ALLIANCE
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QUASAR
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FUND
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Annual Report
September 30, 1999
Alliance Capital [LOGO](R)
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LETTER TO SHAREHOLDERS Alliance Quasar Fund
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November 10, 1999
Dear Shareholder:
This report contains investment results and market commentary for Alliance
Quasar Fund (the "Fund") for the annual reporting period ended September 30,
1999.
INVESTMENT RESULTS
During the six- and 12-month periods under review, the Fund's Class A shares
returned 2.58% and 11.89%, respectively, while the Fund's benchmark index, as
represented by the Russell 2000 Index, returned 8.25% and 19.07%, respectively.
The Fund's underperformance versus its benchmark was largely due to the Fund's
relative underweight position in technology and its relatively large exposure to
certain other industries such as health care, retail and transportation. We
believe that these areas offer much better investments on a risk/reward basis
with much less volatility. Other than technology stocks, most other areas of the
U.S. market have received little investor interest. As a result, we believe
strongly that these areas are where the greatest opportunities lie.
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INVESTMENT RESULTS*
Periods ended September 30, 1999
Total Return
6 months 12 months
-------- ---------
Alliance Quasar Fund
Class A 2.58% 11.89%
Class B 2.16% 11.01%
Class C 2.16% 11.05%
Russell 2000 Index 8.25% 19.07%
* The Fund's investment results represent total returns and are based on the
net asset value of each class of shares as of September 30, 1999. 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 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 appear on page 3.
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MARKET REVIEW
Overall, small-cap stocks continue to underperform large-cap stocks. In fact, if
this trend continues, 1999 will mark the sixth consecutive year of
underperformance for small-cap stocks as measured by the Russell 2000 Index
relative to the Standard & Poor's 500 Stock Index ("S&P 500"). We strongly
believe this six-year cycle is a liquidity-driven event. Since 1979, when the
Russell 2000 Index was introduced to measure small-cap stocks, there have been
four distinct cycles in which either small- or large-cap stocks performed well.
For 1999, not only have we just completed six consecutive years, but also the
disparity in valuations between small- and large-cap stocks has never been more
extreme within this 20-year period. In fact, since the beginning of 1994, when
the current period of underperformance for small-cap stocks began, the S&P 500
has outperformed the Russell 2000 Index by practically a two-to-one margin, or
approximately 26% versus 13% on an annualized basis for the six-year period. In
our view, this is simply not sustainable.
We do strongly believe that there are major opportunities to invest in the U.S.
in literally thousands of small-cap stocks that offer much better risk/reward
tradeoffs than many investors realize. The difficulty, of course, is in
determining exactly when investor psychology will change. When it does, however,
we believe that the Fund is positioned to do well when the market broadens out
and small-cap stocks start to participate.
For example, the Fund holds several positions in the retail and apparel sectors.
The companies in these sectors typically have strong franchises, dominant market
share positions, earnings-per-share growth between 20% and 30% and
price-to-earnings ratios between 10 and 20 times earnings. The Fund's holdings
in these sectors include Zale Corp., a leading jewelry retailer, Men's Wearhouse
Inc., a leading men's retailer of formal wear, and BJ's Wholesale Club Inc., a
leading membership-based warehouse club chain.
Within the leisure category, we are looking for professionally managed
consolidators of fragmented industries who are able to leverage their strengths
in building dominant, national franchises. These include Bally Total Fitness
Holding Corp., which, with over four million members, is the largest health club
provider in the U.S.,
1
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Alliance Quasar Fund
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and Premier Parks Inc., the largest amusement park operator after the Walt
Disney Company. In the consumer manufacturing category, the Fund maintains a
holding in Monaco Coach Corp., a leading manufacturer of recreational vehicles
in the U.S.
Health care continues to be an area of focus for the Fund. The congressional
balancing of the federal budget and various managed-care concerns have put a lot
of pressure on the health care service sector, which in turn has depressed stock
prices in this sector. Nevertheless, we have used this as an opportunity to add
to the Fund's holdings. These include Health Management Associates Inc., a
leading operator of acute care hospitals in rural markets, and Lifepoint
Hospitals Inc., a recently spun-out company from Columbia/HCA Healthcare Corp.
In addition, the Fund holds a position in Medical Manager Corp., an intranet
health care company focusing on managing drug prescriptions via a closed-loop
architecture.
In the turnaround category, we believe that the sports retailing industry has
seen its worst days and that Venator Group Inc., the parent company of both Foot
Locker and Champs, should benefit. As the industry becomes more rational, the
aggressive expansion in square footage seen over the last five years has
essentially come to a halt. In addition, Nike Inc. is seeing its business
turning. These factors, as well as the Olympics being only a year away, should
help Foot Locker and Champs see a turn in their business and we consequently
believe that Venator should do very well.
