713,750
Solutia, Inc. ..................................... 265,000 4,090,937
--------------
14,046,000
--------------
CONSUMER
MANUFACTURING - 1.7%
BUILDING & RELATED - 1.7%
Masco Corp. ....................................... 343,700 8,721,388
--------------
TRANSPORTATION - 0.3%
MISCELLANEOUS - 0.3%
Wisconsin Central Transport
Corp. (a) ...................................... 120,000 1,612,500
Total Common Stocks
(cost $456,089,387)............................. 504,598,958
--------------
SHORT-TERM
INVESTMENT - 4.7%
TIME DEPOSIT - 4.7%
State Street Euro Dollar
3.00%, 1/03/00
(amortized cost
$25,029,000) ................................... $25,029 25,029,000
--------------
TOTAL INVESTMENTS - 99.9%
(cost $481,118,387)............................. 529,627,958
Other assets less
liabilities - 0.1%.............................. 527,661
--------------
NET ASSETS - 100%.................................. $ 530,155,619
--------------
- --------------------------------------------------------------------------------
(a) Non-income producing security.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-12
<PAGE>
GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
COMMON & PREFERRED
STOCKS - 97.4%
TECHNOLOGY - 53.7%
COMMUNICATIONS
EQUIPMENT - 5.3%
Global TeleSystems Group,
Inc. (a) ....................................... 252,428 $ 8,740,319
Loral Space &
Communications (a) ............................. 271,800 6,608,138
Sterling Commerce, Inc. (a) ....................... 266,889 9,090,907
--------------
24,439,364
--------------
COMMUNICATION
SERVICES - 21.2%
AT&T Corp. ........................................ 78,000 3,958,500
Cable & Wireless Plc
(United Kingdom) ............................... 158,000 2,710,409
Mannesmann AG (Germany) ........................... 143,491 34,618,672
MCI WorldCom, Inc. (a) ............................ 274,926 14,579,669
Nextel Communications, Inc.
Cl.A (a) ....................................... 227,000 23,402,281
Nextlink Communications, Inc.
cv. pfd ........................................ 6,000 1,151,250
Sprint Corp. ...................................... 204,000 13,731,750
VoiceStream Wireless
Corp. (a) ...................................... 26,000 3,694,438
--------------
97,846,969
--------------
COMPUTER HARDWARE - 2.8%
International Business
Machines Corp. ................................. 119,000 12,852,000
--------------
COMPUTER SERVICES - 2.3%
Ceridian Corp. (a) ................................ 498,800 10,755,375
--------------
COMPUTER SOFTWARE - 2.5%
Sterling Software, Inc. (a) ....................... 362,200 11,409,300
--------------
ELECTRONICS - 3.8%
3Com Corp. (a) .................................... 14,000 657,563
Flextronics International,
Ltd. (a) ....................................... 120,000 5,523,750
SCI Systems, Inc. (a) ............................ 137,400 11,292,562
--------------
17,473,875
--------------
SEMI-CONDUCTOR
COMPONENTS - 2.6%
Altera Corp. (a) .................................. 24,000 1,189,500
Applied Materials, Inc. (a) ....................... 48,000 6,079,500
Micron Technology, Inc. (a) ....................... 62,000 4,820,500
--------------
12,089,500
--------------
TELECOMMUNICATIONS - 7.3%
Colt Telecom Group Plc
(ADR) (United Kingdom) (a) ..................... 24,700 5,038,800
Globalstar Telecommunications,
Ltd. (a) ....................................... 147,400 6,490,206
Intermedia Communications,
Inc. (a) ....................................... 609 23,591
cv.pfd ......................................... 18,000 913,500
Millicom International Cellular,
SA (Luxembourg) (a) ............................ 56,500 3,517,125
Nokia Corp. (ADR) (Finland) ....................... 13,500 2,565,000
NTL, Inc. (a) ..................................... 102,000 12,711,750
Qwest Communications
International, Inc. (a) ........................ 30,000 1,289,063
Vodafone AirTouch Plc
(ADR) (United Kingdom) ......................... 23,000 1,138,500
--------------
33,687,535
--------------
MISCELLANEOUS - 5.9%
Sanmina Corp. (a) ................................. 174,100 17,344,712
Solectron Corp. (a) ............................... 104,500 9,940,563
--------------
27,285,275
--------------
247,839,193
--------------
FINANCE - 20.9%
BANKING - MONEY
CENTERS - 2.5%
Automatic Common Exchange
Security Trust II .............................. 23,600 225,675
Chase Manhattan Corp. ............................. 111,940 8,696,339
The Bank of Tokyo-Mitsubishi,
Ltd. (ADR) (Japan) ............................. 199,000 2,773,562
--------------
11,695,576
--------------
BANKING - REGIONAL - 5.3%
BankAmerica Corp. ................................. 172,600 8,662,362
Bank One Corp. .................................... 84,000 2,693,250
The CIT Group, Inc. Cl.A .......................... 622,960 13,160,030
--------------
24,515,642
--------------
INSURANCE - 3.8%
Ace, Ltd. ......................................... 80,600 1,345,013
American International
Group, Inc. .................................... 147,546 15,953,411
--------------
17,298,424
--------------
REAL ESTATE - 1.2%
Entertainment Properties Trust .................... 56,000 738,500
Humphrey Hospitality Trust,
Inc ............................................ 99,100 764,928
JP Realty, Inc. ................................... 149,800 2,340,625
Koger Equity, Inc. ................................ 100,000 1,687,500
--------------
5,531,553
--------------
MISCELLANEOUS - 8.1%
Associates First Capital Corp.
Cl.A ........................................... 308,000 8,450,750
Citigroup, Inc. ................................... 223,498 12,418,108
Household International, Inc. ..................... 75,000 2,793,750
MBNA Corp. ........................................ 381,975 10,408,819
Providian Financial Corp. ......................... 34,100 3,105,231
--------------
37,176,658
--------------
96,217,853
--------------
CONSUMER SERVICES - 10.4%
AIRLINES - 0.8%
Continental Airlines, Inc.
Cl.B (a) ....................................... 83,000 3,683,125
--------------
B-13
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
BROADCASTING &
CABLE - 5.4%
AT&T Corp. - Liberty Media
Group (a) ...................................... 437,878 $ 24,849,577
--------------
BUSINESS SERVICES - 1.1%
Cendant Corp. (a) ................................. 196,338 5,215,228
--------------
ENTERTAINMENT &
LEISURE - 0.6%
Carnival Corp. Cl.A ............................... 17,700 846,281
Royal Caribbean Cruises,
Ltd ............................................ 25,600 1,262,400
Walt Disney Co. ................................... 17,000 497,250
--------------
2,605,931
--------------
RETAIL - GENERAL
MERCHANDISE - 2.5%
Gap, Inc. ......................................... 8,000 368,000
Home Depot, Inc. .................................. 117,450 8,052,665
The Limited, Inc. ................................. 78,300 3,391,369
--------------
11,812,034
--------------
48,165,895
--------------
HEALTH CARE - 5.0%
DRUGS - 2.9%
Bristol-Myers Squibb Co. .......................... 98,000 6,290,375
Merck & Co., Inc. ................................. 61,800 4,144,462
Schering-Plough Corp. ............................. 69,000 2,910,938
SICOR, Inc. (a)(b) ................................ 8,000 232,500
--------------
13,578,275
--------------
MEDICAL PRODUCTS - 1.1%
Boston Scientific Corp. (a) ....................... 177,000 3,871,875
Medtronic, Inc. ................................... 30,400 1,107,700
--------------
4,979,575
--------------
MEDICAL SERVICES - 1.0%
McKesson HBOC, Inc. ............................... 205,160 4,628,923
--------------
23,186,773
--------------
BUSINESS SERVICES - 4.3%
BROADCASTING - 2.1%
Adelphia Communications
Corp. Cl. A (a) ................................ 98,400 6,454,425
cv.pfd ......................................... 4,000 752,500
UnitedGlobalCom, Inc.
Cl.A (a) ....................................... 34,400 2,425,200
--------------
9,632,125
--------------
BROADCASTING &
CABLE - 2.2%
CBS Corp. (a) ..................................... 103,700 $ 6,630,319
MediaOne Group, Inc. (a) .......................... 49,000 3,763,812
--------------
10,394,131
--------------
20,026,256
--------------
MULTI-INDUSTRY
COMPANIES - 1.2%
Tyco International, Ltd. .......................... 143,144 5,564,723
--------------
ENERGY - 1.0%
OIL SERVICES - 1.0%
Kerr-McGee Corp. .................................. 21,000 1,302,000
Total Fina SA (ADR)
(France) ....................................... 45,000 3,116,250
--------------
4,418,250
--------------
CONSUMER STAPLES - 0.9%
RETAIL - FOOD &
DRUGS - 0.9%
Kroger Co. (a) .................................... 172,000 3,246,500
Safeway, Inc. (a) ................................. 27,000 960,188
--------------
4,206,688
--------------
Total Common & Preferred
Stocks
(cost $284,750,761)............................. 449,625,631
--------------
LONG-TERM DEBT
SECURITY - 1.1%
COMMUNICATIONS
EQUIPMENT - 1.1%
Global TeleSystems Group, Inc.
5.75%, 7/01/10
(cost $2,915,297) .............................. $3,735 5,014,237
--------------
TOTAL INVESTMENTS - 98.5%
(cost $287,666,058)............................. 454,639,868
Other assets less
liabilities - 1.5%.............................. 7,093,849
--------------
NET ASSETS - 100%.................................. $ 461,733,717
==============
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration
normally applied to certain qualified buyers. At December 31, 1999, the
aggregate market value of this security amounted to $232,500 or .05% of
net assets
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-14
<PAGE>
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 96.9%
FINLAND - 4.5%
Nokia Corp. ....................................... 20,200 $ 3,662,723
--------------
FRANCE - 7.4%
Banque Nationale de Paris ......................... 21,700 2,002,329
Carrefour ......................................... 6,000 1,106,674
Sanofi Synthelabo, SA (a) ......................... 32,400 1,349,260
Total Fina, SA Cl. B .............................. 12,050 1,608,360
--------------
6,066,623
--------------
GERMANY - 6.2%
Mannesmann AG ..................................... 21,123 5,096,140
--------------
HONG KONG - 3.8%
Cheung Kong Holdings, Ltd. ........................ 42,000 532,193
China Telecom
(Hong Kong), Ltd. .............................. 220,000 1,372,612
Citic Pacific, Ltd. ............................... 174,000 653,605
Sun Hung Kai Properties,
Ltd. ........................................... 51,000 531,421
--------------
3,089,831
--------------
IRELAND - 2.1%
Bank of Ireland ................................... 106,000 843,555
CRH Plc (b) ....................................... 40,400 872,949
--------------
1,716,504
--------------
JAPAN - 29.9%
Bank of Fukuoka, Ltd. ............................. 157,000 1,089,488
Bank of Tokyo-Mitsubishi,
Ltd ............................................ 144,000 2,007,008
Banyu Pharmaceutical Co.,
Ltd. ........................................... 48,000 744,641
Canon, Inc. ....................................... 36,000 1,430,557
Daito Trust Construction Co.,
Ltd. ........................................... 6,400 71,410
Daiwa Securities Group, Inc. ...................... 57,000 892,072
Japan Tobacco, Inc. ............................... 56 428,619
Kao Corp. ......................................... 77,000 2,196,878
Kawasaki Steel Corp. .............................. 289,000 517,637
Nippon Television Network
Corp. .......................................... 790 927,865
NTT Mobile Communications
Network, Inc. .................................. 95 3,654,204
Santen Pharmaceutical Co,
Ltd. ........................................... 12,000 197,906
Softbank Corp. .................................... 2,800 2,680,239
Sumitomo Trust & Banking
Co., Ltd. ...................................... 201,000 1,357,444
Takeda Chemical Industries ........................ 31,000 1,532,250
TDK Corp. (a) .................................. 10,000 1,381,032
Tokyo Electron, Ltd. .............................. 19,000 2,603,504
Yamanouchi Pharmaceutical
Co., Ltd. ...................................... 17,000 594,010
--------------
24,306,764
--------------
NETHERLANDS - 11.5%
Akzo Nobel NV ..................................... 11,000 551,826
Equant NV (a) ..................................... 5,500 624,406
NY registered Shares (a)(c) .................... 17,100 1,915,200
St. Microelectronics NV ........................... 13,500 2,077,961
United Pan-Europe
Communications NV (a) ......................... 32,770 4,192,377
--------------
9,361,770
--------------
SINGAPORE - 1.8%
DBS Group Holdings, Ltd. (a) ...................... 89,038 1,459,464
--------------
SOUTH KOREA - 2.4%
SK Telecom Co., Ltd. (ADR) ........................ 51,037 1,958,526
--------------
SPAIN - 2.5%
Altadis, SA Series A .............................. 59,400 849,679
Repsol, SA ........................................ 50,200 1,164,097
--------------
2,013,776
--------------
SWEDEN - 1.4%
Securitas AB Series B ............................. 62,260 1,126,812
--------------
SWITZERLAND - 1.9%
ABB AG (a) ........................................ 12,400 1,516,611
--------------
UNITED KINGDOM - 21.5%
Bank of Scotland .................................. 173,503 2,015,065
British Aerospace Plc ............................. 177,500 1,166,933
British Airways Plc ............................... 177,900 1,160,942
British Sky Broadcasting
Group Plc ...................................... 181,210 2,927,085
CGU Plc ........................................... 45,000 726,158
Dixons Group Plc .................................. 37,200 895,328
Next Plc .......................................... 198,800 1,907,463
Royal Bank of Scotland Group
Plc ............................................ 89,991 1,593,173
Standard Chartered Plc ............................ 148,393 2,361,037
United News & Media Plc ........................... 138,310 1,743,732
Vodafone AirTouch Plc ............................. 191,290 953,515
--------------
17,450,431
--------------
TOTAL INVESTMENTS - 96.9%
(cost $56,284,838).............................. 78,825,975
Other assets less
liabilities - 3.1%.............................. 2,544,280
--------------
NET ASSETS - 100%.................................. $ 81,370,255
==============
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) British Pound denominated security.
(c) United States Dollar denominated security.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-15
<PAGE>
PREMIER GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 96.8%
TECHNOLOGY - 30.2%
COMMUNICATIONS
EQUIPMENT - 10.2%
EMC Corp. (a) ..................................... 602,200 $ 65,790,350
Lucent Technologies, Inc. ......................... 312,384 23,370,228
Nokia Corp. (ADR) (Finland) ....................... 755,200 143,488,000
Nortel Networks Corp. ............................. 80,500 8,130,500
--------------
240,779,078
--------------
COMPUTER
HARDWARE - 6.8%
Dell Computer Corp. (a) ........................... 2,395,100 122,075,253
International Business
Machines Corp. ................................. 51,600 5,572,800
Sun Microsystems, Inc. (a) ........................ 443,000 34,290,969
--------------
161,939,022
--------------
COMPUTER SOFTWARE - 2.1%
Microsoft Corp. (a) ............................... 367,500 42,894,141
Oracle Corp. (a) .................................. 56,000 6,273,750
--------------
49,167,891
--------------
CONTRACT
MANUFACTURING - 0.9%
Solectron Corp. (a) ............................... 219,100 20,841,887
--------------
INTERNET - 0.9%
America Online, Inc. (a) .......................... 273,800 20,654,788
--------------
NETWORKING
SOFTWARE - 5.3%
Cisco Systems, Inc. (a) ........................... 1,184,000 126,799,000
--------------
SEMI-CONDUCTOR CAPITAL
EQUIPMENT - 0.6%
Applied Materials, Inc. (a) ....................... 110,600 14,008,181
--------------
SEMI-CONDUCTOR
COMPONENTS - 3.4%
Intel Corp. ....................................... 847,600 69,741,587
Micron Technology, Inc. (a) ....................... 146,300 11,374,825
--------------
81,116,412
--------------
715,306,259
--------------
CONSUMER SERVICES - 26.3%
AIRLINES - 1.6%
Continental Airlines, Inc.
Cl.B(a) ........................................ 128,000 5,680,000
Delta Air Lines, Inc. ............................. 159,900 7,965,019
KLM Royal Dutch Air
(Netherands) ................................... 141,063 3,517,759
Northwest Airlines Corp.
Cl.A, (a) ...................................... 251,260 5,574,831
UAL Corp. (a) ..................................... 188,000 14,581,750
--------------
37,319,359
--------------
BROADCASTING &
CABLE - 8.0%
AMFM, Inc. (a) .................................... 315,100 24,656,575
AT&T Corp. - Liberty Media
Cl.A (a) ....................................... 955,110 54,202,493
Clear Channel
Communications (a) ............................. 175,400 15,654,450
MediaOne Group, Inc. (a) .......................... 871,400 66,934,412
Vodafone AirTouch Plc
(ADR) (United Kingdom) ......................... 577,800 28,601,100
--------------
190,049,030
--------------
ENTERTAINMENT &
LEISURE - 0.6%
Walt Disney Co. ................................... 532,700 15,581,475
--------------
PRINTING &
PUBLISHING - 0.5%
Gannett Co., Inc. ................................. 147,000 11,989,687
--------------
RETAIL - GENERAL
MERCHANDISE - 15.6%
Costco Wholesale Corp. (a) ........................ 416,500 37,992,609
Dayton Hudson Corp. ............................... 553,300 40,632,969
Gap, Inc. ......................................... 877,050 40,344,300
Home Depot, Inc. .................................. 1,719,447 117,889,585
Kohl's Corp. (a) .................................. 274,900 19,844,344
Lowes Cos., Inc. .................................. 795,400 47,525,150
Tommy Hilfiger Corp. (a) .......................... 403,200 9,399,600
Wal-Mart Stores, Inc. ............................. 808,100 55,859,912
--------------
369,488,469
--------------
624,428,020
--------------
FINANCE - 16.6%
BANKING - MONEY
CENTERS - 2.5%
Chase Manhattan Corp. ............................. 48,800 3,791,150
Citigroup, Inc. ................................... 1,014,375 56,361,211
--------------
60,152,361
--------------
BANKING - REGIONAL - 0.9%
BankAmerica Corp. ................................. 289,567 14,532,644
Fifth Third Bancorp ............................... 84,200 6,175,544
--------------
20,708,188
--------------
BROKERAGE & MONEY
MANAGEMENT - 6.1%
Goldman Sachs Group, Inc. ......................... 315,100 29,678,481
Merrill Lynch & Co., Inc. ......................... 199,900 16,691,650
Morgan Stanley Dean Witter
& Co. .......................................... 690,355 98,548,176
--------------
144,918,307
--------------
INSURANCE - 0.9%
American International Group,
Inc ............................................ 202,868 21,935,103
--------------
MORTGAGE BANKING - 2.2%
Federal Home Loan Mortgage
Corp. .......................................... 822,800 38,723,025
Federal National Mortgage
Assn. .......................................... 226,000 14,110,875
--------------
52,833,900
--------------
B-16
<PAGE>
PREMIER GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
(Continued) Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
MISCELLANEOUS - 4.0%
Associates First Capital Corp.
Cl.A ........................................... 1,019,556 $ 27,974,068
MBNA Corp. ........................................ 2,346,062 63,930,189
The CIT Group, Inc. Cl. A ......................... 98,840 2,087,995
--------------
93,992,252
--------------
394,540,111
--------------
HEALTH CARE - 9.6%
DRUGS - 8.9%
Bristol-Myers Squibb Co. .......................... 732,800 47,036,600
Merck & Co., Inc. ................................. 243,400 16,323,012
Pfizer, Inc. ...................................... 1,103,200 35,785,050
Schering-Plough Corp. ............................. 1,387,700 58,543,594
Warner-Lambert Co. ................................ 636,700 52,169,606
--------------
209,857,862
--------------
MEDICAL PRODUCTS - 0.2%
Medtronic, Inc. ................................... 155,000 5,647,813
--------------
MEDICAL SERVICES - 0.5%
IMS Health, Inc. .................................. 432,400 11,755,875
--------------
227,261,550
--------------
MULTI-INDUSTRY
COMPANIES - 3.9%
Honeywell International, Inc. ..................... 405,237 23,377,109
Tyco International, Ltd. .......................... 1,783,224 69,322,833
--------------
92,699,942
--------------
CONSUMER STAPLES - 3.7%
COSMETICS - 0.4%
Gillette Co. ...................................... 197,500 8,134,531
--------------
HOUSEHOLD
PRODUCTS - 0.7%
Colgate-Palmolive Co. ............................. 257,300 16,724,500
--------------
RETAIL - FOOD &
DRUGS - 1.5%
Kroger Co. (a) .................................... 762,000 14,382,750
Safeway, Inc. (a) ................................. 244,000 8,677,250
Walgreen Co. ...................................... 438,000 12,811,500
--------------
35,871,500
--------------
TOBACCO - 1.1%
Philip Morris Cos., Inc. .......................... 1,149,273 26,648,768
--------------
87,379,299
--------------
UTILITIES - 3.3%
TELEPHONE UTILITIES - 3.3%
MCI WorldCom, Inc. (a) ............................ 500,579 26,546,304
Sprint Corp. ...................................... 770,900 51,891,206
--------------
78,437,510
--------------
CAPITAL GOODS - 1.7%
ELECTRICAL
EQUIPMENT - 0.7%
General Electric Co. .............................. 111,500 17,254,625
--------------
MISCELLANEOUS - 1.0%
United Technologies Corp. ......................... 346,500 22,522,500
--------------
39,777,125
--------------
CONSUMER
MANUFACTURING - 0.8%
AUTO & RELATED - 0.3%
Ford Motor Co. .................................... 127,000 6,786,562
--------------
BUILDING & RELATED - 0.5%
Masco Corp. ....................................... 461,200 11,702,950
--------------
18,489,512
--------------
ENERGY - 0.5%
DOMESTIC
INTEGRATED - 0.3%
Atlantic Richfield Co. ............................ 78,000 6,747,000
--------------
OIL SERVICE - 0.2%
Schlumberger, Ltd. ................................ 83,326 4,687,088
Transocean Sedco Forex, Inc. ...................... 16,131 543,413
--------------
5,230,501
--------------
11,977,501
--------------
BASIC INDUSTRY - 0.2%
PAPER & FOREST
PRODUCTS - 0.2%
International Paper Co. ........................... 97,000 5,474,438
--------------
Total Common Stocks
(cost $1,532,494,276)........................... 2,295,771,267
--------------
SHORT-TERM
INVESTMENT - 3.3%
TIME DEPOSIT - 3.3%
State Street Cayman Islands
3.00%, 1/03/00
(amortized cost
$78,196,000) ................................... $78,196 78,196,000
--------------
TOTAL INVESTMENTS - 100.1%
(cost $1,610,690,276)........................... 2,373,967,267
Other assets less
liabilities - (0.1%)............................ (1,280,286)
--------------
NET ASSETS - 100%.................................. $2,372,686,981
==============
- --------------------------------------------------------------------------------
(a) Non-income producing security.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-17
<PAGE>
QUASAR PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 91.9%
CONSUMER PRODUCTS &
SERVICES - 31.0%
AIRLINES - 2.2%
Alaska Air Group, Inc. (a) ........................ 49,300 $ 1,731,662
America West Holdings
Cl.B (a) ....................................... 96,500 2,002,375
--------------
3,734,037
--------------
BEVERAGES - 0.0%
Canandaigua Brands, Inc.
Cl.A (a) ....................................... 1,000 51,000
--------------
BROADCASTING &
CABLE - 0.5%
Entercom Communications
Corp. (a) ...................................... 13,300 877,800
--------------
BUSINESS SERVICES - 4.0%
Carey International, Inc. (a) ..................... 149,200 3,660,062
FirstService Corp. (a) ............................ 65,400 903,338
TeleSpectrum Worldwide,
Inc. (a) ....................................... 302,400 2,126,250
--------------
6,689,650
--------------
ENTERTAINMENT &
LEISURE - 8.5%
Ackerley Group, Inc. .............................. 50,900 922,563
Bally Total Fitness Holding
Corp. (a) ...................................... 49,600 1,323,700
Cinar Corp. Cl.B (ADR)
(Canada) (a) ................................... 127,700 3,176,537
Imax Corp. (a) .................................... 37,500 1,027,734
Premier Parks, Inc. (a) ........................... 182,400 5,266,800
Sunterra Corp. (a) ................................ 235,800 2,711,700
--------------
14,429,034
--------------
INDUSTRIAL
MACHINERY - 1.3%
United Rentals, Inc. (a) .......................... 132,500 2,269,063
--------------
RESTAURANTS &
LODGING - 0.8%
MeriStar Hospitality Corp. ........................ 82,300 1,316,800
--------------
RETAILING - 12.8%
BJ's Wholesale Club, Inc. (a) ..................... 101,000 3,686,500
Circuit City Stores, Inc.
Car Max Group (a) .............................. 236,400 546,675
Industrie Natuzzi SpA (ADR)
(Italy) ........................................ 112,400 1,489,300
Linens 'n Things, Inc. (a) ........................ 33,700 998,363
Mens Wearhouse, Inc. (a) .......................... 90,450 2,662,622
Movado Group, Inc. ................................ 87,600 1,910,775
ShopKo Stores, Inc. (a) ........................... 79,600 1,830,800
Stage Stores, Inc. (a) ............................ 230,100 532,106
Transport World Entertainment
Corp. (a) ...................................... 129,650 1,353,222
Venator Group, Inc. (a) ........................... 504,300 3,530,100
Zale Corp. (a) .................................... 64,300 3,110,512
--------------
21,650,975
--------------
MISCELLANEOUS - 0.9%
Insight Enterprises, Inc. (a) ..................... 37,800 $ 1,529,719
--------------
52,548,078
--------------
TECHNOLOGY - 21.6%
COMPUTER HARDWARE - 3.0%
Apex, Inc. (a) .................................... 109,500 3,545,062
MIPS Technologies, Inc. (a) ....................... 28,400 1,479,463
--------------
5,024,525
--------------
COMPUTER SOFTWARE &
SERVICES - 6.9%
Activision, Inc. (a) .............................. 63,200 971,700
Aspect Development, Inc. (a) ...................... 22,400 1,537,200
Business Objects SA (ADR)
(France) (a) ................................... 8,600 1,143,263
DBT Online, Inc. (a)............................... 105,400 2,569,125
InterWorld Corp. (a) .............................. 26,500 2,259,953
New Era of Networks, Inc. (a) ..................... 16,400 783,100
Technology Solutions Co. (a) ...................... 28,100 915,884
Visual Networks, Inc. (a) ......................... 19,800 1,566,675
--------------
11,746,900
--------------
ELECTRONICS - 1.2%
Amphenol Corp. Cl.A (a) ........................... 17,100 1,138,219
NetIQ Corp. (a) ................................... 18,200 961,187
--------------
2,099,406
--------------
INDUSTRIAL
MACHINERY - 0.7%
Applied Power, Inc. Cl.A .......................... 32,600 1,198,050
--------------
INTERNET SOFTWARE - 1.5%
Art Technology Group,
Inc. (a) ....................................... 9,400 1,222,881
S1 Corp. (a) ...................................... 17,800 1,388,400
--------------
2,611,281
--------------
RETAIL - 0.6%
Electronics Boutique Holdings
Corp. (a) ...................................... 53,700 976,669
--------------
SEMI-CONDUCTOR
EQUIPMENT - 2.1%
Fairchild Semiconductor
Corp. (a) ...................................... 45,200 1,344,700
MKS Instruments, Inc. (a) ......................... 60,900 2,203,819
--------------
3,548,519
--------------
TELECOMMUNICATIONS - 4.2%
Classic Communications, Inc.
