ALLIANCE QUASAR FUND
SEMI-ANNUAL REPORT
MARCH 31, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE QUASAR FUND
_______________________________________________________________________________
May 27, 1998
Dear Shareholder:
This semi-annual report discusses Alliance Quasar Fund performance for the
periods ended March 31, 1998.
INVESTMENT RESULTS
The following table shows how your Fund performed for the six and 12-month
periods ending March 31, 1998, based on the net asset value of each class of
shares. For comparison, we have also shown the returns for the S&P 500 Stock
Index and the Russell 2000 Index. Your Fund's Class A shares achieved a total
return of 7.97% at net asset value (NAV) for the six-month period ended March
31, 1998, outperforming its benchmark, the Russell 2000 Index, which posted a
6.37% return. This outperformance can be attributed to good stock selection in
the retail and apparel sectors.
INVESTMENT RESULTS*
Periods Ended March 31, 1998
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE QUASAR FUND
Class A 7.97% 36.79%
Class B 7.57% 35.64%
Class C 7.53% 35.69%
RUSSELL 2000 INDEX 6.37% 42.02%
S&P 500 STOCK INDEX 17.21% 47.96%
* THE FUND'S INVESTMENT RESULTS REPRESENT CUMULATIVE TOTAL RETURNS AND ARE
BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES AS OF MARCH 31, 1998.
TOTAL RETURNS FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT EXPENSES
ASSOCIATED WITH THAT CLASS. ALL FEES AND EXPENSES RELATED TO THE OPERATION OF
THE FUND HAVE BEEN DEDUCTED, BUT NO ADJUSTMENT HAS BEEN MADE FOR SALES CHARGES
THAT MAY APPLY WHEN SHARES ARE PURCHASED OR REDEEMED. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS.
THE S&P 500 STOCK INDEX IS AN UNMANAGED INDEX OF 500 U.S. COMPANIES. THE
RUSSELL 2000 INDEX IS A CAPITALIZATION-WEIGHTED INDEX THAT INCLUDES 2,000 OF
THE SMALLEST STOCKS REPRESENTING APPROXIMATELY 11% OF THE U.S. EQUITY MARKET.
AN INVESTOR CANNOT INVEST DIRECTLY IN AN INDEX.
ADDITIONAL INVESTMENT RESULTS CAN BE FOUND ON PAGE 3.
REVIEW OF INVESTMENT STRATEGY
Our basic investment strategy 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. Specifically, in the last
several months, after lagging the market for several quarters, retail and
apparel stocks have performed well.
Both Tommy Hilfiger Corp. and Nautica Enterprises, Inc. continue to gain market
share within the casual apparel industry, and their stocks are finally
beginning to reflect their huge growth potential. In addition, we continue to
be excited about the potential for the rental car industries. Daily rental
rates are increasing in 1998, for the third consecutive year, after about 10
years of virtually unchanged prices. With financial entrepreneurs now in charge
of these companies, we are optimistic about their prospects, and currently hold
positions in Budget Group, Inc., Avis Rent A Car, Inc. and Dollar Thrifty
Automotive Group, Inc. Lastly, we continue to be bullish on the consolidation
taking place within the automotive retailing business. Circuit City Stores,
Inc. - Car Max Group, which was a poor investment in 1997, has rebounded nicely
in 1998 and should be an excellent investment over the next several years.
Within five years, its revenues could exceed $20 billion, with net income
exceeding $600 million.
A new area of focus for us has been the leisure industry. There are several
well positioned, well financed companies gaining market share in their
respective niches of leisure. We currently hold positions in Bally Total
Fitness Holding Corp., the largest health club provider; Family Golf Centers,
Inc., the largest provider of golf driving ranges; and Premier Parks, Inc., the
largest independent operator of amusement parks, gaining market share in the
United States under the name "Six Flags." All three companies should be able to
grow their earnings at least 25% a year and are very attractively valued.
In the turnaround category, we currently hold positions in PETsMART, Inc. which
operates retail superstores catering to animal owners in the U.S. This company
grew too quickly, and could not manage its earnings, causing its stock to drop
more than 50%. However, we believe there is an opportunity in this channel of
distribution for animal supplies.
