--------------------------------------------------------------------------------
SMALL CAP GROWTH
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[GRAPHIC OMITTED]
Alliance Quasar
Fund
Annual Report
September 30, 2000
AllianceCapital [LOGO](R)
The Investment Professional's Choice
<PAGE>
Investment Products Offered
---------------------------
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
---------------------------
This shareholder report must be preceded or accompanied by the Fund's prospectus
for individuals who are not current shareholders of the Fund.
<PAGE>
----------------------
LETTER TO SHAREHOLDERS
----------------------
LETTER TO SHAREHOLDERS
October 13, 2000
Dear Shareholder:
The following report highlights the performance and investment strategy of
Alliance Quasar Fund (the "Fund") for the annual reporting period ended
September 30, 2000.
Investment Objective and Policies
This open-end 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 in the United States and may also
pursue investment opportunities outside the U.S.
Investment Results
The following table provides performance data for the Fund and its benchmark,
the Russell 2000 Growth Stock Index, for the six- and 12-month periods ended
September 30, 2000.
--------------------------------------------------------------------------------
INVESTMENT RESULTS*
Periods Ended September 30, 2000
--------------------------
Total Returns
--------------------------
6 Months 12 Months
--------------------------------------------------------------------------------
Alliance Quasar
Fund
Class A 8.85% 29.03%
--------------------------------------------------------------------------------
Class B 8.42% 28.05%
--------------------------------------------------------------------------------
Class C 8.41% 28.02%
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Russell 2000
Growth Stock
Index -11.05% 29.66%
--------------------------------------------------------------------------------
* The Fund's investment results are total returns for the periods shown and
are based on the net asset value (NAV) of each class of shares as of
September 30, 2000. 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. Returns for the Fund
include the reinvestment of any distributions paid during each period.
Past performance is no guarantee of future results.
The unmanaged Russell 2000 Growth Stock Index measures the performance of
those Russell 2000 companies with higher price-to-book ratios and higher
forecasted growth values. The Index is a capitalization-weighted index
that includes 2,000 of the smallest stocks representing approximately 10%
of the U.S. equity market. An investor cannot invest directly in an index,
and its results are not indicative of any specific investment, including
Alliance Quasar Fund.
Additional investment results appear on pages 5-8.
--------------------------------------------------------------------------------
The Fund's outperformance versus its benchmark during the six-month period under
review resulted from strong stock selection across all major sectors of the
Fund's portfolio. Performance also benefited from modestly overweighted exposure
to health care and energy sectors and underweighted positions in the poorly
performing Internet and telecommunications services. Importantly, each sector
manager outperformed his or her respective sec-
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ALLIANCE QUASAR FUND o 1
<PAGE>
----------------------
LETTER TO SHAREHOLDERS
----------------------
tor of the Russell 2000 Growth Stock Index for the six-month period ending
September 30, 2000.
While our time horizon is longer term in nature, it can be useful to look at
monthly performance to understand better how the Fund performs in different
environments. This can be particularly useful in the current environment, where
investor sentiment has swung wildly from month to month. We are pleased to share
that Alliance Quasar Fund outperformed its benchmark during the six-month period
under review. Importantly, the Fund generated significant outperformance during
months of both positive and negative performance for the benchmark. While this
does not suggest that the Fund will outperform in any environment, we do believe
it underscores the team's balanced approach to small-cap growth investing.
Investment Strategy
The Fund seeks investments in faster-than-average growing companies that are
displaying improving fundamentals and favorable earnings momentum. The Fund
invests in smaller-capitalization companies across all major industry groups.
The portfolio management team incorporates both fundamental and quantitative
disciplines to identify attractive investment opportunities.
Investment Review
Against a backdrop of historically high levels of volatility, small-cap growth
stocks (as measured by the Russell 2000 Growth Stock Index) underperformed their
larger-cap peers (as measured by the Russell 1000 Growth Index) during the
six-month period ending September 30, 2000. Throughout the period, small-cap
investors gravitated to less richly valued securities driving significant
outperformance for the Russell 2000 Value Index relative to the Russell 2000
Growth Stock Index. Within the small-cap growth universe, health care, energy,
and financial services were the only three bright spots during the period. Most
other sectors turned in fairly lackluster returns. The consumer, industrial, and
telecommunications services performed poorly during the period.
As investors in the Fund will recall, the current management team assumed
responsibility for the Fund just prior to the start of the recently completed
six-month period. The new team moved quickly to transition the Fund's assets to
a style more focused on growth and on companies displaying favorable fundamental
momentum. We are pleased to report that this transition has been successfully
completed.
Consistent with the new team's historical discipline, the Fund's sector exposure
remained fairly in line with the sectors of the Russell 2000 Growth Stock Index
throughout the six-month period. Therefore, the team benefited from a modestly
overweighted ex posure to health care and energy. Conversely, a small overweight
position in the consumer space and small un-
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2 o ALLIANCE QUASAR FUND
<PAGE>
----------------------
LETTER TO SHAREHOLDERS
----------------------
derweight position in financial services negatively impacted returns during the
period.
Despite the difficult small-cap environment over the past several months, the
small-cap team has been able to identify what it believes are very attractive
growth opportunities at reasonable valuations. As of September 30, 2000, the
Fund's portfolio traded at a multiple of 35 times forecasted 2000 earnings. This
reflects a meaningful discount to the corresponding valuation of the Russell
2000 Growth Stock Index and a significant discount of the Fund's forecasted
growth rate of 46% for the year 2000.
The Fund's positioning within each sector has also changed somewhat during the
period. In the technology sector, we have reduced our exposure to wireless
handsets and semiconductors, preferring to focus on telecommunications
infrastructure and mission-critical Internet enabling software. Within health
care, we remain exposed to several well-financed, later-stage biotechnology
companies, while modestly increasing our exposure to health services and
specialty pharmaceutical distribution companies in the face of an improving
regulatory environment. We also continue to invest in several energy companies
with faster-than-industry-average production growth rates. Finally, our guarded
stance toward the consumer and industrial sectors remains in place. Within these
sectors, our exposure has been limited to companies whose growth prospects
benefit from non-economically driven factors.
Outlook
We believe strongly that the intermediate- to longer-term prospects for the
small-cap universe remain bright. However, our near-term enthusiasm is tempered
somewhat by decelerating economic growth and continued high volatility. Although
a more neutral bias toward interest rates may improve the outlook for equity
multiples, we remain very focused on the negative impact a year's worth of
rising rates may have on future earnings prospects. We believe these factors,
combined with absolute valuations that still remain above historical averages,
may limit small-cap outperformance over the near-term.
Despite a cautious near-term backdrop for small-cap growth stocks, the Alliance
small-cap portfolio team remains confident in its current portfolio positioning.
Our investment focus has been on high quality companies that we believe will be
able to deliver better-than-expected fundamental performance in the face of a
potentially slowing economy.