Cl.A (a) ....................................... 32,400 1,188,675
Millicom International Cellular,
SA (Luxembourg) (a) ............................ 94,000 5,851,500
--------------
7,040,175
--------------
B-18
<PAGE>
QUASAR PORTFOLIO
PORTFOLIO OF INVESTMENTS
(continued) Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
MISCELLANEOUS - 1.4%
DII Group, Inc. (a) ............................... 12,700 $ 901,303
Excalibur Technologies
Corp. (a) ...................................... 70,700 1,462,606
--------------
2,363,909
--------------
36,609,434
--------------
HEALTH CARE - 10.9%
BIOTECHNOLOGY - 2.1%
Aviron (a) ........................................ 48,700 770,069
IDEC Pharmaceuticals
Corp. (a) ...................................... 28,400 2,787,637
--------------
3,557,706
--------------
DRUGS, HOSPITAL
SUPPLIES & MEDICAL
SERVICES - 8.2%
Alpharma, Inc. Cl.A ............................... 22,400 688,800
Health Management Associates,
Inc. Cl.A, (a) ................................. 471,900 6,311,663
HealthExtras, Inc. (a) ............................ 27,300 328,453
LifePoint Hospitals, Inc. (a) ..................... 270,100 3,190,556
Medical Manager Corp. (a) ......................... 27,700 2,331,128
Orthodontic Centers of
America, Inc. (a) .............................. 88,300 1,054,081
--------------
13,904,681
--------------
MEDICAL PRODUCTS - 0.6%
Summit Technology, Inc. (a) ....................... 76,500 882,141
Women First HealthCare,
Inc. (a) ....................................... 34,700 190,850
--------------
1,072,991
--------------
18,535,378
--------------
FINANCIAL SERVICES - 9.8%
BROKERAGE & MONEY
MANAGEMENT - 4.3%
Legg Mason, Inc. .................................. 199,800 7,242,750
--------------
REAL ESTATE - 5.5%
Chelsea GCA Realty, Inc. .......................... 209,300 6,226,675
Taubman Centers, Inc. ............................. 295,500 3,176,625
--------------
9,403,300
--------------
16,646,050
--------------
BASIC INDUSTRIES - 6.0%
BUILDING & RELATED - 0.6%
Shaw Group, Inc. (a) .............................. 43,600 1,103,625
--------------
CHEMICALS - 0.6%
Lyondell Chemical Co. ............................. 74,300 947,325
--------------
TEXTILE PRODUCTS - 3.1%
Mohawk Industries, Inc. (a) ....................... 196,350 5,178,732
--------------
TRANSPORTATION &
SHIPPING - 1.7%
Consolidated Freightways
Corp. (a) ...................................... 121,800 962,981
Teekay Shipping Corp. ............................. 122,800 1,957,125
--------------
2,920,106
--------------
10,149,788
--------------
CONSUMER
MANUFACTURING - 5.7%
AUTO & RELATED - 5.7%
Budget Group, Inc. Cl.A (a) ....................... 192,500 1,744,531
Dollar Thrifty Automotive
Group, Inc. (a) ................................ 61,500 1,472,156
Group 1 Automotive, Inc. (a) ...................... 146,800 2,046,025
Monaco Coach Corp. (a) ............................ 172,200 4,401,863
--------------
9,664,575
--------------
ENERGY - 2.2%
DOMESTIC PRODUCERS - 0.7%
Murphy Oil Corp. .................................. 21,600 1,239,300
--------------
OIL & GAS SERVICES - 1.5%
Ensco International, Inc. ...................... 62,300 1,425,113
Santa Fe International Corp. ...................... 40,400 1,045,350
--------------
2,470,463
--------------
3,709,763
--------------
UTILITY - 2.0%
UTILITIES - 2.0%
Southern Union Co. ................................ 175,697 3,360,205
--------------
MULTI-INDUSTRY
COMPANIES - 1.4%
Korn/Ferry International (a) ...................... 35,400 1,287,675
Metron Tech NV (a) ................................ 68,100 1,089,600
--------------
2,377,275
--------------
BUSINESS SERVICES - 1.3%
PRINTING, PUBLISHING &
BROADCASTING - 0.7%
Scholastic Corp. (a) .............................. 15,600 970,612
Young Broadcasting Corp.
Cl.A (a) ....................................... 5,200 265,038
--------------
1,235,650
--------------
PROFESSIONAL SERVICES - 0.6%
Century Business Services,
Inc. (a) ....................................... 18,900 158,878
ITT Educational Services,
Inc. (a) ....................................... 51,500 795,031
--------------
953,909
--------------
2,189,559
--------------
Total Common Stocks
(cost $141,343,677)............................. 155,790,105
--------------
B-19
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Shares or
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
SHORT-TERM
INVESTMENTS - 13.9%
U.S. GOVERNMENT
AGENCY obligation - 13.7%
Federal Home Loan Bank
1.28%, 1/03/00 ................................. $23,200 $ 23,198,350
--------------
TIME DEPOSIT - 0.2%
State Street Euro Dollar
3.00%, 1/03/00 ................................. 399 399,000
--------------
Total Short-Term Investments
(amortized cost
$23,597,350).................................... 23,597,350
--------------
TOTAL INVESTMENTS - 105.8%
(cost $164,941,027)............................. 179,387,455
Other assets less
liabilities - (5.8%)............................ (9,776,121)
--------------
NET ASSETS - 100%.................................. $ 169,611,334
==============
- --------------------------------------------------------------------------------
(a) Non-income producing security.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-20
<PAGE>
Real Estate Investment Portfolio
Portfolio Of Investments
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 91.5%
REAL ESTATE INVESTMENT
TRUSTS - 91.5%
APARTMENTS - 12.8%
Apartment Investment &
Management Co. ................................. 22,500 $ 895,781
Avalon Bay Communities,
Inc. ........................................... 19,434 666,829
Equity Residential Properties
Trust .......................................... 4,500 192,094
Essex Property Trust, Inc. ........................ 15,400 523,600
--------------
2,278,304
--------------
DIVERSIFIED - 10.7%
Captec Net Lease Realty,
Inc. ........................................... 6,800 51,425
Correctional Properties Trust ..................... 16,900 207,025
Entertainment Properties
Trust .......................................... 30,600 403,537
Glenborough Realty Trust,
Inc. ........................................... 18,900 252,788
Mission West Properties, Inc. ..................... 17,500 135,625
Vornado Realty Trust .............................. 26,700 867,750
--------------
1,918,150
--------------
HOTELS & RESTAURANTS - 4.7%
Hospitality Properties Trust ...................... 19,200 366,000
MeriStar Hospitality Corp. ........................ 30,078 481,248
--------------
847,248
--------------
MANUFACTURED HOME
COMMUNITIES - 2.2%
Sun Communities, Inc. ............................. 12,000 386,250
--------------
OFFICE - 22.9%
Alexandria Real Estate
Equities, Inc. ................................. 13,300 423,106
Arden Realty Group, Inc. .......................... 22,600 453,413
Boston Properties, Inc. ........................... 28,500 887,062
Cornerstone Properties, Inc. ...................... 53,100 776,588
Equity Office Properties Trust .................... 40,800 1,004,700
SL Green Realty Corp. ............................. 24,800 539,400
--------------
4,084,269
--------------
OFFICE - INDUSTRIAL
MIX - 12.5%
Brandywine Realty Trust ........................... 26,300 430,663
Highwoods Properties, Inc. ........................ 16,000 372,000
Reckson Associates Realty
Corp ........................................... 37,500 $ 768,750
Spieker Properties, Inc. .......................... 18,300 666,806
--------------
2,238,219
--------------
REGIONAL MALLS - 7.0%
Macerich Co. ...................................... 28,400 591,075
Mills Corp. ....................................... 29,800 532,675
Simon Property Group, Inc. ........................ 5,400 123,862
--------------
1,247,612
--------------
SHOPPING CENTERS - 5.8%
Pan Pacific Retail Properties,
Inc. ........................................... 39,400 642,713
Prime Retail, Inc. ................................ 46,400 261,000
Ramco-Gershenson Properties
Trust .......................................... 10,400 131,300
--------------
1,035,013
--------------
STORAGE - 4.2%
Public Storage, Inc. .............................. 33,100 750,956
--------------
WAREHOUSE &
INDUSTRIAL - 8.7%
AMB Property Corp. ................................ 13,100 261,181
Cabot Industrial Trust ............................ 26,300 483,263
ProLogis Trust .................................... 41,900 806,575
--------------
1,551,019
--------------
Total Common Stocks
(cost $18,963,025).............................. 16,337,040
--------------
SHORT-TERM
INVESTMENT - 7.2%
TIME DEPOSIT - 7.2%
State Street Euro Dollar
3.00%, 1/03/00
(amortized cost
$1,285,000) .................................... $ 1,285 1,285,000
--------------
TOTAL INVESTMENTS - 98.7%
(cost $20,248,025).............................. 17,622,040
Other assets less
liabilities - 1.3%.............................. 230,436
--------------
NET ASSETS - 100%.................................. $ 17,852,476
==============
- --------------------------------------------------------------------------------
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-21
<PAGE>
Technology Portfolio
Portfolio Of Investments
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 90.7%
TECHNOLOGY - 86.7%
COMMUNICATIONS
EQUIPMENT - 8.0%
General Instrument Corp. (a) ...................... 56,500 $ 4,802,500
Motorola, Inc. .................................... 58,100 8,555,225
Nokia Corp. (ADR)
(Finland) (a) .................................. 84,700 16,093,000
--------------
29,450,725
--------------
COMPUTER HARDWARE - 6.4%
Apex, Inc. (a) .................................... 78,250 2,533,344
Dell Computer Corp. (a) ........................... 271,900 13,858,403
Gateway, Inc. (a) ................................. 99,900 7,199,044
--------------
23,590,791
--------------
COMPUTER PERIPHERALS - 3.0%
Lexmark International Group,
Inc. (a) ....................................... 119,500 10,814,750
--------------
COMPUTER SERVICES - 11.1%
Computer Sciences Corp. (a) ....................... 100,900 9,547,662
Convergys Corp. (a) ............................... 45,400 1,396,050
DST Systems, Inc. (a) ............................ 89,025 6,793,720
First Data Corp. .................................. 185,900 9,167,194
Fiserv, Inc. (a) .................................. 108,350 4,144,388
Galileo International, Inc. ....................... 35,100 1,050,806
Gartner Group, Inc. Cl.A .......................... 41,000 625,250
IXL Enterprises, Inc. (a) ......................... 22,200 1,229,325
Sabre Group Holdings, Inc.
Cl.A (a) ....................................... 44,400 2,275,500
Sapient Corp. (a) ................................. 17,400 2,451,769
USWeb Corp. (a) ................................... 51,000 2,267,906
--------------
40,949,570
--------------
COMPUTER SOFTWARE - 17.3%
Amdocs, Ltd (a) ................................... 295,200 10,184,400
BEA Systems, Inc. (a).............................. 106,000 7,423,312
DoubleClick, Inc. (a) ............................ 44,900 11,372,328
I2 Technologies, Inc. (a) ......................... 49,900 9,721,144
Lycos, Inc. (a) ................................... 31,300 2,491,284
Microsoft Corp. (a) ............................... 99,100 11,566,828
New Era of Networks,
Inc. (a) ....................................... 70,800 3,380,700
Oracle Corp. (a) .................................. 33,300 3,730,641
Rational Software Corp. (a) ....................... 54,500 2,682,422
Vitria Technology, Inc. (a) ....................... 4,600 1,077,838
--------------
63,630,897
--------------
CONTRACT MANUFACTURING - 8.7%
Flextronics International,
Ltd. (a) ....................................... 81,000 3,728,531
Jabil Circuit, Inc. (a) ........................... 48,700 3,555,100
Sanmina Corp. (a) ................................. 104,750 10,435,719
Solectron Corp. (a) ............................... 150,900 14,354,362
--------------
32,073,712
--------------
Shares or
Principal
Amount
Company (000) U.S. $ Value
================================================================================
INTERNET - 6.6%
America Online, Inc. (a) .......................... 178,300 $ 13,450,506
EBay, Inc. (a) .................................... 48,300 6,048,066
Freemarkets, Inc. (a) ............................ 2,800 955,938
Internet Capital Group,
Inc. (a) ....................................... 21,800 3,703,956
--------------
24,158,466
--------------
NETWORKING
SOFTWARE - 5.6%
Cisco Systems, Inc. (a) ........................... 191,600 20,519,162
--------------
SEMI-CONDUCTOR
CAPITAL EQUIPMENT - 7.7%
Amkor Technology, Inc. (a) ........................ 69,100 1,943,438
Applied Materials, Inc. (a) ....................... 95,100 12,045,009
KLA-Tencor Corp. (a) .............................. 50,900 5,667,397
Teradyne, Inc. (a) ................................ 132,300 8,731,800
--------------
28,387,644
--------------
SEMI-CONDUCTOR
COMPONENTS - 12.3%
Altera Corp. (a) .................................. 166,800 8,267,025
Fairchild Semiconductor Corp.
Cl.A (a) ....................................... 10,300 306,425
Intel Corp. (a) ................................... 72,900 5,998,303
PMC-Sierra, Inc. (a) .............................. 55,500 8,895,609
St. Microelectronics NV
(ADR) (Netherlands) ............................ 36,400 5,512,325
Texas Instruments, Inc. (a) ....................... 66,600 6,451,875
Xilinx, Inc. (a) .................................. 216,500 9,843,985
--------------
45,275,547
--------------
318,851,264
--------------
BASIC INDUSTRY - 2.1%
MISCELLANEOUS
TECHNOLOGY - 2.1%
Mannesmann AG (ADR)
(Germany) ...................................... 32,800 7,873,709
--------------
UTILITY - 1.1%
TELEPHONE UTILITY - 1.1%
MCI WorldCom, Inc. (a) ............................ 74,700 3,961,435
--------------
CONSUMER SERVICES - 0.8%
RETAIL - GENERAL
MERCHANDISE - 0.8%
Tandy Corp. ....................................... 60,300 2,966,006
--------------
Total Common Stocks
(cost $171,589,306)............................. 333,652,414
--------------
SHORT-TERM
INVESTMENT - 8.8%
TIME DEPOSIT - 8.8%
State Street Euro Dollar
3.00%, 1/03/00
(amortized cost
$32,413,000) ................................... $32,413 32,413,000
--------------
B-22
<PAGE>
Technology Portfolio
Portfolio Of Investments
(continued) Alliance Variable Products Series Fund
================================================================================
Company U.S. $ Value
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.5%
(cost $204,002,306)............................. $ 366,065,414
Other assets less
liabilities - 0.5%.............................. 1,764,079
--------------
NET ASSETS - 100%.................................. $ 367,829,493
==============
- --------------------------------------------------------------------------------
(a) Non-income producing security.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-23
<PAGE>
Utility Income Portfolio
Portfolio Of Investments
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
COMMON & PREFERRED
STOCKS - 92.4%
UNITED STATES
INVESTMENTS - 77.9%
UTILITIES - 55.1%
ELECTRIC & GAS
UTILITIES - 30.7%
AGL Resources, Inc. ............................... 6,100 $ 103,700
Allegheny Energy, Inc. ............................ 46,800 1,260,675
Calpine Corp. (a) ................................. 8,900 569,600
CMS Energy Corp. .................................. 18,400 573,850
Consolidated Edison, Inc. ......................... 35,700 1,231,650
DPL, Inc. ......................................... 21,000 363,562
FPL Group, Inc. ................................... 35,200 1,507,000
GPU, Inc. ......................................... 36,000 1,077,750
Illinova Corp. .................................... 28,000 973,000
KeySpan Corp. ..................................... 4,600 106,663
MCN Energy Group, Inc. ............................ 4,600 109,250
Montana Power Co. ................................. 31,200 1,125,150
New Jersey Resources Corp. ........................ 4,400 171,875
NIPSCO Industries, Inc. ........................... 56,200 1,150,075
Northwest Natural Gas Co. ......................... 5,250 114,680
NSTAR ............................................. 28,000 1,134,000
People's Energy Corp. ............................. 3,600 120,600
Pinnacle West Capital Corp. ....................... 19,000 580,687
Potomac Electric Power Co. ........................ 50,000 1,146,875
Questar Corp. ..................................... 7,000 105,000
Reliant Energy, Inc. .............................. 23,000 526,125
Sempra Energy ..................................... 6,165 107,117
--------------
14,158,884
--------------
TELEPHONE UTILITIES - 24.4%
AT&T Corp. ........................................ 36,361 1,845,321
Bell Atlantic Corp. ............................... 12,800 788,000
BellSouth Corp. ................................... 42,900 2,008,257
GTE Corp. ......................................... 20,500 1,446,531
MCI WorldCom, Inc. (a) ............................ 36,000 1,909,125
SBC Communications, Inc. .......................... 35,795 1,745,006
Telephone and Data Systems,
Inc ............................................ 6,000 756,000
US West Communications
Group .......................................... 10,800 777,600
--------------
11,275,840
--------------
25,434,724
--------------
CONSUMER
SERVICES - 15.5%
BROADCASTING &
CABLE - 15.5%
Cablevision Systems Corp.
CI.A (a) ....................................... 14,828 1,119,514
Comcast Corp. Cl.A ................................ 18,000 909,563
MediaOne Group, Inc. (b) .......................... 21,400 2,311,200
NTL, Inc. (a) ..................................... 5,215 649,919
Omnipoint Corp.
7.00% cv. pfd. (c) ............................. 11,000 2,168,375
--------------
7,158,571
--------------
ENERGY - 6.0%
DOMESTIC PRODUCERS - 0.3%
Washington Gas Light Co. .......................... 5,600 154,000
--------------
PIPELINES - 2.9%
Enron Corp. ....................................... 11,600 514,750
Piedmont Natural Gas
Co., Inc. ...................................... 5,100 154,275
The Williams Cos., Inc. ........................... 22,031 673,322
--------------
1,342,347
--------------
MISCELLANEOUS - 2.8%
AES Corp. (a) ..................................... 17,200 1,285,700
--------------
2,782,047
--------------
MULTI-INDUSTRY
COMPANIES - 0.8%
Southwest Gas Corp. ............................... 7,000 161,000
Wicor, Inc. ....................................... 7,000 204,312
--------------
365,312
--------------
TECHNOLOGY - 0.5%
COMMUNICATION
EQUIPMENT - 0.5%
PairGain Technologies,
Inc. (a) ....................................... 17,000 240,656
Total United States Investments
(cost $26,933,113).............................. 35,981,310
--------------
FOREIGN
INVESTMENTS - 14.5%
ARGENTINA - 1.6%
Telecom Argentina, SA ............................. 11,500 393,875
Telefonica De Argentina ........................... 11,500 355,063
--------------
748,938
--------------
BRAZIL - 0.3%
Celular CRT Participacoes,
SA (a) ......................................... 129,000 22,494
Companhia Energetica de
Minas Gerais (ADR) ............................. 1,958 44,214
Companhia Paranaense de
Energia-Copel pfd. (ADR) ....................... 4,700 43,769
Companhia Riograndense de
Telecom pfd .................................... 129,000 39,989
--------------
150,466
--------------
CANADA - 3.3%
BCE, Inc. ......................................... 16,700 1,506,131
FINLAND - 4.1%
Nokia Corp. (ADR) ................................. 10,000 1,900,000
MEXICO - 3.0%
Telefonos de Mexico, SA
Series L (ADR) ................................. 12,400 1,395,000
PERU - 0.2%
Telefonica del Peru, SA Cl.B ...................... 62,000 80,758
PHILIPPINES - 0.4%
Philippine Long Distance
Telephone Co. (ADR) ............................ 6,000 155,250
--------------
B-24
<PAGE>
UTILITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
(continued) Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
SOUTH KOREA - 1.6%
Korea Electric Power Corp. ..................... 4,020 $ 124,618
SK Telecom Co., Ltd. (ADR) ..................... 16,172 620,602
-----------
745,220
-----------
Total Foreign Investments
(cost $2,928,732) ............................ 6,681,763
-----------
Total Common &
Preferred Stocks
(cost $29,861,845) ........................... 42,663,073
-----------
Principal
Amount
Company (000) U.S. $ Value
- --------------------------------------------------------------------------------
SHORT-TERM
INVESTMENT - 7.4%
TIME DEPOSIT - 7.4%
State Street Euro Dollar
3.00%, 1/03/00
(amortized cost
$3,414,000) .................................. $ 3,414 $ 3,414,000
-----------
TOTAL INVESTMENTS - 99.8%
(cost $33,275,845) .................. 46,077,073
Other assets less
liabilities - 0.2% .................. 81,175
-----------
NET ASSETS - 100% ..................... $46,158,248
===========
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Premium Income Exchangeable note which is convertible to Vodafone AirTouch
Plc until 8/15/01 at a rate of 2.0253 shares of Vodafone AirTouch for
every share of the exchangeable note.
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration
normally applied to certain qualified buyers. At December 31, 1999, the
aggregate market value of this security amounted to $2,168,375 or 4.7% of
net assets.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-25
<PAGE>
WORLDWIDE PRIVATIZATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
COMMON STOCKS & OTHER
INVESTMENTS - 95.6%
ARGENTINA - 0.7%
Nortel Inversora, SA
pfd. (ADR) (a) .......................... 22,300 $ 432,062
-----------
AUSTRALIA - 1.3%
CSL, Ltd. ................................. 31,500 452,887
TAB Corp. Holdings, Ltd. .................. 34,000 230,219
Tab Queensland, Ltd. (a) .................. 117,800 163,178
-----------
846,284
-----------
AUSTRIA - 2.0%
Austria Tabakwerke AG ..................... 6,653 321,691
Bank Austria AG ........................... 16,680 940,945
-----------
1,262,636
-----------
BRAZIL - 5.6%
Banco Bradesco SA ......................... 10,000,000 78,439
rights, expiring
2/09/00 (a) ............................. 649,340 2,577
Celular CRT Participacoes,
SA (a) .................................. 454,282 79,213
Companhia Paranaense de
Energia-Copel (ADR) ..................... 34,000 316,625
Companhia Riograndense de
Telecom Cl.A pfd ........................ 454,282 140,824
Companhia Vale do Rio Doce ................ 2,360 0
Embratel Participacoes,
SA (ADR) ................................ 13,000 354,250
Gerdau Siderurg, SA pfd ................... 24,114,144 640,730
Metalurgica Gerdau,
SA pfd .................................. 14,360,043 691,571
Tele Centro Sul
Participacoes, SA (ADR) ................. 7,000 635,250
Tele Sudeste Celular
Participacoes, SA (ADR) (a) ............. 11,000 426,938
Telemig Celular Participacoes,
SA (ADR) ................................ 2,000 92,375
Telesp Participacoes,
SA (ADR) (a) ............................ 5,000 122,188
-----------
3,580,980
-----------
CHILE - 0.7%
Compania de Telecomunicacoes
de Chile, SA (ADR) ...................... 25,000 456,250
-----------
CROATIA - 0.5%
Pliva D.D. (GDR) ........................ 23,500 300,800
-----------
CYPRUS - 0.1%
Premier Telesports, Ltd. (a)(b) ......... 6,600 46,540
-----------
CZECH REPUBLIC - 0.4%
Ceske Radiokomunikace
AS (a) .................................. 6,461 237,291
-----------
EGYPT - 0.4%
Eastern Company for Tobacco
& Cigarettes ............................ 10,500 275,610
-----------
FRANCE - 4.4%
CNP Assurances ............................ 19,650 723,684
Sanofi Synthelabo, SA (a) ................. 21,420 892,011
Societe Generale .......................... 1,749 406,988
Total Fina, SA ............................ 5,833 778,553
-----------
2,801,236
-----------
GERMANY - 6.5%
Mannesmann AG ............................. 13,000 3,136,383
MVV Energie AG (a) ........................ 29,100 395,737
Stinnes AG (a) ............................ 31,400 664,247
-----------
4,196,367
-----------
GREECE - 0.6%
Hellenic Telecommunications
Organisation, SA (ADR) .................. 34,900 416,619
-----------
HONG KONG - 2.9%
China Merchants Holdings
International Co., Ltd. ................. 216,000 177,835
China Telecom
(Hong Kong), Ltd. ....................... 207,000 1,291,503
Citic Pacific, Ltd. ....................... 99,000 371,879
-----------
1,841,217
-----------
HUNGARY - 0.6%
Magyar Olaj-es Gazipari ................... 6,500 135,116
OTP Bank .................................. 4,340 250,635
-----------
385,751
-----------
INDIA - 2.1%
ICICI, Ltd (ADR) (a) ...................... 47,300 691,375
Mahanagar Telephone Nigam,
Ltd. (GDR) .............................. 32,900 361,900
Videsh Sanchar Nigam, Ltd.
