ALLIANCE QUASAR FUND
SEMI-ANNUAL REPORT
MARCH 31, 1997
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE QUASAR FUND
_______________________________________________________________________________
May 5, 1997
Dear Shareholders:
While the past six months continued to be a difficult period for small cap
stocks, Alliance Quasar Fund's investment returns surpassed those of the
Russell 2000 Index, which measures the performance of small cap U.S. stocks.
Shown below are the Fund's total returns for the most recent six- and
twelve-month periods ending March 31, 1997, based on the net asset values of
each class of shares. For comparison, we have also shown the returns for the
S&P 500 Stock Index, a common measure of the broad stock market.
INVESTMENT RESULTS*
TOTAL RETURNS FOR PERIODS
ENDED MARCH 31, 1997
6 MONTHS 12 MONTHS
---------- -----------
ALLIANCE QUASAR FUND
Class A 0.88% 9.80%
Class B 0.48% 8.90%
Class C 0.44% 9.03%
RUSSELL 2000 INDEX 0.24% 5.11%
S&P 500 STOCK INDEX 11.24% 19.82%
* TOTAL RETURNS FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT EXPENSES
ASSOCIATED WITH THAT CLASS.
REVIEW OF INVESTMENT STRATEGY
Throughout the past six months, the Fund has benefited from many of the
investment strategies implemented during 1995 and 1996. We continue to
underweight technology holdings relative to the Fund's benchmark, the Russell
2000 Index. However, given the tremendous sell-off in the technology sector
that took place in the first quarter of 1997, we are now looking at the sector
very closely for the first time in over nine months.
The Fund continued to overweight energy holdings relative to the Russell 2000.
In addition to the offshore drilling operators which we have owned for some
time, we have recently added two new holdings in the oil tanker market. We see
a tightening in the demand/supply for oil tankers similar to the demand crunch
faced by drilling rig operators over the last two years. Both OMI Corporation
and Knightsbridge Tankers are likely beneficiaries of this trend. We continue
to feel confident about the prospects for the U.S. refining business and have
increased our exposure to Valero Energy.
Within the retail sector, we continue to like Tommy Hilfiger, Nine West, and
Timberland. One addition to the portfolio in this area is Stride Rite
Corporation. We believe they are in the midst of a turnaround, and both the
Stride Rite and Keds brands are being reintroduced into the marketplace. In
addition, Stride Rite has been awarded the Tommy Hilfiger footwear license for
men and boys. The launch of this line is currently ahead of schedule.
We are also quite bullish on the retail end of the automotive sector and
believe that Cross-Continent Auto Retailers will benefit as the automobile
industry consolidates, bringing tremendous cost savings and efficiency. On a
related note, we are also bullish on the automobile rental market which is also
going through tremendous change. While car makers are exiting the business to
focus more on manufacturing, rental companies are being bought by financial
entrepreneurs with experience making money through inventory yield management
and greater general efficiency. As a result, the rental industry had a 6% price
increase in the first quarter of 1997, the first major increase in several
years. We believe Team Rental Group (Budget) will be a major beneficiary of
these changes.
OUTLOOK
The market continues to benefit from modest economic growth and modest
inflation. Companies reporting better than average earnings are gaining
attention in the marketplace, driving market valuations higher.
Looking forward, our outlook for the U.S. economy and equities remains
positive. However, an increase in interest rates would put some pressure on
price/earning ratios, which means that stocks with higher P/Es could become
vulnerable. As a result, we continue to focus on the underlying earnings of
each company, working to avoid the risk of unsustainable valuations.
1
ALLIANCE QUASAR FUND
_______________________________________________________________________________
We remain enthusiastic about the growth potential of small cap stocks. After
underperforming large cap stocks in 1994, 1995, 1996 and 1997 year-to-date, we
believe that small cap stocks offer very attractive valuations on a relative
basis. We are hopeful that the relative value of small cap issues will soon be
recognized in the marketplace.
Thank you for your continued interest in the Alliance Quasar Fund. We look
forward to reporting to you on future market activity and Fund investment
results.