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ALLIANCE QUASAR FUND o 3
<PAGE>
----------------------
Letter to Shareholders
----------------------
--------------------------------------------------------------------------------
[PHOTO OMITTED] John D.
Carifa
[PHOTO OMITTED] Bruce K.
Aronow
Portfolio Manager, Bruce K. Aronow, is the team leader of the Small Cap Growth
equity portfolio management team and has over 12 years of investment experience.
--------------------------------------------------------------------------------
Thank you for your continued interest and investment in Alliance Quasar Fund. We
look forward to reporting its progress to you in the coming months.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman and President
/s/ Bruce K. Aronow
Bruce K. Aronow
Senior Vice President
--------------------------------------------------------------------------------
4 o ALLIANCE QUASAR FUND
<PAGE>
------------------
PERFORMANCE UPDATE
------------------
PERFORMANCE UPDATE
ALLIANCE QUASAR FUND
GROWTH OF A $10,000 INVESTMENT
9/30/90 TO 9/30/00
[MOUNTAIN CHART OMITTED]
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
9/30/00 Russell 2000 Growth Alliance Quasar
Stock Index: $45,122 Fund Class A: $39,703
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Quasar Fund Class A shares (from 9/30/90 to 9/30/00) 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 these 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 Growth Stock Index measures the performance of those
Russell 2000 companies with higher price-to-book ratios and higher forecasted
growth values. The Index is a capitalization-weighted index that includes 2,000
of the smallest stocks representing approximately 10% 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.
An investor cannot invest directly in an index, and its results are not
indicative of any specific investment, including Alliance Quasar Fund.
--------------------------------------------------------------------------------
ALLIANCE QUASAR FUND o 5
<PAGE>
------------------
PERFORMANCE UPDATE
------------------
PERFORMANCE UPDATE
ALLIANCE QUASAR FUND
HISTORY OF RETURNS
YEARLY PERIODS ENDED 9/30
[BAR CHART OMITTED]
Alliance Quasar Fund - Yearly Periods Ended 9/30
--------------------------------------------------------------------------------
Russell 2000
Alliance Quasar Fund Growth Stock Index
--------------------------------------------------------------------------------
9/30/91 36.28% 50.78%
9/30/92 -8.34% -0.22%
9/30/93 31.58% 29.18%
9/30/94 -4.05% 0.88%
9/30/95 30.73% 28.18%
9/30/96 42.42% 12.61%
9/30/97 27.81% 23.35%
9/30/98 -23.45% -24.83%
9/30/99 11.89% 32.63%
9/30/00 29.03% 29.66%
Past performance is no guarantee of future results. The Fund's investment
results represent total returns for Class A shares and are based on the net
asset value (NAV). 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. Returns for the Fund include the
reinvestment of any distributions paid during the period. Total returns for
Class B and Class C shares will differ due to different expenses associated with
these classes.
The unmanaged Russell 2000 Growth Stock Index measures the performance of those
Russell 2000 companies with higher price-to-book ratios and higher forecasted
growth values. The Index is a capitalization-weighted index that includes 2,000
of the smallest stocks representing approximately 10% of the U.S. equity market.
An investor cannot invest directly in an index, and its results are not
indicative of any specific investment, including Alliance Quasar Fund.
--------------------------------------------------------------------------------
6 o ALLIANCE QUASAR FUND
<PAGE>
-----------------
PORTFOLIO SUMMARY
-----------------
PORTFOLIO SUMMARY
September 30, 2000
INCEPTION DATES PORTFOLIO STATISTICS
Class A Shares Net Assets ($ mil): $1,277.0
2/12/69 Median Market Capitalization ($ mil): $1,678.0
Class B Shares
9/17/90
Class C Shares
5/3/93
SECTOR BREAKDOWN
35.64% Technology
22.90% Health Care
20.06% Consumer Services
4.90% Energy [PIE CHART OMITTED]
4.63% Finance
4.27% Capital Goods
3.08% Utilities
1.72% Basic Industry
0.99% Transportation
0.85% Consumer Manufacturing
0.96% Short-Term
COUNTRY BREAKDOWN
95.78% United States
2.16% Canada
1.18% France [PIE CHART OMITTED]
0.60% Luxembourg
0.28% Bermuda
All data as of September 30, 2000. The Fund's sector and country breakdowns may
vary over time. These breakdowns are expressed as a percentage of total
investments.
--------------------------------------------------------------------------------
ALLIANCE QUASAR FUND o 7
<PAGE>
------------------
INVESTMENT RESULTS
------------------
INVESTMENT RESULTS
Average Annual Total Returns as of September 30, 2000
Class A Shares
--------------------------------------------------------------------------------
Without Sales Charge With Sales Charge
1 Year 29.03% 23.54%
5 Years 15.00% 14.01%
10 Years 15.29% 14.78%
Class B Shares
--------------------------------------------------------------------------------
Without Sales Charge With Sales Charge
1 Year 28.05% 24.05%
5 Years 14.12% 14.12%
10 Years 13.36% 13.36%
Class C Shares
--------------------------------------------------------------------------------
Without Sales Charge With Sales Charge
1 Year 28.02% 27.02%
5 Years 14.12% 14.12%
Since Inception* 14.94% 14.94%
The Fund's investment results represent average annual total returns. The
returns reflect reinvestment of dividends and/or capital gains distributions in
additional shares without and with 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.
The Fund can invest in foreign securities which may magnify these fluctuations,
due to changes in foreign exchange rates and the possibility of substantial
volatility due to political and economic uncertainties in foreign countries. The
Fund pursues an aggressive investment strategy and an investment in the Fund is
risky.
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: 2/12/69, Class A; 9/17/90, Class B; 5/3/93, Class C.