(GDR) (c) ............................... 11,900 290,955
-----------
1,344,230
-----------
ITALY - 3.0%
Banca Nazionale del Lavoro (a) ............ 100,000 333,433
Enel SpA (a) .............................. 194,700 815,905
Ente Nazionale Idrocarburi
SpA (a) ................................. 80,000 440,010
Monte dei Paschi di Siena (a) ............. 88,000 343,063
-----------
1,932,411
-----------
JAPAN - 16.0%
Daiwa Securities Group, Inc. .............. 160,000 2,504,062
East Japan Railway Co. .................... 87 469,189
Japan Tobacco, Inc. ....................... 137 1,048,586
Nippon Telegraph & Telephone,
Corp .................................... 103 1,764,216
Nomura Securities Co., Ltd. ............... 65,000 1,173,779
NTT Mobile Communications
Network, Inc. (a) ....................... 80 3,077,224
West Japan Railway ........................ 58 205,501
-----------
10,242,557
-----------
MALAYSIA - 0.6%
Telekom Malaysia ........................ 110,000 425,526
-----------
B-26
<PAGE>
WORLDWIDE PRIVATIZATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
(continued) Alliance Variable Products Series Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
MEXICO - 5.1%
Grupo Financiero Banorte,
SA de CV Cl.B (a) .................... 700,000 $ 1,056,464
Nuevo Gurpo Iusacell,
SA de CV (ADR)
Series V (a) ......................... 18,000 268,875
Telefonos de Mexico,
SA Cl.L (ADR) ........................ 13,200 1,485,000
Tubos de Acero de Mexico,
SA (ADR) ............................. 33,000 447,563
-----------
3,257,902
-----------
NETHERLANDS - 14.1%
Akzo Nobel NV .......................... 32,000 1,605,312
Equant NV .............................. 6,900 772,800
ING Groep NV ........................... 18,634 1,125,131
St. Microelectronics NV ................ 16,000 2,462,768
United Pan-Europe
Communications NV (a) ................ 24,000 3,070,402
-----------
9,036,413
-----------
PERU - 0.3%
Explosivios, SA Cl.C (a)(b) ............ 134,977 111,952
Ferreyros, SA .......................... 112,642 61,000
-----------
172,952
-----------
POLAND - 1.3%
Orbis, SA (a) .......................... 45,300 396,375
Polski Koncern Naftowy, SA
(GDR) (a) ............................ 34,000 416,500
-----------
812,875
-----------
PORTUGAL - 0.6%
Soporcel Sociedade Portuguesa
de Papel ............................. 28,000 370,624
-----------
SINGAPORE - 1.4%
DBS Group Holdings, Ltd. ............. 54,172 887,959
-----------
SOUTH AFRICA - 0.3%
Iscor, Ltd. (a) ...................... 45,007 170,376
-----------
SOUTH KOREA - 7.8%
Hanvit Bank (GDR) (a) .................. 68,000 421,600
Housing & Commercial
Bank (a) ............................. 8,800 278,996
GDR (c) .............................. 21,400 625,950
Korea Electric Power Corp. ............. 9,000 278,996
Korea Telecom (ADR) (a) ................ 11,164 834,509
Pohang Iron & Steel Co.,
Ltd. (ADR) ........................... 1,900 217,525
SK Telecom Co., Ltd. (ADR) ............. 41,417 2,358,849
-----------
5,016,425
-----------
SPAIN - 6.6%
Aldeasa, SA (a) ........................ 14,000 279,942
Amadeus Global Travel
Distribution (a) ..................... 129,000 2,046,683
Indra Sistemas, SA ..................... 39,000 732,696
Repsol, SA ............................. 28,650 664,370
Terra Networks, SA (a) ................. 9,800 535,557
-----------
4,259,248
-----------
SWEDEN - 0.3%
ForeningsSparbanken AB
Cl.A ................................. 11,850 174,080
-----------
SWITZERLAND - 0.7%
Sairgroup .............................. 1,000 201,281
Swisscom AG (a) ........................ 700 283,113
-----------
484,394
-----------
TAIWAN - 1.9%
China Steel Corp. ...................... 486,000 359,255
Taiwan Semiconductor Co. ............... 167,710 892,387
-----------
1,251,642
-----------
THAILAND - 0.7%
PTT Exploration & Production
Public Co., Ltd. (a) ................. 24,500 150,909
Siam Commercial Bank (a) ............... 224,000 273,570
-----------
424,479
-----------
TURKEY - 1.1%
Turkiye Is Bankasi Series C ............ 14,766,000 707,810
-----------
UNITED KINGDOM - 5.0%
Anglian Water Plc ...................... 22,059 197,401
British Airways Plc .................... 127,000 828,778
British Energy Plc ..................... 54,197 311,439
Mersey Docks &
Harbour Co. .......................... 40,600 302,985
National Grid Group Plc ................ 68,000 517,348
National Power Plc ..................... 85,101 490,745
PowerGen Plc ........................... 19,724 141,778
Stagecoach Holdings Plc ................ 155,288 398,831
-----------
3,189,305
-----------
Total Common Stocks &
Other Investments
(cost $39,999,926) ................... 61,240,851
-----------
B-27
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT - 5.2%
UNITED STATES - 5.2%
State Street Euro Dollar
3.00%, 1/03/00
(amortized cost
$3,354,000) ......................... $3,354 $ 3,354,000
------------
TOTAL INVESTMENTS - 100.8%
(cost $43,353,926) .................. $ 64,594,851
Other assets less
liabilities - (0.8%) ................ (536,124)
------------
NET ASSETS - 100% ..................... $ 64,058,727
============
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Illiquid security valued at fair market value (see Note A).
(c) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration normally applied to certain qualified buyers. At December 31,
1999, the aggregate market value of these securities amounted to $916,905
or 1.4% of net assets.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-28
<PAGE>
GLOBAL BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
AUSTRALIA - 13.1%
GOVERNMENT
OBLIGATIONS - 13.1%
Commonwealth of Australia
6.75%, 11/15/06 ..................... AUD 3,900 $ 2,550,391
9.50%, 8/15/03 ...................... 6,000 4,310,921
-----------
6,861,312
-----------
AUSTRIA - 4.9%
GOVERNMENT
OBLIGATION - 4.9%
Republic of Austria
4.50%, 9/28/05 (a) .................. JPY 220,000 2,562,396
-----------
CANADA - 4.5%
GOVERNMENT
OBLIGATION - 4.5%
Government of Canada
5.00%, 9/01/04 ...................... CAD 3,600 2,375,725
-----------
FRANCE - 4.5%
GOVERNMENT
OBLIGATION - 4.5%
Government of France
4.00%, 4/25/09 ...................... EUR 2,600 2,333,626
-----------
GERMANY - 13.2%
GOVERNMENT
OBLIGATIONS - 13.2%
Federal Republic of Germany
4.00%, 7/04/09 ...................... 3,400 3,092,080
Government of Germany
6.00%, 2/16/06 (a) .................. 3,600 3,795,089
-----------
6,887,169
-----------
JAPAN - 15.2%
DEBT OBLIGATION - 3.9%
Export-Import Bank
2.875%, 7/28/05 ..................... JPY 190,000 2,044,681
GOVERNMENT
OBLIGATION - 11.3%
Government of Japan
1.90%, 3/20/09 ...................... 260,000 2,576,588
5.50%, 9/20/02 ...................... 300,000 3,337,555
-----------
5,914,143
-----------
7,958,824
-----------
NETHERLANDS - 7.5%
GOVERNMENT
OBLIGATION - 7.5%
Dutch Government
5.25%, 7/15/08 ...................... EUR 3,950 3,945,209
-----------
SPAIN - 2.9%
GOVERNMENT
OBLIGATION - 2.9%
Government of Spain
5.25%, 1/31/03 (a) .................. 1,500 1,533,690
-----------
SWEDEN-0.9%
Government
OBLIGATION - 0.9%
Kingdom of Sweden
5.00%, 1/15/04 ...................... SEK 4,100 475,290
-----------
UNITED KINGDOM - 3.7%
GOVERNMENT
OBLIGATION - 3.7%
United Kingdom Treasury
5.75%, 12/07/09 ..................... GBP 1,160 1,913,097
-----------
UNITED STATES - 26.4%
GOVERNMENT
OBLIGATIONS - 25.8%
U.S. Treasury Bill
Zero Coupon, 1/06/00 ................ US$ 2,500 2,498,443
U.S. Treasury Notes
4.75%, 11/15/08 ..................... 3,600 3,175,308
5.625%, 5/15/08 ..................... 4,500 4,232,790
6.125%, 8/15/07 ..................... 1,400 1,365,000
6.875%, 5/15/06 ..................... 2,200 2,238,852
-----------
13,510,393
-----------
TIME DEPOSIT - 0.6%
State Street Euro Dollar
3.00%, 1/03/00 ...................... 295 295,000
-----------
13,805,393
-----------
TOTAL INVESTMENTS - 96.8%
(cost $51,545,692) .................. 50,651,731
Other assets less
liabilities - 3.2% .................. 1,686,965
-----------
NET ASSETS - 100% ..................... $52,338,696
===========
- --------------------------------------------------------------------------------
(a) Securities, or portion thereof, with an aggregate market value of
$7,891,175 have been segregated to collateralize forward exchange currency
contracts.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-29
<PAGE>
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Shares or
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
SOVEREIGN DEBT
OBLIGATIONS - 67.9%
NON-COLLATERALIZED
BRADY BONDS - 17.0%
BRAZIL - 6.3%
Republic of Brazil, C-Bonds
5.00%, 4/15/14 (a) ..................... $ 534 $ 401,053
Republic of Brazil DCB
7.00%, 4/15/12 ......................... 320 238,400
----------
639,453
----------
BULGARIA - 5.7%
Republic of Bulgaria FLIRB
2.75%, 7/28/12 (b) ..................... 800 576,000
----------
PANAMA - 1.6%
Republic of Panama IRB
4.25%, 7/07/14 ......................... 200 156,500
----------
PERU - 3.4%
Republic of Peru PDI
4.50%, 3/07/17 (c) ..................... 500 346,250
----------
Total Non-Collateralized
Brady Bonds
(cost $1,536,282) ...................... 1,718,203
----------
OTHER SOVEREIGN DEBT
OBLIGATIONS - 50.9%
ARGENTINA - 8.0%
Province of Tucuman
9.45%, 8/01/04 (c) ..................... 373 302,301
Republic of Argentina
11.75%, 4/07/09 ........................ 400 400,000
12.125%, 2/25/19 ....................... 100 105,375
warrants, expiring 2/25/00 (d) ......... 430 7,417
----------
815,093
----------
BRAZIL - 2.2%
Republic of Brazil
14.50%, 10/15/09 ....................... 200 222,000
----------
COLOMBIA - 3.2%
Republic of Colombia
9.75%, 4/23/09 ......................... 350 331,070
----------
LEBANON - 2.4%
Republic of Lebanese
10.25%, 10/06/09 (c) ..................... 250 240,710
----------
MEXICO - 11.1%
United Mexican States
10.375%, 2/17/09 ....................... 950 1,012,985
United Mexican States
11.50%, 5/15/26 ........................ 100 119,130
----------
1,132,115
----------
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
PANAMA - 1.9%
Republic of Panama
9.375%, 4/01/29 ........................ $ 200 $ 191,760
----------
PHILIPPINES - 5.0%
Republic of Philippines
9.50%, 10/21/24 ........................ 500 506,250
----------
RUSSIA - 13.9%
Russia Ministry of Finance
3.00%, 5/14/03 ......................... 1,800 621,000
Russia Ministry of Finance
12.75%, 6/24/28 ........................ 500 350,000
Russian IAN FRN
6.90%, 12/15/15 ........................ 692 121,041
Russian Principal Loan
6.90%, 12/15/20 (e) .................... 2,000 315,000
----------
1,407,041
----------
TURKEY - 3.2%
Republic of Turkey
12.00%, 12/15/08 ....................... 100 106,500
Republic of Turkey
12.375%, 6/15/09 ....................... 200 215,000
----------
321,500
----------
Total Other Sovereign Debt
Obligations
(cost $4,835,164) ...................... 5,167,539
----------
Total Sovereign Debt
Obligations
(cost $6,371,446) ...................... 6,885,742
----------
CORPORATE DEBT
OBLIGATIONS - 15.2%
PUBLIC UTILITIES -
TELEPHONE - 1.0%
PTC International Finance II SA
11.25%, 12/01/09 (c) ................... 100 98,500
----------
COMMUNICATIONS - 4.7%
Tricom SA
11.375%, 9/01/04 ....................... 300 280,500
Viatel, Inc.
11.50%, 3/15/09 ........................ 200 200,500
----------
481,000
----------
INDUSTRIAL - 0.5%
Nuevo Grupo Isuacell
SA de CV
14.25%, 12/01/06 (c) ................... 50 51,875
----------
PETROLEUM PRODUCTS - 4.6%
Petroleos Mexicanos
9.25%, 3/30/18 ......................... 500 466,250
----------
B-30
<PAGE>
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 (continued) Alliance Variable Products Series Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
YANKEE BONDS - 4.4% Cantv Finance, Ltd.
9.25%, 2/01/04 ............................ $ 500 $ 433,750
Transportacion Maritima
Mexicana SP
9.25%, 5/15/03 ............................ 12 9,990
-----------
443,740
-----------
Total Corporate Debt
Obligations
(cost $1,629,029) ......................... 1,541,365
-----------
SHORT-TERM
INVESTMENT - 14.3%
TIME DEPOSIT - 14.3%
State Street Euro Dollar
3.00%, 1/03/00
(amortized cost
$1,448,000) ............................... 1,448 1,448,000
-----------
TOTAL INVESTMENTS - 97.4%
(cost $9,448,475) ......................... 9,875,107
Other assets less
liabilities - 2.6% ........................ 263,456
-----------
NET ASSETS - 100% ........................... $10,138,563
===========
- --------------------------------------------------------------------------------
(a) Coupon consists of 5% cash payment and 3% paid-in kind.
(b) Coupon will increase periodically based upon a predetermined schedule.
Stated interest rate in effect at December 31, 1999.
(c) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration normally applied to certain qualified buyers. At December 31,
1999 the aggregate market value of these securities amounted to $1,039,636
or 10.3% of net assets.
(d) Non-income producing security.
(e) Security is in default and is non-income producing.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-31
<PAGE>
HIGH-YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Shares or
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
CORPORATE DEBT
OBLIGATIONS - 82.5%
AUTOMOTIVE - 3.2%
Federal Mogul Corp.
7.50%, 1/15/09 ............................... $ 300 $ 267,648
Tenneco Automotive, Inc. .......................
11.625%, 10/15/09 (a) ........................ 500 512,500
----------
780,148
----------
BROADCASTING/MEDIA - 1.9%
Fox Family Worldwide, Inc.
9.25%, 11/01/07 .............................. 500 463,750
----------
CABLE - 5.4%
Classic Cable, Inc.
9.375%, 8/01/09 .............................. 500 493,750
NTL, Inc.
10.00%, 2/15/07 .............................. 300 309,750
United Pan Europe Commerce
11.25%, 11/01/09 (a) ......................... 500 515,625
----------
1,319,125
----------
CHEMICALS - 1.5%
Philipp Brothers Chemicals, Inc.
9.875%, 6/01/08 .............................. 400 358,000
----------
COMMUNICATIONS - 16.7%
ICG Services, Inc.
9.875%, 5/01/08 (b) .......................... 750 391,875
Iridium Capital Corp. LLC
14.00%, 7/15/05 (c) .......................... 550 24,750
KMC Telecom Holdings, Inc.
13.50%, 5/15/09 (a) .......................... 500 502,500
Metromedia Fiber Network, Inc.
10.00%, 12/15/09 ............................. 500 515,000
Primus Telecommunications
Group, Inc.
12.75%, 10/15/09 (a) ......................... 500 521,250
Versatel Telecom BV
warrants, expiring 5/15/08 (a)(d) ............ 1,500 600,000
Versatel Telecom
International NV
11.875%, 7/15/09 ............................. 500 510,000
Viatel, Inc.
11.25%, 4/15/08 .............................. 500 498,750
Winstar Equipment Corp.
12.50%, 3/15/04 .............................. 500 537,500
----------
4,101,625
----------
CONSUMER
MANUFACTURING - 2.1%
Generac Portable
11.25%, 7/01/06 .............................. 500 512,500
----------
ENERGY - 7.2%
Chesapeake Energy Corp.
Series B
9.625%, 5/01/05 .............................. 500 473,750
Eott Energy Partners LP
11.00%, 10/01/09 ............................. 500 520,000
Pride International, Inc.
10.00%, 6/01/09 .............................. 500 512,500
Western Gas Resources, Inc.
10.00%, 6/15/09 .............................. 250 257,500
----------
1,763,750
----------
ENTERTAINMENT &
LEISURE - 1.9%
Marvel Enterprises, Inc.
12.00%, 6/15/09 .............................. 500 462,500
----------
GAMING - 2.0%
Mohegan Tribal Gaming Authority
8.75%, 1/01/09 ............................... 500 495,000
HEALTHCARE - 4.2%
Iasis Healthcare Corp.
13.00%, 10/15/09 (a) ......................... 500 517,500
LifePoint Hospitals
Holdings, Inc.
10.75%, 5/15/09 .............................. 500 520,000
----------
1,037,500
----------
HOTELS - 2.0%
Lodgian Financing Corp.
12.25%, 7/15/09 .............................. 500 497,500
----------
HOUSEHOLD
FURNISHINGS - 0.3%
Imperial Home Decor
Group, Inc.
11.00%, 3/15/08 (c) .......................... 400 78,000
----------
INDUSTRIAL - 7.9%
Amtrol, Inc.
10.625%, 12/31/06 ............................ 300 289,500
Anchor Lamina, Inc.
9.875%, 2/01/08 .............................. 500 403,125
Aqua Chemical, Inc.
11.25%, 7/01/08 .............................. 300 168,000
Elgar Holdings, Inc.
9.875%, 2/01/08 .............................. 50 35,250
Geologistics Corp.
9.75%, 10/15/07 .............................. 500 90,000
Russell-Stanley Holdings, Inc.
10.875%, 2/15/09 ............................. 500 437,500
ZSC Specialty Plc
11.00%, 7/01/09 (a) .......................... 500 521,250
----------
1,944,625
----------
METALS & MINING - 5.6%
Alaska Steel Corp.
7.875%, 2/15/09 .............................. 550 522,500
Republic Technologies
International
13.75%, 7/15/09 (a) .......................... 500 332,500
Russel Metals, Inc.
10.00%, 6/01/09 .............................. 500 519,375
----------
1,374,375
----------
B-32
<PAGE>
HIGH-YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 (continued) Alliance Variable Products Series Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
PAPER / PACKAGING - 8.1%
Crown Paper Co.
11.00%, 9/01/05 ......................... $ 500 $ 307,500
Doman Industries, Ltd.
12.00%, 7/01/04 ......................... 250 261,562
Kappa Beheer BV
10.625%, 7/15/09 (a) .................... 500 522,500
Repap New Brunswick, Inc.
9.00%, 6/01/04 .......................... 500 492,500
Riverwood International Corp.
10.625%, 8/01/07 ........................ 400 414,000
-----------
1,998,062
-----------
PUBLIC UTILITIES - 1.0%
AES Corp.
9.50%, 6/01/09 .......................... 250 253,438
-----------
RETAIL - 1.0%
Sonic Automotive, Inc.
11.00%, 8/01/08 ......................... 250 248,750
-----------
SERVICES - 3.2%
Avis Rent a Car, Inc.
11.00%, 5/01/09 (a) ..................... 250 263,750
Cellco Finance NV
12.75%, 8/01/05 (a) ..................... 500 519,375
-----------
783,125
-----------
SUPERMARKET / DRUG - 2.1%
Stater Brothers Holdings, Inc.
10.75%, 8/15/06 ......................... 500 508,750
-----------
Shares or
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
TECHNOLOGY - 5.2%
Dialog Corp. Plc
11.00%, 11/15/07 ........................ $ 500 $ 242,500
Exodus Communications,
Inc.
10.75%, 12/15/09 (a) .................... 500 511,250
SCG Holding &
Semiconductor Co.
12.00%, 8/01/09 (a) ..................... 500 533,750
-----------
1,287,500
-----------
Total Corporate Debt
Obligations
(cost $21,595,675) ...................... 20,268,023
-----------
PREFERRED STOCK - 2.2%
Communications - 2.2%
Nextel Communications, Inc.
11.125%, 2/15/10 (e)
(cost $531,976) ......................... 529 529,000
-----------
SHORT-TERM INVESTMENT - 12.1%
TIME DEPOSIT - 12.1%
State Street Euro Dollar
3.00%, 1/03/00
(amortized cost
$2,981,000) $2,981 2,981,000
-----------
TOTAL INVESTMENTS - 96.8%
(cost $25,108,651) ...................... 23,778,023
Other assets less liabilities - 3.2% ...... 788,812
-----------
NET ASSETS - 100% ......................... $24,566,835
===========
- --------------------------------------------------------------------------------
(a) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration normally applied to certain qualified buyers. At December 31,
1999, the aggregate market value of these securities amounted to
$6,373,750 or 25.9% of net assets.
(b) Indicates a security that has a zero coupon that remains in effect until a
predetermined date at which time the stated coupon rate becomes effective
until final maturity.
(c) Security is in default and is non-income producing.
(d) Non-income producing security.
(e) PIK (Paid-in kind) preferred quarterly stock payments.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-33
<PAGE>
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 Alliance Variable Products Service Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
ARGENTINA - 22.0%
GOVERNMENT
OBLIGATIONS - 22.0%
Republic of Argentina
Pensioner-Bocon
Pre I FRN
2.868%, 4/01/01 ........................ ARS 109 $ 101,772
Supplier-Bocon
Pro I FRN
2.868%, 4/01/07 ........................ 9,219 6,375,007
-----------
Total Argentinian Securities
(cost $6,517,164) ...................... 6,476,779
-----------
CANADA - 7.0%
GOVERNMENT/AGENCY
OBLIGATIONS - 7.0%
Government of Canada
6.50%, 6/01/04 ......................... CA$ 850 594,441
Province of British Columbia
8.00%, 9/08/23 ......................... 400 314,976
Province of Manitoba
7.75%, 12/22/25 ........................ 450 350,324
Province of Ontario
8.25%, 12/01/05 ........................ 275 206,525
Province of Quebec
7.75%, 3/30/06 ......................... 325 237,764
Province of Saskatchewan
9.60%, 2/04/22 ......................... 400 367,407
-----------
Total Canadian Securities
(cost $1,971,140) ...................... 2,071,437
-----------
MEXICO - 24.3%
GOVERNMENT/AGENCY
OBLIGATIONS - 24.3%
Mexican Treasury Bills (a)
22.96%, 5/11/00 ........................ MXP 59,568 5,799,447
23.48%, 7/13/00 ........................ 8,150 780,637
Nacional Financiera SNC
22.00%, 5/20/02 (b) .................... 5,000 550,132
-----------
Total Mexican Securities
(cost $6,989,791) ...................... 7,130,216
-----------
UNITED STATES - 44.6%
FEDERAL/AGENCY
OBLIGATIONS - 0.9%
Federal Home Loan Bank
7.26%, 9/06/01 ......................... US$ 200 202,156
Government National
Mortgage Association
9.00%, 9/15/24 ......................... 59 62,053
-----------
264,209
-----------
U.S. TREASURY
SECURITIES - 38.9%
U.S. Treasury Notes
5.625%, 5/15/08 ........................ 6,800 6,396,216
7.00%, 7/15/06 ......................... 2,400 2,458,128
7.25%, 8/15/04 ......................... 2,500 2,578,125
-----------
11,432,469
-----------
TIME DEPOSIT - 4.8%
State Street Euro Dollar
3.00%, 1/03/00
(amortized cost
$1,407,000)............................. 1,407 1,407,000
-----------
Total United States Securities
(cost $13,889,597) ..................... 13,103,678
-----------
TOTAL INVESTMENTS - 97.9%
(cost $29,367,692) ..................... 28,782,110
Other assets less liabilities - 2.1% ..... 628,446
-----------
NET ASSETS - 100% ........................ $29,410,556
===========
- --------------------------------------------------------------------------------
(a) Interest rate represents annualized yield to maturity at purchase date.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration
normally applied to certain qualified buyers. At December 31, 1999, the
aggregate market value of this security amounted to $550,132 or 1.9% of
net assets.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-34
<PAGE>
SHORT-TERM MULTI-MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 Alliance Variable Product Series Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
AUSTRALIA - 3.1%
DEBT OBLIGATION - 3.1%
State Bank of New South Wales
8.625%, 8/20/01
(cost $140,171) (a) .................... AUD 200 $ 134,911
----------
CANADA - 2.2%
GOVERNMENT
OBLIGATION - 2.2%
Government of Canada
4.50%, 6/01/01
(cost $92,847) (a) ..................... CAD 140 95,289
----------
DENMARK - 6.4%
GOVERNMENT
OBLIGATION - 6.4%
Kingdom of Denmark
8.00%, 11/15/01
(cost $306,656) (a) .................... DKK 1,985 284,443
----------
GERMANY - 18.3%
DEBT OBLIGATION - 13.8%
German Unity Fund
8.00%, 1/21/02 (a) ..................... EUR 565 609,050
----------
GOVERNMENT
OBLIGATION - 4.5%
Federal Republic of Germany
3.00%, 3/16/01 (a) ..................... 200 199,354
----------
Total German Securities
(cost $856,635) ........................ 808,404
----------
ITALY - 4.5%
GOVERNMENT
OBLIGATION - 4.5%
Republic of Italy
6.25%, 5/15/02
(cost $203,593) (a) .................... 190 198,574
----------
JAPAN - 4.4%
DEBT OBLIGATION - 4.4%
Export-Import Bank
7.00%, 8/02/01
(cost $197,288) (a) .................... US$ 196 196,353
----------
NETHERLANDS - 10.3%
DEBT OBLIGATIONS - 5.9%
DSL Finance NV
5.00%, 5/07/02 (a) ..................... DEM 300 155,712
Rabobank Nederland
4.50%, 12/28/01 (a) .................... 200 102,969
----------
258,681
----------
GOVERNMENT
OBLIGATION - 4.4%
Kingdom of Netherlands
3.00%, 2/15/02 (a) ..................... EUR 200 196,030
----------
Total Netherlands
Securities
(cost $469,838) ........................ 454,711
----------
NEW ZEALAND - 1.8%
DEBT OBLIGATION - 1.8%
International Bank for
Reconstruction &
Development
7.25%, 4/09/01
(cost $80,483) (a) ..................... NZ$ 150 78,688
----------
SWEDEN - 2.1%
GOVERNMENT
OBLIGATION - 2.1%
Kingdom of Sweden
13.00%, 6/15/01
(cost $96,619) (a) ..................... SEK 700 91,513
----------
UNITED KINGDOM - 6.4%
DEBT OBLIGATION - 6.4%
Abbey National Treasury
Services
7.125%, 3/14/01
(cost $282,776) (a) .................... GBP 175 283,469
----------
UNITED STATES - 34.5%
DEBT OBLIGATIONS - 25.5%
European Investment Bank
8.00%, 12/03/01 (a) .................... US$ 200 204,790
General Electric Capital
Corp.