Within the real estate sector, we believe that the stocks of real estate
investment trusts ("REITs") have come under a lot of pressure as investors focus
more on momentum growth and less on yield. There are several well-run companies
yielding over 10% with internal growth of 10% to 20%. Therefore, we have about
6% of the Fund's portfolio invested in REITs and currently hold positions in
Chelsea GCA Realty Inc., Taubman Centers Inc., and MeriStar Hospitality Corp.
In addition, we also like the rental car industry and have positions in Budget
Group Inc. and Dollar Thrifty Automotive Group Inc. This industry has gone
through a major change in ownership from the auto manufacturers to financial
entrepreneurs. We are now seeing real pricing power, better yield management,
greater inventory efficiencies, and as a result, a higher level of
profitability. We believe these companies have strong fundamentals that are not
yet recognized in the marketplace.
We remain adverse to establishing an overweight position in the technology
sector and, more specifically, in internet stocks. We still believe that a broad
majority of these stocks have yet to demonstrate the ability to produce
significant earnings and, in some cases, we believe that they probably never
will. In our opinion, these stocks remain overpriced, and we therefore maintain
a low weighting in these sectors.
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,
/s/ Alden M. Stewart
Alden M. Stewart
Chairman and President
/s/ Randall E. Haase
Randall E. Haase
Senior Vice President
2
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INVESTMENT OBJECTIVE AND POLICIES Alliance Quasar Fund
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The Quasar Fund seeks growth of capital by pursuing aggressive investment
policies. The Fund invests in a diversified portfolio of equity securities that
offer the possibility of above-average earnings growth. The Fund emphasizes
investment in small-capitalization companies. The Fund may also pursue
investment opportunities outside of the United States.
INVESTMENT RESULTS
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NAV and SEC Average Annual Total Returns as of September 30, 1999
--------------
CLASS A SHARES
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Without With
Sales Charge Sales Charge
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One Year 11.89% 7.13%
Five Years 15.30% 14.30%
Ten Years 8.32% 7.85%
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CLASS B SHARES
--------------
Without With
Sales Charge Sales Charge
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One Year 11.01% 7.01%
Five Years 14.43% 14.43%
Since Inception* (a) 11.89% 11.89%
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CLASS C SHARES
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Without With
Sales Charge Sales Charge
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One Year 11.05% 10.05%
Five Years 14.44% 14.44%
Since Inception* 13.03% 13.03%
The Fund's investment results represent average annual total returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) 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.
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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.
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* Inception: 9/17/90, Class B; 5/3/93, Class C.
(a) Assumes conversion of Class B shares into Class A shares after eight
years.
3
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Alliance Quasar Fund
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ALLIANCE QUASAR FUND
GROWTH OF A $10,000 INVESTMENT
9/30/89 TO 9/30/99
[The following table was represented as a mountain chart
in the printed material.]
Alliance
Russell Quasar Fund
2000 Index: Class A:
----------- -----------
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
9/30/98
9/30/99 $28,226 $21,298
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Quasar Fund Class A shares (from 9/30/89 to 9/30/99) as compared to the
performance of an appropriate broad-based index. 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 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.
When comparing Alliance Quasar Fund to the index shown above, you should
note that no charges or expenses are reflected in the performance of the index.
4
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TEN LARGEST HOLDINGS
September 30, 1999 Alliance Quasar Fund
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COMPANY VALUE PERCENT OF NET ASSETS
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Legg Mason, Inc. $ 79,372,006 5.5%
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Chelsea GCA Realty, Inc. 54,679,625 3.8
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Premier Parks, Inc. 53,667,400 3.7
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Mohawk Industries, Inc. 40,526,956 2.8
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Venator Group, Inc. 40,181,244 2.8
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Monaco Coach Corp. 38,042,355 2.7
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Carey International, Inc. 36,180,000 2.5
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Sunterra Corp. 34,293,812 2.4
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Zale Corp. 32,274,450 2.2
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BJ's Wholesale Club, Inc. 31,170,700 2.2
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$440,388,548 30.6%
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MAJOR PORTFOLIO CHANGES
Six Months Ended September 30, 1999
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SHARES*
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PURCHASES BOUGHT HOLDINGS 9/30/99
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Applied Power, Inc. Cl.A 583,700 583,700
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Health Management Associates, Inc. Cl.A 3,955,700 3,955,700
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IDEC Pharmaceuticals Corp. 124,300 124,300
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K-Swiss, Inc. 651,500 651,500
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Lifepoint Hospitals, Inc. 2,628,800 2,628,800
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Murphy Oil Corp. 212,300 212,300
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Nielsen Media Research, Inc. 789,700 789,700
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Shopko Stores, Inc. 738,000 738,000
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Summit Technology, Inc. 845,600 845,600
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Visual Networks, Inc. 338,900 338,900
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SALES SOLD HOLDINGS 9/30/99
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Alaska Air Group, Inc. 523,000 731,700
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Bally Total Fitness Holding Corp. 386,700 409,000
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Bethlehem Steel Corp. 4,034,700 -0-
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CheckFree Corp. 883,300 -0-
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Geltex Pharmaceuticals, Inc. 1,326,600 -0-
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Medical Manager Corp. 136,100 257,700
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Pinnicle Holdings, Inc. 1,109,100 -0-
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St. Jude Medical, Inc. 366,400 -0-
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Tiffany & Co. 843,800 -0-
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Tommy Hilfiger Corp. 225,600 -0-
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* Adjusted for Stock Splits.