Sincerely,
Alden M. Stewart
President
Randall E. Haase
Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
2
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE QUASAR FUND
_______________________________________________________________________________
Alliance Quasar Fund seeks growth of capital by pursuing aggressive investment
policies. Quasar Fund invests primarily in a diversified portfolio of equity
securities of any company and industry and in any type of security which is
believed to offer possibilities for capital appreciation.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF MARCH 31, 1997
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year +9.80% +5.13%
Five Years +15.83% +14.83%
Ten Years +10.29% +9.81%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year +8.90% +5.23%
Five Years +14.93% +14.93%
Since Inception* +15.55% +15.55%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year +9.03% +8.11%
Since Inception* +20.24% +20.24%
The average annual total returns reflect reinvestment of dividends and/or
capital gains distributions in additional shares with and without the effect of
the 4.25% maxi-mum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (4% year 1, 3% year 2, 2% year 3, 1% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000. Total return for Advisor Class shares will differ due to
different expenses associated with that class.
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.
* Inception: 9/17/90, Class B; 5/3/93, Class C.
3
TEN LARGEST HOLDINGS
MARCH 31, 1997 (UNAUDITED) ALLIANCE QUASAR FUND
_______________________________________________________________________________
COMPANY VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Nine West Group, Inc. $ 22,276,550 3.9%
OMI Corp. 20,455,500 3.5
Team Rental Group, Inc. 15,760,500 2.7
Continental Airlines, Inc. Cl.B 14,253,662 2.5
Industrie Natuzzi S.p.A. (ADR) 13,248,237 2.3
Parker Drilling Co. 13,157,125 2.3
Knightsbridge Tankers, Ltd. 13,039,225 2.3
Valero Energy Corp. 12,964,050 2.2
Mohawk Industries, Inc. 12,044,875 2.1
Rowan Cos., Inc. 11,979,937 2.1
$149,179,661 25.9%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
_______________________________________________________________________________
SHARES
-----------------------------------------
PURCHASES BOUGHT HOLDINGS 3/31/97
- ----------------------------------------------------------------------------
Bethlehem Steel Corp. 1,408,000 1,408,000
Circuit City Stores, Inc. 534,800 534,800
Continental Airlines, Inc. Cl.B 309,700 454,300
Evergreen Media Corp. 339,300 339,300
Knightsbridge Tankers, Ltd. 537,700 537,700
Miller Industries, Inc. 752,400 752,400
Nine West Group, Inc. 273,600 497,800
OMI Corp. 2,098,000 2,098,000
Parker Drilling Co. 1,571,000 1,571,000
Valero Energy Corp. 356,400 356,400
SALES SOLD HOLDINGS 3/31/97
- ------------------------------------------------------------------------------
Diamond Offshore Drilling, Inc. 165,436 -0-
Host Marriott Corp. 639,200 -0-
Loewen Group, Inc. 148,000 -0-
Noble Drilling Corp. 393,200 -0-
Office Max, Inc. 536,600 -0-
Oxford Resources Corp. 205,400 -0-
Republic Industries, Inc. 274,500 -0-
USA Waste Services, Inc. 310,000 -0-
Western Digital Corp. 88,300 -0-
Xircom, Inc. 320,700 -0-
4
PORTFOLIO OF INVESTMENTS
MARCH 31, 1997 (UNAUDITED) ALLIANCE QUASAR FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-93.9%
CONSUMER PRODUCTS & SERVICES-33.2%
AIRLINES-5.2%
Alaska Air Group, Inc. (a) 253,000 $ 6,483,125
America West Holding Corp. Cl.B (a) 267,300 4,176,563