1
ALLIANCE QUASAR FUND
_______________________________________________________________________________
On the cyclical side, Bethlehem Steel Corp. has been a huge restructuring
success story for us within the steel industry, and is currently one of the
largest positions in the Fund's portfolio. Secondly, we continue to be bullish
on the airline industry, a group we have been overweighted in since 1995. The
airline industry is experiencing its fourth consecutive year of profitability,
after having five consecutive years of losses. We currently hold positions in
Alaska Air Group, Inc., America West Airlines, Inc. and Mesa Air Group, Inc.
We also continue to believe that the oil tanker industry will rebound within
the next several years, when tanker rates are forced upward, older tankers are
retired, and new construction fails to keep up with demand. We continue to hold
positions in OMI Corp., Teekay Shipping Corp., and Knightsbridge Tankers, Ltd.
Within the technology sector, we have increased our weighting to 14%, equal to
the weighting in the Russell 2000, the benchmark index for small cap managers.
We currently hold positions in Checkfree Corp., an online banking company; DBT
Online, Inc., a database management company; and N2K, Inc., a leading internet
music company.
Lastly, we continue to like the real estate investment trust (REIT) sector. The
Fund currently holds positions in Security Capital Group, Inc., Chelsea GCA
Realty, Inc. and Glenborough Realty Trust, Inc. 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 major change in
ownership from being owned by private operators to well financed public
operators. This should also lead to higher valuations.
Thank you for your continued interest in 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 RETURNS AS OF MARCH 31, 1998
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 36.79% 31.00%
Five Years 22.77% 21.71%
Ten Years 15.57% 15.06%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 35.64% 31.64%
Five Years 21.81% 21.81%
Since Inception* 18.04% 18.04%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 35.69% 34.69%
Since Inception* 23.23% 23.23%
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% maximum 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, 1998 (UNAUDITED) ALLIANCE QUASAR FUND
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
Mohawk Industries, Inc. $ 62,439,300 3.7%
Bethlehem Steel Corp. 48,378,794 2.9
Budget Group, Inc. Cl.A 40,957,500 2.4
GelTex Pharmaceuticals, Inc. 40,192,200 2.4
Chelsea GCA Realty, Inc. 40,004,400 2.4
Tommy Hilfiger Corp. 38,752,325 2.3
OMI Corp. 35,327,700 2.1
Neurex Corp. 34,301,212 2.0
Telephone and Data Systems, Inc. 33,311,750 2.0
Consolidated Freightways Corp. 32,961,300 2.0
$ 406,626,481 24.2%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
_______________________________________________________________________________
SHARES
- -------------------------------------------------------------------------------
HOLDINGS
PURCHASES BOUGHT 3/31/98
- -------------------------------------------------------------------------------
Avis Rent A Car, Inc. 589,500 849,000
Bethlehem Steel Corp. 1,974,100 3,567,100
Brylane, Inc. 355,100 355,100
CapStar Hotel Co. 651,500 651,500
Chelsea GCA Realty, Inc. 837,300 1,081,200
Oceaneering International, Inc. 903,600 903,600
Signature Resorts, Inc. 721,200 721,200
Teekay Shipping Corp. 584,300 584,300
Tiffany & Co. 546,300 546,300