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8 o ALLIANCE QUASAR FUND
<PAGE>
--------------------
TEN LARGEST HOLDINGS
--------------------
TEN LARGEST HOLDINGS
September 30, 2000
Percent of
Company Value Net Assets
--------------------------------------------------------------------------------
Exar Corp. $ 26,486,900 2.1%
--------------------------------------------------------------------------------
Informatica Corp. 24,151,750 1.9
--------------------------------------------------------------------------------
King Pharmaceuticals, Inc. 24,067,878 1.9
--------------------------------------------------------------------------------
Elantec Semiconductor, Inc. 22,814,125 1.8
--------------------------------------------------------------------------------
Interwoven, Inc. 21,979,350 1.7
--------------------------------------------------------------------------------
Priority Healthcare Corp. Cl.B 17,995,000 1.4
--------------------------------------------------------------------------------
Dycom Industries, Inc. 17,746,819 1.4
--------------------------------------------------------------------------------
Iron Mountain, Inc. 17,571,300 1.4
--------------------------------------------------------------------------------
LifePoint Hospitals, Inc. 17,537,000 1.4
--------------------------------------------------------------------------------
C&D Technologies, Inc. 17,365,500 1.3
--------------------------------------------------------------------------------
$207,715,622 16.3%
MAJOR PORTFOLIO CHANGES
Six Months Ended September 30, 2000
-------------------------------
Shares*
-------------------------------
Purchases Bought Holdings 9/30/00
--------------------------------------------------------------------------------
Cytyc Corp. 263,600 263,600
--------------------------------------------------------------------------------
Digital Lightwave, Inc. 144,700 144,700
--------------------------------------------------------------------------------
Entravision Communications Corp. Cl.A 714,400 714,400
--------------------------------------------------------------------------------
Informatica Corp. 176,600 259,000
--------------------------------------------------------------------------------
Medicis Pharmaceutical Corp. Cl.A 198,700 198,700
--------------------------------------------------------------------------------
Michaels Stores, Inc. 313,400 313,400
--------------------------------------------------------------------------------
MSC Industrial Direct Co., Inc. Cl.A 627,700 627,700
--------------------------------------------------------------------------------
OM Group, Inc. 299,400 299,400
--------------------------------------------------------------------------------
PC Connection, Inc. 253,900 253,900
--------------------------------------------------------------------------------
Priority Healthcare Corp. Cl.B 236,000 236,000
--------------------------------------------------------------------------------
Sales Sold Holdings 9/30/00
--------------------------------------------------------------------------------
Apex, Inc. 577,300 -0-
--------------------------------------------------------------------------------
Aviron 401,300 -0-
--------------------------------------------------------------------------------
CDW Computer Centers, Inc. 108,500 144,900
--------------------------------------------------------------------------------
Excalibur Technologies Corp. 495,200 136,100
--------------------------------------------------------------------------------
Insight Enterprises, Inc. 458,300 -0-
--------------------------------------------------------------------------------
Legg Mason, Inc. 345,600 -0-
--------------------------------------------------------------------------------
LifePoint Hospitals, Inc. 1,809,900 494,000
--------------------------------------------------------------------------------
Quest Diagnostics, Inc. 392,400 67,000
--------------------------------------------------------------------------------
United Therapeutics Corp. 180,200 -0-
--------------------------------------------------------------------------------
Venator Group, Inc. 1,610,400 437,500
--------------------------------------------------------------------------------
* Adjusted for Stock Splits.
--------------------------------------------------------------------------------
ALLIANCE QUASAR FUND o 9
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
PORTFOLIO OF INVESTMENTS
September 30, 2000
Company Shares Value
--------------------------------------------------------------------------------
Common Stocks-99.8%
Technology-35.9%
Communication Equipment-3.1%
Digital Lightwave, Inc.(a) ................. 144,700 $ 10,508,837
Exfo Electro-Optical Engineering, Inc. .....
(Canada)(a) ............................. 196,200 8,546,962
New Focus, Inc.(a) ......................... 73,100 5,779,469
Powerwave Technologies, Inc.(a) ............ 194,800 7,396,313
Stanford Microdevices, Inc.(a) ............. 134,700 7,206,450
------------
39,438,031
------------
Computer Peripherals-1.9%
Informatica Corp.(a) ....................... 259,000 24,151,750
------------
Computer Services-0.5%
eLoyalty Corp.(a) .......................... 519,800 6,627,450
------------
Computer Software-12.7%
Actuate Corp.(a) ........................... 496,500 17,152,523
BindView Development Corp.(a) .............. 341,900 2,585,619
Business Objects, SA ADR (France)(a) ....... 134,500 15,206,906
Documentum, Inc.(a) ........................ 134,700 10,935,956
Interwoven, Inc.(a) ........................ 194,400 21,979,350
Macrovision Corp.(a) ....................... 125,900 10,197,900
MatrixOne, Inc.(a) ......................... 272,100 10,884,000
Micromuse, Inc.(a) ......................... 66,600 13,382,438
NetIQ Corp.(a) ............................. 226,700 14,891,356
Niku Corp.(a) .............................. 269,500 6,569,063
Pivotal Corp.(a) ........................... 162,100 8,510,250
SMTC Corp. (Canada)(a) ..................... 346,800 7,456,200
Tumbleweed Communications Corp.(a) ......... 152,200 7,762,200
WatchGuard Technologies, Inc.(a) ........... 236,000 14,160,000
------------
161,673,761
------------
Contract Manufacturing-2.2%
DDi Corp.(a) ............................... 355,800 15,744,150
Semtech Corp.(a) ........................... 290,800 12,540,750
------------
28,284,900
------------
Internet-1.6%
Docent, Inc.(a) ............................ 5,400 98,888
Excalibur Technologies Corp.(a) ............ 136,100 9,144,219
Packeteer, Inc.(a) ......................... 157,500 5,975,156
Selectica, Inc.(a) ......................... 65,000 2,591,875
Virage, Inc.(a) ............................ 186,200 3,142,125
------------
20,952,263
------------
--------------------------------------------------------------------------------
10 o ALLIANCE QUASAR FUND
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Company Shares Value
--------------------------------------------------------------------------------
Networking Software-1.9%
Predictive Systems, Inc.(a) .................. 239,000 $ 4,615,688
SonicWALL, Inc.(a) ........................... 424,800 12,106,800
Stratos Lightwave, Inc.(a) ................... 250,500 8,078,625
------------
24,801,113
------------
Semi-Conductor Capital Equipment-2.6%
Credence Systems Corp.(a) .................... 275,400 8,262,000
Internet Security Systems, Inc.(a) ........... 134,200 10,081,775
MKS Instruments, Inc.(a) ..................... 242,000 6,624,750
Varian Semiconductor Equipment
Associates, Inc.(a) ....................... 211,000 7,899,312
------------
32,867,837
------------
Semi-Conductor Components-5.8%
ASAT Holdings, Ltd. ADR(a) ................... 755,200 4,956,000
Elantec Semiconductor, Inc.(a) ............... 229,000 22,814,125
Fairchild Semiconductor Corp.(a) ............. 392,200 11,030,625
