ALLIANCE QUASAR FUND
ANNUAL REPORT
SEPTEMBER 30, 1997
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE QUASAR FUND
_______________________________________________________________________________
October 24, 1997
Dear Shareholder:
We are pleased to report the performance numbers for our fiscal year ending
September 30, 1997. Shown below are the Fund's total returns for the most
recent six- and twelve-month periods ending September 30, 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, and the Russell 2000 Index, which measures the performance of small-cap
U.S. stocks.
INVESTMENT RESULTS*
Total Returns for Periods Ended
September 30, 1997
6 Months 12 Months
-------- ---------
ALLIANCE QUASAR FUND
Class A 26.70% 27.81%
Class B 26.10% 26.70%
Class C 26.19% 26.74%
RUSSELL 2000 INDEX 33.51% 33.19%
S&P 500 STOCK INDEX 26.24% 40.43%
* TOTAL RETURNS ARE BASED ON NET ASSET VALUE FOR EACH CLASS OF SHARES. TOTAL
RETURNS FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT EXPENSES
ASSOCIATED WITH THAT CLASS.
REVIEW OF INVESTMENT STRATEGY
Our basic investment strategy, which has enabled the Fund to outperform for
most periods during the past several years, remains unchanged. We continue to
adjust the Fund's portfolio composition to reflect our perception of those
smaller, highly competitive companies that will, in our judgment, exhibit
long-term price appreciation through superior earnings growth. Within the
energy sector, we have eliminated our holdings in offshore drillers. However,
we are still bullish about onshore drillers and hold a position in Parker
Drilling.
We continue to 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.
On the cyclical side, we continue to look for industries where demand is
growing much greater than supply and capacity to meet demand is insufficient.
As a result, companies can raise prices to meet this greater demand and most of
this falls right to the bottom line as incremental profitability. We continue
to overweight the airline industry, hotel industry, and rental car industry,
believing that they exhibit superior pricing power.
Specifically, the airline industry today is more fundamentally sound than it
has ever been. Airline operators are much more focused on their bottom line
than was the case in previous cycles, and are taking their excess cash flow and
instead paying down debt and buying back stock. We feel that both Continental
Airlines and Alaska Air Group should perform well. Similarly, both the hotel
industry and rental car industry are experiencing close to 10% price growth on
a year-over-year basis, substantially adding to profitability. This year is the
first time the auto rental industry has increased rental rates in 10 years. We
should continue to see less inventory, higher inventory turns, higher prices
and therefore greater profitability going forward. We feel Budget Group and
Avis Rent A Car should do well as a result of these trends.
We have added to the Fund's healthcare holdings, focusing specifically on
biotechnology companies with products either approved by the FDA or nearing the
end of the approval process. Therefore, many of the risk hurdles that these
companies typically face are already behind them. We currently hold positions
in GelTex Pharmaceuticals, Medimmune, Neurex and IDEC Pharmaceuticals.
The retail and apparel sectors continue to present attractive growth stocks
with very low price/earnings ratio multiples. We believe that the strong trend
favoring casual wear will continue to benefit Nautica Enterprises,
1
ALLIANCE QUASAR FUND
_______________________________________________________________________________
Tommy Hilfiger and Abercrombie & Fitch. Furthermore, the changing landscape
within the automobile retail sector will likely benefit Circuit City's Car Max
as the superstore format further penetrates the automobile market. Miller
Industries, a leading auto towing manufacturer, is trying to consolidate the
towing service industry. We are very excited about the prospects for this
investment.
Within the technology sector, we increased our weighting in the summer from 9%
to 12% of the portfolio. However, our technology stake is still less than that
of the Russell 2000, and the recent sell-off in the group has hurt us less than
other small cap portfolios with greater exposure to technology stocks.
Lastly, we have added a few holdings in the real estate investment trust (REIT)
sector. The Fund now holds positions in Security Capital Group, Chelsea GCA
Realty and Glenborough Realty Trust. We feel that the strength of the economy,
coupled with minimal new construction, has led to higher valuations. The real
estate industry is also going through a structural change, from private
companies to publicly traded REITs.
