-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WvXG/nBZ7HDWDd6xL1H9IXkUC/PUBi5Nug3nqsLAUAzyi2/v9HOteUjSnOKum5V7 GaKYqfgaMQAxWGRALTbnHQ== 0000936772-02-000229.txt : 20020531 0000936772-02-000229.hdr.sgml : 20020531 20020531120648 ACCESSION NUMBER: 0000936772-02-000229 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020531 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE QUASAR FUND INC CENTRAL INDEX KEY: 0000081443 IRS NUMBER: 132625045 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-01716 FILM NUMBER: 02667380 BUSINESS ADDRESS: STREET 1: 1345 AVENUE OF THE AMERICAS STREET 2: C/O ALLIANCE CAPITAL MANAGEMENT LP CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 2125544623 MAIL ADDRESS: STREET 1: ALLIANCE CAPITAL MANAGEMENT LP STREET 2: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 FORMER COMPANY: FORMER CONFORMED NAME: QUASAR ASSOCIATES INC DATE OF NAME CHANGE: 19890427 FORMER COMPANY: FORMER CONFORMED NAME: ALLIANCE CAPITAL QUASAR FUND INC DATE OF NAME CHANGE: 19930907 N-30D 1 edg7882.txt QUASAR FUND SAR - -------------------------------------------------------------------------------- SMALL CAP GROWTH - -------------------------------------------------------------------------------- [GRAPHIC OMITTED] Alliance Quasar Fund Semi-Annual Report March 31, 2002 Alliance Capital [LOGO](R) The Investment Professional's Choice 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. Alliance Fund Distributors, Inc., the principal underwriter of the Alliance mutual funds and an affiliate of Alliance Capital Management L.P., the manager of the funds, is a member of the NASD. ---------------------- LETTER TO SHAREHOLDERS ---------------------- LETTER TO SHAREHOLDERS May 22, 2002 Dear Shareholder: The following report highlights the performance and investment strategy of Alliance Quasar Fund (the "Fund") for the semi-annual reporting period ended March 31, 2002. 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 United States. Investment Results The following table provides performance data for the Fund and its benchmark, the Russell 2000 Growth Index, for the six- and 12-month periods ended March 31, 2002. INVESTMENT RESULTS* Periods Ended March 31, 2002 ------------------------ Total Returns ------------------------ 6 Months 12 Months - -------------------------------------------------------------------------------- Alliance Quasar Fund Class A 23.14% 6.04% - -------------------------------------------------------------------------------- Class B 22.68% 5.23% - -------------------------------------------------------------------------------- Class C 22.65% 5.22% - -------------------------------------------------------------------------------- Russell 2000 Growth Index 23.69% 4.95% - -------------------------------------------------------------------------------- * 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 March 31, 2002. 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 Advisor Class shares will vary due to different expenses associated with this class. 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 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. Small-cap growth stocks rebounded nicely from their September 2001 lows, with the Russell 2000 Growth Index gaining 23.69% for the six-month period ended March 31, 2002. Strength during the period was widespread, and all major sectors turned in positive returns, excluding telecommunications services. Furthermore, in a notable departure from recent periods, both value and growth stocks performed well. The Fund benefited from the favorable backdrop, gaining 23.14% during the six-month period, performing in line with its benchmark. The Fund's absolute and relative returns during the period benefited from strong stock selection in the consumer, indus- - -------------------------------------------------------------------------------- ALLIANCE QUASAR FUND o 1 - ---------------------- LETTER TO SHAREHOLDERS - ---------------------- trial and energy sectors. Sector allocations had only a minimal impact on relative performance. For the 12-month period ended March 31, 2002, the Fund gained 6.04%, modestly outperforming the Russell 2000 Growth Index, which advanced 4.95% over the same time frame. Cyclical sectors, including the consumer and industrial sectors, were the strongest performing areas within the small-cap growth market. Not surprisingly, telecommunications services and technology were two of the year's more disappointing sectors, both of which were down in absolute terms for the entire 12-month period. The Fund's relative returns during the period benefited from a modest underweight position in technology and strong stock selection in the consumer, industrial and technology sectors within the Fund's portfolio. 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 Recovering from an oversold condition in September 2001, small-cap growth stocks performed very strongly during the six-month period ended March 31, 2002. Gains during the period were both strong and widespread, with all sectors, excluding telecommunications services, generating solid positive returns. Although corporate profits have been under pressure for well over a year, investors have increasingly shown a willingness to look through the current environment in anticipation of improved earnings later in 2002. Within this context, both early and late-stage cyclical stocks performed strongest during the period, with the consumer and industrial sectors each up more than 30% over the past six months. Technology stocks were not far behind, with a 29% gain over the same time frame. The consumer sector was among one of the more significant performers within the Fund's portfolio during the period, including companies such as Action Performance Cos., Inc., a marketer of licensed NASCAR collectibles, and Take-Two Interactive Software, Inc., a developer of entertainment software. Both of these companies benefited from surprisingly strong customer demand for their products. Two other notable performers in the portfolio's consumer