International Rectifier Corp.(a) ............. 152,800 7,725,950
Intersil Holding Corp.(a) .................... 305,800 15,251,775
Marvell Technology Group, Ltd. (Bermuda)(a) .. 46,700 3,601,738
Virata Corp.(a) .............................. 122,500 8,100,312
------------
73,480,525
------------
Miscellaneous-3.6%
Aeroflex, Inc.(a) ............................ 192,450 9,357,881
Amphenol Corp. Cl.A(a) ....................... 147,800 8,415,363
Exar Corp.(a) ................................ 218,900 26,486,900
TTM Technologies, Inc.(a) .................... 94,800 2,227,800
------------
46,487,944
------------
458,765,574
------------
Health Care-23.1%
Biotechnology-4.6%
Abgenix, Inc.(a) ............................. 79,500 6,424,594
Cephalon, Inc.(a) ............................ 198,600 9,632,100
Ciphergen Biosystems, Inc.(a) ................ 14,400 460,800
Discovery Partners International(a) .......... 160,500 3,260,156
Enzon, Inc.(a) ............................... 88,600 5,847,600
Genomic Solutions, Inc.(a) ................... 413,200 7,101,875
Intermune Pharmaceuticals, Inc.(a) ........... 151,400 8,213,450
Tanox, Inc.(a) ............................... 201,300 6,819,037
Titan Pharmaceuticals, Inc.(a) ............... 13,400 871,000
Trimeris, Inc.(a) ............................ 143,100 10,008,056
------------
58,638,668
------------
Drugs-6.4%
Alpharma, Inc. Cl.A .......................... 281,000 17,176,125
Aurora Biosciences Corp.(a) .................. 116,400 7,915,200
Barr Laboratories, Inc.(a) ................... 94,900 6,293,056
King Pharmaceuticals, Inc.(a) ................ 719,787 24,067,878
Matrix Pharmaceutical, Inc.(a) ............... 552,300 8,595,169
--------------------------------------------------------------------------------
ALLIANCE QUASAR FUND o 11
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Company Shares Value
--------------------------------------------------------------------------------
Medicis Pharmaceutical Corp. Cl.A(a) ....... 198,700 $ 12,220,050
Noven Pharmaceuticals, Inc.(a) ............. 114,300 4,886,325
------------
81,153,803
------------
Medical Products-2.1%
Cytyc Corp.(a) ............................. 263,600 11,367,750
INAMED Corp.(a) ............................ 251,500 7,073,438
Sybron International Corp.(a) .............. 373,100 8,954,400
------------
27,395,588
------------
Medical Services-9.2%
AmeriSource Health Corp. Cl.A(a) ........... 294,800 13,855,600
Bindley Western Industries, Inc. ........... 444,600 14,227,200
Caremark Rx, Inc.(a) ....................... 965,900 10,866,375
Laboratory Corp. of America Holdings ....... 124,900 14,956,775
LifePoint Hospitals, Inc.(a) ............... 494,000 17,537,000
Orthodontic Centers of America, Inc.(a) .... 230,700 7,685,194
Priority Healthcare Corp. Cl.B(a) .......... 236,000 17,995,000
Quest Diagnostics, Inc.(a) ................. 67,000 7,688,250
Universal Health Services, Inc. Cl.B(a) .... 145,100 12,424,187
------------
117,235,581
------------
Miscellaneous-0.8%
Tektronix, Inc. ............................ 135,200 10,385,050
------------
294,808,690
------------
Consumer Services-20.2%
Apparel-0.6%
The Men's Wearhouse, Inc.(a) ............... 260,950 7,388,147
------------
Broadcasting & Cable-1.3%
Entravision Communications Corp. Cl.A(a) ... 714,400 12,412,700
ValueVision International, Inc. Cl.A(a) .... 178,700 4,489,838
------------
16,902,538
------------
Cellular Communications-1.4%
o2wireless Solutions, Inc.(a) .............. 181,100 3,497,494
SBA Communications Corp. Cl.A(a) ........... 340,100 14,262,943
------------
17,760,437
------------
Entertainment & Leisure-1.7%
Ackerley Group, Inc. ....................... 466,700 4,667,000
Imax Corp. (Canada)(a) ..................... 302,600 5,125,287
Penton Media, Inc. ......................... 420,600 11,566,500
------------
21,358,787
------------
Printing & Publishing-0.5%
Barnes & Noble, Inc.(a) .................... 321,300 6,325,594
------------
Restaurants & Lodging-0.2%
Orient-Express Hotels, Ltd. Cl.A(a) ........ 137,100 2,639,175
------------
--------------------------------------------------------------------------------
12 o ALLIANCE QUASAR FUND
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Company Shares Value
--------------------------------------------------------------------------------
Retail - General Merchandise-3.5%
BJ's Wholesale Club, Inc.(a) ............... 425,400 $ 14,516,775
Fred's, Inc. Cl.A .......................... 235,400 5,281,787
Group 1 Automotive, Inc.(a) ................ 682,800 7,425,450
MSC Industrial Direct Co., Inc. Cl.A(a) .... 627,700 9,572,425
Ultimate Electronics, Inc.(a) .............. 63,900 2,627,888
Venator Group, Inc.(a) ..................... 437,500 5,414,062
------------
44,838,387
------------
Miscellaneous-11.0%
Career Education Corp.(a) .................. 288,400 12,833,800
CDW Computer Centers, Inc.(a) .............. 144,900 9,998,100
ChoicePoint, Inc.(a) ....................... 203,312 9,326,938
DigitalThink, Inc.(a) ...................... 174,100 7,333,962
Dycom Industries, Inc.(a) .................. 426,350 17,746,819
FirstService Corp. (Canada)(a) ............. 510,200 6,632,600
Iron Mountain, Inc.(a) ..................... 474,900 17,571,300
Michaels Stores, Inc.(a) ................... 313,400 12,536,000
Optimal Robotics Corp. Cl.A (Canada)(a) .... 39,900 1,605,975
PC Connection, Inc.(a) ..................... 253,900 14,472,300
Rent-Way, Inc.(a) .......................... 369,300 11,217,487
ScanSource, Inc.(a) ........................ 132,700 7,082,863
TeleSpectrum Worldwide, Inc.(a) ............ 1,773,300 1,108,313
West TeleServices Corp.(a) ................. 527,900 11,613,800
------------
141,080,257
------------
258,293,322
------------
Energy-4.9%
Domestic Producers-0.8%
Barrett Resources Corp.(a) ................. 262,300 9,918,219
------------
Oil Service-1.4%
Santa Fe International Corp. ............... 178,900 8,061,681
Spinnaker Exploration Co.(a) ............... 307,800 10,734,525
------------
18,796,206
------------
Pipelines-1.8%
Kinder Morgan, Inc. ........................ 174,000 7,123,125
Maverick Tube Corp.(a) ..................... 296,500 7,986,969
Patterson Energy, Inc.(a) .................. 226,300 7,779,062
------------
22,889,156
------------
Miscellaneous-0.9%
Newfield Exploration Co.(a) ................ 246,000 11,485,125
------------
63,088,706
------------
Finance-4.7%
Banking-Regional-1.0%
Greater Bay Bancorp ........................ 93,900 6,520,181
Silicon Valley Bancshares(a) ............... 117,300 6,830,892
------------
13,351,073
------------
--------------------------------------------------------------------------------
ALLIANCE QUASAR FUND o 13
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Company Shares Value
--------------------------------------------------------------------------------
Brokerage & Money Management-0.2%
Southwest Bancorporation of Texas, Inc.(a) ..... 62,500 $ 2,042,969
-----------
Insurance-1.6%
Reinsurance Group of America, Inc. ............. 434,900 14,895,325
StanCorp Financial Group, Inc. ................. 128,800 5,506,200
-----------
20,401,525
-----------
Miscellaneous-1.9%
CompuCredit Corp.(a) ........................... 299,600 16,805,687
Investment Technology Group, Inc.(a) ........... 176,900 7,064,944
-----------
23,870,631
-----------
59,666,198
-----------
Capital Goods-4.3%
Electrical Equipment-1.6%
Active Power, Inc.(a) .......................... 59,200 3,670,400
C&D Technologies, Inc. ......................... 306,000 17,365,500
-----------
21,035,900
-----------
Pollution Control-0.9%
Tetra Tech, Inc.(a) ............................ 392,800 11,219,350
-----------
Miscellaneous-1.8%
Carlisle Cos., Inc. ............................ 226,500 9,399,750
L-3 Communications Holdings, Inc.(a) ........... 236,700 13,373,550
-----------
22,773,300