Thank you for your continued interest in the Alliance Quasar Fund. We look
forward to reporting to you on future market activity and investment results.
Sincerely,
Alden M. Stewart
Chairman and President
Randall E. Haase
Senior 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 September 30, 1997
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year +27.81% +22.38%
Five Years +24.61% +23.53%
Ten Years +12.97% +12.48%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year +26.70% +22.70%
Five Years +23.62% +23.62%
Since Inception* +18.20% +18.20%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year +26.74% +25.74%
Since Inception* +24.12% +24.12%
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
ALLIANCE QUASAR FUND
_______________________________________________________________________________
ALLIANCE QUASAR FUND
GROWTH OF A $10,000 INVESTMENT
9/30/87 TO 9/30/97
$37,000
$31,000
$25,000
$19,000
$13,000
$10,000
$7,000
9/30/87 9/30/88 9/30/89 9/30/90 9/30/91 9/30/92 9/30/93
9/30/94 9/30/95 9/30/96 9/30/97
S&P 500: $39,500
QUASAR FUND CLASS A: $32,425
RUSSELL 2000 INDEX: $31,749
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Quasar Fund Class A shares (from 9/30/87 to 9/30/97) as compared to
the performance of appropriate broad-based indices. The chart reflects the
deduction of the maximum 4.25% sales charge from the initial $10,000 investment
in the Fund and assumes the reinvestment of dividends and capital gains.
Performance for Class B, Class C and Advisor Class shares will vary from the
results shown above due to differences in expenses charged to those classes.
Past performance is not indicative of future results, and is not representative
of future gain or loss in capital value or dividend income.
The unmanaged Standard & Poor's 500 Stock Index includes 500 U.S. stocks and is
a common measure of the performance of the overall U.S. stock market.
The unmanaged Russell 2000 Index measures small-cap stock performance.
When comparing Alliance Quasar Fund to the indices shown above, you should note
that no charges or expenses are reflected in the performance of the indices.
QUASAR FUND
STANDARD &POOR'S 500 STOCK INDEX
RUSSELL 2000 INDEX
4
TEN LARGEST HOLDINGS
SEPTEMBER 30, 1997 ALLIANCE QUASAR FUND
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- ------------------------------------------------------------------------
Parker Drilling Co. $ 36,752,231 3.3%
OMI Corp. 35,462,500 3.2
Mohawk Industries, Inc. 32,647,425 2.9
Consolidated Freightways Corp. 28,143,600 2.5
Budget Group, Inc. Cl.A 24,990,900 2.2
Continental Airlines, Inc. Cl.B 24,593,625 2.2
GelTex Pharmaceuticals, Inc. 23,946,600 2.2
Miller Industries, Inc. 20,859,587 1.9
Security Capital Group, Inc. Cl.B 20,545,938 1.9
Telephone and Data Systems, Inc. 20,497,500 1.8
$268,439,906 24.1%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED SEPTEMBER 30, 1997
SHARES
- -------------------------------------------------------------------------------
HOLDINGS
PURCHASES BOUGHT 9/30/97
- -------------------------------------------------------------------------------
Consolidated Freightways Corp. 943,500 1,596,800
Kaiser Aluminum Corp. 753,100 753,100
Mohawk Industries, Inc. 615,600 1,192,600
Nautica Enterprises, Inc. 532,900 532,900
Neurex Corp. 875,900 875,900
Pacific Sunwear of California 295,500 295,500
Security Capital Group, Inc. Cl.B 597,700 597,700