5
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PORTFOLIO OF INVESTMENTS
September 30, 1999 Alliance Quasar Fund
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Company Shares Value
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COMMON STOCKS-97.1%
CONSUMER SERVICES-35.0%
AIRLINES-3.2%
Alaska Air Group, Inc. (a) .................. 731,700 $ 29,771,044
America West Holdings Corp. .................
Cl.B (a) ................................. 778,900 13,484,706
Atlas Air, Inc. (a) ......................... 100,200 2,191,875
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45,447,625
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APPAREL-3.7%
Men's Wearhouse, Inc. (a) ................... 981,050 21,092,575
Zale Corp. (a) .............................. 842,400 32,274,450
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53,367,025
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BROADCASTING &
CABLE-1.3%
SFX Entertainment, Inc. .....................
Cl.A (a) ................................. 618,150 18,853,575
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ENTERTAINMENT &
LEISURE-10.7%
Ackerley Group, Inc. ........................ 539,600 6,643,825
Bally Total Fitness Holding
Corp. (a) ................................ 409,000 12,500,063
Cinar Corp. Cl.B (a) ........................ 645,200 19,517,300
Imax Corp. (a) .............................. 472,300 9,446,000
Premier Parks, Inc. (a) ..................... 1,850,600 53,667,400
Sunterra Corp. (a) .......................... 2,887,900 34,293,812
Trans World Entertainment
Corp. (a) ................................ 1,421,000 18,028,937
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154,097,337
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RETAIL - GENERAL
MERCHANDISE-12.0%
BJ's Wholesale Club, Inc. (a) ............... 1,054,400 31,170,700
Circuit City Stores, Inc. -
CarMax Group (a) ......................... 2,887,400 9,744,975
Furniture Brands International,
Inc. (a) ................................. 623,700 12,279,094
Industrie Natuzzi SpA
(ADR) (Italy) ............................ 1,089,400 21,379,475
Movado Group, Inc. (a) ...................... 783,500 18,020,500
Sharper Image Corp. (a) ..................... 269,700 2,966,700
Shopko Stores, Inc. (a) ..................... 738,000 21,402,000
Stage Stores, Inc. (a) ...................... 2,444,700 15,126,581
Venator Group, Inc. (a) ..................... 4,692,700 40,181,244
--------------
172,271,269
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MISCELLANEOUS-4.1%
Century Business Services,
Inc. (a) ................................. 1,255,422 14,594,281
Insight Enterprises, Inc. (a) ............... 447,400 14,540,500
Nielsen Media Research, Inc. ................ 789,700 29,366,969
--------------
58,501,750
--------------
502,538,581
--------------
TECHNOLOGY-15.6%
COMMUNICATION
EQUIPMENT-1.1%
TeleSpectrum Worldwide,
Inc. (a) ................................. 2,715,000 16,120,312
--------------
COMPUTER
HARDWARE-2.2%
Apex, Inc. (a) .............................. 1,663,400 31,084,787
--------------
COMPUTER
PERIPHERALS-1.2%
InterWorld Corp. (a) ........................ 493,700 17,834,912
--------------
COMPUTER SERVICES-2.1%
DBT Online, Inc. (a) ........................ 1,131,400 28,214,287
IMRglobal Corp. (a) ......................... 210,800 1,739,100
--------------
29,953,387
--------------
COMPUTER
SOFTWARE-3.5%
BackWeb Technologies,
Ltd. (a) ................................. 348,000 5,916,000
Business Objects S.A. (a) ................... 65,600 3,870,400
Digex, Inc. (a) ............................. 299,500 7,094,406
Sapient Corp. (a) ........................... 196,400 18,510,700
Visual Networks, Inc. (a) ................... 338,900 14,382,069
--------------
49,773,575
--------------
ELECTRONIC
COMPONENTS-0.4%
DII Group, Inc. (a) ......................... 140,900 4,957,919
--------------
NETWORKING
SOFTWARE-0.5%
MMC Networks, Inc. (a) ...................... 241,000 7,516,188
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SEMI-CONDUCTOR
CAPITAL
EQUIPMENT-0.9%
MKS Instruments, Inc. (a) ................... 585,000 13,016,250
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6
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Alliance Quasar Fund
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Company Shares Value
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SEMI-CONDUCTOR
COMPONENTS-2.4%
Fairchild Semiconductor
Corp. Cl.A (a) ........................... 490,000 $ 11,515,000
MIPS Technologies, Inc. (a) ................. 291,500 9,273,344
SDL, Inc. (a) ............................... 102,200 7,799,137
Triquint Semiconductor,
Inc. (a) ................................. 114,600 6,553,688
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35,141,169
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TELECOMMUNICATIONS-0.3%
GST Telecommunications,
Inc. (a) ................................. 606,800 4,266,563
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MISCELLANEOUS-1.0%
Excalibur Technologies