-----------
55,028,550
-----------
Utilities-3.1%
Telephone Utility-0.6%
Millicom International Cellular, SA
(Luxembourg)(a) ............................. 217,100 7,720,619
-----------
Miscellaneous-2.5%
Dobson Communications Corp. Cl.A(a) ............ 177,300 2,604,094
FLAG Telecom Holdings, Ltd. (Bermuda)(a) ....... 422,400 4,646,400
GT Group Telecom, Inc. Cl.B(a) ................. 406,500 5,360,719
Mpower Communications Corp.(a) ................. 440,100 3,837,122
Net2000 Communications, Inc.(a) ................ 816,600 5,205,825
Proton Energy Systems, Inc.(a) ................. 19,100 546,737
Rural Cellular Corp. Cl.A(a) ................... 142,600 9,714,625
-----------
31,915,522
-----------
39,636,141
-----------
Basic Industry-1.7%
Chemicals-1.0%
OM Group, Inc. ................................. 299,400 13,061,325
-----------
Paper & Forest Products-0.7%
Pactiv Corp.(a) ................................ 812,000 9,084,250
-----------
22,145,575
-----------
--------------------------------------------------------------------------------
14 o ALLIANCE QUASAR FUND
<PAGE>
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
<TABLE>
<CAPTION>
Shares or
Principal
Amount
Company (000) Value
--------------------------------------------------------------------------------------
<S> <C> <C>
Transportation-1.0%
Shipping-1.0%
Expeditors International of Washington, Inc. .... 281,700 $ 12,694,106
---------------
Consumer Manufacturing-0.9%
Auto & Related-0.4%
Tower Automotive, Inc.(a) ....................... 502,200 4,708,125
---------------
Miscellaneous-0.5%
Concord Camera Corp.(a) ......................... 244,700 6,270,438
---------------
10,978,563
---------------
Total Common Stocks
(cost $1,087,175,646) ........................ 1,275,105,425
---------------
Short-Term Investment-1.0%
Time Deposit-1.0%
State Street Euro Dollar
6.00%, 10/02/00
(amortized cost $12,321,000) ................. $ 12,321 12,321,000
---------------
Total Investments-100.8%
(cost $1,099,496,646) ........................ 1,287,426,425
Other assets less liabilities-(0.8%) ............ (10,461,220)
---------------
Net Assets-100% ................................. $ 1,276,965,205
===============
</TABLE>
(a) Non-income producing security.
Glossary:
ADR - American Depositary Receipt
See notes to financial statements.
--------------------------------------------------------------------------------
ALLIANCE QUASAR FUND o 15
<PAGE>
---------------------------------
STATEMENT OF ASSETS & Liabilities
---------------------------------
STATEMENT OF ASSETS & LIABILITIES
September 30, 2000
<TABLE>
<S> <C>
Assets
Investments in securities, at value
(cost $1,099,496,646) ............................................... $ 1,287,426,425
Cash ................................................................... 1,236,986
Receivable for investment securities sold .............................. 21,078,882
Receivable for capital stock sold ...................................... 1,286,932
Dividends and interest receivable ...................................... 223,047
---------------
Total assets ........................................................... 1,311,252,272
---------------
Liabilities
Payable for investment securities purchased ............................ 26,413,348
Advisory fee payable ................................................... 3,214,539
Payable for capital stock redeemed ..................................... 3,078,677
Distribution fee payable ............................................... 666,591
Accrued expenses ....................................................... 913,912
---------------
Total liabilities ...................................................... 34,287,067
---------------
Net Assets ............................................................. $ 1,276,965,205
===============
Composition of Net Assets
Shares of capital stock, at par ........................................ $ 88,564
Additional paid-in capital ............................................. 1,057,528,954
Accumulated net investment loss ........................................ (330)
Accumulated net realized gain on investment
transactions ........................................................ 31,418,238
Net unrealized appreciation of investments ............................. 187,929,779
---------------
$ 1,276,965,205
===============
Calculation of Maximum Offering Price
Class A Shares
Net asset value and redemption price per share
($458,007,882 / 14,888,657 shares of capital stock
issued and outstanding) ............................................. $30.76
Sales charge--4.25% of public offering price ........................... 1.37
------
Maximum offering price ................................................. $32.13
======
Class B Shares
Net asset value and offering price per share
($546,302,258 / 20,012,346 shares of capital stock
issued and outstanding) ............................................. $27.30
======
Class C Shares
Net asset value and offering price per share
($137,241,519 / 5,022,563 shares of capital stock
issued and outstanding) ............................................. $27.32
======
Advisor Class Shares
Net asset value, redemption and offering price per share
($135,413,546 / 4,358,642 shares of capital stock
issued and outstanding) ............................................. $31.07
======
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
16 o ALLIANCE QUASAR FUND
<PAGE>
-----------------------
STATEMENT OF OPERATIONS
-----------------------
STATEMENT OF OPERATIONS
Year Ended September 30, 2000
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Income
Dividends (net of foreign taxes
withheld of $5,620) ............................. $ 2,263,692
Interest ........................................... 1,467,518 $ 3,731,210
------------
Expenses
Advisory fee ....................................... 13,554,246
Distribution fee - Class A ......................... 1,300,882
Distribution fee - Class B ......................... 5,604,349
Distribution fee - Class C ......................... 1,526,604
Transfer agency .................................... 4,112,222
Printing ........................................... 707,286
Custodian .......................................... 291,634
Administrative ..................................... 129,000
Registration ....................................... 93,600
Audit and legal .................................... 72,670
Directors' fees .................................... 23,000
Miscellaneous ...................................... 61,500
------------
Total expenses ..................................... 27,476,993
Less: expense offset arrangement
(see Note B) .................................... (155,302)
------------
Net expenses ....................................... 27,321,691
-------------
Net investment loss ................................ (23,590,481)
-------------
Realized and Unrealized Gain
on Investments
Net realized gain on investment transactions ....... 172,570,882
Net change in unrealized appreciation/
depreciation of investments ..................... 203,728,087
-------------
Net gain on investments ............................ 376,298,969
-------------
Net Increase in Net Assets
from Operations ................................. $ 352,708,488
=============
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
ALLIANCE QUASAR FUND o 17
<PAGE>
----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
----------------------------------
STATEMENT OF CHANGES
IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
September 30, September 30,
2000 1999
=============== ===============
<S> <C> <C>
Increase (Decrease) in Net Assets
from Operations
Net investment loss ......................... $ (23,590,481) $ (20,698,529)
Net realized gain (loss) on investment
transactions ............................. 172,570,882 (106,576,025)