5.50%, 4/15/02 MTN (a) ................. 200 194,580
7.375%, 5/09/01 (a) .................... 125 125,812
Inter-American Development
Bank
5.125%, 2/22/01 (a) .................... 150 147,750
KFW International Finance
6.125%, 7/08/02 MTN (a) ................ 100 98,530
Morgan Guaranty Trust Co.
6.375%, 3/26/01 (a) .................... 355 352,888
----------
1,124,350
----------
B-35
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
GOVERNMENT
OBLIGATION - 9.0%
United States Treasury Notes
5.75%, 11/15/00 (a) .................... US$ 400 $ 398,748
----------
Total United States
Securities
(cost $1,532,300) ..................... 1,523,098
----------
TOTAL INVESTMENTS - 94.0%
(cost $4,259,206) ...................... $4,149,453
Other assets less
liabilities - 6.0% ..................... 266,413
----------
NET ASSETS - 100% ........................ $4,415,866
==========
- --------------------------------------------------------------------------------
(a) Securities, or portion thereof, with an aggregate market value of
$4,149,453 have been segregated to collateralize forward exchange currency
contracts.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-36
<PAGE>
U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
U.S. GOVERNMENT/AGENCY
OBLIGATIONS - 70.9%
FEDERAL AGENCIES - 40.7%
Federal National Mortgage
Association
6.00%, 9/01/13 ..................... $1,377 $ 1,307,018
6.00%, 3/01/29 ..................... 2,533 2,316,280
6.50%, 10/01/28 .................... 794 748,445
6.50%, 12/01/28 .................... 709 668,382
6.50%, 6/01/29 ..................... 597 562,111
6.50%, 8/01/29 ..................... 997 939,201
7.00%, 2/01/12 ..................... 1,660 1,640,601
7.00%, 4/01/26 ..................... 308 298,171
7.00%, 5/01/28 ..................... 343 332,829
7.00%, 11/01/29 .................... 1,998 1,931,873
7.50%, 9/01/27 ..................... 913 902,966
7.50%, 4/01/29 ..................... 2,094 2,073,063
7.50%, 11/01/29 .................... 1,742 1,722,763
8.00%, 11/01/28 .................... 447 450,720
8.00%, 1/01/29 ..................... 760 766,702
Government National
Mortgage Association
6.50%, 3/15/28 ..................... 527 495,407
6.50%, 7/15/28 ..................... 1,111 1,042,685
6.50%, 3/15/29 ..................... 2,686 2,520,752
7.00%, 7/15/23 ..................... 50 48,974
7.00%, 7/15/27 ..................... 742 718,975
7.00%, 2/15/28 ..................... 660 636,957
7.00%, 3/15/28 ..................... 851 823,836
7.00%, 12/15/28 .................... 2,341 2,262,246
-----------
25,210,957
-----------
U.S. TREASURY
SECURITIES - 30.2%
U.S. Treasury Bonds
6.125%, 8/15/29 .................... 1,000 953,280
8.125%, 8/15/19 .................... 4,250 4,843,003
11.25%, 2/15/15 .................... 975 1,378,250
U.S. Treasury Notes
6.25%, 4/30/01 ..................... 9,000 9,007,020
6.50%, 8/31/01 ..................... 2,500 2,509,375
-----------
18,690,928
-----------
Total U.S. Government/Agency
Obligations
(cost $45,440,054) ................. 43,901,885
-----------
CORPORATE DEBT
OBLIGATIONS - 19.6%
AUTOMOTIVE - 3.1%
Ford Motor Co.
6.375%, 2/01/29 .................... 2,250 1,898,289
-----------
BANKING - 2.2%
Citicorp
6.375%, 11/15/08 ................... 1,400 1,294,421
Wachovia Corp.
6.375%, 4/15/03 .................... 75 73,277
-----------
1,367,698
-----------
BROADCASTING/MEDIA - 4.9%
Clear Channel
Communications, Inc.
7.25%, 10/15/27 .................... 2,675 2,412,850
Time Warner, Inc.
6.625%, 5/15/29 .................... 750 640,178
-----------
3,053,028
-----------
CABLE - 0.7%
Comcast Cable Corp.
8.375%, 5/01/07 .................... 400 414,034
-----------
FINANCE - 3.9%
Household Finance Corp.
5.875%, 11/01/02 ................... 1,150 1,107,634
Household Netherlands BV
6.20%, 12/01/03 .................... 1,350 1,303,475
-----------
2,411,109
-----------
TRANSPORTATION - 2.0%
Union Pacific Corp.
6.79%, 11/09/07 .................... 1,300 1,228,707
-----------
YANKEE BONDS - 2.8%
KBC Bank Funding Trust III
9.86%, 11/29/49 (a) ................ 1,225 1,270,015
St. George Bank, Ltd.
7.15%, 10/15/05 (a) ................ 500 486,082
-----------
1,756,097
-----------
Total Corporate Debt
Obligations
(cost $12,947,605) ................. 12,128,962
-----------
ASSET BACKED
SECURITIES - 3.9%
Capital Auto Receivables
Asset Trust
Series 1999-1 Cl.A2
5.58%, 6/15/02 ..................... 1,500 1,479,840
Carco Auto Loan Master Trust
Series 1999-1 Cl.A1
5.65%, 3/15/03 ..................... 920 908,215
-----------
(cost $2,419,665) .................. 2,388,055
-----------
COLLATERALIZED
MORTGAGE BACKED
SECURITIES - 0.9%
LB Commercial Conduit
Mortgage Trust
Series 1999-Cl Cl.A2
6.78%, 4/15/09
(cost $605,773) .................... 600 572,445
-----------
B-37
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT - 3.4%
TIME DEPOSIT - 3.4%
State Street Euro Dollar
3.00%, 1/03/00
(amortized cost
$2,129,000) ......................... $2,129 $ 2,129,000
-----------
TOTAL INVESTMENTS - 98.7%
(cost $63,542,097) .................. $61,120,347
Other assets less
liabilities - 1.3% .................. 821,156
-----------
NET ASSETS - 100% ..................... $61,941,503
===========
- --------------------------------------------------------------------------------
(a) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration normally applied to certain qualified buyers. At December 31,
1999, the aggregate market value of these securities amounted to
$1,756,097 or 2.8% of net assets.
See Glossary of Terms on page B-40.
See Notes to Financial Statements.
B-38
<PAGE>
MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER - 63.2%
AIG Funding, Inc.
4.45%, 1/05/00 ....................... $6,000 $ 5,997,033
Allstate Corp.
5.75%, 3/14/00 ....................... 2,000 1,976,681
American General Corp.
5.90%, 2/29/00 ....................... 2,000 1,980,661
Associates First Capital Corp.
6.10%, 2/14/00 ....................... 2,000 1,985,089
BankAmerica Corp.
6.04%, 3/15/00 ....................... 2,000 1,975,169
Bell Atlantic Network Funding
6.08%, 2/02/00 ....................... 2,000 1,989,191
BellSouth Telecommunications,
Inc.
6.00%, 2/25/00 ....................... 2,000 1,981,667
Caterpillar Financial Services,
Ltd.
5.95%, 3/13/00 ....................... 2,000 1,976,200
Chevron USA, Inc.
6.10%, 2/15/00 ....................... 2,000 1,984,750
Coca-Cola Co.
6.00%, 2/14/00 ....................... 2,000 1,985,333
DaimlerChrysler North America
Holding Corp.
5.90%, 3/01/00 ....................... 2,000 1,980,333
Du Pont E.I. de Nemours & Co.
5.95%, 2/08/00 ....................... 2,000 1,987,439
Eastman Kodak Co.
5.50%, 1/13/00 ....................... 2,000 1,996,333
Florida Power Corp.
5.92%, 2/10/00 ....................... 2,000 1,986,844
GE Capital International
Funding
5.94%, 2/28/00 (a) ................... 3,500 3,466,505
General Motors Acceptance
Corp.
5.90%, 1/28/00 ....................... 1,485 1,478,429
Georgia Power Co.
6.20%, 2/01/00 ....................... 2,000 1,989,322
Goldman Sachs Group, Inc.
6.07%, 3/29/00 ....................... 1,000 985,162
6.15%, 2/29/00 ....................... 1,000 989,921
J.P. Morgan & Co., Inc.
5.90%, 2/29/00 ....................... 2,000 1,980,661
KFW International Finance,
Inc.
5.92%, 3/28/00 ....................... 2,000 1,971,387
6.25%, 2/29/00 ....................... 2,400 2,375,416
Koch Industries, Inc.
4.50%, 1/03/00 (a) ................... 2,000 1,999,500
Marsh USA, Inc.
6.30%, 2/07/00 ....................... 2,000 1,987,050
Merrill Lynch & Co.
5.55%, 1/24/00 ....................... 3,000 2,989,362
6.10%, 2/11/00 ....................... 2,000 1,986,106
MetLife Funding, Inc.
5.90%, 1/31/00 ....................... 2,000 1,990,167
Minnesota Mining &
Manufacturing Co.
5.95%, 2/15/00 ....................... 2,000 1,985,125
Morgan Stanley Dean Witter
6.00%, 3/15/00 ....................... 2,000 1,975,333
National Rural Utilities
Cooperative Finance Corp.
5.75%, 3/14/00 ....................... 2,000 1,976,681
Paccar Financial Corp.
6.35%, 1/26/00 ....................... 2,000 1,991,181
Private Export Funding Corp.
5.86%, 2/17/00 ....................... 2,000 1,984,699
Procter & Gamble Co.
6.02%, 2/29/00 ....................... 2,000 1,980,268
Prudential Funding Corp.
5.97%, 2/01/00 ....................... 2,000 1,989,718
Republic New York Corp.
5.91%, 1/31/00 ....................... 2,000 1,990,150
Salomon Smith Barney
Holding, Inc.
5.79%, 3/10/00 ....................... 2,000 1,977,805
Snap-On, Inc.
6.60%, 1/20/00 ....................... 2,000 1,993,033
Tampa Electric Co.
6.25%, 1/26/00 ....................... 2,000 1,991,320
Teachers Insurance
5.95%, 2/28/00 ....................... 2,000 1,980,828
Wells Fargo Co.
5.77%, 3/31/00 ....................... 2,000 1,971,150
Xerox Corp.
5.00%, 1/03/00 ....................... 2,000 1,999,445
-----------
Total Commercial Paper
(amortized cost
$85,758,447) ......................... 85,758,447
-----------
U.S. GOVERNMENT Agency
OBLIGATIONS - 21.4%
Federal Home Loan Bank FRN
6.17%, 10/06/00 ...................... 8,000 7,995,828
Federal National Mortgage
Association FRN
6.16%, 10/05/00 ...................... 5,000 4,998,143
Student Loan Marketing
Association FRN
6.27%, 10/04/00 ...................... 8,000 7,997,040
6.16%, 10/12/00 ...................... 8,000 7,993,304
-----------
Total U.S. Government
Agency Obligations
(amortized cost
$28,984,315) ......................... 28,984,315
-----------
B-39
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
CERTIFICATES OF
DEPOSIT - 7.3%
Chase Manhattan Bank
5.37%, 5/22/00 ....................... $2,000 $ 1,995,510
Fifth Third Bank
5.99%, 1/28/00 ....................... 2,000 1,999,472
First Tennessee Bank
5.50%, 1/31/00 ....................... 2,000 2,000,000
Southtrust Bank National
Associates
5.92%, 2/22/00 ....................... 2,000 2,000,000
Wachovia Bank NA
5.95%, 9/11/00 ....................... 2,000 2,000,000
------------
Total Certificates of Deposit
(amortized cost
$9,994,982)........................... 9,994,982
------------
BANKERS ACCEPTANCE - 3.7%
First National Bank of Chicago
5.60%, 6/14/00
(amortized cost
$4,998,916)........................... 5,000 4,998,916
------------
CORPORATE
OBLIGATION - 1.5%
Dorada Finance, Inc. MTN
6.02%, 9/15/00
(amortized cost
$2,000,000) (a) ...................... 2,000 2,000,000
------------
TOTAL INVESTMENTS - 97.1%
(cost $131,736,660) .................. 131,736,660
Other assets less
liabilities - 2.9% ................... 3,894,083
------------
NET ASSETS - 100% ...................... $135,630,743
============
- --------------------------------------------------------------------------------
(a) Securities issued in reliance on Section (4) 2 or Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration normally to qualified institutional buyers. At
December 31, 1999, the aggregate market value of these securities amounted
to $7,466,005 or 5.5% of net assets.
Glossary of Terms:
ADR - American Depositary Receipt
DCB - Debt Conversion Bond
FLIRB - Front Load Interest Reduction Bond
FRN - Floating Rate Note
GDR - Global Depositary Receipt
IAN - Interest Arrears Note
IRB - Interest Reduction Bond
MTN - Medium Term Note
PDI - Past Due Interest
See Notes to Financial Statements.
B-40
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Conservative Growth Total Growth and
Investors Investors Return Income
Portfolio Portfolio Portfolio Portfolio
============ ============ ============ ============
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $29,604,372, $15,947,199,
$71,733,654 and $481,118,387,
respectively) ................... $ 30,437,081 $ 18,069,489 $ 74,690,999 $529,627,958
Cash .............................. 497 1,179 784 5,059
Foreign cash, at value
(cost $987,435, $786,278, $0
and $0, respectively) ........... 983,852 782,592 -0- -0-
Dividends and interest
receivable ...................... 330,034 141,159 386,057 471,576
Receivable for capital stock sold . 15,450 -0- 164,588 2,962,914
------------ ------------ ------------ ------------
Total assets ...................... 31,766,914 18,994,419 75,242,428 533,067,507
------------ ------------ ------------ ------------
LIABILITIES
Unrealized depreciation of
forward exchange
currency contracts .............. 46,615 -0- 18 -0-
Advisory fee payable .............. 19,867 8,528 38,656 269,449
Payable for capital stock
redeemed ........................ 321 47,766 42 2,968
Payable for investment securities
purchased ....................... -0- -0- -0- 2,534,426
Accrued expenses .................. 14,394 9,099 34,109 105,045
------------ ------------ ------------ ------------
Total liabilities ................. 81,197 65,393 72,825 2,911,888
------------ ------------ ------------ ------------
NET ASSETS .......................... $ 31,685,717 $ 18,929,026 $ 75,169,603 $530,155,619
============ ============ ============ ============
COMPOSITION OF NET ASSETS
Capital stock, at par ............. $ 2,359 $ 1,105 $ 4,297 $ 24,336
Additional paid-in capital ........ 27,311,880 12,915,341 65,477,102 442,611,349
Undistributed net investment
income .......................... 1,315,595 371,528 1,664,189 3,350,850
Accumulated net realized gain
on investments and foreign
currency transactions ........... 2,273,571 3,522,678 5,066,866 35,659,513
Net unrealized appreciation of
investments and foreign
currency denominated assets
and liabilities ................. 782,312 2,118,374 2,957,149 48,509,571
------------ ------------ ------------ ------------
$ 31,685,717 $ 18,929,026 $ 75,169,603 $530,155,619
============ ============ ============ ============
</TABLE>
B-41
<PAGE>
Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Conservative Growth Total Growth and
Investors Investors Return Income
Portfolio Portfolio Portfolio Portfolio
============ ============ ============ ============
<S> <C> <C> <C> <C>
Class A Shares
Net assets ........................ $ 31,685,717 $ 18,929,026 $ 75,169,603 $522,162,855
============ ============ ============ ============
Shares of capital stock
outstanding ..................... 2,358,852 1,104,790 4,296,741 23,968,854
============ ============ ============ ============
Net asset value per share $ 13.43 $ 17.13 $ 17.49 $ 21.79
============ ============ ============ ============
Class B Shares
Net assets ........................ $ 7,992,764
============
Shares of capital stock
outstanding ..................... 367,308
============
Net asset value per share.......... $ 21.76
============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-42
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
(continued) Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Premier
Growth International Growth Quasar
Portfolio Portfolio Portfolio Portfolio
============ ============= ============== ============
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $287,666,058, $56,284,838,
$1,610,690,276 and $164,941,027,
respectively) ................... $454,639,868 $78,825,975 $2,373,967,267 $179,387,455
Cash .............................. -0- -0- 667 500
Foreign cash, at value (cost $0,
$3,010,280, $0 and $0,
respectively) ................... -0- 3,011,521 -0- -0-
Receivable for investment
securities sold ................. 8,652,443 772,599 -0- 276,299
Receivable for capital
stock sold ...................... 4,360,656 67,779 1,229,261 -0-
Dividends and interest
receivable ...................... 332,968 149,396 1,035,783 137,233
Deferred organization expenses .... -0- -0- -0- 8,425
------------ ----------- -------------- ------------
Total assets ...................... 467,985,935 82,827,270 2,376,232,978 179,809,912
------------ ----------- -------------- ------------
LIABILITIES
Due to custodian .................. 3,611,316 941,670 -0- -0-
Payable for investment securities
purchased ....................... 2,222,132 163,375 -0- 809,793
Advisory fee payable .............. 278,898 48,128 1,890,188 89,436
Payable for capital stock
redeemed ........................ 21,692 282,892 1,456,652 9,253,340
Accrued expenses .................. 118,180 20,950 199,157 46,009
------------ ----------- -------------- ------------
Total liabilities ................. 6,252,218 1,457,015 3,545,997 10,198,578
------------ ----------- -------------- ------------
NET ASSETS .......................... $461,733,717 $81,370,255 $2,372,686,981 $169,611,334
============ =========== ============== ============
COMPOSITION OF NET ASSETS
Capital stock, at par ............. $ 13,748 $ 3,737 $ 58,664 $ 13,042
Additional paid-in capital ........ 249,355,514 51,474,844 1,472,738,124 151,804,281
Undistributed net
investment income ............... 410,276 94,817 -0- 801,669
Accumulated net realized gain
on investments and
foreign currency transactions ... 44,980,703 7,255,752 136,613,202 2,545,914
Net unrealized appreciation of
investments and foreign
currency denominated assets
and liabilities ................. 166,973,476 22,541,105 763,276,991 14,446,428
------------ ----------- -------------- ------------
$461,733,717 $81,370,255 $2,372,686,981 $169,611,334
============ =========== ============== ============
</TABLE>
B-43
<PAGE>
Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Premier
Growth International Growth Quasar
Portfolio Portfolio Portfolio Portfolio
============ ============= ============== ============
<S> <C> <C> <C> <C>
Class A Shares
Net assets ........................ $456,026,905 $81,370,255 $2,345,563,181 $169,611,334
============ =========== ============== ============
Shares of capital stock
outstanding ..................... 13,577,675 3,736,544 57,992,291 13,042,204
============ =========== ============== ============
Net asset value per share ......... $ 33.59 $ 21.78 $ 40.45 $ 13.00
============ =========== ============== ============
Class B Shares
Net assets ........................ $ 5,706,812 $ 27,123,800
============ ==============
Shares of capital stock
outstanding ..................... 170,152 671,458
============ ==============
Net asset value per share ......... $ 33.54 $ 40.40
============ ==============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Fianancial Statements.