Continental Airlines, Inc. Cl.B (a) 454,300 14,253,662
USAir Group, Inc. (a) 200,900 4,922,050
------------
29,835,400
APPAREL-8.2%
Jones Apparel Group, Inc. (a) 129,800 4,818,825
Nine West Group, Inc. (a) 497,800 22,276,550
Stride Rite Corp. 621,200 9,318,000
Timberland Co. Cl.A (a) 71,700 3,145,837
Tommy Hilfiger Corp. (a) 150,200 7,847,950
------------
47,407,162
AUTO & RELATED-4.3%
Miller Industries, Inc. (a) 752,400 9,028,800
Team Rental Group, Inc. (a) 750,500 15,760,500
------------
24,789,300
BROADCASTING & CABLE-1.7%
Evergreen Media Corp. (a) 339,300 9,903,319
COMMERCIAL SERVICES-0.7%
TeleSpectrum Worldwide, Inc. (a) 360,700 4,283,313
CONTAINERS & PACKAGING-1.4%
Silgan Holdings, Inc. (a) 329,600 8,240,000
COSMETICS & HOUSEHOLD PRODUCTS-0.4%
Playtex Products, Inc. (a) 203,700 2,215,238
ENTERTAINMENT & LEISURE-1.0%
Florida Panthers Holdings, Inc. Cl.A (a) 222,800 6,043,450
RESTAURANTS & LODGING-4.0%
Interstate Hotels Co. (a) 342,400 9,672,800
Studio Plus Hotels, Inc. (a) 242,000 4,174,500
Suburban Lodges of America, Inc. (a) 498,500 8,973,000
------------
22,820,300
RETAILING-5.2%
Circuit City Stores, Inc. (a) 534,800 8,022,000
Cross-Continent Auto Retailers, Inc. (a) 463,700 8,462,525
Industrie Natuzzi S.p.A. (ADR) (b) 554,900 13,248,237
------------
29,732,762
OTHER-1.1%
Equity Corp. International (a) 296,900 6,234,900
------------
191,505,144
BASIC INDUSTRIES-29.9%
BUILDING & RELATED-0.9%
Hughes Supply, Inc. 156,800 5,115,600
CHEMICALS-5.7%
Crompton & Knowles Corp. 551,800 10,760,100
Cytec Industries, Inc. (a) 140,100 5,306,288
Hexcel Corp. (a) 334,300 5,892,037
International Specialty Products, Inc. (a) 509,200 6,365,000
Polymer Group, Inc. (a) 324,800 4,303,600
------------
32,627,025
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE QUASAR FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
ENVIRONMENTAL CONTROL-2.8%
American Disposal
Services, Inc. (a) 257,900 $ 4,577,725
Superior Services, Inc. (a) 283,200 6,301,200
United Waste Systems, Inc. (a) 147,300 5,486,925
------------
16,365,850
FOREST PRODUCTS-0.9%
Buckeye Cellulose Corp. (a) 181,100 5,387,725
METAL HARDWARE-6.2%
Bethlehem Steel Corp. (a) 1,408,000 11,616,000
Century Aluminum Co. 358,400 6,048,000
Gibraltar Steel Corp. (a) 299,700 5,994,000
Steel Dynamics, Inc. (a) 374,100 6,546,750
Titanium Metals Corp. (a) 209,800 5,323,675
------------
35,528,425
METALS & MINING-2.1%
Pegasus Gold, Inc. (a) 701,500 5,699,687
Royal Oak Mines, Inc. (a) 2,014,900 6,422,494
------------
12,122,181
TRANSPORTATION & SHIPPING-9.2%
Consolidated Freightways Corp. (a) 653,300 7,757,937
Genesee & Wyoming, Inc. Cl.A (a) 192,500 6,111,875
Knightsbridge Tankers, Ltd. (a) 537,700 13,039,225
OMI Corp. (a) 2,098,000 20,455,500
Xtra Corp. 139,700 5,780,088
------------
53,144,625
TEXTILE PRODUCTS-2.1%
Mohawk Industries, Inc. (a) 577,000 12,044,875
------------
172,336,306
TECHNOLOGY-13.1%
AEROSPACE & DEFENSE-1.6%
Doncasters Plc (ADR) (a) (c) 288,400 5,587,750
Orbital Sciences Corp. Cl.A (a) 266,600 3,674,081
------------
9,261,831
COMPUTER PERIPHERALS-1.0%
Read-Rite Corp. (a) 232,000 5,858,000
COMPUTER SOFTWARE & SERVICES-1.9%
Comverse Technology, Inc. (a) 202,700 8,006,650
HMT Technology Corp. (a) 233,700 2,862,825
------------
10,869,475
ELECTRONICS-3.8%
Apogee Enterprises, Inc. 292,000 5,767,000
BMC Industries, Inc. 164,900 4,658,425
Harman International Industries, Inc. 246,700 8,264,450
Kent Electronics Corp. (a) 128,300 2,950,900
------------
21,640,775
TELECOMMUNICATIONS-4.0%
ICG Communications, Inc. (a) 263,892 3,001,772
Millicom International