Corp. (a) ................................ 725,600 5,986,200
Harman International
Industries, Inc. ......................... 189,000 7,949,813
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13,936,013
--------------
223,601,075
--------------
FINANCE-12.2%
BROKERAGE & MONEY
MANAGEMENT-5.5%
Legg Mason, Inc. ............................ 2,071,700 79,372,006
--------------
REAL ESTATE-4.7%
Chelsea GCA Realty, Inc. .................... 1,729,000 54,679,625
MeriStar Hospitality Corp. .................. 859,800 13,111,950
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67,791,575
--------------
MISCELLANEOUS-2.0%
Taubman Centers, Inc. ....................... 2,439,300 28,051,950
--------------
175,215,531
--------------
HEALTH CARE-8.9%
BIOTECHNOLOGY-1.4%
Human Genome Sciences,
Inc. (a) ................................. 127,400 9,395,750
IDEC Pharmaceuticals
Corp. (a) ................................ 124,300 11,688,084
--------------
21,083,834
--------------
DRUGS-0.2%
Cephalon, Inc. (a) .......................... 148,200 2,662,969
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MEDICAL PRODUCTS-1.5%
Novoste Corp. (a) ........................... 331,600 5,916,988
Summit Technology, Inc. (a) ................. 845,600 15,485,050
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21,402,038
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MEDICAL SERVICES-5.6%
Health Management
Associates, Inc. Cl.A (a) ................ 3,955,700 29,173,287
Lifepoint Hospitals, Inc. (a) ............... 2,628,800 22,837,700
Medical Manager Corp. (a) ................... 257,700 12,820,575
Orthodontic Centers of
America, Inc. (a) ........................ 913,100 15,979,250
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80,810,812
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MISCELLANEOUS-0.2%
Women First Healthcare,
Inc. (a) ................................. 380,600 2,687,988
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128,647,641
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CONSUMER
MANUFACTURING-7.7%
AUTO & RELATED-6.3%
Budget Group, Inc. (a) ...................... 1,341,800 9,476,462
Dollar Thrifty Automotive
Group, Inc. (a) .......................... 737,400 15,254,962
Group 1 Automotive, Inc. (a) ................ 1,517,100 27,781,894
Monaco Coach Corp. (a) ...................... 1,560,712 38,042,355
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90,555,673
--------------
TEXTILE PRODUCTS-1.4%
K-Swiss, Inc. ............................... 651,500 20,562,969
--------------
111,118,642
--------------
CAPITAL GOODS-5.8%
MACHINERY-1.7%
United Rentals, Inc. (a) .................... 1,124,800 24,464,400
--------------
MISCELLANEOUS-4.1%
Applied Power, Inc. Cl.A .................... 583,700 17,729,888
Mohawk Industries, Inc. (a) ................. 2,032,700 40,526,956
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58,256,844
--------------
82,721,244
--------------
ENERGY-3.4%
OIL - DOMESTIC-0.8%
Murphy Oil Corp. ............................ 212,300 11,477,469
--------------
OIL SERVICE-0.6%
Oceaneering International,
Inc. (a) ................................. 128,900 2,167,131
Santa Fe International Corp. ................ 306,300 6,604,594
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8,771,725
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PIPELINES-2.0%
Southern Union Co. .......................... 1,522,391 28,925,429
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49,174,623
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7
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PORTFOLIO OF INVESTMENTS (continued) Alliance Quasar Fund
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Company Shares Value
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BUSINESS SERVICES-2.5%
PROFESSIONAL
SERVICES-2.5%
Carey International, Inc. (a) ............... 1,447,200 $ 36,180,000
--------------
TRANSPORTATION-2.4%
SHIPPING-1.2%
Teekay Shipping Corp. ....................... 1,133,700 17,714,062
--------------
TRUCKING-1.2%
Consolidated Freightways
Corp. (a) ................................ 1,706,600 16,852,675
--------------
34,566,737
--------------
UTILITIES-1.8%
TELEPHONE UTILITY-1.8%
Millicom International
Cellular, SA
(Luxembourg) (a) ......................... 931,000 26,475,312
--------------
CONSUMER STAPLES-1.1%
RETAIL - FOOD &
DRUG-0.4%
Whole Foods Market, Inc. (a) ................ 166,700 5,454,216
--------------
MISCELLANEOUS-0.7%
FirstService Corp. (a) ...................... 874,000 10,542,625
--------------
15,996,841
--------------
MULTI-INDUSTRY
COMPANIES-0.7%
Korn/Ferry International (a) ................ 264,100 6,090,806
Playtex Products, Inc. (a) .................. 315,100 4,647,725
--------------
10,738,531
--------------
TOTAL INVESTMENTS-97.1%
(cost $1,412,771,791) .................... 1,396,974,758
Other assets less
liabilities-2.9% ......................... 41,024,023
--------------
NET ASSETS-100% ............................. $1,437,998,781
==============
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(a) Non-income producing security.