B-44
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
(continued) Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Real Estate Utility Worldwide
Investment Technology Income Privatization
Portfolio Portfolio Portfolio Portfolio
=========== ============ =========== =============
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $20,248,025, $204,002,306,
$33,275,845 and $43,353,926,
respectively) .................... $17,622,040 $366,065,414 $46,077,073 $64,594,851
Cash ............................... 716 191 634 1,261
Foreign cash, at value (cost $0, $0,
$5,553, and $372,251,
respectively) ................. -0- -0- 5,640 380,321
Receivable for investment
securities sold .................. 204,945 2,278,315 -0- -0-
Dividends and interest
receivable ....................... 178,812 16,396 30,624 127,655
Receivable for capital stock sold .. 175,842 2,433,859 138,888 47,203
Deferred organization expenses ..... 8,097 4,586 -0- -0-
----------- ------------ ----------- -----------
Total assets ....................... 18,190,452 370,798,761 46,252,859 65,151,291
----------- ------------ ----------- -----------
LIABILITIES
Payable for investment securities
purchased ........................ 265,301 1,776,783 -0- 603,351
Payable for capital stock redeemed . 33,307 933,328 35,552 394,674
Advisory fee payable ............... 8,454 225,458 32,074 57,497
Accrued expenses ................... 30,914 33,699 26,985 37,042
----------- ------------ ----------- -----------
Total liabilities .................. 337,976 2,969,268 94,611 1,092,564
----------- ------------ ----------- -----------
NET ASSETS ........................... $17,852,476 $367,829,493 $46,158,248 $64,058,727
=========== ============ =========== ===========
COMPOSITION OF NET ASSETS
Capital stock, at par .............. $ 2,013 $ 10,943 $ 2,131 $ 2,946
Additional paid-in capital ......... 22,310,433 175,849,088 30,249,804 39,018,465
Undistributed net investment
income ........................... 1,041,896 -0- 810,980 382,029
Accumulated net realized gain
(loss) on investments and
foreign currency transactions .... (2,875,881) 29,906,354 2,293,936 3,407,603
Net unrealized appreciation
(depreciation) of investments
and foreign currency
denominated assets and
liabilities ...................... (2,625,985) 162,063,108 12,801,397 21,247,684
----------- ------------ ----------- -----------
$17,852,476 $367,829,493 $46,158,248 $64,058,727
=========== ============ =========== ===========
</TABLE>
B-45
<PAGE>
Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Real Estate Utility Worldwide
Investment Technology Income Privatization
Portfolio Portfolio Portfolio Portfolio
=========== ============ =========== =============
<S> <C> <C> <C> <C>
Class A Shares
Net assets ......................... $17,852,476 $357,479,914 $46,158,248 $64,058,727
=========== ============ =========== ===========
Shares of capital stock
outstanding ...................... 2,013,431 10,635,438 2,131,363 2,946,351
=========== ============ =========== ===========
Net asset value per share .......... $ 8.87 $ 33.61 $ 21.66 $ 21.74
=========== ============ =========== ===========
Class B Shares
Net assets ......................... $10,349,579
===========
Shares of capital stock
outstanding ...................... 307,940
===========
Net asset value per share .......... $ 33.61
===========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-46
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
(continued) Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Global Dollar North American
Global Bond Government High-Yield Government Income
Portfolio Portfolio Portfolio Portfolio
============ ============= ============ =================
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $51,545,692, $9,448,475,
$25,108,651 and $29,367,692,
respectively) ................... $ 50,651,731 $ 9,875,107 $ 23,778,023 $ 28,782,110
Cash .............................. 919 836 675 853
Foreign cash, at value
(cost $10,998, $0, $0, and $0,
respectively) ................... 10,941 -0- -0- -0-
Interest receivable ............... 986,077 233,271 659,547 322,111
Receivable for captial stock sold . 931,572 47,055 152,102 222,243
Receivable for investment
securities sold ................. -0- -0- -0- 114,366
------------ ------------ ------------ ------------
Total assets ........................ 52,581,240 10,156,269 24,590,347 29,441,683
------------ ------------ ------------ ------------
LIABILITIES
Unrealized depreciation of forward
exchange currency contracts ..... 200,894 -0- -0- -0-
Advisory fee payable .............. 28,229 3,662 13,271 11,135
Payable for capital stock
redeemed ........................ 997 104 -0- 14
Accrued expenses .................. 12,424 13,940 10,241 19,978
------------ ------------ ------------ ------------
Total liabilities ................. 242,544 17,706 23,512 31,127
------------ ------------ ------------ ------------
NET ASSETS .......................... $ 52,338,696 $ 10,138,563 $ 24,566,835 $ 29,410,556
============ ============ ============ ============
COMPOSITION OF NET ASSETS
Capital stock, at par ............. $ 4,652 $ 940 $ 2,687 $ 2,367
Additional paid-in capital ........ 52,749,579 12,823,506 27,491,368 27,453,582
Undistributed net investment
income .......................... 1,372,664 1,075,231 2,014,827 2,109,155
Accumulated net realized gain
(loss) on investments and
foreign currency transactions ... (683,956) (4,187,746) (3,611,419) 430,783
Net unrealized appreciation
(depreciation) of investments
and foreign currency
denominated assets and
liabilities ..................... (1,104,243) 426,632 (1,330,628) (585,331)
------------ ------------ ------------ ------------
$ 52,338,696 $ 10,138,563 $ 24,566,835 $ 29,410,556
============ ============ ============ ============
</TABLE>
B-47
<PAGE>
(continued) Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Global Dollar North American
Global Bond Government High-Yield Government Income
Portfolio Portfolio Portfolio Portfolio
============ ============= ============ =================
<S> <C> <C> <C> <C>
Class A Shares
Net assets ........................ $ 50,569,150 $ 10,138,563 $ 24,566,835 $ 29,410,556
============ ============ ============ ============
Shares of capital stock
outstanding ....................... 4,494,914 940,028 2,687,017 2,367,494
============ ============ ============ ============
Net asset value per share ........... $ 11.25 $ 10.79 $ 9.14 $ 12.42
============ ============ ============ ============
Class B Shares
Net assets ........................ $ 1,769,546
============
Shares of capital stock
outstanding ....................... 157,528
============
Net asset value per share ........... $ 11.23
============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-48
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
(continued) Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Short-Term U.S. Government/
Multi-Market High Grade Securities Money Market
Portfolio Portfolio Portfolio
============ ===================== ============
<S> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $4,259,206, $63,542,097 and
$131,736,660, respectively) .............. $ 4,149,453 $61,120,347 $131,736,660
Cash ....................................... 177,674 846 3,639,566
Interest receivable ........................ 132,228 690,338 730,963
Unrealized appreciation of forward exchange
currency contracts ....................... 31,866 -0- -0-
Receivable for capital stock sold .......... 2,854 184,949 415,327
Receivable from Adviser .................... 2,242 -0- -0-
----------- ----------- ------------
Total assets ............................... 4,496,317 61,996,480 136,522,516
----------- ----------- ------------
LIABILITIES
Payable for capital stock redeemed ......... 77,564 159 202,990
Advisory fee payable ....................... -0- 31,596 59,095
Dividend payable ........................... -0- -0- 611,174
Accrued expenses ........................... 2,887 23,222 18,514
----------- ----------- ------------
Total liabilities .......................... 80,451 54,977 891,773
----------- ----------- ------------
NET ASSETS ................................... $ 4,415,866 $61,941,503 $135,630,743
=========== =========== ============
COMPOSITION OF NET ASSETS
Capital stock, at par ...................... $ 446 $ 5,543 $ 135,631
Additional paid-in capital ................. 5,537,107 63,046,621 135,494,910
Undistributed net investment income ........ 200,788 3,374,992 573
Accumulated net realized loss on investments
and foreign currency transactions ........ (1,242,377) (2,063,903) (371)
Net unrealized depreciation of investments
and foreign currency denominated
assets and liabilities ................... (80,098) (2,421,750) -0-
----------- ----------- ------------
$ 4,415,866 $61,941,503 $135,630,743
=========== =========== ============
Class A shares
Net assets ................................. $ 4,415,866 $60,503,884 $134,467,400
=========== =========== ============
Shares of capital stock outstanding ........ 445,796 5,413,967 134,467,528
=========== =========== ============
Net asset value per share .................. $ 9.91 $ 11.18 $ 1.00
=========== =========== ============
Class B shares
Net assets ................................. $ 1,437,619 $ 1,163,343
=========== ============
Shares of capital stock outstanding ........ 128,843 1,163,343
=========== ============
Net asset value per share .................. $ 11.16 $ 1.00
=========== ============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-49
<PAGE>
STATEMENTS OF OPERATIONS
Year Ended December 31, 1999 Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Conservative Growth Total Growth and
Investors Investors Return Income
Portfolio Portfolio Portfolio Portfolio
============ =========== =========== ===========
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest .......................... $ 1,596,572 $ 474,959 $ 1,738,940 $ 876,747
Dividends (net of foreign tax
withheld of $6,075, $8,710,
$955 and $10,363,
respectively) ................... 86,944 133,048 514,919 5,742,589
----------- ----------- ----------- -----------
Total investment income ........... 1,683,516 608,007 2,253,859 6,619,336
----------- ----------- ----------- -----------
EXPENSES
Advisory fee ...................... 259,153 145,027 420,619 2,838,962
Distribution fee -- Class B ....... -0- -0- -0- 5,646
Custodian ......................... 63,427 65,238 69,231 111,741
Administrative .................... 63,000 63,000 63,000 63,000
Audit and legal ................... 7,615 3,440 15,346 104,106
Printing .......................... 4,083 2,001 5,053 74,010
Directors' fees ................... 1,675 1,393 1,274 1,088
Amortization of organization
expenses ........................ 1,637 1,638 -0- -0-
Transfer agency ................... 935 895 951 942
Miscellaneous ..................... 5,535 2,262 6,633 18,108
----------- ----------- ----------- -----------
Total expenses .................... 407,060 284,894 582,107 3,217,603
Less: expenses waived and
reimbursed ...................... (78,799) (101,193) -0- -0-
----------- ----------- ----------- -----------
Net expenses ...................... 328,261 183,701 582,107 3,217,603
----------- ----------- ----------- -----------
Net investment income ............. 1,355,255 424,306 1,671,752 3,401,733
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain on investment
transactions .................... 2,307,587 3,531,141 5,104,617 35,901,038
Net realized gain (loss) on foreign
currency transactions ........... (25,436) (40,376) 2,545 42
Net change in unrealized
appreciation/depreciation of
investments ..................... (1,906,852) (997,647) (2,584,824) 7,123,872
Net change in unrealized
appreciation/depreciation of
foreign currency denominated
assets and liabilities .......... (50,665) (4,207) (196) -0-
----------- ----------- ----------- -----------
Net gain on investments and
foreign currency transactions ... 324,634 2,488,911 2,522,142 43,024,952
----------- ----------- ----------- -----------
NET INCREASE IN NET
ASSETS FROM OPERATIONS .............. $ 1,679,889 $ 2,913,217 $ 4,193,894 $46,426,685
=========== =========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-50
<PAGE>
STATEMENTS OF OPERATIONS
(continued) Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Premier
Growth International Growth Quasar
Portfolio Portfolio Portfolio Portfolio
============ ============= ============ ===========
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign tax
withheld of $28,731, $122,844,
$120,147 and $7,407,
respectively) ................ $ 2,840,703 $ 1,018,458 $ 9,574,440 $ 922,968
Interest ....................... 698,679 43,554 3,767,890 1,079,662
------------ ----------- ------------ -----------
Total investment income ........ 3,539,382 1,062,012 13,342,330 2,002,630
------------ ----------- ------------ -----------
EXPENSES
Advisory fee ................... 2,765,805 648,349 17,175,879 1,201,308
Distribution fee -- Class B .... 3,332 -0- 7,165 -0-
Custodian ...................... 121,865 137,575 221,259 91,749
Audit and legal ................ 71,568 15,685 326,899 33,142
Administrative ................. 63,000 63,000 63,000 63,000
Printing ....................... 56,461 7,672 188,656 30,070
Directors' fees ................ 1,795 1,410 1,673 1,544
Amortization of organization
expenses ..................... 1,402 -0- -0- 5,126
Transfer agency ................ 948 950 946 908
Miscellaneous .................. 17,667 7,109 27,980 6,874
------------ ----------- ------------ -----------
Total expenses ................. 3,103,843 881,750 18,013,457 1,433,721
Less: expenses waived and
reimbursed ................... -0- (265,818) -0- (292,478)
------------ ----------- ------------ -----------
Net expenses ................... 3,103,843 615,932 18,013,457 1,141,243
------------ ----------- ------------ -----------
Net investment income (loss) ... 435,539 446,080 (4,671,127) 861,387
------------ ----------- ------------ -----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain on
investment transactions ...... 44,958,445 8,273,793 136,966,399 6,765,798
Net realized loss on foreign
currency transactions ........ (7,129) (196,165) (57) -0-
Net change in unrealized
appreciation/depreciation of
investments .................. 71,614,995 15,916,793 381,569,586 16,149,753
Net change in unrealized
appreciation/depreciation of
foreign currency denominated
assets and liabilities ....... (838) (12,278) -0- -0-
------------ ----------- ------------ -----------
Net gain on investments
and foreign currency
transactions ................. 116,565,473 23,982,143 518,535,928 22,915,551
------------ ----------- ------------ -----------
NET INCREASE
IN NET ASSETS FROM
OPERATIONS ....................... $117,001,012 $24,428,223 $513,864,801 $23,776,938
============ =========== ============ ===========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-51
<PAGE>
Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Real Estate Utility Worldwide
Investment Technology Income Privatization
Portfolio Portfolio Portfolio Portfolio
=========== ============ ========== =============
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes
withheld of $0, $5,105, $4,757
and $96,822, respectively) .. $ 1,191,556 $ 186,903 $1,027,657 $ 830,280
Interest ..................... 29,822 924,790 166,559 49,449
----------- ------------ ---------- -----------
Total investment income ...... 1,221,378 1,111,693 1,194,216 879,729
----------- ------------ ---------- -----------
EXPENSES
Advisory fee ................. 159,126 1,986,639 296,886 468,454
Distribution fee - Class B ... -0- 1,988 -0- -0-
Administrative ............... 63,000 63,000 63,000 63,000
Custodian .................... 62,735 82,940 57,884 121,915
Printing ..................... 4,981 25,453 15,540 7,503
Amortization of organization
expenses ................... 3,997 4,296 1,078 1,446
Audit and legal .............. 3,408 47,398 10,879 9,885
Directors' fees .............. 1,457 1,741 1,656 2,162
Transfer agency .............. 968 951 944 890
Miscellaneous ................ 3,564 8,994 3,905 6,779
----------- ------------ ---------- -----------
Total expenses ............... 303,236 2,223,400 451,772 682,034
Less: expenses waived and
reimbursed ................. (135,270) (334,008) (75,717) (237,003)
----------- ------------ ---------- -----------
Net expenses ................. 167,966 1,889,392 376,055 445,031
----------- ------------ ---------- -----------
Net investment income (loss) . 1,053,412 (777,699) 818,161 434,698
----------- ------------ ---------- -----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain (loss) on
investment transactions .... (2,542,073) 31,114,658 2,302,169 3,929,491
Net realized loss on written
options transactions ....... -0- (208,258) -0- -0-
Net realized loss on foreign
currency transactions ...... -0- -0- (940) (73,731)
Net change in unrealized
appreciation/depreciation of
investments ................ 391,755 111,387,457 3,974,557 19,281,420
Net change in unrealized
appreciation/depreciation of
foreign currency denominated
assets and liabilities ..... -0- -0- 182 3,769
----------- ------------ ---------- -----------
Net gain (loss) on investments
and foreign currency options
transactions ................. (2,150,318) 142,293,857 6,275,968 23,140,949
----------- ------------ ---------- -----------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
OPERATIONS ..................... $(1,096,906) $141,516,158 $7,094,129 $23,575,647
=========== ============ ========== ===========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-52
<PAGE>
STATEMENTS OF OPERATIONS
(continued Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Global Dollar North American
Global Bond Government High-Yield Government Income
Portfolio Portfolio Portfolio Portfolio
=========== ============= =========== =================
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest .......................... $ 2,223,871 $ 1,187,425 $ 2,230,502 $ 3,244,302
----------- ----------- ----------- -----------
EXPENSES
Advisory fee ...................... 285,555 66,591 156,825 194,253
Distribution fee - Class B ........ 868 -0- -0- -0-
Custodian ......................... 83,210 57,172 61,389 80,582
Administrative .................... 63,000 63,000 63,000 63,000
Audit and legal ................... 10,379 2,449 4,331 9,108
Printing .......................... 9,742 6,760 2,526 6,986
Directors' fees ................... 1,445 1,386 1,406 1,416
Transfer agency ................... 1,009 937 943 937
Amortization of organization
expenses ........................ -0- 1,105 -0- 1,429
Miscellaneous ..................... 3,308 3,542 2,521 1,818
----------- ----------- ----------- -----------
Total expenses .................... 458,516 202,942 292,941 359,529
Less: expenses waived and
reimbursed ...................... (63,000) (118,593) (94,296) (75,619)
----------- ----------- ----------- -----------
Net expenses ...................... 395,516 84,349 198,645 283,910
----------- ----------- ----------- -----------
Net investment income ............. 1,828,355 1,103,076 2,031,857 2,960,392
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain (loss) on
investment transactions ......... (1,055,602) (1,747,639) (2,750,615) 445,177
Net realized gain (loss) on foreign
currency transactions ........... 417,844 -0- 12 (254,120)
Net change in unrealized
appreciation/depreciation of
investments ..................... (3,522,957) 2,700,036 214,705 (569,233)
Net change in unrealized
appreciation/depreciation of
foreign currency denominated
assets and liabilities .......... (17,447) -0- -0- (2)
----------- ----------- ----------- -----------
Net gain (loss) on investments
and foreign currency
transactions .................... (4,178,162) 952,397 (2,535,898) (378,178)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
OPERATIONS .......................... $(2,349,807) $ 2,055,473 $ (504,041) $ 2,582,214
=========== =========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-53
<PAGE>
Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Short-Term U.S. Government/
Multi-Market High Grade Securities Money Market
Portfolio Portfolio Portfolio
============ ===================== ============
<S> <C> <C> <C>
INVESTMENT INCOME
Interest .......................................... $ 376,509 $ 3,851,208 $7,340,560
--------- ----------- ----------
EXPENSES
Advisory fee ...................................... 34,277 362,797 702,447
Distribution fee -- Class B ....................... -0- 1,070 1,035
Administrative .................................... 63,000 63,000 63,000
Custodian ......................................... 58,013 63,442 75,123
Directors' fees ................................... 3,712 1,405 1,217
Audit and legal ................................... 1,455 11,153 28,596
Transfer agency ................................... 946 1,021 882
Printing .......................................... 900 12,207 13,781
Miscellaneous ..................................... 2,955 5,468 7,933
--------- ----------- ----------
Total expenses .................................... 165,258 521,563 894,014
Less: expenses waived and reimbursed .............. (106,052) -0- -0-
--------- ----------- ----------
Net expenses ...................................... 59,206 521,563 894,014
--------- ----------- ----------
Net investment income ............................. 317,303 3,329,645 6,446,546
--------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain (loss) on investment transactions (95,430) (1,963,401) 92
Net realized gain on foreign currency transactions 10,283 3,258 -0-
Net change in unrealized appreciation/depreciation
of investments .................................. (15,456) (2,786,439) -0-
--------- ----------- ----------
Net gain (loss) on investments and foreign currency
transactions .................................... (100,603) (4,746,582) 92
--------- ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS ..................................... $ 216,700 $(1,416,937) $6,446,638
========= =========== ==========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-54
<PAGE>
STATEMENTS OF CHANGES
IN NET ASSETS Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Conservative Investors Portfolio Growth Investors Portfolio
================================== ==================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
============ ============ ============ ============
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net investment income .......... $ 1,355,255 $ 1,293,443 $ 424,306 $ 315,400
Net realized gain on investments
and foreign currency
transactions ................. 2,282,151 1,744,403 3,490,765 1,521,478
Net change in unrealized
appreciation/depreciation of
investments and foreign
currency denominated assets
and liabilities .............. (1,957,517) 1,547,074 (1,001,854) 2,044,183
------------ ------------ ------------ ------------
Net increase in net assets from
operations ................... 1,679,889 4,584,920 2,913,217 3,881,061
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A ...................... (1,308,187) (983,527) (322,580) (214,940)
Net realized gain on investments
Class A ...................... (1,740,989) (1,277,811) (1,494,582) (1,371,580)
CAPITAL STOCK
TRANSACTIONS
Net increase (decrease) ........ (4,285,668) 4,820,709 (3,195,501) 2,134,021
------------ ------------ ------------ ------------
Total increase (decrease) ...... (5,654,955) 7,144,291 (2,099,446) 4,428,562
NET ASSETS
Beginning of year .............. 37,340,672 30,196,381 21,028,472 16,599,910
------------ ------------ ------------ ------------
End of year (including
undistributed net investment
income of $1,315,595,
$1,293,963, $371,528 and
$310,178, respectively) ...... $ 31,685,717 $ 37,340,672 $ 18,929,026 $ 21,028,472
============ ============ ============ ============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-55
<PAGE>
Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Total Return Portfolio Growth and Income Portfolio
=============================== ==================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
=========== =========== ============ ============
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net investment income .......... $ 1,671,752 $ 1,227,924 $ 3,401,733 $ 3,319,311
Net realized gain on investments
and foreign currency
transactions ................. 5,107,162 4,687,411 35,901,080 42,675,250
Net change in unrealized
appreciation/depreciation of
investments and foreign
currency denominated assets
and liabilities .............. (2,585,020) 2,033,090 7,123,872 13,019,417
----------- ----------- ------------ ------------
Net increase in net assets from
operations ................... 4,193,894 7,948,425 46,426,685 59,013,978
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A ...................... (1,231,521) (828,887) (3,318,107) (2,226,956)
Net realized gain on investments
Class A ...................... (4,690,187) (3,824,313) (42,704,228) (28,160,219)
CAPITAL STOCK
TRANSACTIONS
Net increase ................... 17,433,667 13,248,556 148,136,928 102,785,943
----------- ----------- ------------ ------------
Total increase ................. 15,705,853 16,543,781 148,541,278 131,412,746
NET ASSETS
Beginning of year .............. 59,463,750 42,919,969 381,614,341 250,201,595
----------- ----------- ------------ ------------
End of year (including
undistributed net investment
income of $1,664,189,
$1,221,413, $3,350,850 and
$3,281,944, respectively) .... $75,169,603 $59,463,750 $530,155,619 $381,614,341
=========== =========== ============ ============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-56
<PAGE>
STATEMENTS OF CHANGES
IN NET ASSETS (continued) Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Growth Portfolio International Portfolio
================================== ===============================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
============ ============ =========== ===========
<S> <C> <C> <C> <C>
INCREASE IN
NET ASSETS
FROM OPERATIONS
Net investment income .......... $ 435,539 $ 1,173,874 $ 446,080 $ 697,067
Net realized gain on investments
and foreign currency
transactions ................. 44,951,316 28,074,041 8,077,628 2,211,966
Net change in unrealized
appreciation/depreciation of
investments and foreign
currency denominated assets
and liabilities .............. 71,614,157 41,502,598 15,904,515 5,095,509
------------ ------------ ----------- -----------
Net increase in net assets from
operations ................... 117,001,012 70,750,513 24,428,223 8,004,542
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A ...................... (1,078,120) (667,879) (553,389) (1,367,666)
Net realized gain on investments
Class A ...................... (28,188,611) (15,606,121) (1,787,594) (2,040,979)
CAPITAL STOCK
TRANSACTIONS
Net increase (decrease) ........ 45,317,991 38,329,947 (5,768,778) (254,502)
------------ ------------ ----------- -----------
Total increase ................. 133,052,272 92,806,460 16,318,462 4,341,395
NET ASSETS
Beginning of year .............. 328,681,445 235,874,985 65,051,793 60,710,398
------------ ------------ ----------- -----------
End of year (including
undistributed net investment
income of $410,276,
$1,157,118, $94,817 and
$367,008, respectively) ...... $461,733,717 $328,681,445 $81,370,255 $65,051,793
============ ============ =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-57
<PAGE>
Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Premier Growth Portfolio Quasar Portfolio
------------------------------------ --------------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
============== ============== ============ ===========
<S> <C> <C> <C> <C>
INCREASE (Decrease)
IN NET ASSETS
FROM OPERATIONS
Net investment income (loss) ... $ (4,671,127) $ (327,127) $ 861,387 $ 414,211
Net realized gain (loss) on
investments and
foreign currency
transactions ................. 136,966,342 31,022,713 6,765,798 (3,461,226)
Net change in unrealized
appreciation/depreciation of
investments and foreign
currency denominated assets
and liabilities .............. 381,569,586 291,597,182 16,149,753 (1,930,679)
-------------- -------------- ------------ -----------
Net increase (decrease) in
net assets from
operations ................... 513,864,801 322,292,768 23,776,938 (4,977,694)
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A ...................... -0- (748,382) (312,237) (58,060)
Net realized gain on investments
Class A ...................... (23,280,324) -0- -0- (6,038,262)
CAPITAL STOCK
TRANSACTIONS
Net increase ................... 634,848,234 453,383,779 55,276,395 42,667,086
-------------- -------------- ------------ -----------
Total increase ................. 1,125,432,711 774,928,165 78,741,096 31,593,070
NET ASSETS
Beginning of year .............. 1,247,254,270 472,326,105 90,870,238 59,277,168
-------------- -------------- ------------ -----------
End of year (including
undistributed net investment
income of $0, $0,
$801,669 and $261,320,
respectively) ................ $2,372,686,981 $1,247,254,270 $169,611,334 $90,870,238
============== ============== ============ ===========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-58
<PAGE>
STATEMENTS OF CHANGES
IN NET ASSETS (continued) Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Real Estate Investment Portfolio Technology Portfolio
================================ ==================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
=========== =========== ============ ============
<S> <C> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS
Net investment income (loss) ... $ 1,053,412 $ 793,118 $ (777,699) $ (269,678)
Net realized gain (loss) on
investments and
foreign currency
transactions ................. (2,542,073) (314,101) 30,906,400 2,981,897
Net change in unrealized
appreciation/depreciation of
investments and foreign
currency denominated assets
and liabilities .............. 391,755 (4,050,201) 111,387,457 45,284,402
----------- ----------- ------------ ------------
Net increase (decrease) in net
assets from operations ....... (1,096,906) (3,571,184) 141,516,158 47,996,621
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A ...................... (845,701) (240,978) -0- (121,060)
Net realized gain on investments
Class A ...................... -0- (104,773) (356,801) -0-
CAPITAL STOCK
TRANSACTIONS
Net increase ................... 2,715,524 7,302,437 96,068,474 13,486,268
----------- ----------- ------------ ------------
Total increase ................. 772,917 3,385,502 237,227,831 61,361,829
NET ASSETS
Beginning of year .............. 17,079,559 13,694,057 130,601,662 69,239,833
----------- ----------- ------------ ------------
End of year (including
undistributed net investment
income of $1,041,896,
$834,185, $0 and $283,
respectively) ................ $17,852,476 $17,079,559 $367,829,493 $130,601,662
=========== =========== ============ ============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-59
<PAGE>
Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Utility Income Portfolio Worldwide Privatization Portfolio
================================ =================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
=========== =========== =========== ============
<S> <C> <C> <C> <C>
INCREASE in NET ASSETS
FROM OPERATIONS
Net investment income .......... $ 818,161 $ 573,673 $ 434,698 $ 797,477
Net realized gain on investments
and foreign currency
transactions ................. 2,301,229 1,038,950 3,855,760 2,235,067
Net change in unrealized
appreciation/depreciation of
investments and foreign
currency denominated assets
and liabilities .............. 3,974,739 4,488,575 19,285,189 1,068,120
----------- ----------- ----------- -----------
Net increase in net assets from
operations ................... 7,094,129 6,101,198 23,575,647 4,100,664
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A ...................... (573,650) (467,584) (823,765) (602,038)
Net realized gain on investments
Class A ...................... (1,041,778) (217,903) (2,431,306) (2,230,552)
CAPITAL STOCK
TRANSACTIONS
Net increase (decrease) ........ 6,243,310 8,673,520 (2,529,698) 3,181,810
----------- ----------- ----------- -----------
Total increase ................. 11,722,011 14,089,231 17,790,878 4,449,884
NET ASSETS
Beginning of year ................ 34,436,237 20,347,006 46,267,849 41,817,965
----------- ----------- ----------- -----------
End of year (including
undistributed net investment
income of $810,980, $567,409,
$382,029 and $817,021,
respectively) ................ $46,158,248 $34,436,237 $64,058,727 $46,267,849
=========== =========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-60
<PAGE>
STATEMENTS OF CHANGES
IN NET ASSETS (continued) Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Global Bond Portfolio Global Dollar Government Portfolio
================================ ==================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
=========== =========== =========== ===========
<S> <C> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS FROM
OPERATIONS
Net investment income ........... $ 1,828,355 $ 1,108,817 $ 1,103,076 $ 1,310,397
Net realized gain (loss)
on investments
and foreign currency
transactions .................. (637,758) 35,057 (1,747,639) (2,456,480)
Net change in unrealized
appreciation/depreciation of
investments and foreign
currency denominated assets
and liabilities ............... (3,540,404) 2,427,349 2,700,036 (2,200,919)
----------- ----------- ----------- -----------
Net increase (decrease) in
net assets from
operations .................... (2,349,807) 3,571,223 2,055,473 (3,347,002)
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A ....................... (1,344,306) (359,373) (1,308,548) (1,020,590)
Net realized gain on investments
Class A ....................... (153,010) (126,325) -0- (745,193)
CAPITAL STOCK
TRANSACTIONS
Net increase (decrease) ......... 21,533,885 9,372,064 (988,270) 114,249
----------- ----------- ----------- -----------
Total increase (decrease) ....... 17,686,762 12,457,589 (241,345) (4,998,536)
NET ASSETS
Beginning of year ............... 34,651,934 22,194,345 10,379,908 15,378,444
----------- ----------- ----------- -----------
End of year (including
undistributed net investment
income of $1,372,664, $867,842,
$1,075,231 and $1,297,076,
respectively) ................. $52,338,696 $34,651,934 $10,138,563 $10,379,908
=========== =========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-61
<PAGE>
Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
North American
High-Yield Portfolio Government Income Portfolio
================================ ================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
=========== =========== =========== ===========
<S> <C> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS
Net investment income ............. $ 2,031,857 $ 1,083,734 $ 2,960,392 $ 2,994,908
Net realized gain (loss) on
investments and
foreign currency
transactions .................... (2,750,603) (860,804) 191,057 (895,371)
Net change in unrealized
appreciation/depreciation of
investments and foreign
currency denominated assets
and liabilities ................. 214,705 (1,556,891) (569,235) (929,103)
----------- ----------- ----------- -----------
Net increase (decrease) in
net assets from
operations ...................... (504,041) (1,333,961) 2,582,214 1,170,434
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A ......................... (1,097,239) (11,475) (2,352,761) (2,126,978)
Net realized gain on investments
Class A ......................... -0- -0- (303,946) (285,327)
CAPITAL STOCK
TRANSACTIONS
Net increase (decrease) ........... 9,257,880 17,114,316 (2,573,513) 2,793,932
----------- ----------- ----------- -----------
Total increase (decrease) ......... 7,656,600 15,768,880 (2,648,006) 1,552,061
NET ASSETS
Beginning of year ................. 16,910,235 1,141,355 32,058,562 30,506,501
----------- ----------- ----------- -----------
End of year (including
undistributed net investment
income of $2,014,827, $1,080,197,
$2,109,155 and $1,754,004,
respectively) ................... $24,566,835 $16,910,235 $29,410,556 $32,058,562
=========== =========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-62
<PAGE>
STATEMENTS OF CHANGES
IN NET ASSETS (continued) Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
U.S. Government/
Short-Term Multi-Market Portfolio High Grade Securities Portfolio
================================= ================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
=========== ========== =========== ===========
<S> <C> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS
Net investment income .......... $ 317,303 $ 379,654 $ 3,329,645 $ 2,340,340
Net realized gain (loss) on
investments and
foreign currency
transactions ................. (85,147) (48,980) (1,960,143) 1,404,021
Net change in unrealized
appreciation/depreciation of
investments and foreign
currency denominated assets
and liabilities .............. (15,456) 59,323 (2,786,439) (296,956)
----------- ---------- ----------- -----------
Net increase (decrease) in net
assets from operations ....... 216,700 389,997 (1,416,937) 3,447,405
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A ...................... (333,118) (630,815) (2,355,508) (1,873,534)
Net realized gain on investments
Class A ...................... -0- -0- (1,423,816) (214,996)
CAPITAL STOCK
TRANSACTIONS
Net increase (decrease) ........ (1,936,540) 220,210 8,720,062 20,861,049
----------- ---------- ----------- -----------
Total increase (decrease) ...... (2,052,958) (20,608) 3,523,801 22,219,924
NET ASSETS
Beginning of year .............. 6,468,824 6,489,432 58,417,702 36,197,778
----------- ---------- ----------- -----------
End of year (including
undistributed net investment
income of $200,788, $195,069,
$3,374,992 and $2,341,951,
respectively) ................ $ 4,415,866 $6,468,824 $61,941,503 $58,417,702
=========== ========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-63
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Money Market Portfolio
===================================
Year Ended Year Ended
December 31, December 31,
1999 1998
============ ============
INCREASE IN
NET ASSETS FROM
OPERATIONS
Net investment income .......... $ 6,446,546 $ 4,568,135
Net realized gain on
investments .................. 92 178
------------ ------------
Net increase in net assets from
operations ................... 6,446,638 4,568,313
DIVIDENDS TO
SHAREHOLDERS FROM:
Net investment income
Class A ...................... (6,427,061) (4,568,135)
Class B ...................... (19,485) -0-
CAPITAL STOCK
TRANSACTIONS
Net increase ................... 16,056,947 51,989,705
------------ ------------
Total increase ................. 16,057,039 51,989,883
NET ASSETS
Beginning of year .............. 119,573,704 67,583,821
End of year (including
undistributed net investment
income of $573 and $573,
respectively) ................ $135,630,743 $119,573,704
============ ============
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
B-64
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 Alliance Variable Products Series Fund
================================================================================
NOTE A: Significant Accounting Policies
Alliance Variable Products Series Fund, Inc. (the "Fund"), was incorporated in
the State of Maryland on November 17, 1987, as an open-end series investment
company. The Fund had no operations prior to November 28, 1990. The Fund offers
nineteen separately managed pools of assets which have differing investment
objectives and policies. The Fund currently issues shares of the Conservative
Investors Portfolio, Growth Investors Portfolio, Total Return Portfolio, Growth
and Income Portfolio, Growth Portfolio, International Portfolio, Premier Growth
Portfolio, Quasar Portfolio, Real Estate Investment Portfolio, Technology
Portfolio, Utility Income Portfolio, Worldwide Privatization Portfolio, Global
Bond Portfolio, Global Dollar Government Portfolio, High-Yield Portfolio, North
American Government Income Portfolio, Short-Term Multi-Market Portfolio, U.S.