Viasoft, Inc. 559,900 559,900
HOLDINGS
SALES SOLD 3/31/98
- -------------------------------------------------------------------------------
Abercrombie & Fitch Co. Cl.A 338,900 -0-
ACC Corp. 165,400 -0-
American Disposal Services, Inc. 322,100 -0-
Check Point Software Technologies, Ltd. 345,500 -0-
Continental Airlines, Inc. Cl.B 624,600 -0-
Crompton & Knowles Corp. 538,100 -0-
Kaiser Aluminum Corp. 753,100 -0-
Renaissance Worldwide Inc. 245,920 -0-
Snyder Communications, Inc. 386,000 -0-
WHX Corp. 824,600 -0-
4
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998 (UNAUDITED) ALLIANCE QUASAR FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-89.1%
CONSUMER PRODUCTS & SERVICES-30.7%
ADVERTISING-0.8%
Princeton Video Image, Inc. (a) 365,300 $ 2,968,063
TeleSpectrum Worldwide, Inc. (a) 1,528,100 11,078,725
------------
14,046,788
AIRLINES-3.7%
Alaska Air Group, Inc. (a) 443,800 24,048,412
America West Airlines, Inc. Cl.B (a) 638,200 16,353,875
Mesa Air Group, Inc. (a) 1,170,600 10,754,888
Trans World Airlines, Inc. (a) 857,700 10,560,431
------------
61,717,606
APPAREL-4.5%
Nautica Enterprises, Inc. (a) 603,400 18,554,550
Tommy Hilfiger Corp. (a) 645,200 38,752,325
Wolverine World Wide, Inc. 639,100 18,054,575
------------
75,361,450
BROADCASTING & CABLE-1.8%
Sinclair Broadcast Group, Inc. Cl.A (a) 246,100 14,181,512
Young Broadcasting Corp. Cl.A (a) 322,900 16,145,000
------------
30,326,512
ENTERTAINMENT & LEISURE-3.7%
Bally Total Fitness HoldingCorp. (a) 512,900 16,156,350
Family Golf Centers, Inc. (a) 169,200 6,852,600
N2K, Inc. (a) 350,800 10,480,150
Premier Parks, Inc. (a) 260,300 15,097,400
Signature Resorts, Inc. (a) 721,200 14,243,700
------------
62,830,200
RESTAURANTS & LODGING-2.8%
CapStar Hotel Co. (a) 651,500 22,598,906
Extended Stay America, Inc. (a) 485,082 7,124,642
Florida Panthers Holdings,Inc. Cl.A (a) 759,200 16,892,200
------------
46,615,748
RETAILING-11.6%
Brylane, Inc. (a) 355,100 19,907,794
Circuit City Stores, Inc. -
Car Max Group (a) 2,282,500 26,391,406
Elder-Beerman Stores Corp. (a) 158,700 3,550,913
Furniture Brands International, Inc. (a) 514,100 16,547,594
Goody's Family Clothing, Inc. (a) 197,300 8,730,525
Industrie Natuzzi SpA (ADR)(b) 762,500 21,064,063
Movado Group, Inc. 478,000 13,802,250
Pacific Sunwear of California (a) 530,800 22,028,200
Pep Boys-Manny, Moe & Jack 424,400 9,840,775
PETsMART, Inc. (a) 907,500 9,698,906
Tiffany & Co. 546,300 26,597,981
United Rentals, Inc. (a) 614,600 15,979,600
------------
194,140,007
MISCELLANEOUS-1.8%
Central Garden & Pet Co. (a) 204,800 8,000,000
Century Business Services,Inc. (a) 1,252,011 22,144,945
------------
30,144,945
------------
515,183,256
TECHNOLOGY-15.7%
COMMUNICATION EQUIPMENT-1.3%
Comverse Technology, Inc. (a) 457,600 22,365,200
COMPUTER SOFTWARE & SERVICES-5.6%
CDW Computer Centers, Inc. (a) 326,200 19,531,225
Checkfree Corp. (a) 659,100 14,582,587
DBT Online, Inc. (a) 829,000 18,652,500
Insight Enterprises, Inc. (a) 347,900 14,133,438
ISS Group, Inc. (a) 164,800 6,406,600
QAD, Inc. (a) 357,600 5,252,250
Viasoft, Inc. (a) 559,900 15,327,262
------------
93,885,862
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE QUASAR FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
NETWORKING SOFTWARE-1.6%
Apex PC Solutions, Inc. (a) 614,400 $ 16,512,000
Fore Systems, Inc. (a) 712,600 11,223,450
------------
27,735,450
SEMI-CONDUCTOR EQUIPMENT-1.0%