Cellular, S.A. (a) (d) 289,400 11,973,925
Telephone and Data Systems, Inc. 216,400 8,304,350
------------
23,280,047
OTHER-0.8%
Synetic, Inc. (a) 92,500 4,370,625
------------
75,280,753
ENERGY-9.1%
OIL & GAS SERVICES-9.1%
Costilla Energy, Inc. (a) 458,100 6,642,450
KCS Energy, Inc. 190,100 6,249,538
6
ALLIANCE QUASAR FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
Parker Drilling Co. (a) 1,571,000 $ 13,157,125
Rowan Cos., Inc. (a) 529,500 11,979,937
Southern Union Co. (a) 64,600 1,477,725
Valero Energy Corp. 356,400 12,964,050
------------
52,470,825
HEALTH CARE-4.5%
BIOTECHNOLOGY-1.1%
Human Genome Sciences, Inc. (a) 94,800 3,081,000
Medimmune, Inc. (a) 234,600 3,225,750
------------
6,306,750
DRUGS, HOSPITAL SUPPLIES & MEDICAL
SERVICES-3.4%
GelTex Pharmaceuticals, Inc. (a) 513,200 10,905,500
National Surgery Centers, Inc. (a) 205,650 5,963,850
Regeneron Pharmaceuticals, Inc. (a) 352,000 2,816,000
------------
19,685,350
------------
25,992,100
FINANCIAL SERVICES-2.6%
FINANCE-1.1%
Aames Financial Corp. 130,750 2,647,688
Firstfed America Bancorp, Inc. (a) 289,300 3,941,712
------------
6,589,400
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
REAL ESTATE-1.5%
Taubman Centers, Inc. 640,300 $ 8,323,900
------------
14,913,300
DIVERSIFIED-1.5%
International Alliance Services, Inc. (a) 753,711 7,537,110
International Alliance warrants,
expiring 1/01/49 (a) 549,311 1,088,734
------------
8,625,844
Total Common Stocks
(cost $524,657,896) 541,124,272
SHORT-TERM DEBT SECURITIES-4.1%
Federal National Mortgage Association
5.35%, 8/14/97 $10,000 10,000,000
Student Loan Marketing Association
6.48%, 4/01/97 13,500 13,500,000
Total Short-Term Debt Securities
(amortized cost $23,500,000) 23,500,000
TOTAL INVESTMENTS-98.0%
(cost $548,157,896) 564,624,272
Other assets less liabilities-2.0% 11,766,014
NET ASSETS-100% $576,390,286
(a) Non-income producing security.
(b) Country of origin--Italy.
(c) Country of origin--Great Britain.
(d) Country of origin--Luxembourg.
Glossary:
ADR - American depository receipt
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1997 (UNAUDITED) ALLIANCE QUASAR FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $548,157,896) $564,624,272
Cash 11,320,322
Receivable for capital stock sold 5,462,414
Receivable for investment securities sold 294,827
Dividends and interest receivable 241,330
Total assets 581,943,165
LIABILITIES
Payable for investment securities purchased 3,593,076
Advisory fee payable 1,417,627
Distribution fee payable 299,364
Payable for capital stock redeemed 203,297
Accrued expenses 39,515
Total liabilities 5,552,879
NET ASSETS $576,390,286
COMPOSITION OF NET ASSETS
Shares of capital stock, at par $ 50,223
Additional paid-in capital 544,414,474
Accumulated net investment loss (2,764,785)
Accumulated net realized gain 18,225,148
Net unrealized appreciation of investments and other assets 16,465,226
$576,390,286
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($265,131,470/
11,060,119 shares of capital stock issued and outstanding) $23.97
Sales charge--4.25% of public offering price 1.06
Maximum offering price $25.03
CLASS B SHARES
Net asset value and offering price per share ($229,756,333/
10,412,615 shares of capital stock issued and outstanding) $22.07
CLASS C SHARES
Net asset value and offering price per share ($66,741,612/
3,023,547 shares of capital stock issued and outstanding) $22.07
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share($14,760,871
/615,120 shares of capital stock issued and outstanding) $24.00
See notes to financial statements.