Government/High Grade Securities Portfolio and Money Market Portfolio (the
"Portfolios"). On January 5, 1999, the creation of a second class of shares,
Class B shares, was approved by the Board of Directors. The Fund offers Class A
and Class B shares. Both classes of shares have identical voting, dividend,
liquidating and other rights, except that Class B shares bear a distribution
expense and have exclusive voting rights with respect to the Class B
distribution plan. As of December 31, 1999, the following Portfolios had Class B
shares issued and outstanding: Growth & Income Portfolio, Growth Portfolio,
Premier Growth Portfolio, Technology Portfolio, Global Bond Portfolio, U.S.
Government/High Grade Securities Portfolio and Money Market Portfolio. The
investment objectives of each Portfolio are as follows:
Conservative Investors Portfolio -- seeks to achieve a high total return
without, in the view of Alliance, undue risk to principal.
Growth Investors Portfolio -- seeks to achieve the highest total return
consistent with what Alliance considers to be reasonable risk.
Total Return Portfolio -- seeks to achieve a high return through a combination
of current income and capital appreciation.
Growth and Income Portfolio -- seeks reasonable current income and reasonable
opportunity for appreciation through investments primarily in dividend-paying
common stocks of good quality.
Growth Portfolio -- seeks to provide long-term growth of capital. Current income
is incidental to the Portfolio's objective.
International Portfolio -- seeks to obtain a total return on its assets from
long-term growth of capital principally through a broad portfolio of marketable
securities of established non-U.S. companies (i.e., companies incorporated
outside the U.S.), companies participating in foreign economies with prospects
for growth, and foreign government securities.
Premier Growth Portfolio -- seeks growth of capital by pursuing aggressive
investment policies.
Quasar Portfolio -- seeks growth of capital by pursuing aggressive investment
policies. Current income is incidental to the Portfolio's objective.
Real Estate Investment Portfolio -- seeks total return from long-term growth of
capital and income principally through investing in equity securities of
companies that are primarily engaged in or related to the real estate industry.
Technology Portfolio -- seeks growth of capital. Current income is incidental to
the Portfolio's objective.
Utility Income Portfolio -- seeks current income and capital appreciation by
investing primarily in equity and fixed-income securities of companies in the
utilities industry.
Worldwide Privatization Portfolio -- seeks long-term capital appreciation.
Global Bond Portfolio -- seeks a high level of return from a combination of
current income and capital appreciation by investing in a globally diversified
portfolio of high-quality debt securities denominated in the U.S. Dollar and a
range of foreign currencies.
Global Dollar Government Portfolio -- seeks a high level of current income and,
secondarily, capital appreciation.
High-Yield Portfolio -- seeks to earn the highest level of current income
without assuming undue risk by investing principally in high-yielding
fixed-income securities rated Baa or lower by Moody's or BBB or lower by S&P,
Duff & Phelps or Fitch or, if unrated, of comparable quality.
North American Government Income Portfolio -- seeks the highest level of current
income, consistent with what Alliance considers to be prudent investment risk,
that is available from a portfolio of debt securities issued or guaranteed by
the United States, Canada, or Mexico, their political subdivisions (including
Canadian provinces, but excluding states of the United States), agencies,
instrumentalities or authorities.
B-65
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Short-Term Multi-Market Portfolio -- seeks the highest level of current income,
consistent with what the Alliance considers to be prudent investment risk, that
is available from a portfolio of high-quality debt securities having remaining
maturities of not more than three years.
U.S. Government/High Grade Securities Portfolio -- seeks high current income
consistent with preservation of capital.
Money Market Portfolio -- seeks safety of principal, excellent liquidity and
maximum current income to the extent consistent with the first two objectives.
The Fund offers and sells its shares only to separate accounts of certain life
insurance companies for the purpose of funding variable annuity contracts and
variable life insurance policies. Sales are made without a sales charge at each
Portfolio's net asset value per share.
The financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities in the financial statements and amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are generally
valued at the last reported sales price or if no sale occurred, at the mean of
the closing bid and asked price on that day. Readily marketable securities
traded in the over-the-counter market, securities listed on a foreign securities
exchange whose operations are similar to the U.S. over-the-counter market, and
securities listed on a national securities exchange whose primary market is
believed to be over-the-counter (but excluding securities traded on The Nasdaq
Stock Market, Inc.), are valued at the mean of the current bid and asked price.
U.S. government and fixed income securities which mature in 60 days or less are
valued at amortized cost, unless this method does not represent fair value.
Securities for which current market quotations are not readily available are
valued at their fair value as determined in good faith by, or in accordance with
procedures adopted by, the Board of Directors. Fixed income securities may be
valued on the basis of prices obtained from a pricing service when such prices
are believed to reflect the fair market value of such securities.
Securities in which the Money Market Portfolio invests are valued at amortized
cost which approximates fair value, under which method a portfolio instrument is
valued at cost and any premium or discount is amortized on a straight-line basis
to maturity.
2. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the mean
of the quoted bid and asked price of such currencies against the U.S. dollar.
Purchases and sales of portfolio securities are translated at the rates of
exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at rates of exchange prevailing when accrued.
The Portfolios isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuations arising
from changes in market prices of securities held.
Net realized gains and losses on foreign currency transactions represent foreign
exchange gains and losses from sales and maturities of securities and forward
exchange currency contracts, holdings of foreign currencies, exchange gains and
losses realized between the trade and settlement dates on investment
transactions, and the difference between the amounts of interest, dividends and
foreign witholding tax reclaims recorded on the Portfolio's books and the U.S.
dollar equivalent amounts actually received or paid. Net currency gains and
losses from valuing foreign currency denominated assets and liabilities at year
end exchange rates are reflected as a component of net unrealized appreciation
(depreciation) of investments and foreign currency denominated assets and
liabilities.
3. Organization Expenses
Organization expenses of each Portfolio have been deferred and are being
amortized on a straight-line basis as follows: Quasar Portfolio $26,098 through
August 2001; Real Estate Investment Portfolio $20,000 through January 2002;
Technology Portfolio $21,500 through January 2001. For the following Portfolios
the organization expense was amortized on a straight-line basis as follows:
Utility Income Portfolio $15,299 through April 1999; Global Dollar Government
Portfolio $16,723 through April 1999; North American Government Income Portfolio
$21,570 through April 1999; Growth Portfolio $10,000 through September 1999;
Worldwide Privatization Portfolio $10,000 through September 1999; Conservative
Investors Portfolio $10,000 through October 1999; Growth Investors Portfolio
$10,000 through October 1999.
B-66
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(continued) Alliance Variable Products Series Fund
================================================================================
4. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
5. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. The Fund accretes discounts as adjustments to interest income
and in the case of the Money Market Portfolio, amortizes premium as well.
Investment gains and losses are determined on the identified cost basis.
6. Dividends and Distributions
Each Portfolio declares and distributes dividends and distributions from net
investment income and net realized gains, respectively, if any, at least
annually, except for dividends on the Money Market Portfolio, which are declared
daily and paid monthly. Income dividends and capital gains distributions to
shareholders are recorded on the ex-dividend date.
Income dividends and capital gains distributions are determined in accordance
with federal tax regulations and may differ from those determined in accordance
with generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts based
on their federal tax basis treatment; temporary differences do not require such
reclassification. During the current fiscal year, permanent differences,
primarily due to book/tax differences, resulted in reclassification of amounts
within the composition of net assets. These reclassifiations had no effect on
net assets.
- --------------------------------------------------------------------------------
NOTE B: Advisory Fee and Other Transactions with Affiliates
Under the terms of an investment advisory agreement, each Portfolio pays
Alliance Capital Management L.P. (the "Adviser"), an investment advisory fee,
based on average net assets at the following annual rates: Conservative
Investors Portfolio, .75 of 1%; Growth Investors Portfolio, .75 of 1%; Total
Return Portfolio, .625 of 1%; Growth and Income Portfolio, .625 of 1%; Growth
Portfolio, .75 of 1%; International Portfolio, 1%; Premier Growth Portfolio, 1%;
Quasar Portfolio, 1%; Real Estate Investment Portfolio, .90 of 1%; Technology
Portfolio, 1%; Utility Income Portfolio, .75 of 1%; Worldwide Privatization
Portfolio, 1%; Global Bond Portfolio, .65 of 1%; Global Dollar Government
Portfolio, .75 of 1%; High-Yield Portfolio, .75 of 1%; North American Government
Income Portfolio, .65 of 1%; Short-Term Multi-Market Portfolio, .55 of 1%; U.S.
Government/High Grade Securities Portfolio, .60 of 1%; and Money Market
Portfolio, .50 of 1%. The fee is accrued daily and paid monthly. For the Global
Bond Portfolio, the Adviser has retained, under a sub-advisory agreement, a
sub-adviser, AIGAM International Limited, an affiliate of American International
Group, Inc.
Pursuant to the advisory agreement, the Total Return, Growth & Income, Growth,
Premier Growth, U.S. Government/High Grade Securities and Money Market
Portfolios each paid $63,000, respectively, to the Adviser representing the cost
of certain legal and accounting services provided to these Portfolios by the
Adviser for the year ended December 31, 1999.
The Fund compensates Alliance Fund Services, Inc., a wholly-owned subsidiary of
the Adviser, under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. For the year ended
December 31, 1999, the Fund paid a total of $18,000 which was allocated evenly
among the Portfolios.
During the year ended December 31, 1999, the Adviser agreed to waive its fee and
to reimburse the additional operating expenses of each Portfolio, except for the
Premier Growth Portfolio, so that expenses did not exceed .95% and 1.20% of
average net assets respectively, for Class A and Class B shares. Expense
waivers/reimbursements, if any, are accrued daily and paid monthly. For the year
ended December 31, 1999, such waivers/reimbursements amounted to $78,799,
$101,193, $265,818, $292,478, $135,270, $334,008, $75,717, $237,003, $63,000,
$118,593, $94,296, $75,619 and $106,052 for the Conservative Investors
Portfolio, the Growth Investors Portfolio, the International Portfolio, the
Quasar Portfolio, the Real Estate Investment Portfolio, the Technology
Portfolio, the Utility Income Portfolio, the Worldwide Privatization Portfolio,
the Global Bond Portfolio, the Global Dollar Government Portfolio, the
High-Yield Portfolio, North American Government Income Portfolio and the
Short-Term Multi-Market Portfolio, respectively.
Brokerage commissions paid on investment transactions for the year ended
December 31, 1999, amounted to $12,591, $18,197, $58,560, $713,666, $440,888,
$313,885, $1,235,365, $393,620, $39,280, $172,733,
B-67
<PAGE>
Alliance Variable Products Series Fund
================================================================================
$19,516 and $147,273 for the Conservative Investors Portfolio, the Growth
Investors Portfolio, the Total Return Portfolio, the Growth and Income
Portfolio, the Growth Portfolio, the International Portfolio, the Premier Growth
Portfolio, the Quasar Portfolio, the Real Estate Investment Portfolio, the
Technology Portfolio, the Utility Income Portfolio and the Worldwide
Privatization Portfolio, respectively, none of which was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp. ("DLJ"), an affiliate of the Adviser, and of which $480 was
paid by the Growth Portfolio, $632 was paid by the International Portfolio, $515
was paid by the Quasar Portfolio, $840 was paid by the Technology Portfolio and
$942 was paid by the Worldwide Privatization Portfolio to DLJ directly.
- --------------------------------------------------------------------------------
NOTE C: Distribution Plan
The Portfolios have each adopted a Plan for Class B shares of the Fund pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (each a "Plan" and
collectively the "Plans"). Under the Plans, the Portfolios pay distribution and
servicing fees to the Distributor at an annual rate of up to .50% of each
portfolio's average daily net assets attributable to the Class B shares. The
fees are accrued daily and paid monthly. The Board of Directors currently limit
payments under the Plan to .25% of each Portfolio's average daily net assets
attributable to Class B shares. The Plans provide that the Distributor will use
such payments in their entirety for distribution assistance and promotional
activities.
The Portfolios are not obligated under the Plans to pay any distribution
services fee in excess of the amounts set forth above. The purpose of the
payments to the Distributor under the Plans is to compensate the Distributor for
its distribution services with respect to the sale of each Portfolio's shares.
Since the Distributor's compensation is not directly tied to its expenses, the
amount of compensation received by it under the Plan during any year may be more
or less than its actual expenses. For this reason, the Plans are characterized
by the staff of the Commission as being of the "compensation" variety.
In the event that a Plan is terminated or not continued, no distribution
services fees (other than current amounts accrued but not yet paid) would be
owed by the Portfolios to the Distributor with respect to the relevant Plan.
The Plan also provides that the Adviser may use its own resources to finance the
distribution of each Portfolio's shares.
- --------------------------------------------------------------------------------
NOTE D: Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the year ended December 31, 1999, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
=================================== ===================================
Stocks and U.S. Government Stocks and U.S. Government
Portfolio Debt Obligations and Agencies Debt Obligations and Agencies
=================================== ===================================
<S> <C> <C> <C> <C>
Conservative Investors........ $ 6,089,959 $ 23,631,055 $ 11,615,982 $ 18,749,385
Growth Investors.............. 10,818,032 7,321,155 15,710,013 3,358,133
Total Return.................. 20,451,364 48,892,653 19,439,757 37,004,183
Growth and Income............. 296,451,230 -0- 198,827,164 -0-
Growth........................ 219,292,550 -0- 193,838,122 -0-
International................. 71,401,945 -0- 77,269,235 -0-
Premier Growth................ 1,011,261,561 -0- 427,961,453 -0-
Quasar........................ 173,909,655 -0- 111,297,335 -0-
Real Estate Investment........ 8,644,492 -0- 6,305,007 -0-
Technology.................... 189,915,946 -0- 117,647,634 -0-
Utility Income................ 11,036,175 -0- 5,632,525 -0-
Worldwide Privatization....... 25,075,440 -0- 30,638,917 -0-
Global Bond................... 79,839,960 15,253,071 63,172,405 12,155,926
Global Dollar Government...... 9,781,939 -0- 12,517,846 -0-
High-Yield.................... 45,436,486 -0- 36,915,007 -0-
North American Government
Income..................... 1,206,002 -0- 115,935 1,754,523
Short-Term Multi-Market....... 5,346,470 764,926 4,997,268 620,575
U.S. Government/High Grade
Securities................. 26,822,897 84,491,812 22,481,349 78,981,000
</TABLE>
B-68
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(continued) Alliance Variable Products Series Fund
================================================================================
At December 31, 1999, the cost of investments for federal income tax purposes
and the tax basis gross unrealized appreciation, depreciation and net unrealized
appreciation (depreciation) were as follows (excluding foreign currency
transactions):
<TABLE>
<CAPTION>
Net
Gross Unrealized Unrealized
---------------------------------- Appreciation
Portfolio Cost Appreciation Depreciation (Depreciation)
================ =============== =============== ===============
<S> <C> <C> <C> <C>
Conservative Investors............ $ 29,628,313 $ 1,686,055 $ (877,287) $ 808,768
Growth Investors.................. 16,022,056 2,525,639 (478,206) 2,047,433
Total Return...................... 71,761,302 8,105,750 (5,176,053) 2,929,697
Growth and Income................. 481,148,572 91,108,525 (42,629,139) 48,479,386
Growth............................ 287,709,804 186,030,207 (19,100,143) 166,930,064
International..................... 56,367,843 24,545,766 (2,087,634) 22,458,132
Premier Growth.................... 1,610,716,647 835,273,431 (72,022,811) 763,250,620
Quasar............................ 166,953,414 24,952,547 (12,518,506) 12,434,041
Real Estate Investment............ 20,399,839 83,994 (2,861,793) (2,777,799)
Technology........................ 204,194,864 165,002,656 (3,132,106) 161,870,550
Utility Income.................... 33,275,845 15,671,059 (2,869,831) 12,801,228
Worldwide Privatization........... 43,520,324 23,148,892 (2,074,365) 21,074,527
Global Bond....................... 51,572,867 790,339 (1,711,475) (921,136)
Global Dollar Government.......... 9,451,486 691,963 (268,342) 423,621
High-Yield........................ 25,108,651 726,426 (2,057,054) (1,330,628)
North American Government
Income......................... 29,497,954 156,463 (872,307) (715,844)
Short-Term Multi-Market........... 4,264,077 3,135 (117,759) (114,624)
U.S. Government/High Grade
Securities..................... 63,593,579 -0- (2,473,232) (2,473,232)
</TABLE>
At December 31, 1999, for federal income tax purposes, the Real Estate
Investment, Global Bond, Global Dollar Government, High-Yield, Short-Term
Multi-Market, U.S. Government/High Grade Securities and Money Market Portfolios
had net capital loss carryforwards of $1,747,827 (of which $191,303 expires in
the year 2006 and $1,556,524 expires in the year 2007), $254,633 which expires
in the year 2007, $4,129,904 (of which $2,000,064 expires in the year 2006 and
$2,129,840 expires in the year 2007), $3,260,804 (of which $63,971 expires in
the year 2006 and $3,196,833 expires in the year 2007), $1,184,755 (of which
$5,518 expires in the year 2000, $150,822 expires in the year 2002, $941,593
expires in the year 2003, $32,651 expires in the year 2005, $5,112 expires in
the year 2006 and $49,059 expires in the year 2007), $1,546,295 which expires in
the year 2007 and $371 (of which $73 expires in the year 2004 and $298 expires
in the year 2005).
1. Forward Exchange Currency Contracts
The Conservative Investors, Total Return, Global Bond and Short-Term
Multi-Market Portfolios enter into forward exchange currency contracts to hedge
exposure to changes in foreign currency exchange rates on foreign portfolio
holdings, to hedge certain firm purchase and sales commitments denominated in
foreign currencies and for investment purposes. A forward exchange currency
contract is a commitment to purchase or sell a foreign currency at a future date
at a negotiated forward rate.
The Portfolios may enter into contracts to deliver or receive foreign currency
it will receive from or require for its normal investment activities. It may
also use contracts in a manner intended to protect foreign currency denominated
securities from declines in value due to unfavorable exchange rate movements.
The gain or loss arising from the difference between the original contracts and
the closing of such contracts is included in realized gains or losses from
foreign currency transactions. Fluctuations in the value of forward exchange
currency contracts are recorded for financial reporting purposes as unrealized
gains or losses by the Portfolio.
Each Portfolio's custodian will place and maintain cash not available for
investment or other liquid assets in a separate account of the Portfolio having
an approximate value equal to the aggregate amount of the respective portfolio's
commitments under forward exchange currency contracts entered into with respect
to position hedges.
B-69
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Risks may arise from the potential inability of a counterparty to meet the terms
of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount, in U.S.
dollars, reflects the total exposure each Portfolio has in that particular
currency contract.
At December 31, 1999, the outstanding forward exchange currency contracts were
as follows:
<TABLE>
<CAPTION>
U.S. $
Contract Value on U.S. $ Unrealized
Amount Origination Current Appreciation
(000) Date Value (Depreciation)
========== ============= ============ ================
<S> <C> <C> <C> <C>
CONSERVATIVE INVESTORS PORTFOLIO:
Foreign Currency Buy Contracts
Euro Dollar, settling 1/26/00............... 693 $ 746,186 $ 699,571 $ (46,615)
=========
TOTAL RETURN PORTFOLIO:
Foreign Currency Sale Contracts
Euro Dollar, settling 3/15/00............... 100 $ 101,285 $ 101,303 $ (18)
=========
GLOBAL BOND PORTFOLIO:
Foreign Currency Buy Contracts
Euro Dollar, settling 2/24/00............... 2,100 $2,182,110 $2,124,390 $ (57,720)
Japanese Yen, settling 2/24/00.............. 300,000 2,903,601 2,962,691 59,090
Pound Sterling, settling 2/24/00............ 700 1,135,680 1,130,741 (4,939)
Swedish Krona, settling 2/24/00............. 900 108,460 106,178 (2,282)
Foreign Currency Sale Contracts
Australian Dollar, settling 2/24/00 ........ 10,150 6,485,573 6,668,475 (182,902)
Canadian Dollar, settling 2/24/00........... 1,500 1,028,383 1,040,524 (12,141)
---------
$(200,894)
=========
SHORT-TERM MULTI-MARKET PORTFOLIO:
Foreign Currency Buy Contracts
Danish Kroner, settling 2/15/00............. 1,050 $ 142,049 $ 142,506 $ 457
Euro Dollar, settling 1/20/00............ 100 102,210 100,883 (1,327)
New Zealand Dollar, settling 3/06/00 ....... 409 207,567 213,748 6,181
Foreign Currency Sale Contracts
Australian Dollar, settling 3/01/00 ........ 225 143,674 147,798 (4,124)
Danish Kroner, settling 2/15/00............. 2,000 284,091 271,518 12,573
Euro Dollar, settling 2/25/00 - 3/15/00 .... 1,521 1,561,772 1,540,429 21,343
New Zealand Dollar, settling 3/06/00 ....... 316 161,637 165,190 (3,553)
Pound Sterling, settling 3/06/00............ 182 293,323 294,657 (1,334)
Swedish Krona, settling 3/13/00............. 1,003 120,165 118,515 1,650
---------
$ 31,866
=========
</TABLE>
B-70
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(continued) Alliance Variable Products Series Fund
================================================================================
2. Option Transactions
For hedging and investment purposes, the Portfolios purchase and write (sell)
put and call options on U.S. securities that are traded on U.S. securities
exchanges and over-the-counter markets.
The risk associated with purchasing an option is that the Portfolio pays a
premium whether or not the option is exercised. Additionally, the Portfolio
bears the risk of loss of premium and change in market value should the
counterparty not perform under the contract. Put and call options purchased are
accounted for in the same manner as portfolio securities. The cost of securities
acquired through the exercise of call options is increased by premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
When the Portfolio writes an option, the premium received by the Portfolio is
recorded as a liability and is subsequently adjusted to the current market value
of the option written. Premiums received from which written options expire
unexercised are recorded by the Portfolio the expiration date as realized gains
from written options. The difference between the premium received and the amount
paid on effecting a closing purchase transaction, including brokerage
commissions, is also treated as a realized gain, or if the premium received is
less than the amount paid for the closing purchase transaction, as a realized
loss. If a call option is exercised, the premium received is added to the
proceeds from the sale of the underlying security or currency in determining
whether the Portfolio has realized a gain or loss. If a put option is exercised,
the premium received reduces the cost basis of the security or currency
purchased by the Portfolio. In writing an option, the Portfolio bears the market
risk of an unfavorable change in the price of the security or currency
underlying the written option. Exercise of an option written by the Portfolio
could result in the Portfolio selling or buying a security or currency at a
price different from the current market value.
Transactions in options written for the year ended December 31, 1999, were as
follows:
Technology Portfolio
Number of
Contracts Premiums
========= ========
Options outstanding at beginning of year............... -0- $ -0-
Options written........................................ 375 162,704
Options terminated in closing purchase transactions.... (375) (162,704)
--------- --------
Options outstanding at December 31, 1999............... -0- $ -0-
========= ========
Global Dollar Government Portfolio
Number of
Contracts Premiums
--------- --------
Options outstanding at beginning of year............... -0- $ -0-
Options written ....................................... 700,000 3,407
Options terminated in closing purchase transactions.... (700,000) (3,407)
--------- --------
Options outstanding at December 31, 1999............... -0- $ -0-
========= ========
B-71
<PAGE>
Alliance Variable Products Series Fund
================================================================================
NOTE E: Capital Stock
There are 20,000,000,000 shares of capital stock, $.001 par value per share of
the Fund authorized divided into two classes, designated Class A and Class B.