Glossary:
ADR - American Depositary Receipt
See notes to financial statements.
8
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STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999 Alliance Quasar Fund
================================================================================
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $1,412,771,791) .................... $ 1,396,974,758
Receivable for investment securities sold .................................... 47,911,044
Receivable for capital stock sold ............................................ 26,195,519
Dividends receivable ......................................................... 2,142,660
---------------
Total assets ................................................................. 1,473,223,981
---------------
LIABILITIES
Due to Custodian ............................................................. 5,718,191
Payable for capital stock redeemed ........................................... 12,164,047
Payable for investment securities purchased .................................. 12,010,918
Advisory fee payable ......................................................... 3,536,106
Distribution fee payable ..................................................... 767,342
Accrued expenses ............................................................. 1,028,596
---------------
Total liabilities ............................................................ 35,225,200
---------------
NET ASSETS ...................................................................... $ 1,437,998,781
===============
COMPOSITION OF NET ASSETS
Shares of capital stock, at par .............................................. $ 128,012
Additional paid-in capital ................................................... 1,571,231,570
Accumulated net investment loss .............................................. (330)
Accumulated net realized loss on investment transactions ..................... (117,562,163)
Net unrealized depreciation of investments and other assets .................. (15,798,308)
---------------
$ 1,437,998,781
===============
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share
($517,288,932 / 21,698,964) shares of capital stock issued and outstanding) $23.84
Sales charge -- 4.25% of public offering price ............................... 1.06
------
Maximum offering price ....................................................... $24.90
======
Class B Shares
Net asset value and offering price per share
($587,918,453 / 27,572,202 shares of capital stock issued and outstanding) $21.32
======
Class C Shares
Net asset value and offering price per share
($168,120,092 / 7,877,406 shares of capital stock issued and outstanding) . $21.34
======
Advisor Class Shares
Net asset value, redemption and offering price per share
($164,671,304 / 6,857,580 shares of capital stock issued and outstanding) . $24.01
======
</TABLE>
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See notes to financial statements.