Applied Micro Circuits Corp. (a) 286,800 6,453,000
Photronics, Inc. (a) 43,300 1,212,400
PMC-Sierra, Inc. (a) 238,600 9,066,800
------------
16,732,200
TELECOMMUNICATIONS-5.9%
Globecomm Systems, Inc. (a) 530,000 7,353,750
GST Telecommunications, Inc. (a) 695,400 10,474,462
Level One Communications, Inc. (a) 678,750 15,950,625
Millicom International Cellular, SA (a)(c) 729,000 32,076,000
Telephone and Data Systems, Inc. 701,300 33,311,750
------------
99,166,587
MISCELLANEOUS-0.3%
Excalibur Technologies Corp. (a) 369,500 4,295,438
------------
264,180,737
BASIC INDUSTRIES-15.2%
BUILDING & RELATED-0.7%
Associated Materials, Inc. (a) 616,200 12,324,000
Triangle Pacific Corp. (a) 4,300 163,400
------------
12,487,400
CONTAINERS-0.1%
U.S. Can Corp. (a) 76,700 1,361,425
METAL HARDWARE-2.9%
Bethlehem Steel Corp. (a) 3,567,100 48,378,794
METALS & MINING-0.4%
Royal Oak Mines, Inc. (a) 5,701,200 6,770,175
TEXTILE PRODUCTS-4.4%
Mohawk Industries, Inc. (a) 1,982,200 62,439,300
Novel Denim Holdings, Ltd. (a) 437,500 11,976,563
------------
74,415,863
TRANSPORTATION & SHIPPING-6.7%
AMERCO (a) 100,200 3,081,150
Carey International, Inc. (a) 349,400 8,298,250
Consolidated Freightways Corp. (a) 1,938,900 32,961,300
Knightsbridge Tankers, Ltd. 495,900 14,133,150
OMI Corp. (a) 3,925,300 35,327,700
Teekay Shipping Corp. 584,300 18,186,337
------------
111,987,887
------------
255,401,544
HEALTH CARE-11.2%
BIOTECHNOLOGY-6.4%
Corixa Corp. (a) 437,000 3,222,875
GelTex Pharmaceuticals, Inc. (a) 1,488,600 40,192,200
Gensia Sicor, Inc. (a) 1,276,000 6,380,000
MedImmune, Inc. (a) 433,400 23,891,175
Neurex Corp. (a) 1,436,700 34,301,212
------------
107,987,462
DRUGS, HOSPITAL SUPPLIES &
MEDICAL SERVICES-4.8%
American Oncology Resources, Inc. (a) 640,300 9,764,575
Mid Atlantic Medical Services, Inc. (a) 1,237,500 15,314,063
National Surgery Centers, Inc. (a) 789,575 20,183,511
Physio-Control International Corp. (a) 687,500 12,031,250
Synetic, Inc. (a) 306,300 15,889,312
Veterinary Centers of America, Inc. (a) 445,600 7,185,300
------------
80,368,011
------------
188,355,473
FINANCIAL SERVICES-5.3%
REAL ESTATE-4.6%
CCA Prison Realty Trust 276,400 11,453,325
Chelsea GCA Realty, Inc. 1,081,200 40,004,400
Glenborough Realty Trust, Inc. 445,200 12,966,450
Security Capital Group, Inc. Cl.B (a) 401,300 12,339,975
------------
76,764,150
6
ALLIANCE QUASAR FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
OTHER-0.7%
International Alliance warrants,
expiring 12/30/99 (a) 549,311 $ 4,366,473
Waddell & Reed Financial, Inc. Cl.A (a) 279,200 7,259,200
------------
11,625,673
------------
88,389,823
ENERGY-4.5%
OIL & GAS SERVICES-4.5%
Oceaneering International,Inc. (a) 903,600 17,846,100
Parker Drilling Co. (a) 1,860,400 19,534,200
Southern Union Co. 653,100 15,674,400
Valero Energy Corp. 677,400 22,608,225
------------
75,662,925
CONSUMER MANUFACTURING-6.5%
AUTO & RELATED-6.5%
Avis Rent A Car, Inc. (a) 849,000 27,539,437
Budget Group, Inc. Cl.A (a) 1,092,200 40,957,500
Dollar Thrifty Automotive Group, Inc. (a) 770,600 17,338,500
Miller Industries, Inc. (a) 1,114,600 8,150,513
Monaco Coach Corp. (a) 375,100 14,722,675
------------
108,708,625
Total Common Stocks & Other Investments
(cost $1,265,125,138) 1,495,882,383
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
SHORT-TERM INVESTMENTS-10.3%
U.S. GOVERNMENT & AGENCIES-10.3%
Federal Home Loan Bank
Zero Coupon, 4/22/98 $34,000 $ 33,892,305
Federal Home Loan Mortgage Corp.