Southern Union Co. 480,700 545,300
St. John Knits, Inc. 254,500 254,500
WHX Corp. 824,600 824,600
HOLDINGS
SALES SOLD 9/30/97
- -------------------------------------------------------------------------------
Chancellor Media Corp. 339,300 -0-
Cytec Industries, Inc. 140,100 -0-
Gibraltar Steel Co. 299,700 -0-
Harman International Industries, Inc. 246,700 -0-
KCS Energy, Inc. 190,100 -0-
Nine West Group, Inc. 497,800 -0-
Rowan Cos., Inc. 529,500 -0-
Taubman Centers, Inc. 640,300 -0-
United Waste Systems, Inc. 147,300 -0-
USAir Group, Inc. 200,900 -0-
5
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1997 ALLIANCE QUASAR FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-87.5%
CONSUMER PRODUCTS & SERVICES-30.4%
ADVERTISING-1.0%
Snyder Communications, Inc. (a) 386,000 $ 10,615,000
AIRLINES-4.0%
Alaska Air Group, Inc. (a) 623,000 20,481,125
Continental Airlines, Inc. Cl.B (a) 624,600 24,593,625
------------
45,074,750
APPAREL-4.1%
Nautica Enterprises, Inc. (a) 532,900 14,987,813
Stride Rite Corp. 832,100 11,285,356
Tefron, Ltd. (a) 55,700 1,114,000
Timberland Co. Cl.A (a) 37,200 2,966,700
Tommy Hilfiger Corp. (a) 303,600 15,161,025
------------
45,514,894
AUTO & RELATED-6.3%
Avis Rent A Car, Inc. (a) 259,500 6,195,563
Budget Group, Inc. Cl.A (a) 757,300 24,990,900
Miller Industries, Inc. (a) 1,747,400 20,859,587
Monaco Coach Corp. (a) 364,900 8,620,762
Watsco, Inc. 313,900 9,809,375
------------
70,476,187
BROADCASTING & CABLE-1.3%
Globecomm Systems, Inc. (a) 273,000 4,777,500
Sinclair Broadcast Group, Inc. Cl.A (a) 241,700 9,758,638
------------
14,536,138
CONTAINERS & PACKAGING-1.6%
Silgan Holdings, Inc. (a) 223,800 8,952,000
U.S. Can Corp. (a) 520,700 8,656,638
------------
17,608,638
ENTERTAINMENT & LEISURE-0.8%
Florida Panthers Holdings, Inc. Cl.A (a) 318,300 7,499,944
Trendwest Resorts, Inc. (a) 39,400 925,900
------------
8,425,844
RESTAURANTS & LODGING-1.7%
Extended Stay America, Inc. (a) 428,682 6,430,230
Interstate Hotels Co. (a) 193,300 6,306,412
Suburban Lodges of America, Inc. (a) 239,600 6,319,450
------------
19,056,092
RETAILING-7.7%
Abercrombie & Fitch Co. Cl. A (a) 338,900 8,896,125
Circuit City Stores, Inc. -
Car Max Group (a) 906,400 15,012,250
Filene's Basement Corp. (a) 348,100 2,893,581
Furniture Brands International, Inc. (a) 480,900 9,076,987
Industrie Natuzzi SpA (ADR) (b) 593,300 14,053,794
Pacific Sunwear of California (a) 295,500 12,115,500
St. John Knits, Inc. 254,500 11,436,594
The Finish Line Cl.A (a) 382,000 7,234,125
Wet Seal, Inc. Cl.A (a) 226,400 5,292,100
------------
86,011,056
MISCELLANEOUS-1.9%
Equity Corp. International (a) 252,400 5,884,075
International Alliance Services, Inc. (a) 743,311 7,340,196
warrants, expiring 12/30/99 (a) 549,311 1,028,860
TeleTech Holdings, Inc. (a) 468,800 6,592,500
------------
20,845,631
------------
338,164,230
BASIC INDUSTRIES-21.9%
BUILDING & RELATED-0.7%
Hughes Supply, Inc. 269,100 8,123,456
CHEMICALS-1.7%
Crompton & Knowles Corp. 538,100 14,293,281
Polymer Group, Inc. (a) 383,500 4,937,563
------------
19,230,844
ENVIRONMENTAL CONTROL-1.7%
American Disposal Services, Inc. (a) 322,100 10,065,625
Superior Services, Inc. (a) 321,500 9,162,750
------------
19,228,375
6
ALLIANCE QUASAR FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
FOREST PRODUCTS-0.6%
Buckeye Cellulose Corp. (a) 149,500 $ 6,026,719