8
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED) ALLIANCE QUASAR FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 1,151,647
Dividends 598,107 $ 1,749,754
EXPENSES
Advisory 2,558,942
Distribution fee - Class A 270,965
Distribution fee - Class B 843,656
Distribution fee - Class C 225,960
Transfer agency 317,784
Administrative 69,500
Custodian 67,140
Audit and legal 51,531
Registration 51,385
Printing 23,410
Directors' fees 18,000
Miscellaneous 16,266
Total expenses 4,514,539
Net investment loss (2,764,785)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investment transactions 21,681,343
Net change in unrealized appreciation of
investments and other assets (23,995,979)
Net loss on investment transactions (2,314,636)
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (5,079,421)
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE QUASAR FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1997 SEPTEMBER 30,
(UNAUDITED) 1996
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (2,764,785) $ (3,160,861)
Net realized gain on investments transactions 21,681,343 65,887,574
Net change in unrealized appreciation of
investments and other assets (23,995,979) 13,713,401
Net increase (decrease) in net assets
from operations (5,079,421) 76,440,114
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (35,781,299) (29,221,160)
Class B (23,349,486) (3,571,423)
Class C (5,648,782) (875,215)
Advisor Class (312,701) -0-
CAPITAL STOCK TRANSACTIONS
Net increase 275,732,785 163,177,466
Total increase 205,561,096 205,949,782
NET ASSETS
Beginning of year 370,829,190 164,879,408
End of period $576,390,286 $370,829,190
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997 (UNAUDITED) ALLIANCE QUASAR FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Quasar Fund, (the "Fund") is registered under the Investment Company
Act of 1940 as a diversified open-end management investment company. On April
15, 1996 the Board of Directors approved the creation of a fourth class of
shares, Advisor Class Shares. The Fund offers Class A, Class B, Class C and
Advisor Class shares. Class A shares are sold with a front-end sales charge of
up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases
of $1,000,000 or more, Class A shares redeemed within one year of purchase will
be subject to a contingent deferred sales charge of 1%. Class B shares are
currently sold with a contingent deferred sales charge which declines from 4%
to zero depending on the period of time the shares are held. Class B shares
will automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Class C shares purchased on or after July 1, 1996,
are subject to a contingent deferred sales charge of 1% on redemptions made
within the first year after purchase. Advisor Class shares are sold without an
initial or contingent deferred sales charge and are not subject to ongoing
distribution expenses. Advisor Class shares are offered solely to investors
participating in fee based programs. All four classes of shares have identical
voting, dividend, liquidation and other rights, except that each class bears
different distribution expenses and has exclusive voting rights with respect to
its distribution plan. The following is a summary of significant accounting
policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange are valued at the
last reported sales price or if no sale occurred, at the mean of the bid and
asked price at the regular close of the New York Stock Exchange.
Over-the-counter securities not traded on national securities exchanges are
valued at the mean of the closing bid and asked price. Securities which mature
in 60 days or less are valued at amortized cost which approximates market
value, unless this method does not represent fair value. Securities for which
current market quotations are not readily available (including investments
which are subject to limitations as to their sale) are valued at their fair
value as determined in good faith by the Board of Directors.
2. 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.
3. 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 the securities are
purchased or sold. Investment gains and losses are determined on the identified
cost basis.
4. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser"), an advisory fee at a quarterly rate
equal to .25 of 1% (approximately 1% on an annual basis) of the net assets of
the Fund valued on the last business day of the previous quarter.
Pursuant to the advisory agreement, the Fund paid $69,500 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the six months ended March 31, 1997.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Adviser) in accordance with a Services Agreement for providing personnel
and facilities to perform transfer agency services for the Fund. Such
compensation amounted to $237,347 for the six months ended March 31, 1997.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE QUASAR FUND
_______________________________________________________________________________
Alliance Fund Distributors, Inc., a wholly-owned subsidiary of the Adviser,
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $85,651 from the sales of Class A shares and
$157,711 and $10,518 in contingent deferred sales charges imposed upon
redemptions by shareholders of Class B and Class C shares, respectively, for
the six months ended March 31, 1997.
Brokerage commissions paid on investment transactions for the six months ended
March 31, 1997 amounted to $1,351,749, of which $4,865 was paid to Donaldson,
Lufkin & Jenrette Securities Corp. ("DLJ"), an affiliate of the Adviser.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to 0.30% of the Fund's average daily net assets attributable to the
Class A shares and 1% of the average daily net assets attributable to both
Class B and C shares. There is no distribution fee on the Advisor Class shares.