Zero Coupon, 4/01/98 39,100 39,100,000
Zero Coupon, 4/27/98 18,400 18,327,576
Zero Coupon, 4/30/98 7,000 6,969,268
Zero Coupon, 5/08/98 32,900 32,715,376
Zero Coupon, 5/28/98 15,000 14,870,325
Federal National Mortgage Association
Zero Coupon, 4/14/98 23,500 23,453,750
Zero Coupon, 6/17/98 3,000 2,965,286
Total Short-Term Investments
(cost $172,293,886) 172,293,886
TOTAL INVESTMENTS-99.4%
(COST $1,437,419,024) 1,668,176,269
Other assets less liabilities-0.6% 9,444,343
NET ASSETS-100% $1,677,620,612
(a) Non-income producing security.
(b) Country of origin--Italy.
(c) Country of origin--Luxembourg.
Glossary:
ADR - American Depositary Receipt
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998 (UNAUDITED) ALLIANCE QUASAR FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $1,437,419,024) $1,668,176,269
Cash 37,395
Receivable for investment securities sold 35,968,674
Receivable for capital stock sold 9,215,852
Dividends receivable 930,736
Other assets 30,481
Total assets 1,714,359,407
LIABILITIES
Payable for investment securities purchased 30,220,028
Advisory fee payable 4,194,052
Payable for capital stock redeemed 1,426,048
Distribution fee payable 856,995
Accrued expenses 41,672
Total liabilities 36,738,795
NET ASSETS $1,677,620,612
COMPOSITION OF NET ASSETS
Shares of capital stock, at par $ 112,650
Additional paid-in capital 1,381,179,895
Accumulated net investment loss (6,961,641)
Accumulated net realized gain on investment transactions 72,533,877
Net unrealized appreciation of investments and other assets 230,755,831
$1,677,620,612
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($562,517,168/17,909,350 shares of capital stock
issued and outstanding) $31.41
Sales charge--4.25% of public offering price 1.39
Maximum offering price $32.80
CLASS B SHARES
Net asset value and offering price per share
($716,817,654/25,100,981 shares of capital stock
issued and outstanding) $28.56
CLASS C SHARES
Net asset value and offering price per share
($206,104,387/7,213,575 shares of capital stock
issued and outstanding) $28.57
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per
share ($192,181,403/6,101,023 shares of capital
stock issued and outstanding) $31.50
See notes to financial statements.
8
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1998 (UNAUDITED) ALLIANCE QUASAR FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 2,925,300
Dividends 2,845,201
$ 5,770,501
EXPENSES
Advisory fee 7,169,414
Distribution fee - Class A 523,815
Distribution fee - Class B 2,849,212
Distribution fee - Class C 814,610
Transfer agency 878,112
Registration 108,367
Custodian 102,511
Printing 94,930
Administrative 64,500
Audit and legal 45,052
Directors' fees 16,000
Miscellaneous 65,289
Total expenses 12,731,812
Net investment loss (6,961,311)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 74,522,131
Net change in unrealized appreciation of
investments and other assets 59,719,107
Net gain on investments 134,241,238
NET INCREASE IN NET ASSETS FROM OPERATIONS $127,279,927
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE QUASAR FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPTEMBER 30,
(UNAUDITED) 1997
------------------ ------------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (6,961,311) $ (8,301,609)
Net realized gain on
investment transactions 74,522,131 61,906,245
Net change in unrealized appreciation
of investments and other assets 59,719,107 130,575,519
Net increase in net assets
from operations 127,279,927 184,180,155
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (17,163,903) (35,781,862)
Class B (24,996,773) (23,349,486)
Class C (7,133,144) (5,648,782)
Advisor Class (2,825,501) (312,701)
CAPITAL STOCK TRANSACTIONS
Net increase 489,392,876 623,150,616
Total increase 564,553,482 742,237,940
NET ASSETS
Beginning of year 1,113,067,130 370,829,190
End of period $1,677,620,612 $1,113,067,130
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998 (UNAUDITED) 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 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 are generally
valued at the last reported sales price or if no sale occurred, at the mean of
the closing bid and asked prices on that day. Securities traded in the
over-the-counter market, including securities traded on a national securities
exchange whose primary market is believed to be over-the-counter, are valued at
the mean of the current bid and asked prices. Readily marketable debt
securities are valued at the last sales price. 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 value of such
securities.