Net change in unrealized appreciation/
depreciation of investments and
other assets ............................. 203,728,087 329,590,064
--------------- ---------------
Net increase in net assets from
operations ............................... 352,708,488 202,315,510
Distributions to Shareholders from:
Net realized gain on investments
Class A .................................. -0- (22,822,927)
Class B .................................. -0- (32,223,330)
Class C .................................. -0- (9,594,700)
Advisor Class ............................ -0- (9,530,738)
Capital Stock Transactions
Net decrease ................................ (513,742,064) (167,508,661)
--------------- ---------------
Total decrease .............................. (161,033,576) (39,364,846)
Net Assets
Beginning of period ......................... 1,437,998,781 1,477,363,627
--------------- ---------------
End of period ............................... $ 1,276,965,205 $ 1,437,998,781
=============== ===============
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
18 o ALLIANCE QUASAR FUND
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
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 accounting principles generally
accepted in the United States, which require management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities in the financial statements and amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange or on the Nasdaq
Stock Market, Inc. 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 (but excluding securities traded on The Nasdaq Stock Market,
Inc.), 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
--------------------------------------------------------------------------------
ALLIANCE QUASAR FUND o 19
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
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 accounting principles generally accepted in the United States. To the
extent these differences are permanent, such amounts are reclassified within the
capital accounts based on their federal tax basis treatment; temporary
differences do not require such reclassification. During the current fiscal
year, permanent differences, primarily due to net investment loss, resulted in a
net decrease in accumulated net investment loss and a corresponding decrease in
accumulated net realized gain on investment transactions. 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 $129,000 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the year ended September 30, 2000.
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 $2,345,482 for the year ended September 30, 2000.
For the year ended September 30, 2000, the Fund's expenses were reduced by
$155,302 under an expense offset arrangement with Alliance Fund Services, Inc.
--------------------------------------------------------------------------------
20 o ALLIANCE QUASAR FUND
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
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 $57,392, $2,330,398 and $67,324 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, 2000.
Brokerage commissions paid on investment transactions for the year ended
September 30, 2000 amounted to $5,108,394, of which $315,593 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 $25,760,319 and $1,913,954 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 $2,123,303,384 and $2,618,446,961,
respectively, for the year ended September 30, 2000. There were no purchases or
sales of U.S. government and government agency obligations for the year ended
September 30, 2000.
At September 30, 2000, the cost of investments for federal income tax purposes
was $1,101,564,521. Accordingly, gross unrealized appreciation of investments
was $277,643,752 and gross unrealized depreciation of investments was
$91,781,848, resulting in net unrealized appreciation of $185,861,904.
The Fund utilized $57,376,477 of capital loss carryover in the current year.
--------------------------------------------------------------------------------
ALLIANCE QUASAR FUND o 21
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
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
$84,215,560 during the fiscal year 2000. 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,
2000 1999 2000 1999
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold 71,452,610 98,790,378 $ 1,917,697,808 $ 2,400,686,846
-------------------------------------------------------------------------------------------------
Shares issued in
reinvestment of
distributions -0- 905,363 -0- 20,225,926
-------------------------------------------------------------------------------------------------
Shares converted
from Class B 121,389 207,656 3,274,845 5,081,272
-------------------------------------------------------------------------------------------------
Shares redeemed (78,384,306) (100,436,418) (2,114,290,137) (2,454,577,511)
-------------------------------------------------------------------------------------------------
Net decrease (6,810,307) (533,021) $ (193,317,484) $ (28,583,467)
=================================================================================================
Class B
Shares sold 5,124,914 10,825,928 $ 123,708,117 $ 234,278,096
-------------------------------------------------------------------------------------------------
Shares issued in
reinvestment of
distributions -0- 1,502,631 -0- 30,216,175
-------------------------------------------------------------------------------------------------
Shares converted
to Class A (136,146) (230,997) (3,274,845) (5,081,272)
-------------------------------------------------------------------------------------------------
Shares redeemed (12,548,624) (15,515,244) (302,334,990) (336,327,068)
-------------------------------------------------------------------------------------------------
Net decrease (7,559,856) (3,417,682) $ (181,901,718) $ (76,914,069)
=================================================================================================
Class C
Shares sold 7,065,746 15,173,234 $ 173,913,714 $ 331,891,743
-------------------------------------------------------------------------------------------------
Shares issued in
reinvestment of
distributions -0- 445,616 -0- 8,970,452
-------------------------------------------------------------------------------------------------
Shares redeemed (9,920,589) (16,765,900) (243,910,007) (368,024,477)
-------------------------------------------------------------------------------------------------
Net decrease (2,854,843) (1,147,050) $ (69,996,293) $ (27,162,282)
=================================================================================================
-------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
22 o ALLIANCE QUASAR FUND
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
------------------------------- ---------------------------------
Shares Amount
------------------------------- ---------------------------------
Year Ended Year Ended Year Ended Year Ended
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Advisor Class
Shares sold 3,760,199 15,459,710 $ 101,412,439 $ 362,260,667
-------------------------------------------------------------------------------------------
Shares issued in
reinvestment of
distributions -0- 413,259 -0- 9,281,785
-------------------------------------------------------------------------------------------
Shares redeemed (6,259,137) (16,841,169) (169,939,008) (406,391,295)
-------------------------------------------------------------------------------------------
Net decrease (2,498,938) (968,200) $ (68,526,569) $ (34,848,843)
===========================================================================================
-------------------------------------------------------------------------------------------
</TABLE>
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, 2000.