METAL HARDWARE-4.4%
Bethlehem Steel Corp. (a) 1,593,000 16,427,812
Birmingham Steel Corp. 298,200 5,162,588
Kaiser Aluminum Corp. (a) 753,100 10,684,606
Steel Dynamics, Inc. (a) 260,100 6,112,350
WHX Corp. (a) 824,600 10,719,800
------------
49,107,156
METALS & MINING-0.4%
Pegasus Gold, Inc. (a) 289,100 1,626,187
Royal Oak Mines, Inc. (a) 894,400 2,515,500
------------
4,141,687
TEXTILE PRODUCTS-4.0%
Mohawk Industries, Inc. (a) 1,192,600 32,647,425
Novel Denim Holdings, Ltd. (a) 422,000 11,394,000
------------
44,041,425
TRANSPORTATION & SHIPPING-8.4%
Consolidated Freightways Corp. (a) 1,596,800 28,143,600
Genesee & Wyoming, Inc. Cl.A (a) 219,900 6,954,338
Knightsbridge Tankers, Ltd. 525,300 14,872,556
OMI Corp. (a) 2,837,000 35,462,500
Roadway Express, Inc. 297,200 8,135,850
------------
93,568,844
------------
243,468,506
TECHNOLOGY-14.3%
AEROSPACE & DEFENSE-0.5%
Doncasters Plc (ADR) (a)(c) 188,100 5,643,000
COMMUNICATION EQUIPMENT-1.3%
Comverse Technology, Inc. (a) 264,600 13,957,650
COMPUTER PERIPHERALS-0.4%
Read-Rite Corp. (a) 152,700 3,741,150
COMPUTER SOFTWARE & SERVICES-4.6%
Check Point Software Technologies, Ltd. (a) 345,500 10,710,500
Checkfree Corp. (a) 477,000 10,076,625
Cognos, Inc. (a) 253,000 6,008,750
DBT Online, Inc. (a) 152,700 9,429,225
QAD, Inc. (a) 354,900 6,610,012
Rational Software Corp. (a) 532,600 8,521,600
------------
51,356,712
NETWORKING SOFTWARE-1.0%
The Registry, Inc. (a) 245,920 11,343,060
SEMI-CONDUCTOR EQUIPMENT-2.5%
Actel Corp. (a) 475,900 9,161,075
CFM Technologies, Inc. (a) 234,800 9,201,225
PMC-Sierra, Inc. (a) 386,500 9,855,750
------------
28,218,050
TELECOMMUNICATIONS-4.0%
ACC Corp. (a) 165,400 5,437,525
Millicom International Cellular, SA (a)(d) 355,200 18,559,200
Telephone and Data Systems, Inc. 455,500 20,497,500
------------
44,494,225
------------
158,753,847
HEALTH CARE-9.5%
BIOTECHNOLOGY-6.2%
Endovascular Technologies (a) 311,200 5,329,300
GelTex Pharmaceuticals, Inc. (a) 895,200 23,946,600
IDEC Pharmaceuticals Corp. (a) 213,500 8,940,313
Medimmune, Inc. (a) 482,900 17,746,575
Neurex Corp. (a) 875,900 12,919,525
------------
68,882,313
DRUGS, HOSPITAL SUPPLIES &
MEDICAL SERVICES-3.3%
AutoCyte, Inc. (a) 378,000 3,213,000
Mid Atlantic Medical Services, Inc. (a) 531,000 8,396,437
National Surgery Centers, Inc. (a) 643,075 13,986,881
Physio-Control International Corp. (a) 423,400 7,171,338
Synetic, Inc. (a) 113,500 4,653,500
------------
37,421,156
------------
106,303,469
7
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE QUASAR FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
ENERGY-6.4%
OIL & GAS SERVICES-6.4%
Costilla Energy, Inc. (a) 458,100 $ 6,527,925
Parker Drilling Co. (a) 2,419,900 36,752,231
Southern Union Co. 545,300 13,291,687
Valero Energy Corp. 454,300 14,906,719
------------
71,478,562
FINANCIAL SERVICES-4.1%
REAL ESTATE-4.1%
CCA Prison Realty Trust 210,300 7,938,825
Chelsea GCA Realty, Inc. 243,900 10,182,825
Glenborough Realty Trust, Inc. 268,400 7,431,325
Security Capital Group, Inc. Cl.B (a) 597,700 20,545,938
------------
46,098,913
MULTI INDUSTRY-0.9%
Culligan Water Technologies, Inc. (a) 210,000 9,660,000
Total Common Stocks
(cost $802,889,574) 973,927,527
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
SHORT-TERM DEBT SECURITIES-12.5%
Federal Home Loan Bank
5.90%, 10/01/97 $48,200 $ 48,200,000
Federal Home Loan Mortgage Corp.