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. The fund accretes discounts as adjustments to income.
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 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.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) 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% (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 $64,500 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, 1998.
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 $643,928 for the six months ended March 31, 1998.
Alliance Fund Distributors, Inc., (the "Distributor"), a wholly-owned
subsidiary of the Adviser, serves as the Distributor of the Fund's shares. The
Distributor received front-end sales charges of $111,882 from the sales of
Class A shares and $4,853, $367,748 and $52,257 in contingent deferred sales
charges imposed upon redemptions by shareholders of Class A, Class B and Class
C shares, respectively, for the six months ended March 31, 1998.
Brokerage commissions paid on investment transactions for the six months ended
March 31, 1998 amounted to $2,570,606, of which $19,605 was paid to Donaldson,
Lufkin & Jenrette Securities Corp., 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
$1,507,367 and $21,324,018 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 $1,126,746,355 and $739,026,693,
respectively, for the six months ended March 31, 1998. There were no purchases
or sales of U.S. government and government agency obligations for the six
months ended March 31, 1998.
At March 31, 1998, the cost of investments for federal income tax purposes was
$1,438,697,459. Accordingly, gross unrealized appreciation of investments was
$267,509,072 and gross unrealized depreciation of investments was $38,030,262,
resulting in net unrealized appreciation of $229,478,810.
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 31,1998 SEP. 30, MARCH 31,1998 SEP. 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------- ------------ -------------- --------------
CLASS A
Shares sold 13,516,525 11,397,616 $ 393,215,988 $ 301,819,124
Shares issued in
reinvestment of
distributions 571,297 1,338,101 15,983,664 31,392,004
Shares converted
from Class B 59,880 93,234 1,709,430 2,388,921
Shares redeemed (9,478,334) (7,820,120) (277,250,965) (205,201,851)
Net increase 4,669,368 5,008,831 $ 133,658,117 $ 130,398,198
CLASS B
Shares sold 8,533,630 15,718,977 $ 227,182,737 $ 384,984,682
Shares issued in
reinvestment of
distributions 922,762 806,589 23,530,481 17,462,788
Shares converted
to Class A (65,719) (101,254) (1,709,430) (2,388,921)
Shares redeemed (2,364,557) (2,654,832) (62,034,516) (64,196,011)
Net increase 7,026,116 13,769,480 $ 186,969,272 $ 335,862,538
CLASS C
Shares sold 4,100,499 6,517,559 $ 108,477,735 $ 158,023,140
Shares issued in
reinvestment of
distributions 260,209 149,743 6,638,007 3,241,980
Shares redeemed (2,372,062) (2,534,347) (61,870,302) (61,156,504)
Net increase 1,988,646 4,132,955 $ 53,245,440 $ 100,108,616
OCT. 2,1996(A) OCT. 2,1996(A)
TO TO
SEPTEMBER 30, SEPTEMBER 30,
1997 1997
------------- --------------
ADVISOR CLASS
Shares sold 5,175,112 2,134,062 $ 149,495,047 $ 58,915,871
Shares issued in
reinvestment of
distributions 95,462 13,323 2,676,749 312,693
Shares redeemed (1,222,578) (94,358) (36,651,749) (2,447,300)
Net increase 4,047,996 2,053,027 $ 115,520,047 $ 56,781,264
(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,
1998 ----------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
------------- ------------ ----------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $30.37 $27.92 $24.16 $22.65 $24.43 $19.34
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.09)(a) (.24)(a) (.25) (.22)(a) (.60) (.41)
Net realized and unrealized gain (loss)
on investment transactions 2.36 6.80 8.82 5.59 (.36) 6.38
Net increase (decrease) in net asset
value from operations 2.27 6.56 8.57 5.37 (.96) 5.97
LESS: DISTRIBUTIONS
Distributions from net realized gains (1.23) (4.11) (4.81) (3.86) (.82) (.88)
Net asset value, end of period $31.41 $30.37 $27.92 $24.16 $22.65 $24.43
TOTAL RETURN
Total investment return based on net
asset value (b) 7.97% 27.81% 42.42% 30.73% (4.05)% 31.58%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $562,517 $402,081 $229,798 $146,663 $155,470 $228,874