--------------------------------------------------------------------------------
ALLIANCE QUASAR FUND o 23
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
Class A
--------------------------------------------------------------------------------------------
Year Ended September 30,
--------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ............ $ 23.84 $ 22.27 $ 30.37 $ 27.92 $ 24.16
--------------------------------------------------------------------------------------------
Income From
Investment Operations
Net investment loss .............. (.38)(a) (.22)(a) (.17)(a) (.24)(a) (.25)
Net realized and unrealized
gain (loss) on investment
transactions ................... 7.30 2.80 (6.70) 6.80 8.82
--------------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value from
operations ..................... 6.92 2.58 (6.87) 6.56 8.57
--------------------------------------------------------------------------------------------
Less: Distributions
Distributions from net
realized gains ................. -0- (1.01) (1.23) (4.11) (4.81)
--------------------------------------------------------------------------------------------
Net asset value,
end of period .................. $ 30.76 $ 23.84 $ 22.27 $ 30.37 $ 27.92
============================================================================================
Total Return
Total investment return
based on net asset
value(b) ....................... 29.03% 11.89% (23.45)% 27.81% 42.42%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ................ $ 458,008 $ 517,289 $ 495,070 $ 402,081 $ 229,798
Ratio to average net assets of:
Expenses ....................... 1.68%(c) 1.69%(c) 1.61%(c) 1.67% 1.79%
Net investment loss ............ (1.39)% (.90)% (.59)% (.91)% (1.11)%
Portfolio turnover rate .......... 160% 91% 109% 135% 168%
</TABLE>
See footnote summary on page 27.
--------------------------------------------------------------------------------
24 o ALLIANCE QUASAR FUND
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
Class B
--------------------------------------------------------------------------------------------
Year Ended September 30,
--------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ............ $ 21.32 $ 20.17 $ 27.83 $ 26.13 $ 23.03
--------------------------------------------------------------------------------------------
Income From
Investment Operations
Net investment loss .............. (.52)(a) (.37)(a) (.36)(a) (.42)(a) (.20)
Net realized and unrealized
gain (loss) on investment
transactions ................... 6.50 2.53 (6.07) 6.23 8.11
--------------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value from
operations ..................... 5.98 2.16 (6.43) 5.81 7.91
--------------------------------------------------------------------------------------------
Less: Distributions
Distributions from net
realized gains ................. -0- (1.01) (1.23) (4.11) (4.81)
--------------------------------------------------------------------------------------------
Net asset value,
end of period .................. $ 27.30 $ 21.32 $ 20.17 $ 27.83 $ 26.13
============================================================================================
Total Return
Total investment return
based on net asset
value(b) ....................... 28.05% 11.01% (24.03)% 26.70% 41.48%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ................ $ 546,302 $ 587,919 $ 625,147 $ 503,037 $ 112,490
Ratio to average net assets of:
Expenses ....................... 2.44%(c) 2.46%(c) 2.39%(c) 2.51% 2.62%
Net investment loss ............ (2.16)% (1.68)% (1.36)% (1.73)% (1.96)%
Portfolio turnover rate .......... 160% 91% 109% 135% 168%
</TABLE>
See footnote summary on page 27.
--------------------------------------------------------------------------------
ALLIANCE QUASAR FUND o 25
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
Class C
--------------------------------------------------------------------------------------------
Year Ended September 30,
--------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ............ $ 21.34 $ 20.18 $ 27.85 $ 26.14 $ 23.05
--------------------------------------------------------------------------------------------
Income From
Investment Operations
Net investment loss .............. (.52)(a) (.36)(a) (.35)(a) (.42)(a) (.20)
Net realized and unrealized
gain (loss) on investment
transactions ................... 6.50 2.53 (6.09) 6.24 8.10
--------------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value from
operations ..................... 5.98 2.17 (6.44) 5.82 7.90
--------------------------------------------------------------------------------------------
Less: Distributions
Distributions from net
realized gains ................. -0- (1.01) (1.23) (4.11) (4.81)
--------------------------------------------------------------------------------------------
Net asset value,
end of period .................. $ 27.32 $ 21.34 $ 20.18 $ 27.85 $ 26.14
============================================================================================
Total Return
Total investment return
based on net asset
value(b) ....................... 28.02% 11.05% (24.05)% 26.74% 41.46%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ................ $ 137,242 $ 168,120 $ 182,110 $ 145,494 $ 28,541
Ratio to average net assets of:
Expenses ....................... 2.43%(c) 2.45%(c) 2.38%(c) 2.50% 2.61%
Net investment loss ............ (2.12)% (1.66)% (1.35)% (1.72)% (1.94)%
Portfolio turnover rate .......... 160% 91% 109% 135% 168%
</TABLE>
See footnote summary on page 27.
--------------------------------------------------------------------------------
26 o ALLIANCE QUASAR FUND
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
Advisor Class
--------------------------------------------------------------------------
October 2,
Year Ended September 30, 1996(d) to
----------------------------------------------------- September 30,
2000 1999 1998 1997
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..... $ 24.01 $ 22.37 $ 30.42 $ 27.82
--------------------------------------------------------------------------
Income from Investment Operations
Net investment loss(a) ................... (.30) (.15) (.09) (.17)
Net realized and unrealized gain (loss)
on investment transactions ............. 7.36 2.80 (6.73) 6.88
--------------------------------------------------------------------------
Net increase (decrease) in net asset
value from operations .................. 7.06 2.65 (6.82) 6.71
--------------------------------------------------------------------------
Less: Distributions
Distributions from net realized gains .... -0- (1.01) (1.23) (4.11)
--------------------------------------------------------------------------
Net asset value, end of period ........... $ 31.07 $ 24.01 $ 22.37 $ 30.42
==========================================================================
Total Return
Total investment return based on net
asset value(b) ......................... 29.40% 12.16% (23.24)% 28.47%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ........................ $ 135,414 $ 164,671 $ 175,037 $ 62,455
Ratio to average net assets of:
Expenses ............................... 1.39%(c) 1.42%(c) 1.38%(c) 1.58%(e)
Net investment loss .................... (1.08)% (.62)% (.32)% (.74)%(e)
Portfolio turnover rate .................. 160% 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 periods shown below, the net expense ratios were
as follows:
Year Ended September 30,
---------------------------------------
2000 1999 1998
---------------------------------------
Class A 1.67% 1.68% 1.60%
Class B 2.42% 2.45% 2.38%
Class C 2.42% 2.44% 2.37%
Advisor Class 1.38% 1.41% 1.37%
(d) Commencement of distribution.
(e) Annualized.
--------------------------------------------------------------------------------
ALLIANCE QUASAR FUND o 27
<PAGE>
------------------------------------------------
REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS
------------------------------------------------
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of 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, 2000, 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 auditing standards generally accepted
in the United States. 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, 2000, 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, 2000, 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 accounting principles generally accepted in the
United States.
/s/ Ernst & Young LLP
New York, New York
November 10, 2000
--------------------------------------------------------------------------------
28 o ALLIANCE QUASAR FUND
<PAGE>
----------------------------
GLOSSARY OF INVESTMENT TERMS
----------------------------
GLOSSARY OF INVESTMENT TERMS
equity
Another term for stock.
sector
A group of securities that are similar with respect to maturity, type, rating,
industry and/or coupon. Refers to a distinct part of the market, for example,
the technology sector.
benchmark
A standard by which a fund's performance can be measured. A benchmark is usually
an unmanaged index, such as the Standard & Poor's 500 Stock Index or the Lehman
Brothers Aggregate Bond Index.
portfolio
The collection of securities that make up a Fund's or an investor's investments.
small-capitalization or small-cap company
Refers to a company with a relatively small market capitalization.
net asset value (NAV)
The value of a mutual fund's total assets, minus its liabilities, divided by the
number of shares outstanding.