The fees are accrued daily and paid monthly. The Agreement provides that the
Distributor will use such payments in their entirety for distribution
assistance and promotional activities. The Distributor has incurred expenses in
excess of the distribution costs reimbursed by the Fund in the amount of
$8,435,880 and $867,348 for Class B and Class C shares, respectively; such
costs may be recovered from the Fund in future periods so long as the Agreement
is in effect. In accordance with the Agreement, there is no provision for
recovery of unreimbursed distribution costs incurred by the Distributor, beyond
the current fiscal year for Class A shares. The Agreement also provides that
the Adviser may use its own resources to finance the distribution of the Fund's
shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $528,575,955 and $328,584,624,
respectively, for the six months ended March 31, 1997. There were no purchases
or sales of U.S. government and government agency obligations for the six
months ended March 31, 1997.
At March 31, 1997, the cost of investments for federal income tax purposes was
$548,777,326. Accordingly, gross unrealized appreciation of investments was
$40,044,270 and gross unrealized depreciation of investments was $24,197,324,
resulting in net unrealized appreciation of $15,846,946.
12
ALLIANCE QUASAR FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 200,000,000 shares of $.002 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Each class consists of 50,000,000 authorized shares. Transactions
in capital stock were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31,1997 SEP. 30, MARCH 31, 1997 SEP. 30,
(UNAUDITED) 1996 (UNAUDITED) 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 5,710,031 5,471,871 $ 148,388,462 $ 136,248,579
Shares issued in
reinvestment of
distributions 1,338,000 1,253,727 31,389,627 25,952,159
Shares converted
from Class B 49,306 23,945 1,245,541 625,453
Shares redeemed (4,268,369) (4,589,604) (110,254,004) (113,607,805)
Net increase 2,828,968 2,159,939 $ 70,769,626 $ 49,218,386
CLASS B
Shares sold 6,699,038 4,441,473 $ 160,513,057 $ 109,239,019
Shares issued in
reinvestment of
distributions 806,475 171,932 17,460,185 3,349,236
Shares converted
to Class A (53,391) (25,549) (1,245,541) (625,453)
Shares redeemed (1,344,892) (1,003,450) (32,585,604) (23,478,495)
Net increase 6,107,230 3,584,406 $ 144,142,097 $ 88,484,307
CLASS C
Shares sold 2,835,543 2,062,696 $ 67,372,283 $ 49,417,709
Shares issued in
reinvestment of
distributions 149,728 16,499 3,241,625 321,569
Shares redeemed (1,053,698) (1,057,147) (25,148,755) (24,264,505)
Net increase 1,931,573 1,022,048 $ 45,465,153 $ 25,474,773
OCTOBER 2,1996(a) OCTOBER 2,1996(a)
TO TO
MARCH 31, 1997 MARCH 31, 1997
(UNAUDITED) (UNAUDITED)
------------ --------------
ADVISOR CLASS
Shares sold 608,538 $ 15,215,930
Shares issued in
reinvestment of
distributions 13,323 312,693
Shares redeemed (6,741) (172,714)
Net increase 615,120 $ 15,355,909
(a) Commencement of distribution.
13
FINANCIAL HIGHLIGHTS ALLIANCE QUASAR FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------------
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
1997 ----------------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
------------- ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $27.92 $24.16 $22.65 $24.43 $19.34 $21.27
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.11)(a) (.25) (.22)(a) (.60) (.41) (.24)
Net realized and unrealized
gain (loss) on investments .27 8.82 5.59 (.36) 6.38 (1.53)
Net increase (decrease) in net
asset value from operations .16 8.57 5.37 (.96) 5.97 (1.77)
LESS: DISTRIBUTIONS
Distributions from net realized gains (4.11) (4.81) (3.86) (.82) (.88) (.16)
Net asset value, end of period $23.97 $27.92 $24.16 $22.65 $24.43 $19.34
TOTAL RETURN
Total investment return based
on net asset value (b) .88% 42.42% 30.73% (4.05)% 31.58% (8.34)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $265,131 $229,798 $146,663 $155,470 $228,874 $252,140
Ratio of expenses to average net assets 1.54%(c) 1.79% 1.83% 1.67% 1.65% 1.62%
Ratio of net investment loss
to average net assets (.81)%(c) (1.11)% (1.06)% (1.15)% (1.00)% (.89)%
Portfolio turnover rate 75% 168% 160% 110% 102% 128%
Average commission rate (d) $.0533 $.0596 -- -- -- --
</TABLE>
See footnote summary on page 17.