5.48%, 10/31/97 50,000 49,771,667
5.50%, 10/14/97 25,000 24,950,347
Federal National Mortgage Association
5.41%, 10/23/97 6,140 6,119,700
5.54%, 3/12/98 10,000 10,000,000
Total Short-Term Debt Securities
(amortized cost $139,041,714) 139,041,714
TOTAL INVESTMENTS-100.0%
(cost $941,931,288) 1,112,969,241
Other assets less liabilities-0.0% 97,889
NET ASSETS-100% $1,113,067,130
(a) Non-income producing security.
(b) Country of origin - Italy.
(c) Country of origin - Great Britain.
(d) Country of origin - Luxembourg.
Glossary:
ADR - American Depositary Receipt
See notes to financial statements.
8
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1997 ALLIANCE QUASAR FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $941,931,288) $1,112,969,241
Cash 352,602
Receivable for capital stock sold 15,864,420
Receivable for investment securities sold 10,223,655
Dividends and interest receivable 259,288
Total assets 1,139,669,206
LIABILITIES
Payable for investment securities purchased 19,053,867
Payable for capital stock redeemed 3,863,596
Advisory fee payable 2,753,606
Distribution fee payable 551,302
Accrued expenses 379,705
Total liabilities 26,602,076
NET ASSETS $1,113,067,130
COMPOSITION OF NET ASSETS
Shares of capital stock, at par $ 77,186
Additional paid-in capital 891,822,483
Accumulated net investment loss (330)
Accumulated net realized gain on investment transactions 50,131,067
Net unrealized appreciation of investments and
other assets 171,036,724
$1,113,067,130
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($402,081,447/13,239,982 shares of capital stock issued
and outstanding) $30.37
Sales charge--4.25% of public offering price 1.35
Maximum offering price $31.72
CLASS B SHARES
Net asset value and offering price per share
($503,036,755/18,074,865 shares of capital stock issued
and outstanding) $27.83
CLASS C SHARES
Net asset value and offering price per share
($145,494,421/5,224,929 shares of capital stock issued
and outstanding) $27.85
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($62,454,507/2,053,027 shares of capital stock issued
and outstanding) $30.42
See notes to financial statements.
9
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1997 ALLIANCE QUASAR FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $2,856,743
Dividends (net of foreign taxes withheld
of $12,814) 1,952,909 $ 4,809,652
EXPENSES
Advisory fee 7,233,060
Distribution fee - Class A 613,080
Distribution fee - Class B 2,505,578
Distribution fee - Class C 715,331
Transfer agency 1,168,353
Registration 234,979
Custodian 174,047
Printing 140,619
Administrative 129,000
Audit and legal 110,130
Directors' fees 32,000
Miscellaneous 55,084
Total expenses 13,111,261
Net investment loss (8,301,609)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 61,906,245
Net change in unrealized appreciation of
investments and other assets 130,575,519
Net gain on investment transactions 192,481,764
NET INCREASE IN NET ASSETS FROM OPERATIONS $184,180,155
See notes to financial statements.
10
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE QUASAR FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (8,301,609) $ (3,160,861)
Net realized gain on investment
transactions 61,906,245 65,887,574
Net change in unrealized appreciation of
investments and other assets 130,575,519 13,713,401
Net increase in net assets from operations 184,180,155 76,440,114
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (35,781,862) (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 623,150,616 163,177,466
Total increase 742,237,940 205,949,782
NET ASSETS
Beginning of year 370,829,190 164,879,408
End of year $1,113,067,130 $ 370,829,190
See notes to financial statements.
11
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 ALLIANCE QUASAR FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Quasar Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940 as a diversified open-end management investment company.