--------------------------------------------------------------------------------
ALLIANCE QUASAR FUND o 29
<PAGE>
----------------
ALLIANCE CAPITAL
----------------
ALLIANCE CAPITAL
The Investment Professional's Choice
Alliance Capital is a leading global investment management firm with over $474
billion in assets under management. In recognition of our far-reaching
investment capabilities, Alliance Capital has been selected by employee benefit
plans for 38 of the FORTUNE 100 companies and public retirement funds in 35
states as well as by hundreds of foundations, endowments and foreign
institutions. By sharing this institutional money management experience with
millions of mutual fund investors as well, Alliance stands out as a "manager of
choice" for thousands of investment professionals around the world.
At Alliance Capital, we place a premium on investment research. We carefully
select securities based on our proprietary research, conducted by over 585
investment professionals in 28 investment offices worldwide. Our commitment to
this process means that our mutual fund shareholders have their portfolios
managed by the same experienced analysts and portfolio managers who manage the
pension funds of some of America's largest institutional investors.
All information on Alliance Capital is as of 10/2/00.
--------------------------------------------------------------------------------
30 o ALLIANCE QUASAR FUND
<PAGE>
--------------------------------
ALLIANCE CAPITAL AT YOUR SERVICE
--------------------------------
ALLIANCE CAPITAL AT YOUR SERVICE
At Alliance Capital, shareholder satisfaction is among our top priorities.
That's why we provide our shareholders with a wide variety of products and
time-saving services to meet their needs.
o Low Minimum Investments
You can begin investing in Alliance Capital funds with as little as $250
(except for Alliance Select Investor Series Premier Portfolio, Alliance
Select Investor Series Technology Portfolio, and Alliance Select Investor
Series Biotechnology Portfolio which generally have a $10,000 minimum
initial investment) and may make subsequent investments of $50 or more.
o Automatic Reinvestment
You may choose to reinvest fund dividend and capital-gains distributions
automatically at no charge.
o Automatic Investment Program
Build your investment account by having money automatically transferred
from your bank account on a regular basis.
o Dividend Direction Plans
You may cross-invest dividends from one fund into the same class of shares
in any other fund without incurring a sales charge. This can be a good way
to diversify your assets.
o The Alliance Advance
A quarterly newsletter discussing investment strategies, economic news and
other matters that could affect your mutual fund investment.
o Auto Exchange
You may choose to automatically exchange money from one Alliance Capital
fund to another on a regular basis. This can be a good way to dollar cost
average*, helping you to invest with discipline.
o Systematic Withdrawals
Regular checks for specified amounts can be sent to you or to your
brokerage or bank account.
o A Choice of Purchase Plans
Most funds are available in A, B, and C Class shares. Many funds are also
available in Advisor Class shares.
o Telephone Transaction
Purchases, transfers and redemptions can be made by calling (800)
221-5672. Our knowledgeable representatives are available to assist you
Monday through Friday from 8:30 a.m. to 8:00 p.m. Eastern Standard Time.
o Alliance Answer: 24-Hour Information
For your convenience, our computerized audio response system is available
to you 24-hours a day by calling (800) 251-0539. Using any touch tone
phone, you can hear share prices, get account balances, review details of
your last transaction, obtain dividend information, order
statements/checkbooks, review fund objectives, literature and Watchlist
information, order additional copies of statements and request additional
year-end tax forms (available from February 1 to May 31).
o Alliance Capital on the World Wide Web at www.alliancecapital.com. Here,
you can access updated account information, make additional investments,
request more information, exchange between Alliance funds and view fund
performance, press releases and articles.
* Dollar cost averaging does not assure a profit nor protect against loss in
a declining market. Since this strategy involves continuous investments in
securities, regardless of fluctuating prices, investors should consider
their financial ability to invest during periods of low price levels.
--------------------------------------------------------------------------------
ALLIANCE QUASAR FUND o 31
<PAGE>
------------------
BOARD OF DIRECTORS
------------------
BOARD OF DIRECTORS
John D. Carifa, Chairman and President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
William H. Foulk, Jr.(1)
Dr. James M. Hester(1)
Clifford L. Michel(1)
Donald J. Robinson(1)
OFFICERS
Bruce K. Aronow, Senior Vice President
Kathleen A. Corbet, 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 (800) 221-5672
Independent Auditors
Ernst & Young LLP
787 Seventh Avenue
New York, NY 10019
(1) Member of the Audit Committee.
--------------------------------------------------------------------------------
32 o ALLIANCE QUASAR FUND
<PAGE>
--------------------------------
ALLIANCE CAPITAL FAMILY OF FUNDS
--------------------------------
ALLIANCE CAPITAL FAMILY OF FUNDS
Domestic Equity Funds
Balanced Shares
Conservative Investors Fund
Disciplined Value Fund
Growth & Income Fund
Growth Fund
Growth Investors Fund
Health Care Fund
Premier Growth Fund
Quasar Fund
Real Estate Investment Fund
Technology Fund
The Alliance Fund
Utility Income Fund
Global & International Equity Funds
All-Asia Investment Fund
Global Small Cap Fund
Greater China '97 Fund
International Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
Select Investor Series
Biotechnology Portfolio
Premier Portfolio
Technology Portfolio
Fixed Income Funds
Corporate Bond Portfolio
Global Dollar Government Fund
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
North American Government Income Trust
Quality Bond Portfolio
U.S. Government Portfolio
Municipal Income Funds
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
Closed-End Funds
The Spain Fund
ACM Municipal Securities Income Fund
All-Market Advantage Fund
ACM Government Income Fund
ACM Managed Income Fund
The Southern Africa Fund
The Austria Fund
World Dollar Government Fund
ACM Managed Dollar Income Fund
The Korean Investment Fund
World Dollar Government Fund II
Alliance also offers AFD Exchange Reserves, which serves as the money market
fund exchange vehicle for the Alliance mutual funds.
To obtain a prospectus for any Alliance Capital fund, call your investment
professional, or call Alliance at (800) 227-4618.
--------------------------------------------------------------------------------
ALLIANCE QUASAR FUND o 33
<PAGE>
Alliance Quasar Fund -----------------
1345 Avenue of the Americas BULK RATE
New York, NY 10105 U.S. POSTAGE
(800) 221-5672 PAID
New York, NY
Permit No. 7131
-----------------
AllianceCapital [LOGO](R)
The Investment Professional's Choice
(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.
QSRAR900