9
<PAGE>
STATEMENT OF OPERATIONS
Year Ended September 30, 1999 Alliance Quasar Fund
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $136,750) ............... $ 9,982,272
Interest ............................................................ 2,635,125 $ 12,617,397
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EXPENSES
Advisory fee ........................................................ 16,461,584
Distribution fee - Class A .......................................... 1,494,767
Distribution fee - Class B .......................................... 6,637,963
Distribution fee - Class C .......................................... 1,962,805
Transfer agency ..................................................... 5,289,767
Printing ............................................................ 885,456
Custodian ........................................................... 263,524
Audit and legal ..................................................... 131,119
Administrative ...................................................... 122,000
Taxes ............................................................... 114,188
Registration ........................................................ 86,142
Directors' fees ..................................................... 23,000
Miscellaneous ....................................................... 73,649
------------
Total expenses ...................................................... 33,545,964
Less: expense offset arrangement (see Note B) ....................... (230,038)
------------
Net expenses ........................................................ 33,315,926
-------------
Net investment loss ................................................. (20,698,529)
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment transactions ........................ (106,576,025)
Net change in unrealized depreciation of investments and other assets 329,590,064
-------------
Net gain on investments ............................................. 223,014,039
-------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ............................. $ 202,315,510
=============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
10
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS Alliance Quasar Fund
================================================================================
<TABLE>
<CAPTION>
Year Ended Year Ended
September 30, September 30,
1999 1998
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss ..................................... $ (20,698,529) $ (14,960,472)
Net realized gain (loss) on investment transactions ..... (106,576,025) 79,606,746
Net change in unrealized appreciation/depreciation
of investments and other assets ...................... 329,590,064 (516,425,096)
--------------- ---------------
Net increase (decrease) in net assets from operations ... 202,315,510 (451,778,822)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A .............................................. (22,822,927) (17,164,110)
Class B .............................................. (32,223,330) (24,996,773)
Class C .............................................. (9,594,700) (7,133,144)
Advisor Class ........................................ (9,530,738) (2,825,501)
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) ................................. (167,508,661) 868,194,847
--------------- ---------------
Total increase (decrease) ............................... (39,364,846) 364,296,497
NET ASSETS
Beginning of year ....................................... 1,477,363,627 1,113,067,130
--------------- ---------------
End of year ............................................. $ 1,437,998,781 $ 1,477,363,627
=============== ===============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 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 may 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 market 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. During the current fiscal year, permanent differences,
primarily due to net investment loss,
12
<PAGE>
Alliance Quasar Fund
================================================================================
resulted in a net increase in accumulated net investment loss and accumulated
net realized loss on investment transactions and a corresponding decrease in
additional paid-in capital. This reclassification had no effect on net assets.
- --------------------------------------------------------------------------------
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 $122,000 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, 1999.
The Fund compensates Alliance Fund Services, Inc., a wholly-owned subsidiary of
the Adviser, under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $3,055,959 for the year ended September 30, 1999.
In addition, for the year ended September 30, 1999, the Fund's expenses were
reduced by $230,038 under an expense offset arrangement with Alliance Fund
Services.
Alliance Fund Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary
of the Adviser, serves as the Distributor of the Fund's shares. The Distributor
has advised the Fund that it has received front-end sales charges of $149,975
from the sales of Class A shares and $49,939, $2,587,993 and $144,996 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, 1999.
Brokerage commissions paid on investment transactions for the year ended
September 30, 1999 amounted to $4,958,576, of which $157,696 was paid to
Donaldson, Lufkin & Jenrette Securities Corp., directly and none was paid to the
Pershing Division of Donaldson, Lufkin & Jenrette Securities Corp., affiliates
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 distribution and servicing fees 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 are no distribution and servicing fees 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 advised
the Fund that it has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $28,354,921 and $1,856,687 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 $1,444,263,303 and $1,680,192,736,
respectively, for the year ended September 30, 1999. There were no purchases or
sales of U.S. government and government agency obligations for the year ended
September 30, 1999.
At September 30, 1999, the cost of investments for federal income tax purposes
was $1,435,021,378. Accordingly, gross unrealized appreciation of investments
was $165,233,174 and gross unrealized
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) Alliance Quasar Fund
================================================================================
depreciation of investments was $203,279,794, resulting in net unrealized
depreciation of $38,046,620.
At September 30, 1999, the Fund had a capital loss carryforward of $57,376,477
which expires in the year 2007.
Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
$37,936,099 during the fiscal year 1999. To the extent that the carryover losses
are used to offset future capital gain, it is probable that gain will not be
distributed to shareholders.
- --------------------------------------------------------------------------------
NOTE E: Capital Stock
There are 12,000,000,000 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 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
--------------------------- ----------------------------------
SHARES AMOUNT
--------------------------- ----------------------------------
Year Ended Year Ended Year Ended Year Ended
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
------------ ----------- --------------- ---------------
<S> <C> <C> <C> <C>
Class A
Shares sold .................... 98,790,378 43,817,026 $ 2,400,686,846 $ 1,244,246,754
Shares issued in reinvestment of
distributions ............... 905,363 571,457 20,225,926 15,988,123
Shares converted from Class B .. 207,656 165,256 5,081,272 4,647,898
Shares redeemed ................ (100,436,418) (35,561,736) (2,454,577,511) (1,011,637,305)
------------ ----------- --------------- ---------------
Net increase (decrease) ........ (533,021) 8,992,003 $ (28,583,467) $ 253,245,470
============ =========== =============== ===============
Class B
Shares sold .................... 10,825,928 18,286,351 $ 234,278,096 $ 482,762,932
Shares issued in reinvestment of
distributions ............... 1,502,631 923,019 30,216,175 23,536,952
Shares converted to Class A .... (230,997) (181,899) (5,081,272) (4,647,898)
Shares redeemed ................ (15,515,244) (6,112,452) (336,327,068) (154,925,238)
------------ ----------- --------------- ---------------
Net increase (decrease) ........ (3,417,682) 12,915,019 $ (76,914,069) $ 346,726,748
============ =========== =============== ===============
Class C
Shares sold .................... 15,173,234 11,956,015 $ 331,891,743 $ 308,470,104
Shares issued in reinvestment of
distributions ............... 445,616 260,405 8,970,452 6,642,958
Shares redeemed ................ (16,765,900) (8,416,893) (368,024,477) (213,847,794)
------------ ----------- --------------- ---------------
Net increase (decrease) ........ (1,147,050) 3,799,527 $ (27,162,282) $ 101,265,268
============ =========== =============== ===============
Advisor Class
Shares sold .................... 15,459,710 9,129,797 $ 362,260,667 $ 259,655,427
Shares issued in reinvestment of
distributions ............... 413,259 95,462 9,281,785 2,676,749
Shares redeemed ................ (16,841,169) (3,452,506) (406,391,295) (95,374,815)
------------ ----------- --------------- ---------------
Net increase (decrease) ........ (968,200) 5,772,753 $ (34,848,843) $ 166,957,361
============ =========== =============== ===============
</TABLE>
14
<PAGE>
Alliance Quasar Fund
================================================================================
NOTE F: Bank Borrowing
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility")
intended to provide short-term financing if necessary, subject to certain
restrictions, in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended September 30, 1999.