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 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
to investors participating in fee-based programs and to certain retirement plan
accounts. 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 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. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the net assets of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A shares and the Advisory Class shares have no distribution fees.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income 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 net investment loss, resulted in a net increase in accumulated
net investment loss and additional paid-in capital and a corresponding decrease
in accumulated net realized gain on investment transactions. This
reclassification had no affect on net assets.
12
ALLIANCE QUASAR FUND
_______________________________________________________________________________
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 $129,000 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the year ended September 30, 1997.
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. Such compensation
amounted to $827,120 for the year ended September 30, 1997.
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 $201,195 from the sales of Class A shares and
$3,953, $482,376 and $51,887 in contingent deferred sales charges imposed upon
redemptions by shareholders of Class A, Class B and Class C shares,
respectively, for the year ended September 30, 1997.
Brokerage commissions paid on investment transactions for the year ended
September 30, 1997 amounted to $2,877,625, 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 .30% of the Fund's average daily net assets attributable to Class
A shares and 1% of the average daily net assets attributable to both Class B
and Class 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
$15,242,262 and $1,262,697 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 $1,224,230,685 and $786,073,558,
respectively, for the year ended September 30, 1997. There were no purchases or
sales of U.S. government and government agency obligations for the year ended
September 30, 1997.
At September 30, 1997, the cost of investments for federal income tax purposes
was $943,557,056. Accordingly, gross unrealized appreciation of investments was
$183,569,276 and gross unrealized depreciation of investments was $14,157,091,
resulting in net unrealized appreciation of $169,412,185.
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 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
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 11,397,616 5,471,871 $301,819,124 $136,248,579
Shares issued in
reinvestment of
distributions 1,338,101 1,253,727 31,392,004 25,952,159
Shares converted
from Class B 93,234 23,945 2,388,921 625,453
Shares redeemed (7,820,120) (4,589,604) (205,201,851) (113,607,805)
Net increase 5,008,831 2,159,939 $130,398,198 $ 49,218,386
CLASS B
Shares sold 15,718,977 4,441,473 $384,984,682 $109,239,019
Shares issued in
reinvestment of
distributions 806,589 171,932 17,462,788 3,349,236
Shares converted
to Class A (101,254) (25,549) (2,388,921) (625,453)
Shares redeemed (2,654,832) (1,003,450) (64,196,011) (23,478,495)
Net increase 13,769,480 3,584,406 $335,862,538 $ 88,484,307
CLASS C
Shares sold 6,517,559 2,062,696 $158,023,140 $ 49,417,709
Shares issued in
reinvestment of
distributions 149,743 16,499 3,241,980 321,569
Shares redeemed (2,534,347) (1,057,147) (61,156,504) (24,264,505)
Net increase 4,132,955 1,022,048 $100,108,616 $ 25,474,773
OCT. 2, 1996(A) OCT. 2, 1996(A)
TO TO
SEPT. 30, 1997 SEPT. 30, 1997
------------ --------------
ADVISOR CLASS
Shares sold 2,134,062 $ 58,915,871
Shares issued in
reinvestment of
distributions 13,323 312,693
Shares redeemed (94,358) (2,447,300)
Net increase 2,053,027 $ 56,781,264
(a) Commencement of distribution.