Each consists of 10,000,000,000 authorized shares. Transactions in capital stock
were as follows:
<TABLE>
<CAPTION>
Conservative Investors Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
-------------------------------- --------------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
============== ============= ============== ==============
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 198,340 675,652 $ 2,679,220 $ 9,097,687
Shares issued in reinvestment of
dividends and distributions ......... 237,845 171,184 3,049,175 2,261,337
Shares redeemed ........................ (739,222) (489,669) (10,014,063) (6,538,315)
-------------- -------------- -------------- --------------
Net increase (decrease) ................ (303,037) 357,167 $ (4,285,668) $ 4,820,709
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Growth Investors Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
-------------------------------- --------------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
============== ============= ============== ==============
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 55,821 263,760 $ 920,155 $ 4,023,709
Shares issued in reinvestment of
dividends and distributions ......... 121,063 105,839 1,817,162 1,586,520
Shares redeemed ........................ (360,186) (235,959) (5,932,818) (3,476,208)
-------------- -------------- -------------- --------------
Net increase (decrease) ................ (183,302) 133,640 $ (3,195,501) $ 2,134,021
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Total Return Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
-------------------------------- --------------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
============== ============= ============== ==============
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 1,313,899 1,066,045 $ 23,372,094 $ 18,467,616
Shares issued in reinvestment of
dividends and distributions ......... 346,907 274,525 5,921,708 4,653,200
Shares redeemed ........................ (656,997) (583,936) (11,860,135) (9,872,260)
-------------- -------------- -------------- --------------
Net increase ........................... 1,003,809 756,634 $ 17,433,667 $ 13,248,556
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Growth and Income Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
-------------------------------- --------------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
============== ============= ============== ==============
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 7,229,780 5,339,328 $ 158,338,431 $ 109,529,029
Shares issued in reinvestment of
dividends and distributions ......... 2,179,088 1,482,301 46,022,335 30,387,175
Shares redeemed ........................ (2,910,169) (1,904,291) (64,051,586) (37,130,261)
-------------- -------------- -------------- --------------
Net increase ........................... 6,498,699 4,917,338 $ 140,309,180 $ 102,785,943
============== ============== ============== ==============
</TABLE>
B-72
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(continued) Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Growth and Income Portfolio (continued)
-------------------------------- --------------------------------
SHARES AMOUNT
================================ ================================
June 1, 1999* June 1, 1999*
to December to December
31, 1999 31, 1999
============== ==============
<S> <C> <C>
Class B
Shares sold ............................ 384,785 $ 8,209,638
Shares redeemed ........................ (17,477) (381,890)
-------------- --------------
Net increase ........................... 367,308 $ 7,827,748
============== ==============
</TABLE>
<TABLE>
<CAPTION>
Growth Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
================================ ================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 2,994,264 2,150,440 $ 85,831,721 $ 51,763,496
Shares issued in reinvestment of
dividends and distributions ......... 1,101,081 657,801 29,266,731 16,274,000
Shares redeemed ........................ (2,579,730) (1,267,396) (74,650,826) (29,707,549)
-------------- -------------- -------------- --------------
Net increase ........................... 1,515,615 1,540,845 $ 40,447,626 $ 38,329,947
============== ============== ============== ==============
<CAPTION>
June 1, 1999* June 1, 1999*
to December to December
31, 1999 31, 1999
============== ==============
<S> <C> <C>
Class B
Shares sold ............................ 172,661 $ 4,938,843
Shares redeemed ........................ (2,509) (68,478)
-------------- --------------
Net increase ........................... 170,152 $ 4,870,365
============== ==============
</TABLE>
<TABLE>
<CAPTION>
International Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
================================ ================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 7,048,844 8,028,440 $ 122,548,001 $ 130,223,344
Shares issued in reinvestment of
dividends and distributions ......... 149,679 209,505 2,340,983 3,408,645
Shares redeemed ........................ (7,485,752) (8,256,225) (130,657,762) (133,886,491)
-------------- -------------- -------------- --------------
Net decrease ........................... (287,229) (18,280) $ (5,768,778) $ (254,502)
============== ============== ============== ==============
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of distribution.
B-73
<PAGE>
Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Premier Growth Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
================================ ================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 22,731,430 21,307,889 $ 777,611,880 $ 546,039,957
Shares issued in reinvestment of
dividends and distributions ......... 743,305 27,956 23,280,324 748,382
Shares redeemed ........................ (5,672,425) (3,650,182) (190,852,826) (93,404,560)
-------------- -------------- -------------- --------------
Net increase ........................... 17,802,310 17,685,663 $ 610,039,378 $ 453,383,779
============== ============== ============== ==============
<CAPTION>
July 14, 1999* July 14, 1999*
to December to December
31, 1999 31, 1999
============== ==============
<S> <C> <C>
Class B
Shares sold ............................ 678,946 $ 25,084,578
Shares redeemed ........................ (7,488) (275,722)
-------------- --------------
Net increase ........................... 671,458 $ 24,808,856
============== ==============
</TABLE>
<TABLE>
<CAPTION>
Quasar Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
================================ ================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 18,952,076 4,852,440 $ 218,586,174 $ 56,389,957
Shares issued in reinvestment of
dividends and distributions ......... 27,705 471,122 312,238 6,096,321
Shares redeemed ........................ (14,096,710) (1,865,305) (163,622,017) (19,819,192)
-------------- -------------- -------------- --------------
Net increase ........................... 4,883,071 3,458,257 $ 55,276,395 $ 42,667,086
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Real Estate Investment Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
================================ ================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 780,673 1,017,147 $ 7,467,394 $ 11,445,744
Shares issued in reinvestment of
dividends and distributions ......... 84,995 31,720 845,701 345,751
Shares redeemed ........................ (599,456) (411,779) (5,597,571) (4,489,058)
-------------- -------------- -------------- --------------
Net increase ........................... 266,212 637,088 $ 2,715,524 $ 7,302,437
============== ============== ============== ==============
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of distribution.
B-74
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(continued) Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Technology Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
-------------------------------- --------------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
============== ============== ============== ==============
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 12,863,200 2,683,902 $ 307,701,168 $ 39,262,852
Shares issued in reinvestment of
dividends ........................... 17,796 8,130 356,801 121,060
Shares redeemed ........................ (9,058,244) (1,789,557) (221,002,537) (25,897,644)
-------------- -------------- -------------- --------------
Net increase ........................... 3,822,752 902,475 $ 87,055,432 $ 13,486,268
============== ============== ============== ==============
<CAPTION>
September 22, September 22,
1999* to 1999* to
December 31, December 31,
1999 1999
============== ==============
<S> <C> <C>
Class B
Shares sold ............................ 318,126 $ 9,336,030
Shares redeemed ........................ (10,186) (322,988)
-------------- --------------
Net increase ........................... 307,940 $ 9,013,042
============== ==============
</TABLE>
<TABLE>
<CAPTION>
Utility Income Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
================================ ================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 648,227 827,755 $ 13,051,564 $ 13,812,249
Shares issued in reinvestment of
dividends and distributions ......... 80,330 41,319 1,615,428 685,488
Shares redeemed ........................ (419,601) (345,013) (8,423,682) (5,824,217)
-------------- -------------- -------------- --------------
Net increase ........................... 308,956 524,061 $ 6,243,310 $ 8,673,520
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Worldwide Privatization Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
================================ ================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 414,446 574,559 $ 7,084,102 $ 8,801,773
Shares issued in reinvestment of
dividends and distributions ......... 218,608 188,588 3,255,071 2,832,590
Shares redeemed ........................ (810,215) (584,343) (12,868,871) (8,452,553)
-------------- -------------- -------------- --------------
Net increase (decrease) ................ (177,161) 178,804 $ (2,529,698) $ 3,181,810
============== ============== ============== ==============
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of distribution.
B-75
<PAGE>
Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Global Bond Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
================================ ================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
============== ============== ============== ==============
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 1,956,191 1,110,903 $ 22,925,201 $ 13,087,136
Shares issued in reinvestment of
dividends and distributions ......... 132,977 43,327 1,497,316 485,698
Shares redeemed ........................ (384,245) (363,470) (4,660,247) (4,200,770)
-------------- -------------- -------------- --------------
Net increase ........................... 1,704,923 790,760 $ 19,762,270 $ 9,372,064
============== ============== ============== ==============
<CAPTION>
July 16, 1999* July 16, 1999*
to December to December
31, 1999 31, 1999
============== ==============
<S> <C> <C>
Class B
Shares sold ............................ 208,064 $ 2,343,805
Shares redeemed ........................ (50,536) (572,190)
-------------- --------------
Net increase ........................... 157,528 $ 1,771,615
============== ==============
</TABLE>
<TABLE>
<CAPTION>
Global Dollar Government Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
================================ ================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
============== ============== ============== ==============
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 168,519 266,108 $ 1,674,926 $ 3,464,930
Shares issued in reinvestment of
dividends and distributions ......... 148,026 136,883 1,308,548 1,765,784
Shares redeemed ........................ (396,557) (433,004) (3,971,744) (5,116,465)
-------------- -------------- -------------- --------------
Net increase (decrease) ................ (80,012) (30,013) $ (988,270) $ 114,249
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
High-Yield Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
================================ ================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
============== ============== ============== ==============
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 1,418,641 2,333,171 $ 13,391,064 $ 24,996,204
Shares issued in reinvestment of
dividends ........................... 119,655 1,032 1,097,239 11,475
Shares redeemed ........................ (552,554) (743,394) (5,230,423) (7,893,363)
-------------- -------------- -------------- --------------
Net increase ........................... 985,742 1,590,809 $ 9,257,880 $ 17,114,316
============== ============== ============== ==============
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of distribution.
B-76
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(continued) Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
North American Government Income Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
================================ ================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
============== ============== ============== ==============
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 483,931 807,658 $ 5,974,758 $ 10,378,068
Shares issued in reinvestment of
dividends and distributions ......... 226,103 195,804 2,656,706 2,412,304
Shares redeemed ........................ (898,014) (800,671) (11,204,977) (9,996,440)
-------------- -------------- -------------- --------------
Net increase (decrease) ................ (187,980) 202,791 $ (2,573,513) $ 2,793,932
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Short-Term Multi-Market Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
================================ ================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
============== ============== ============== ==============
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 150,040 320,284 $ 1,514,086 $ 3,296,379
Shares issued in reinvestment of
dividends ........................... 34,201 64,303 333,119 630,815
Shares redeemed ........................ (378,700) (357,998) (3,783,745) (3,706,984)
-------------- -------------- -------------- --------------
Net increase (decrease) ................ (194,459) 26,589 $ (1,936,540) $ 220,210
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
U.S. Government/High Grade Securities Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
================================ ================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
============== ============== ============== ==============
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 2,407,804 2,327,632 $ 27,841,628 $ 28,190,782
Shares issued in reinvestment of
dividends and distributions ......... 337,139 178,050 3,779,324 2,088,529
Shares redeemed ........................ (2,092,575) (777,937) (24,336,452) (9,418,262)
-------------- -------------- -------------- --------------
Net increase ........................... 652,368 1,727,745 $ 7,284,500 $ 20,861,049
============== ============== ============== ==============
<CAPTION>
June 2, 1999* June 2, 1999*
to December to December
31, 1999 31, 1999
-------------- --------------
============== ==============
<S> <C> <C>
Class B
Shares sold ............................ 169,657 $ 1,893,421
Shares redeemed ........................ (40,814) (457,859)
-------------- --------------
Net increase ........................... 128,843 $ 1,435,562
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of distribution.
B-77
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(continued) Alliance Variable Products Series Fund
================================================================================
<TABLE>
<CAPTION>
Money Market Portfolio
-------------------------------- --------------------------------
SHARES AMOUNT
================================ ================================
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
============== ============== ============== ==============
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 524,546,562 426,000,949 $ 524,546,562 $ 426,000,949
Shares issued in reinvestment of
dividends ........................... 6,427,061 4,568,135 6,427,061 4,568,135
Shares redeemed ........................ (516,080,019) (378,579,379) (516,080,019) (378,579,379)
-------------- -------------- -------------- --------------
Net increase ........................... 14,893,604 51,989,705 $ 14,893,604 $ 51,989,705
============== ============== ============== ==============
<CAPTION>
June 16, 1999* June 16, 1999*
to December to December
31, 1999 31, 1999
============== ==============
<S> <C> <C>
Class B
Shares sold ............................ 2,025,867 $ 2,025,867
Shares issued in reinvestment of
dividends ........................... 19,485 19,485
Shares redeemed ........................ (882,009) (882,009)
-------------- --------------
Net increase ........................... 1,163,343 $ 1,163,343
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
NOTE F: Concentration of Risk
Investing in securities of foreign companies or foreign governments involves
special risks which include changes in foreign exchange rates and the
possibility of future political and economic developments which could adversely
affect the value of such securities. Moreover, securities of many foreign
companies or foreign governments and their markets may be less liquid and their
prices more volatile than those of comparable United States companies or of the
United States government.
- --------------------------------------------------------------------------------
NOTE G:Bank Borrowing
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility")
intended to provide short-term financing if necessary, subject to certain
restrictions in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
the miscellaneous expenses in the statement of operations. The Fund did not
utilize the Facility during the year ended December 31, 1999.
- --------------------------------------------------------------------------------
* Commencement of distribution.
B-78
<PAGE>
FINANCIAL HIGHLIGHTS Alliance Variable Products Series Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Year
<TABLE>
<CAPTION>
----------------------------------------------------------------------
CONSERVATIVE INVESTORS PORTFOLIO
----------------------------------------------------------------------
Year Ended December 31,
======================================================================
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Class A
Net asset value, beginning of year ..................... $ 14.03 $ 13.10 $ 12.07 $ 11.76 $ 10.07
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income (a)(b) ........................... .53 .50 .48 .45 .51
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ........ .12 1.31 .86 (.01) 1.20
---------- ---------- ---------- ---------- ----------
Net increase in net asset value from operations ........ .65 .1.81 1.34 .44 1.71
---------- ---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income ................... (.54) (.38) (.31) (.09) (.02)
Distributions from net realized gains .................. (.71) (.50) -0- (.04) -0-
---------- ---------- ---------- ---------- ----------
Total dividends and distributions ...................... (1.25) (.88) (.31) (.13) (.02)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ........................... $ 13.43 $ 14.03 $ 13.10 $ 12.07 $ 11.76
========== ========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) ... 5.04% 14.20% 11.22% 3.79% 16.99%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ................ $ 31,686 $ 37,341 $ 30,196 $ 21,729 $ 7,420
Ratios to average net assets of:
Expenses, net of waivers and reimbursements .......... .95% .90% .95% .95% .95%
Expenses, before waivers and reimbursements .......... 1.18% 1.19% 1.33% 1.40% 4.25%
Net investment income (a) ............................ 3.92% 3.69% 3.85% 3.93% 4.65%
Portfolio turnover rate ................................ 103% 123% 209% 211% 61%
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------
GROWTH INVESTORS PORTFOLIO
----------------------------------------------------------------------
Year Ended December 31,
======================================================================
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Class A
Net asset value, beginning of year ..................... $ 16.33 $ 14.38 $ 12.74 $ 11.87 $ 9.86
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income (a)(b) ........................... .35 .26 .23 .24 .35
Net realized and unrealized gain on
investments and foreign currency transactions ........ 2.08 3.03 1.83 .72 1.67
---------- ---------- ---------- ---------- ----------
Net increase in net asset value from operations ........ 2.43 3.29 2.06 .96 2.02
---------- ---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income ................... (.29) (.18) (.20) (.07) (.01)
Distributions from net realized gains .................. (1.34) (1.16) (.22) (.02) - 0-
---------- ---------- ---------- ---------- ----------
Total dividends and distributions ...................... (1.63) (1.34) (.42) (.09) (.01)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ........................... $ 17.13 $ 16.33 $ 14.38 $ 12.74 $ 11.87
========== ========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) ... 16.28% 23.68% 16.34% 8.18% 20.48%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ................ $ 18,929 $ 21,028 $ 16,600 $ 10,709 $ 4,978
Ratios to average net assets of:
Expenses, net of waivers and reimbursements .......... .95% .94% .95% .95% .95%
Expenses, before waivers and reimbursements .......... 1.47% 1.68% 1.70% 1.85% 6.17%
Net investment income (a) ............................ 2.19% 1.71% 1.72% 2.01% 3.21%
Portfolio turnover rate ................................ 110% 100% 164% 160% 50%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page B-91.
B-79
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Year
<TABLE>
<CAPTION>
----------------------------------------------------------------------
TOTAL RETURN PORTFOLIO
----------------------------------------------------------------------
Year Ended December 31,
======================================================================
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Class A
Net asset value, beginning of year .................... $ 18.06 $ 16.92 $ 14.63 $ 12.80 $ 10.41
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income (b) ............................. .44 .41(a) .39(a) .27(a) .36(a)
Net realized and unrealized gain on
investment transactions ............................. .70 2.36 2.62 1.66 2.10
---------- ---------- ---------- ---------- ----------
Net increase in net asset value from operations ....... 1.14 .2.77 3.01 1.93 2.46
---------- ---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income .................. (.36) (.29) (.23) (.07) (.07)
Distributions from net realized gains ................. (1.35) (1.34) (.49) (.03) -0-
---------- ---------- ---------- ---------- ----------
Total dividends and distributions ..................... (1.71) (1.63) (.72) (.10) (.07)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year .......................... $ 17.49 $ 18.06 $ 16.92 $ 14.63 $ 12.80
========== ========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) .. 6.53% 16.99% 21.11% 15.17% 23.67%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ............... $ 75,170 $ 59,464 $ 42,920 $ 25,875 $ 8,242
Ratios to average net assets of:
Expenses, net of waivers and reimbursements ......... .86% .88% .88% .95% .95%
Expenses, before waivers and reimbursements ......... .86% .95% .88% 1.12% 4.49%
Net investment income ............................... 2.48% 2.41%(a) 2.46%(a) 2.76%(a) 3.16%(a)
Portfolio turnover rate ............................... 91% 57% 65% 57% 30%
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------
GROWTH AND INCOME PORTFOLIO
----------------------------------------------------------------------
Year Ended December 31,
======================================================================
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Class A
Net asset value, beginning of year .................... $ 21.84 $ 19.93 $ 16.40 $ 15.79 $ 11.85
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income (b) ............................. .16 .22 .21(a) .24(a) .27(a)
Net realized and unrealized gain on
investment transactions ............................. 2.25 3.81 4.39 3.18 3.94
---------- ---------- ---------- ---------- ----------
Net increase in net asset value from operations ....... 2.41 4.03 4.60 3.42 4.21
---------- ---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income .................. (.18) (.16) (.13) (.25) (.13)
Distributions from net realized gains .............. (2.28) (1.96) (.94) (2.56) (.14)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions ..................... (2.46) (2.12) (1.07) (2.81) (.27)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year .......................... $ 21.79 $ 21.84 $ 19.93 $ 16.40 $ 15.79
========== ========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) .. 11.37% 20.89% 28.80% 24.09% 35.76%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ............... $ 522,163 $ 381,614 $ 250,202 $ 126,729 $ 41,993
Ratios to average net assets of:
Expenses, net of waivers and reimbursements ......... .71% .73% .72% .82% .79%
Expenses, before waivers and reimbursements ......... .71% .73% .72% .82% .79%
Net investment income ............................... .75% 1.07% 1.16%(a) 1.58%(a) 1.95%(a)
Portfolio turnover rate ............................... 46% 79% 86% 87% 150%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page B-91.
B-80
<PAGE>
FINANCIAL HIGHLIGHTS (continued) Alliance Variable Products Series Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
---------------
GROWTH
AND
INCOME
PORTFOLIO
---------------
June 1, 1999(d)
to
December 31,
1999
===============
<S> <C>
Class B
Net asset value, beginning of period.............................................................. $ 21.37
----------
Income From Investment Operations
Net investment income (b)......................................................................... .07
Net realized and unrealized gain on investment transactions....................................... .32
----------
Net increase in net asset value from operations................................................... .39
----------
Less: Dividends and Distributions
Dividends from net investment income.............................................................. -0-
Distributions from net realized gains............................................................. -0-
----------
Total dividends and distributions................................................................. -0-
----------
Net asset value, end of period.................................................................... $ 21.76
==========
Total Return
Total investment return based on net asset value (c).............................................. 1.83%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)......................................................... $ 7,993
Ratios to average net assets of:
Expenses........................................................................................ .97%(e)
Net investment income........................................................................... .55%(e)
Portfolio turnover rate........................................................................... 46%
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------
GROWTH PORTFOLIO
----------------------------------------------------------------------
Year Ended December 31,
======================================================================
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Class A
Net asset value, beginning of year .................... $ 27.25 $ 22.42 $ 17.92 $ 14.23 $ 10.53
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income (b) ............................. .03 .10 .07 .06(a) .17(a)
Net realized and unrealized gain on
investment transactions ............................. 8.73 6.19 5.18 3.95 3.54
---------- ---------- ---------- ---------- ----------
Net increase in net asset value from operations ....... 8.76 6.29 5.25 4.01 3.71
---------- ---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income .................. (.09) (.06) (.03) (.04) (.01)
Distributions from net realized gains ................. (2.33) (1.40) (.72) (.28) - 0-
---------- ---------- ---------- ---------- ----------
Total dividends and distributions ..................... (2.42) (1.46) (.75) (.32) (.01)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year .......................... $ 33.59 $ 27.25 $ 22.42 $ 17.92 $ 14.23
========== ========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) .. 34.47% 28.73% 30.02% 28.49% 35.23%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ............... $ 456,027 $ 328,681 $ 235,875 $ 138,688 $ 45,220
Ratios to average net assets of:
Expenses, net of waivers and reimbursements ......... .84% .87% .84% .93% .95%
Expenses, before waivers and reimbursements ......... .84% .87% .84% .93% 1.27%
Net investment income ............................... .12% .43% .37% .35%(a) 1.31%(a)
Portfolio turnover rate ............................... 54% 62% 62% 98% 86%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page B-91.
B-81
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
---------------
GROWTH
PORTFOLIO
---------------
June 1, 1999(d)
to
December 31,
1999
===============
<S> <C>
Class B
Net asset value, beginning of period.............................................................. $ 26.83
----------
Income From Investment Operations
Net investment loss (b)........................................................................... (.03)
Net realized and unrealized gain on investment transactions....................................... 6.74
----------
Net increase in net asset value from operations .................................................. 6.71
----------
Less: Dividends and Distributions
Dividends from net investment income.............................................................. -0-
Distributions from net realized gains.......................................................... -0-
----------
Total dividends and distributions................................................................. -0-
----------
Net asset value, end of period.................................................................... $ 33.54
==========
Total Return
Total investment return based on net asset value (c).............................................. 25.01%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)......................................................... $ 5,707
Ratios to average net assets of:
Expenses........................................................................................ 1.12%(e)
Net investment loss ............................................................................ (.20)%(e)
Portfolio turnover rate........................................................................... 54%
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------
INTERNATIONAL PORTFOLIO
----------------------------------------------------------------------
Year Ended December 31,
======================================================================
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Class A
Net asset value, beginning of year ..................... $ 16.17 $ 15.02 $ 14.89 $ 14.07 $ 12.88
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income (a)(b) ........................... .12 .17 .13 .19 .18
Net realized and unrealized gain on
investments and foreign currency transactions ........ 6.13 1.80 .39 .83 1.08
---------- ---------- ---------- ---------- ----------
Net increase in net asset value from operations ........ 6.25 1.97 .52 1.02 1.26
---------- ---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income ................... (.15) (.33) (.15) (.08) (.03)
Distributions from net realized gains .................. (.49) (.49) (.24) (.12) (.04)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions ...................... (.64) (.82) (.39) (.20) (.07)
---------- ---------- ----------
Net asset value, end of year ........................... $ 21.78 $ 16.17 $ 15.02 $ 14.89 $ 14.07
========== ========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) ... 40.23% 13.02% 3.33% 7.25% 9.86%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ................ $ 81,370 $ 65,052 $ 60,710 $ 44,324 $ 16,542
Ratios to average net assets of:
Expenses, net of waivers and reimbursements .......... .95% .95% .95% .95% .95%
Expenses, before waivers and reimbursements .......... 1.36% 1.37% 1.42% 1.91% 2.99%
Net investment income (a) ............................ .69% 1.08% .87% 1.29% 1.41%
Portfolio turnover rate ................................ 111% 117% 134% 60% 87%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page B-91.
B-82
<PAGE>
FINANCIAL HIGHLIGHTS (continued) Alliance Variable Products Series Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
----------------------------------------------------------------------
PREMIER GROWTH PORTFOLIO
----------------------------------------------------------------------
Year Ended December 31,
======================================================================
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Class A
Net asset value, beginning of year .................... $ 31.03 $ 20.99 $ 15.70 $ 17.80 $ 12.37
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income (loss) (b) ...................... (.09) (.01)(a) .04(a) .08(a) .09(a)
Net realized and unrealized gain on
investment transactions ............................. 9.98 10.08 5.27 3.29 5.44
---------- ---------- ---------- ---------- ----------
Net increase in net asset value from operations ....... 9.89 10.07 5.31 3.37 5.53
---------- ---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income .................. -0- (.03) (.02) (.10) (.03)
Distributions from net realized gains ................. (.47) -0- -0- (5.37) (.07)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions ..................... (.47) (.03) (.02) (5.47) (.10)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year .......................... $ 40.45 $ 31.03 $ 20.99 $ 15.70 $ 17.80
========== ========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) .. 32.32% 47.97% 33.86% 22.70% 44.85%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ............... $2,345,563 $1,247,254 $ 472,326 $ 96,434 $ 29,278
Ratios to average net assets of:
Expenses, net of waivers and reimbursements ......... 1.05% 1.06% .95% .95% .95%
Expenses, before waivers and reimbursements ......... 1.05% 1.09% 1.10% 1.23% 1.19%
Net investment income (loss) ........................ (.27)% (.04)%(a) .21%(a) .52%(a) .55%(a)
Portfolio turnover rate ............................... 26% 31% 27% 32% 97%
</TABLE>
<TABLE>
<CAPTION>
----------------
PREMIER
GROWTH
PORTFOLIO
----------------
July 14, 1999(d)
to
December 31,
1999
================
<S> <C>
Class B
Net asset value, beginning of period ............................................................ $ 35.72
----------
Income From Investment Operations
Net investment loss (b)........................................................................... (.07)
Net realized and unrealized gain on
investment transactions......................................................................... 4.75
----------
Net increase in net asset value from operations................................................... 4.68
----------
Less: Dividends and Distributions
Dividends from net investment income.............................................................. -0-
Distributions from net realized gains ............................................................ -0-
----------
Total dividends and distributions................................................................. -0-
----------
Net asset value, end of period.................................................................... $40.40
==========
Total Return
Total investment return based on net asset value (c).............................................. 13.10%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) ........................................................ $27,124
Ratios to average net assets of:
Expenses........................................................................................ 1.29%(e)
Net investment loss............................................................................. (.53)%(e)
Portfolio turnover rate........................................................................... 26%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page B-91.