15
<PAGE>
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,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ................... $22.27 $30.37 $27.92 $24.16 $22.65
------ ------ ------ ------ ------
Income From Investment Operations
Net investment loss .................................. (.22)(a) (.17)(a) (.24)(a) (.25) (.22)(a)
Net realized and unrealized gain (loss) on investment
transactions ...................................... 2.80 (6.70) 6.80 8.82 5.59
------ ------ ------ ------ ------
Net increase (decrease) in net asset value from
operations ........................................ 2.58 (6.87) 6.56 8.57 5.37
------ ------ ------ ------ ------
Less: Distributions
Distributions from net realized gains ................ (1.01) (1.23) (4.11) (4.81) (3.86)
------ ------ ------ ------ ------
Net asset value, end of year ......................... $23.84 $22.27 $30.37 $27.92 $24.16
====== ====== ====== ====== ======
Total Return
Total investment return based on net asset value (b) . 11.89% (23.45)% 27.81% 42.42% 30.73%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) .............. $517,289 $495,070 $402,081 $229,798 $146,663
Ratio of expenses to average net assets .............. 1.69%(c) 1.61%(c) 1.67% 1.79% 1.83%
Ratio of net investment loss to average net assets ... (.90)% (.59)% (.91)% (1.11)% (1.06)%
Portfolio turnover rate .............................. 91% 109% 135% 168% 160%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 19.
16
<PAGE>
Alliance Quasar Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Year
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
CLASS B
-----------------------------------------------------------------------
Year Ended September 30,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ................... $20.17 $27.83 $26.13 $23.03 $21.92
------ ------ ------ ------ ------
Income From Investment Operations
Net investment loss .................................. (.37)(a) (.36)(a) (.42)(a) (.20) (.37)(a)
Net realized and unrealized gain (loss) on investment
transactions ...................................... 2.53 (6.07) 6.23 8.11 5.34
------ ------ ------ ------ ------
Net increase (decrease) in net asset value from
operations ........................................ 2.16 (6.43) 5.81 7.91 4.97
------ ------ ------ ------ ------
Less: Distributions
Distributions from net realized gains ................ (1.01) (1.23) (4.11) (4.81) (3.86)
------ ------ ------ ------ ------
Net asset value, end of year ......................... $21.32 $20.17 $27.83 $26.13 $23.03
====== ====== ====== ====== ======
Total Return
Total investment return based on net asset value (b) . 11.01% (24.03)% 26.70% 41.48% 29.78%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) .............. $587,919 $625,147 $503,037 $112,490 $16,604
Ratio of expenses to average net assets .............. 2.46%(c) 2.39%(c) 2.51% 2.62% 2.65%
Ratio of net investment loss to average net assets ... (1.68)% (1.36)% (1.73)% (1.96)% (1.88)%
Portfolio turnover rate .............................. 91% 109% 135% 168% 160%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 19.