14
FINANCIAL HIGHLIGHTS ALLIANCE QUASAR FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $27.92 $24.16 $22.65 $24.43 $19.34
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.24)(a) (.25) (.22)(a) (.60) (.41)
Net realized and unrealized gain (loss)
on investment transactions 6.80 8.82 5.59 (.36) 6.38
Net increase (decrease) in net asset
value from operations 6.56 8.57 5.37 (.96) 5.97
LESS: DISTRIBUTIONS
Distributions from net realized gains (4.11) (4.81) (3.86) (.82) (.88)
Net asset value, end of year $30.37 $27.92 $24.16 $22.65 $24.43
TOTAL RETURN
Total investment return based on net
asset value (b) 27.81% 42.42% 30.73% (4.05)% 31.58%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $402,081 $229,798 $146,663 $155,470 $228,874
Ratio of expenses to average net assets 1.67% 1.79% 1.83% 1.67% 1.65%
Ratio of net investment loss to
average net assets (.91)% (1.11)% (1.06)% (1.15)% (1.00)%
Portfolio turnover rate 135% 168% 160% 110% 102%
Average commission rate (c) $.0536 $.0596 -- -- --
</TABLE>
See footnote summary on page 18.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE QUASAR FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $26.13 $23.03 $21.92 $23.88 $19.07
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.42)(a) (.20) (.37)(a) (.53) (.18)
Net realized and unrealized gain (loss)
on investment transactions 6.23 8.11 5.34 (.61) 5.87
Net increase (decrease) in net asset
value from operations 5.81 7.91 4.97 (1.14) 5.69
LESS: DISTRIBUTIONS
Distributions from net realized gains (4.11) (4.81) (3.86) (.82) (.88)
Net asset value, end of year $27.83 $26.13 $23.03 $21.92 $23.88
TOTAL RETURN
Total investment return based on net
asset value (b) 26.70% 41.48% 29.78% (4.92)% 30.53%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $503,037 $112,490 $16,604 $13,901 $16,779
Ratio of expenses to average net assets 2.51% 2.62% 2.65% 2.50% 2.46%
Ratio of net investment loss to
average net assets (1.73)% (1.96)% (1.88)% (1.98)% (1.81)%
Portfolio turnover rate 135% 168% 160% 110% 102%
Average commision rate (c) $.0536 $.0596 -- -- --
</TABLE>
See footnote summary on page 18.
16
ALLIANCE QUASAR FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
MAY 3, 1993(D)
YEAR ENDED SEPTEMBER 30, TO
-------------------------------------------------- SEPT. 30,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $26.14 $23.05 $21.92 $23.88 $20.33
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.42)(a) (.20) (.37)(a) (.36) (.10)
Net realized and unrealized gain (loss)
on investment transactions 6.24 8.10 5.36 (.78) 3.65
Net increase (decrease) in net asset
value from operations 5.82 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 year $27.85 $26.14 $23.05 $21.92 $23.88
TOTAL RETURN
Total investment return based on net
asset value (b) 26.74% 41.46% 29.87% (4.92)% 17.46%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $145,494 $28,541 $1,611 $1,220 $118
Ratio of expenses to average net assets 2.50% 2.61% 2.64% 2.48% 2.49%(e)
Ratio of net investment loss to
average net assets (1.72)% (1.94)% (1.76)% (1.96)% (1.90)%(e)
Portfolio turnover rate 135% 168% 160% 110% 102%
Average commission rate (c) $.0536 $.0596 -- -- --
</TABLE>
See footnote summary on page 18.
17
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE QUASAR FUND
_______________________________________________________________________________
Selected Data For A Share Of Capital Stock Outstanding Throughout The Period
ADVISOR CLASS
------------------
OCTOBER 2, 1996(D)
TO
SEPTEMBER 30, 1997
------------------
Net asset value, beginning of period $27.82
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (.17)
Net realized and unrealized gain on
investment transactions 6.88
Net increase in net asset value from
operations 6.71
LESS: DISTRIBUTIONS
Distributions from net realized gains (4.11)
Net asset value, end of period $30.42
TOTAL RETURN
Total investment return based on net
asset value (b) 28.47%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $62,455
Ratio of expenses to average net assets (e) 1.58%
Ratio of net investment loss to average
net assets (e) (.74)%
Portfolio turnover rate 135%
Average commission rate $.0536
(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) 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.
(d) Commencement of distribution.
(e) Annualized.
18
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE QUASAR FUND
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS ALLIANCE QUASAR FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Alliance Quasar Fund, Inc., including the portfolio of investments, as of
September 30, 1997, and the related statement of operations for the year then
ended, the statement 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit 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
September 30, 1997, 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
Alliance Quasar Fund, Inc. at September 30, 1997, the results of its operations
for the year then ended, the changes in its 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 generally accepted accounting principles.
New York, New York
November 4, 1997
19
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
RANDALL E. HAASE, SENIOR VICE PRESIDENT
THOMAS BARDONG, 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.
20
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 High Yield Fund
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
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
21
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.
QSRAR