B-83
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
-------------------------------------------------------
QUASAR PORTFOLIO
-------------------------------------------------------
August 5,
Year Ended December 31, 1996(f) to
======================================== December 31,
1999 1998 1997 1996
========== ========== ========== ==========
<S> <C> <C> <C> <C>
Class A
Net asset value, beginning of period ................... $ 11.14 $ 12.61 $ 10.64 $ 10.00
---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income (a)(b) ........................... .08 .07 .02 .04
Net realized and unrealized gain (loss) on
investment transactions .............................. 1.82 (.49) 1.96 .60
---------- ---------- ---------- ----------
Net increase (decrease) in net asset value from
operations ........................................... 1.90 (.42) 1.98 .64
---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income ................... (.04) (.01) (.01) -0-
Distributions from net realized gains .................. -0- (1.04) -0- -0-
---------- ---------- ---------- ----------
Total dividends and distributions ...................... (.04) (1.05) (.01) -0-
---------- ---------- ---------- ----------
Net asset value, end of period ......................... $ 13.00 $ 11.14 $ 12.61 $ 10.64
========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) ... 17.08% (4.49)% 18.60% 6.40%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) .............. $ 169,611 $ 90,870 $ 59,277 $ 8,842
Ratios to average net assets of:
Expenses, net of waivers and reimbursements .......... .95% .95% .95% .95%(e)
Expenses, before waivers and reimbursements .......... 1.19% 1.30% 1.37% 4.44%(e)
Net investment income (a) ............................ .72% .55% .17% .93%(e)
Portfolio turnover rate ................................ 110% 107% 210% 40%
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------
REAL ESTATE INVESTMENT
PORTFOLIO
----------------------------------------
January 9,
Year Ended December 31, 1997(f) to
========================= December 31,
1999 1998 1997
========== ========== ==========
<S> <C> <C> <C>
Class A
Net asset value, beginning of period ................... $ 9.78 $ 12.34 $ 10.00
---------- ---------- ----------
Income From Investment Operations
Net investment income (a)(b) ........................... .56 .54 .56
Net realized and unrealized gain (loss) on
investment transactions .............................. (1.01) (2.87) 1.78
---------- ---------- ----------
Net increase (decrease) in net asset value from
operations ........................................... (.45) (2.33) 2.34
---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income ................... (.46) (.16) -0-
Distributions from net realized gains ............... -0- (.07) -0-
---------- ---------- ----------
Total dividends and distributions ...................... (.46) (.23) -0-
---------- ---------- ----------
Net asset value, end of period ......................... $ 8.87 $ 9.78 $ 12.34
========== ========== ==========
Total Return
Total investment return based on net asset value (c) ... (5.11)% (19.07)% 23.40%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) .............. $ 17,852 $ 17,080 $ 13,694
Ratios to average net assets of:
Expenses, net of waivers and reimbursements .......... .95% .95% .95%(e)
Expenses, before waivers and reimbursements .......... 1.72% 1.77% 2.31%(e)
Net investment income (a) ............................ 5.96% 4.98% 5.47%(e)
Portfolio turnover rate ................................ 37% 27% 26%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page B-91.
B-84
<PAGE>
FINANCIAL HIGHLIGHTS (continued) Alliance Variable Products Series Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
-------------------------------------------------------
TECHNOLOGY PORTFOLIO
-------------------------------------------------------
January 11,
Year Ended December 31, 1996(f) to
======================================== December 31,
1999 1998 1997 1996
========== ========== ========== ==========
<S> <C> <C> <C> <C>
Class A
Net asset value, beginning of period ................... $ 19.17 $ 11.72 $ 11.04 $ 10.00
---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income (loss) (a)(b) .................... (.09) (.04) .02 .11
Net realized and unrealized gain on
investment transactions .............................. 14.57 7.51 .69 .93
---------- ---------- ---------- ----------
Net increase in net asset value from operations ........ 14.48 7.47 .71 1.04
---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income ................... -0- (.02) (.03) -0-
Distribution from net realized gains ................... (.04) -0- -0- -0-
---------- ---------- ---------- ----------
Total dividends and distributions ...................... (.04) (.02) (.03) -0-
---------- ---------- ---------- ----------
Net asset value, end of period ......................... $ 33.61 $ 19.17 $ 11.72 $ 11.04
========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) ... 75.71% 63.79% 6.47% 10.40%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) .............. $ 357,480 $ 130,602 $ 69,240 $ 28,083
Ratios to average net assets of:
Expenses, net of waivers and reimbursements .......... .95% .95% .95% .95%(e)
Expenses, before waivers and reimbursements .......... 1.12% 1.20% 1.19% 1.62%(e)
Net investment income (loss) (a) ..................... (.39)% (.30)% .16% 1.17%(e)
Portfolio turnover rate ................................ 64% 63% 46% 22%
</TABLE>
<TABLE>
<CAPTION>
-------------
TECHNOLOGY
PORTFOLIO
-------------
September 22,
1999(d) to
December 31,
1999
=============
<S> <C>
Class B
Net asset value, beginning of period.............................................................. $ 23.59
----------
Income From Investment Operations
Net investment loss (a) (b)....................................................................... (.05)
Net realized and unrealized gain on
investment transactions......................................................................... 10.07
----------
Net increase in net asset value from operations................................................... 10.02
----------
Less: Dividends and Distributions
Dividends from net investment income.............................................................. -0-
Distributions from net realized gains............................................................. -0-
Total dividends and distributions................................................................. -0-
----------
Net asset value, end of period.................................................................... $33.61
==========
Total Return
Total investment return based on net asset value (c).............................................. 42.48%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)......................................................... $10,350
Ratios to average net assets of:
Expenses, net of waivers and reimbursements..................................................... 1.20%(e)
Expenses, before waivers and reimbursements..................................................... 1.52%(e)
Net investment loss (a)......................................................................... (.64)%(e)
Portfolio turnover rate........................................................................... 64%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page B-91.
B-85
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Year
<TABLE>
<CAPTION>
----------------------------------------------------------------------
UTILITY INCOME PORTFOLIO
----------------------------------------------------------------------
Year Ended December 31,
======================================================================
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Class A
Net asset value, beginning of year ..................... $ 18.90 $ 15.67 $ 12.69 $ 12.01 $ 9.96
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income (a)(b) ........................... .41 .37 .38 .31 .30
Net realized and unrealized gain on
investments and foreign currency transactions ........ 3.19 3.31 2.84 .62 1.83
---------- ---------- ---------- ---------- ----------
Net increase in net asset value from operations ........ 3.60 3.68 3.22 .93 2.13
---------- ---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income ................... (.30) (.31) (.24) (.09) (.08)
Distributions from net realized gains .................. (.54) (.14) -0- (.16) -0-
---------- ---------- ---------- ---------- ----------
Total dividends and distributions ...................... (.84) (.45) (.24) (.25) (.08)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ........................... $ 21.66 $ 18.90 $ 15.67 $ 12.69 $ 12.01
========== ========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) ... 19.40% 23.91% 25.71% 7.88% 21.45%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ................ $ 46,158 $ 34,436 $ 20,347 $ 14,857 $ 6,251
Ratios to average net assets of:
Expenses, net of waivers and reimbursements .......... .95% .95% .95% .95% .95%
Expenses, before waivers and reimbursements .......... 1.14% 1.35% 1.08% 1.51% 3.79%
Net investment income (a) ............................ 2.07% 2.20% 2.83% 2.61% 2.73%
Portfolio turnover rate ................................ 16% 20% 30% 75% 138%
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------
WORLDWIDE PRIVATIZATION PORTFOLIO
----------------------------------------------------------------------
Year Ended December 31,
======================================================================
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Class A
Net asset value, beginning of year ..................... $ 14.81 $ 14.20 $ 13.13 $ 11.17 $ 10.10
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income (a)(b) ........................... .15 .26 .25 .28 .32
Net realized and unrealized gain on
investments and foreign currency transactions ........ 8.00 1.29 1.17 1.78 .78
---------- ---------- ---------- ---------- ----------
Net increase in net asset value from operations ........ 8.15 .1.55 1.42 2.06 1.10
---------- ---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income ................... (.31) (.20) (.16) (.10) (.03)
Distributions from net realized gains .................. (.91) (.74) (.19) -0- -0-
---------- ---------- ---------- ---------- ----------
Total dividends and distributions ...................... (1.22) (.94) (.35) (.10) (.03)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ........................... $ 21.74 $ 14.81 $ 14.20 $ 13.13 $ 11.17
========== ========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) ... 58.83% 10.83% 10.75% 18.51% 10.87%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ................ $ 64,059 $ 46,268 $ 41,818 $ 18,807 $ 5,947
Ratios to average net assets of:
Expenses, net of waivers and reimbursements .......... .95% .95% .95% .95% .95%
Expenses, before waivers and reimbursements .......... 1.46% 1.70% 1.55% 1.85% 4.17%
Net investment income (a) ............................ .93% 1.74% 1.76% 2.26% 2.96%
Portfolio turnover rate ................................ 54% 92% 58% 47% 23%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page B-91.
B-86
<PAGE>
FINANCIAL HIGHLIGHTS (continued) Alliance Variable Products Series Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
----------------------------------------------------------------------
GLOBAL BOND PORTFOLIO
----------------------------------------------------------------------
Year Ended December 31,
======================================================================
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Class A
Net asset value, beginning of year ..................... $ 12.42 $ 11.10 $ 11.74 $ 12.15 $ 9.82
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income (b) .............................. 48 .49(a) .54(a) .67(a) .69(a)
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ........ (1.24) 1.06 (.48) .01 1.73
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value from
operations ........................................... (.76) 1.55 .06 .68 2.42
---------- ---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income ................... (.37) (.17) (.57) (.84) (.09)
Distributions from net realized gains .................. (.04) (.06) (.13) (.25) -0-
---------- ---------- ---------- ---------- ----------
Total dividends and distributions ...................... (.41) (.23) (.70) (1.09) (.09)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ........................... $ 11.25 $ 12.42 $ 11.10 $ 11.74 $ 12.15
========== ========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) ... (6.11)% 14.12% .67% 6.21% 24.73%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ................ $ 50,569 $ 34,652 $ 22,194 $ 18,117 $ 11,553
Ratios to average net assets of:
Expenses, net of waivers and reimbursements .......... .90% .93% .94% .94% .95%
Expenses, before waivers and reimbursements .......... 1.04% 1.17% 1.03% 1.15% 1.77%
Net investment income ................................ 4.16% 4.23%(a) 4.81%(a) 5.76%(a) 6.22%(a)
Portfolio turnover rate ................................ 183% 42% 257% 191% 262%
</TABLE>
<TABLE>
<CAPTION>
----------------
GLOBAL
BOND
PORTFOLIO
----------------
July 16, 1999(d)
to
December 31,
1999
================
<S> <C>
Class B
Net asset value, beginning of period.............................................................. $ 10.98
----------
Income From Investment Operations
Net investment income (b)......................................................................... .21
Net realized and unrealized gain on
investment transactions......................................................................... .04
----------
Net increase in net asset value from operations................................................... .25
----------
Less: Dividends and Distributions
Dividends from net investment income.............................................................. -0-
Distributions from net realized gains............................................................. -0-
----------
Total dividends and distributions................................................................. -0-
----------
Net asset value, end of period.................................................................... $11.23
==========
Total Return
Total investment return based on net asset value (c).............................................. 2.18%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)......................................................... $1,770
Ratios to average net assets of:
Expenses, net of waivers and reimbursements..................................................... 1.20%(e)
Expenses, before waivers and reimbursements..................................................... 1.34%(e)
Net investment income............................................................................. 3.96%(e)
Portfolio turnover rate........................................................................... 183%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page B-91.
B-87
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
----------------------------------------------------------------------
GLOBAL DOLLAR GOVERNMENT PORTFOLIO
----------------------------------------------------------------------
Year Ended December 31,
======================================================================
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Class A
Net asset value, beginning of year ..................... $ 10.18 $ 14.65 $ 14.32 $ 11.95 $ 9.84
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income (a)(b) ........................... 1.21 1.20 1.17 1.10 .92
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ........ 1.08 (4.03) .70 1.78 1.32
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value from
operations ........................................... 2.29 (2.83) 1.87 2.88 2.24
---------- ---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income ................... (1.68) (.95) (.61) (.48) (.13)
Distributions from net realized gains .................. -0- (.69) (.93) (.03) -0-
---------- ---------- ---------- ---------- ----------
Total dividends and distributions ...................... (1.68) (1.64) (1.54) (.51) (.13)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ........................... $ 10.79 $ 10.18 $ 14.65 $ 14.32 $ 11.95
========== ========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) ... 26.08% (21.71)% 13.23% 24.90% 22.98%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ................ $ 10,139 $ 10,380 $ 15,378 $ 8,847 $ 3,778
Ratios to average net assets of:
Expenses, net of waivers and reimbursements .......... .95% .95% .95% .95% .95%
Expenses, before waivers and reimbursements .......... 2.29% 1.75% 1.29% 1.97% 4.82%
Net investment income (a) ............................ 12.42% 9.49% 7.87% 8.53% 8.65%
Portfolio turnover rate ................................ 117% 166% 214% 155% 13%
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------
HIGH-YIELD PORTFOLIO
----------------------------------------
October 27,
Year Ended December 31, 1997(f) to
------------------------- December 31,
1999 1998 1997
========== ========== ==========
<S> <C> <C> <C>
Class A
Net asset value, beginning of period ................... $ 9.94 $ 10.33 $ 10.00
---------- ---------- ----------
Income From Investment Operations
Net investment income (a)(b) ........................... .91 1.03 .13
Net realized and unrealized gain (loss) on
investment transactions .............................. (1.16) (1.41) .20
---------- ---------- ----------
Net increase (decrease) in net asset value from
operations ........................................... (.25) (.38) .33
---------- ---------- ----------
Less: Dividends
Dividends from net investment income ................... (.55) (.01) -0-
---------- ---------- ----------
Net asset value, end of period ......................... $ 9.14 $ 9.94 $ 10.33
========== ========== ==========
Total Return
Total investment return based on net asset value (c) ... (2.58)% (3.69)% 3.30%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) .............. $ 24,567 $ 16,910 $ 1,141
Ratios to average net assets of:
Expenses, net of waivers and reimbursements .......... .95% .95% .95%(e)
Expenses, before waivers and reimbursements .......... 1.40% 1.80% 8.26%(e)
Net investment income (a) ............................ 9.72% 9.77% 7.28%(e)
Portfolio turnover rate ................................ 198% 295% 8%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page B-91.
B-88
<PAGE>
FINANCIAL HIGHLIGHTS (continued) Alliance Variable Products Series Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Year
<TABLE>
<CAPTION>
----------------------------------------------------------------------
NORTH AMERICAN GOVERNMENT INCOME PORTFOLIO
----------------------------------------------------------------------
Year Ended December 31,
======================================================================
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Class A
Net asset value, beginning of year ..................... $ 12.55 $ 12.97 $ 12.38 $ 10.48 $ 8.79
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income (a)(b) ........................ 1.22 1.16 1.07 1.26 1.13
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ........ (.16) (.65) .10 .69 .83
---------- ---------- ---------- ---------- ----------
Net increase in net asset value from operations ........ 1.06 .51 1.17 1.95 1.96
---------- ---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income ................... (1.05) (.82) (.58) (.05) (.27)
Distributions from net realized gains .................. (.14) (.11) -0- -0- -0-
---------- ---------- ---------- ---------- ----------
Total dividends and distributions ...................... (1.19) (.93) (.58) (.05) (.27)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ........................... $ 12.42 $ 12.55 $ 12.97 $ 12.38 $ 10.48
========== ========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) ... 8.90% 4.07% 9.62% 18.70% 22.71%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ................ $ 29,411 $ 32,059 $ 30,507 $ 16,696 $ 7,278
Ratios to average net assets of:
Expenses, net of waivers and reimbursements .......... .95% .86% .95% .95% .95%
Expenses, before waivers and reimbursements .......... 1.20% 1.17% 1.04% 1.41% 2.57%
Net investment income (a) ............................ 9.91% 9.16% 8.34% 11.04% 12.24%
Portfolio turnover rate ................................ 6% 8% 20% 4% 35%
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------
SHORT-TERM MULTI-MARKET PORTFOLIO
======================================================================
Year Ended December 31,
======================================================================
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Class A
Net asset value, beginning of year ..................... $ 10.10 $ 10.57 $ 10.73 $ 10.58 $ 9.91
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income (a)(b) ........................... .51 .61 .59 .64 .82
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ........ (.16) .03 (.11) .33 (.15)
---------- ---------- ---------- ---------- ----------
Net increase in net asset value from operations ........ .35 .64 .48 .97 .67
---------- ---------- ---------- ---------- ----------
Less: Dividends
Dividends from net investment income ................... (.54) (1.11) (.64) (.82) -0-
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ........................... $ .9.91 $ 10.10 $ 10.57 $ 10.73 $ 10.58
========== ========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) ... 3.51% 6.32% 4.59% 9.57% 6.76%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ................ $ 4,416 $ 6,469 $ 6,489 $ 7,112 $ 3,152
Ratios to average net assets of:
Expenses, net of waivers and reimbursements .......... .95% .94% .94% .95% .95%
Expenses, before waivers and reimbursements .......... 2.65% 2.69% 1.42% 2.09% 1.30%
Net investment income (a) ............................ 5.09% 5.94% 5.50% 6.03% 8.22%
Portfolio turnover rate ................................ 123% 18% 222% 159% 379%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page B-91.
B-89
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
----------------------------------------------------------------------
U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
----------------------------------------------------------------------
Year Ended December 31,
======================================================================
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Class A
Net asset value, beginning of year ..................... $ 12.27 $ 11.93 $ 11.52 $ 11.66 $ 9.94
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income (b) .............................. .64 .63(a) .68(a) .66(a) .65(a)
Net realized and unrealized gain (loss) on
investment transactions .............................. (.94) .32 .29 (.39) 1.25
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value from
operations ........................................... (.30) .95 .97 .27 1.90
---------- ---------- ---------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income ................... (.49) (.55) (.54) (.28) (.18)
Distributions from net realized gains .................. (.30) (.06) (.02) (.13) -0-
---------- ---------- ---------- ---------- ----------
Total dividends and distributions ...................... (.79) (.61) (.56) (.41) (.18)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ........................... $ 11.18 $ 12.27 $ 11.93 $ 11.52 $ 11.66
========== ========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) ... (2.45)% 8.22% 8.68% 2.55% 19.26%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ................ $ 60,504 $ 58,418 $ 36,198 $ 29,150 $ 16,947
Ratios to average net assets of:
Expenses, net of waivers and reimbursements .......... .86% .78% .84% .92% .95%
Expenses, before waivers and reimbursements .......... .86% .91% .84% .98% 1.58%
Net investment income (a) ............................ 5.51% 5.24%(a) 5.89%(a) 5.87%(a) 5.96%(a)
Portfolio turnover rate ................................ 172% 235% 114% 137% 68%
</TABLE>
<TABLE>
<CAPTION>
---------------
U.S.
GOVERNMENT/
HIGH GRADE
SECURITIES
PORTFOLIO
---------------
June 2, 1999(d)
to
December 31,
1999
===============
<S> <C>
Class B
Net asset value, beginning of period.............................................................. $ 11.13
----------
Income From Investment Operations
Net investment income (b)......................................................................... .33
Net realized and unrealized loss on
investment transactions......................................................................... (.30)
----------
Net increase in net asset value from operations................................................... .03
----------
Less: Dividends and Distributions
Dividends from net investment income.............................................................. -0-
Distributions from net realized gains............................................................. -0-
Total dividends and distributions................................................................. -0-
----------
Net asset value, end of period.................................................................... $11.16
==========
Total Return
Total investment return based on net asset value (c).............................................. .27%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)......................................................... $1,438
Ratios to average net assets of:
Expenses ....................................................................................... 1.15%(e)
Net investment income .......................................................................... 5.48%(e)
Portfolio turnover rate........................................................................... 172%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page B-91.
B-90
<PAGE>
Alliance Variable Products Series Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
----------------------------------------------------------------------
MONEY MARKET PORTFOLIO
----------------------------------------------------------------------
Year Ended December 31,
======================================================================
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Class A
Net asset value, beginning of year ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net investment income .................................. .05 .05 .05 (a) .05(a) .05(a)
---------- ---------- ---------- ---------- ----------
Less: Dividends
Dividends from net investment income ................... (.05) (.05) (.05) (.05) (.05)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return
Total investment return based on net asset value (c) ... 4.69% 4.98% 5.11% 4.71% 4.97%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) ................ $ 134,467 $ 119,574 $ 67,584 $ 64,769 $ 28,092
Ratios to average net assets of:
Expenses, net of waivers and reimbursements .......... .64% .68% .64% .69% .95%
Expenses, before waivers and reimbursements .......... .64% .68% .64% .69% 1.07%
Net investment income ................................ 4.59% 4.84% 5.00%(a) 4.64%(a) 4.85%(a)
</TABLE>
<TABLE>
<CAPTION>
----------------
MONEY
MARKET
PORTFOLIO
----------------
June 16, 1999(d)
to
December 31,
1999
================
<S> <C>
Class B
Net asset value, beginning of period.............................................................. $ 1.00
----------
Income From Investment Operations
Net investment income............................................................................. .02
----------
Less: Dividends
Dividends from net investment income ............................................................. (.02)
----------
Net asset value, end of period.................................................................... $ 1.00
==========
Total Return
Total investment return based on net asset value (c).............................................. 2.52%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)......................................................... $ 1,163
Ratios to average net assets of:
Expenses........................................................................................ .89%(e)
Net investment income .......................................................................... 4.71%(e)
</TABLE>
- --------------------------------------------------------------------------------
Footnote Summary:
(a) Net of expenses reimbursed or waived by the Adviser.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Total investment return
calculated for a period of less than one year is not annualized.
(d) Commencement of distribution.
(e) Annualized.
(f) Commencement of operations.
B-91
<PAGE>
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS Alliance Variable Products Series Fund
================================================================================
To the Shareholders and Board of Directors Alliance Variable Products Series
Fund, Inc.
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Alliance Variable Products Series Fund, Inc.
(the "Fund"), (comprising, respectively, Conservative Investors, Growth
Investors, Total Return, Growth and Income, Growth, International, Premier
Growth, Quasar, Real Estate Investment, Technology, Utility Income, Worldwide
Privatization, Global Bond, Global Dollar Government, High Yield, North American
Government Income, Short-Term Multi-Market, U.S. Government/High Grade
Securities and Money Market Portfolios), as of December 31, 1999, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1999, by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Portfolios constituting Alliance Variable Products Series
Fund, Inc. at December 31, 1999, the results of their operations for the year
then ended, the changes in their net assets for each of the two years in the
period then ended, and the financial highlights for each of the indicated
periods, in conformity with accounting principles generally accepted in the
United States.
/s/ Ernst & Young LLP
New York, New York
February 14, 2000
FEDERAL INCOME TAX INFORMATION (unaudited)
================================================================================
The following Portfolios of the Fund hereby designate the respective amounts as
long-term capital gain distributions during the taxable year ended December 31,
1999:
Long-Term
Capital Gain
Distributions
-------------
Conservative Investors $ 824,035
Growth Investors 976,668
Total Return 2,175,109
Growth and Income 18,652,637
Growth 27,134,718
International 1,598,277
Premier Growth 23,280,324
Technology 218,946
Utility Income 1,041,778
Worldwide Privatization 391,888
Global Bond 97,755
North American Government Income 220,643
U.S. Government/High Grade
Securities 195,970
B-92
<PAGE>
Alliance Variable Products Series Fund
================================================================================
BOARD OF DIRECTORS
John D. Carifa, Chairman and President
Ruth Block (1)
David H. Dievler (1)
John H. Dobkin (1)
William H. Foulk, Jr. (1)
Dr. James M. Hester (1)
Clifford L. Michel (1)
Donald J. Robinson (1)
OFFICERS
Matthew Bloom, Senior Vice President
Kathleen A. Corbet, Senior Vice President
Alfred L. Harrison, Senior Vice President
Nelson Jantzen, Senior Vice President
Wayne D. Lyski, Senior Vice President
Raymond J. Papera, Senior Vice President
Alden M. Stewart, Senior Vice President
Peter Anastos, Vice President
Steven Beinhacker, Vice President
Mark H. Breedon, Vice President
Russell Brody, Vice President
Nicholas D.P. Carn, Vice President
Ian Coulman, Vice President
Randall E. Haase, Vice President
David Kruth, Vice President
Gerald T. Malone, Vice President
Douglas J. Peebles, Vice President
Daniel G. Pine, Vice President
Paul C. Rissman, Vice President
Tyler J. Smith, Vice President
Wayne C. Tappe, Vice President
Jean Van De Walle, Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Thomas Manley, Controller
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
DISTRIBUTOR
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas
New York, NY 10105
INDEPENDENT AUDITORS
Ernst & Young LLP
787 Seventh Avenue
New York, NY 10019
LEGAL COUNSEL
Seward & Kissel
One Battery Park Plaza
New York, NY 10004
TRANSFER AGENT
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-free 1-(800) 221-5672
- --------------------------------------------------------------------------------
(1) Member of the Audit Committee.
B-93
<PAGE>
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<PAGE>
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<PAGE>
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