17
<PAGE>
FINANCIAL HIGHLIGHTS (continued) Alliance Quasar Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Year
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
CLASS C
-----------------------------------------------------------------------
Year Ended September 30,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ................... $20.18 $27.85 $26.14 $23.05 $21.92
------ ------ ------ ------ ------
Income From Investment Operations
Net investment loss .................................. (.36)(a) (.35)(a) (.42)(a) (.20) (.37)(a)
Net realized and unrealized gain (loss) on investment
transactions ...................................... 2.53 (6.09) 6.24 8.10 5.36
------ ------ ------ ------ ------
Net increase (decrease) in net asset value from
operations ........................................ 2.17 (6.44) 5.82 7.90 4.99
------ ------ ------ ------ ------
Less: Distributions
Distributions from net realized gains ................ (1.01) (1.23) (4.11) (4.81) (3.86)
------ ------ ------ ------ ------
Net asset value, end of year ......................... $21.34 $20.18 $27.85 $26.14 $23.05
====== ====== ====== ====== ======
Total Return
Total investment return based on net asset value (b) . 11.05% (24.05)% 26.74% 41.46% 29.87%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) .............. $168,120 $182,110 $145,494 $28,541 $1,611
Ratio of expenses to average net assets .............. 2.45%(c) 2.38%(c) 2.50% 2.61% 2.64%
Ratio of net investment loss to average net assets ... (1.66)% (1.35)% (1.72)% (1.94)% (1.76)%
Portfolio turnover rate .............................. 91% 109% 135% 168% 160%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 19.
18
<PAGE>
Alliance Quasar Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
------------------------------------------------
ADVISOR CLASS
------------------------------------------------
October 2,
1996(d)
Year Ended September 30, to
------------------------ September 30,
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Net asset value, beginning of period ................ $22.37 $30.42 $27.82
------ ------ ------
Income from Investment Operations
Net investment loss (a) ............................. (.15) (.09) (.17)
Net realized and unrealized gain (loss) on investment
transactions ..................................... 2.80 (6.73) 6.88
------ ------ ------
Net increase (decrease) in net asset value from
operations ....................................... 2.65 (6.82) 6.71
------ ------ ------
Less: Distributions
Distributions from net realized gains ............... (1.01) (1.23) (4.11)
------ ------ ------
Net asset value, end of period ...................... $24.01 $22.37 $30.42
====== ====== ======
Total Return
Total investment return based on net asset value (b) 12.16% (23.24)% 28.47%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) ........... $164,671 $175,037 $62,455
Ratio of expenses to average net assets ............. 1.42%(c) 1.38%(c) 1.58%(e)
Ratio of net investment loss to average net assets .. (.62)% (.32)% (.74)%(e)
Portfolio turnover rate ............................. 91% 109% 135%
</TABLE>
- --------------------------------------------------------------------------------
(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 charges or
contingent deferred sales charges are not reflected in the calculation of
total investment return. Total investment return calculated for a period
of less than one year is not annualized.
(c) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For the year ended September 30, 1999, and the year ended
September 30, 1998, the ratios of expenses to average net assets were
1.68% and 1.60% for Class A shares, 2.45% and 2.38% for Class B shares,
2.44% and 2.37% for Class C shares and 1.41% and 1.37% for Advisor Class
shares, respectively.
(d) Commencement of distribution.
(e) Annualized.
19
<PAGE>
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. (the "Fund"), including the portfolio of investments, as of
September 30, 1999, 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 and financial highlights. Our procedures included confirmation of
securities owned as of September 30, 1999, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Quasar Fund, Inc. at September 30, 1999, 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.
/s/ Ernst & Young LLP
New York, New York
November 2, 1999
FEDERAL INCOME TAX INFORMATION (unaudited)
================================================================================
In order to meet certain requirements of the Internal Revenue Code we are
advising you that $60,952,977 of the capital gain distributions paid by the Fund
during the fiscal year September 30, 1999 are subject to a maximum tax rate of
20%.
Shareholders should not use the above information to prepare their tax returns.
The information necessary to complete your income tax returns will be included
with your Form 1099 DIV which will be sent to you separately in January 2000.
20
<PAGE>
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 J. Bardong, 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 LLP
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.
21
<PAGE>
(This page left intentionally blank.)
<PAGE>
THE ALLIANCE FAMILY OF MUTUAL FUNDS
================================================================================
Fixed Income
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Quality 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 U.S. Government Fund
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
Select Investors Series - Premier Portfolio
Growth & Income
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors 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 International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
Institutional
Premier Growth
Quasar
Real Estate Investment
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
Alliance Capital Reserves
Alliance Government Reserves
Alliance Institutional Reserves
Prime Portfolio
Government Portfolio
Tax-Free Portfolio
Treasury Portfolio
Trust Portfolio
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
General Municipal Portfolio
Government Portfolio
23
<PAGE>
---------------
ALLIANCE QUASAR FUND BULK RATE
1345 Avenue of the Americas U.S. POSTAGE
New York, NY 10105 PAID
(800) 221-5672 New York, NY
Permit No. 7131
---------------
Alliance Capital [LOGO](R)
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.
QSRAR999