14
ALLIANCE QUASAR FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------------------
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
1997 ----------------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
------------- ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $26.13 $23.03 $21.92 $23.88 $19.07 $21.14
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.19)(a) (.20) (.37)(a) (.53) (.18) (.39)
Net realized and unrealized
gain (loss) on investments .24 8.11 5.34 (.61) 5.87 (1.52)
Net increase (decrease) in net
asset value from operations .05 7.91 4.97 (1.14) 5.69 (1.91)
LESS: DISTRIBUTIONS
Distributions from net realized gains (4.11) (4.81) (3.86) (.82) (.88) (.16)
Net asset value, end of period $22.07 $26.13 $23.03 $21.92 $23.88 $19.07
TOTAL RETURN
Total investment return based
on net asset value (b) .48% 41.48% 29.78% (4.92)% 30.53% (9.05)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $229,756 $112,490 $16,604 $13,901 $16,779 $9,454
Ratio of expenses to average net assets 2.35%(c) 2.62% 2.65% 2.50% 2.46% 2.42%
Ratio of net investment loss
to average net assets (1.61)%(c) (1.96)% (1.88)% (1.98)% (1.81)% (1.67)%
Portfolio turnover rate 75% 168% 160% 110% 102% 128%
Average commision rate (d) $.0533 $.0596 -- -- -- --
</TABLE>
See footnote summary on page 17.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE QUASAR FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------------------------------
SIX MONTHS
ENDED MAY 3,1993(E)
MARCH 31, YEAR ENDED SEPTEMBER 30, TO
1997 -------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1996 1995 1994 1993
------------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $26.14 $23.05 $21.92 $23.88 $20.33
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.19)(a) (.20) (.37)(a) (.36) (.10)
Net realized and unrealized
gain (loss) on investments .23 8.10 5.36 (.78) 3.65
Net increase (decrease) in net
asset value from operations .04 7.90 4.99 (1.14) 3.55
LESS: DISTRIBUTIONS
Distributions from net realized gains (4.11) (4.81) (3.86) (.82) -0-
Net asset value, end of period $22.07 $26.14 $23.05 $21.92 $23.88
TOTAL RETURN
Total investment return based
on net asset value (b) .44% 41.46% 29.87% (4.92)% 17.46%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $66,742 $28,541 $1,611 $1,220 $118
Ratio of expenses to average net assets 2.34%(c) 2.61% 2.64% 2.48% 2.49%(c)
Ratio of net investment loss
to average net assets (1.59)%(c) (1.94)% (1.76)% (1.96)% (1.90)%(c)
Portfolio turnover rate 75% 168% 160% 110% 102%
Average commission rate (d) $.0533 $.0596 -- -- --
</TABLE>
See footnote summary on page 17.
16
ALLIANCE QUASAR FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
ADVISOR CLASS
-----------------
OCTOBER 2,1996(E)
TO
MARCH 31,1997
(UNAUDITED)
-----------------
Net asset value, beginning of period $27.82
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (.04)
Net realized and unrealized gain on investments .33
Net increase in net asset value from operations .29
LESS: DISTRIBUTION
Distributions from net realized gains (4.11)
Net asset value, end of period $24.00
TOTAL RETURN
Total investment return based on net asset value (b) 1.36%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $14,761
Ratio of expenses to average net assets (c) 1.34%
Ratio of net investment loss to average net assets (c) (.40)%
Portfolio turnover rate 75%
Average commission rate (d) $.0533
(a) Based on average shares outstanding.
(b) 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. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return calculated for periods of less than one year is
not annualized.
(c) Annualized.
(d) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on which
commissions are charged.
(e) Commencement of distribution.
17
ALLIANCE QUASAR FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN
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
ALDEN M. STEWART, PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
THOMAS BARDONG, VICE PRESIDENT
RANDALL E. HAASE, VICE PRESIDENT
DANIEL V. PANKER, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, CONTROLLER
CUSTODIAN
STATE STREET BANK & TRUST COMPANY
225 Franklin Street
Boston, MA 02110
DISTRIBUTOR
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
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
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
(1) Member of the Audit Committee.
18
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
Alliance Global Environment Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
19
ALLIANCE QUASAR FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
QSRSR