Ratio of expenses to average net assets 1.56%(c) 1.67% 1.79% 1.83% 1.67% 1.65%
Ratio of net investment loss to average
net assets (.66)%(c) (.91)% (1.11)% (1.06)% (1.15)% (1.00)%
Portfolio turnover rate 63% 135% 168% 160% 110% 102%
Average commission rate (d) $.0540 $.0536 $.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,
1998 -----------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
------------- ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $27.83 $26.13 $23.03 $21.92 $23.88 $19.07
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.19)(a) (.42)(a) (.20) (.37)(a) (.53) (.18)
Net realized and unrealized gain (loss)
on investment transactions 2.15 6.23 8.11 5.34 (.61) 5.87
Net increase (decrease) in net asset
value from operations 1.96 5.81 7.91 4.97 (1.14) 5.69
LESS: DISTRIBUTIONS
Distributions from net realized gains (1.23) (4.11) (4.81) (3.86) (.82) (.88)
Net asset value, end of period $28.56 $27.83 $26.13 $23.03 $21.92 $23.88
TOTAL RETURN
Total investment return based on net
asset value (b) 7.57% 26.70% 41.48% 29.78% (4.92)% 30.53%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $716,818 $503,037 $112,490 $16,604 $13,901 $16,779
Ratio of expenses to average net assets 2.34%(c) 2.51% 2.62% 2.65% 2.50% 2.46%
Ratio of net investment loss to average
net assets (1.44)%(c) (1.73)% (1.96)% (1.88)% (1.98)% (1.81)%
Portfolio turnover rate 63% 135% 168% 160% 110% 102%
Average commision rate (d) $.0540 $.0536 $.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
1998 -------------------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
------------- ------------ ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $27.85 $26.14 $23.05 $21.92 $23.88 $20.33
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.19)(a) (.42)(a) (.20) (.37)(a) (.36) (.10)
Net realized and unrealized gain (loss)
on investment transactions 2.14 6.24 8.10 5.36 (.78) 3.65
Net increase (decrease) in net asset
value from operations 1.95 5.82 7.90 4.99 (1.14) 3.55
LESS: DISTRIBUTIONS
Distributions from net realized gains (1.23) (4.11) (4.81) (3.86) (.82) -0-
Net asset value, end of period $28.57 $27.85 $26.14 $23.05 $21.92 $23.88
TOTAL RETURN
Total investment return based on net
asset value (b) 7.53% 26.74% 41.46% 29.87% (4.92)% 17.46%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $206,104 $145,494 $28,541 $1,611 $1,220 $118
Ratio of expenses to average net assets 2.33%(c) 2.50% 2.61% 2.64% 2.48% 2.49%(c)
Ratio of net investment loss to average
net assets (1.44)%(c) (1.72)% (1.94)% (1.76)% (1.96)% (1.90)%(c)
Portfolio turnover rate 63% 135% 168% 160% 110% 102%
Average commission rate (d) $.0540 $.0536 $.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
--------------------------
SIX MONTHS OCTOBER 2,
ENDED 1996(E)
MARCH 31, TO
1998 SEPTEMBER 30,
(UNAUDITED) 1997
----------- -------------
Net asset value, beginning of period $30.42 $27.82
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (a) (.06) (.17)
Net realized and unrealized gain
on investment transactions 2.37 6.88
Net increase in net asset
value from operations 2.31 6.71
LESS: DISTRIBUTIONS
Distributions from net realized gains (1.23) (4.11)
Net asset value, end of period $31.50 $30.42
TOTAL RETURN
Total investment return based on net
asset value (b) 8.09% 28.47%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $192,181 $62,455
Ratio of expenses to average net assets (c) 1.35% 1.58%
Ratio of net investment loss to average
net assets (c) (.42)% (.74)%
Portfolio turnover rate 63% 135%
Average commission rate $.0540 $.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) 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)
OFFICERS
ALDEN M. STEWART, PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
RANDALL E. HAASE, SENIOR VICE PRESIDENT
THOMAS J. 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.
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 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 Environment 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 Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage 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
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