holdings were discount retailer Fred's, Inc. and stock photography provider Getty Images, Inc. All four of these investments more than doubled during the period under review, albeit from somewhat depressed levels. Industrial investments during the period provided strong contributions to the Fund's performance, including Georgia Gulf Corp., a manufacturer of specialty chemicals, and Pactive Corp., a maker of specialty packaging products. These companies' stocks benefited from growing expectations that improvements in economic activity would drive earnings materially higher in future periods. - -------------------------------------------------------------------------------- 2 o ALLIANCE QUASAR FUND - ---------------------- LETTER TO SHAREHOLDERS - ---------------------- Although many stocks in the portfolio posted very sharp gains from September 2001 lows, the period was not without its share of disappointments. Two of the period's poor performers were CIMA Labs, Inc., a developer of drug delivery systems, and Biosite Diagnostics, Inc. a developer of diagnostic tests. Both of these stocks declined sharply following lowered earnings guidance (expectations for the period's future earnings) last fall. Another disappointing investment in the telecommunications segment of the portfolio was Sprint PCS, a provider of wireless communications services. Hurt by widespread sluggishness in the wireless communications industry, Sprint PCS was forced to lower earnings guidance early this year. All three of these investments have been sold from the Fund. Outlook Although first quarter earnings reports have only started to trickle in, early indications would suggest that business conditions remain challenging. Revenue growth remains muted, and few companies have been willing to take forward-looking guidance materially higher. Additionally, cost structures have been rationalized and analyst expectations have been lowered, enabling companies to do a much better job meeting and, in many cases, even exceeding earnings estimates. As a result, first quarter 2002's ratio of positive earnings surprises to negative surprises appears likely to improve dramatically from fourth quarter 2001's level. Earnings revision trends have also provided another encouraging sign that small-cap growth stocks may be positioned for better performance in upcoming quarters. Although still negative--more estimates are being reduced than are being raised--the trend in this measure has improved significantly over the past several months. Historically, improving revisions have been a powerful predictor of future stock price performance. Given this backdrop, the Fund's portfolio management team has continued to shift incremental investment dollars into companies whose earnings are expected to disproportionately benefit from improvements in economic activity. Reflecting this shift, the Fund has increased its allocation to technology stocks and has lowered its allocation to health care stocks. Both sectors are now roughly in line with those of the Russell 2000 Growth Index. This change is significant in that it marks the first time in recent years that the Fund's technology exposure has been market weight. Although fundamentals within the technology sector remain difficult, we have identified pockets of attractive opportunities in semiconductors and selected services companies. We are deliberately underweight in the area of software. Although the Fund's relative weightings in the consumer and commercial services, industrial, finance and energy sectors are roughly consistent with recent levels, it should be noted that the nature of the exposure within these two areas has shifted toward more economically sensitive investments. In short, the environment for small-cap growth stock investors remains difficult. However, there is growing evidence that fundamentals have found a bottom and expectations are in check. - -------------------------------------------------------------------------------- ALLIANCE QUASAR FUND o 3 - ---------------------- LETTER TO SHAREHOLDERS - ---------------------- Should these trends continue, we believe the outlook for small-cap growth stocks will likely brighten as the year progresses. 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 [PHOTO] John D. Carifa [PHOTO] Bruce K. Aronow Bruce K. Aronow, Portfolio Manager, is the team leader of the Small-Cap Growth equity portfolio management team and has over 14 years of investment experience. - -------------------------------------------------------------------------------- 4 o ALLIANCE QUASAR FUND ------------------ PERFORMANCE UPDATE ------------------ PERFORMANCE UPDATE ALLIANCE QUASAR FUND GROWTH OF A $10,000 INVESTMENT 3/31/92 TO 3/31/02 [The following table was depicted as a mountain chart in the printed material.] Alliance Quasar Fund Class A: $20,163 Russell 2000 Growth Index: $19,108 This chart illustrates the total value of an assumed $10,000 investment in Alliance Quasar Fund Class A shares (from 3/31/92 to 3/31/02) 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 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 - ------------------ PERFORMANCE UPDATE - ------------------ PERFORMANCE UPDATE ALLIANCE QUASAR FUND HISTORY OF RETURNS YEARLY PERIODS ENDED 3/31 [BAR CHART OMITTED] Alliance Quasar Fund - Yearly Periods Ended 3/31 - -------------------------------------------------------------------------------- Alliance Russell 2000 Quasar Fund Growth Index - -------------------------------------------------------------------------------- 3/31/93 2.27% 3.02% 3/31/94 9.86% 10.73% 3/31/95 2.67% 7.28% 3/31/96 64.64% 31.37% 3/31/97 9.80% -5.82% 3/31/98 36.80% 41.17% 3/31/99 -22.67% -11.04% 3/31/00 21.60% 59.04% 3/31/01 -25.96% -39.81% 3/31/02 6.04% 4.95% 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 each period. Total returns for Class B, Class C and Advisor Class shares will vary due to different expenses associated with these classes. The unmanaged Russell 2000 Growth 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 ----------------- PORTFOLIO SUMMARY ----------------- PORTFOLIO SUMMARY March 31, 2002 (unaudited) INCEPTION DATES PORTFOLIO STATISTICS Class A Shares Net Assets ($ mil): $696.7 2/12/69 Median Market Capitalization ($ mil): $876.0 Class B Shares 9/17/90 Class C Shares 5/3/93 SECTOR BREAKDOWN 25.1% Technology 24.7% Consumer Services 21.1% Health Care 9.4% Finance 5.9% Energy 4.0% Capital Goods [PIE CHART OMITTED] 3.7% Basic Industry 2.8% Transportation 1.4% Aerospace & Defense 0.6% Multi-Industry Companies 0.3% Consumer Manufacturing 1.0% Short-Term All data as of March 31, 2002. The Fund's sector breakdown is expressed as a percentage of total investments and may vary over time. - -------------------------------------------------------------------------------- ALLIANCE QUASAR FUND o 7 - ------------------ INVESTMENT RESULTS - ------------------ INVESTMENT RESULTS AVERAGE ANNUAL TOTAL RETURNS AS OF MARCH 31, 2002 Class A Shares - -------------------------------------------------------------------------------- Without Sales Charge With Sales Charge 1 Year 6.04% 1.52% 5 Years 0.20% -0.67% 10 Years 7.73% 7.26% Class B Shares - -------------------------------------------------------------------------------- Without Sales Charge With Sales Charge 1 Year 5.23% 1.23% 5 Years -0.59% -0.59% 10 Years(a) 7.06% 7.06% Class C Shares - -------------------------------------------------------------------------------- Without Sales Charge With Sales Charge 1 Year 5.22% 4.22% 5 Years -0.57% -0.57% Since Inception* 8.10% 8.10% 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 vary due to different expenses associated with this class. The Fund can invest in foreign securities, which may magnify 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 invests in small capitalization stocks which may be more volatile because these companies tend to have limited product lines, markets, or financial resources. 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: 5/3/93, Class C. (a) Assumes conversion of Class B shares into Class A shares after 8 years. - -------------------------------------------------------------------------------- 8 o ALLIANCE QUASAR FUND -------------------- TEN LARGEST HOLDINGS -------------------- TEN LARGEST HOLDINGS March 31, 2002 (unaudited) Percent of Company Value Net Assets - -------------------------------------------------------------------------------- SICOR, Inc. $10,854,340 1.6% - -------------------------------------------------------------------------------- Cytyc Corp. 10,447,652 1.5 - -------------------------------------------------------------------------------- MSC Industrial Direct Co., Inc. Cl.A 9,581,360 1.4 - -------------------------------------------------------------------------------- Priority Healthcare Corp. Cl.B 9,579,483 1.4 - -------------------------------------------------------------------------------- Engineered Support Systems, Inc. 9,569,125 1.4 - -------------------------------------------------------------------------------- Southwest Bancorporation of Texas, Inc. 9,338,534 1.3 - -------------------------------------------------------------------------------- Georgia Gulf Corp. 9,029,655 1.3 - -------------------------------------------------------------------------------- Retek, Inc. 8,922,375 1.3 - -------------------------------------------------------------------------------- Iron Mountain, Inc. 8,661,146 1.2 - -------------------------------------------------------------------------------- Amphenol Corp. Cl. A 8,573,760 1.2 - -------------------------------------------------------------------------------- $94,557,430 13.6% - -------------------------------------------------------------------------------- MAJOR PORTFOLIO CHANGES Six Months Ended March 31, 2002 (unaudited) -------------------------------- Shares* -------------------------------- Purchases Bought Holdings 3/31/02 - -------------------------------------------------------------------------------- 02Micro International, Ltd. 396,500 396,500 - -------------------------------------------------------------------------------- American Medical Systems Holdings, Inc. 337,100 337,100 - -------------------------------------------------------------------------------- Charles River Laboratories International, Inc. 207,000 207,000 - -------------------------------------------------------------------------------- EDO Corp. 276,500 276,500 - -------------------------------------------------------------------------------- Engineered Support Systems, Inc. 180,900 206,900 - -------------------------------------------------------------------------------- Hyperion Solutions Corp. 278,100 278,100 - -------------------------------------------------------------------------------- Integrated Circuit Systems, Inc. 408,000 408,000 - -------------------------------------------------------------------------------- Stericycle, Inc. 133,800 133,800 - -------------------------------------------------------------------------------- Strayer Education, Inc. 135,800 135,800 - -------------------------------------------------------------------------------- Taro Pharmaceutical Industries, Ltd. 174,900 174,900 - -------------------------------------------------------------------------------- Sales Sold Holdings 3/31/02 - -------------------------------------------------------------------------------- CIMA Labs, Inc. 267,500 -0- - -------------------------------------------------------------------------------- Dal-Tile International, Inc. 423,600 -0- - -------------------------------------------------------------------------------- Fisher Scientific International, Inc. 305,900 -0- - -------------------------------------------------------------------------------- InterMune, Inc. 267,100 -0- - -------------------------------------------------------------------------------- Medicis Pharmaceuticals Corp. Cl.A 178,100 -0- - -------------------------------------------------------------------------------- OSI Pharmaceuticals, Inc. 164,300 -0- - -------------------------------------------------------------------------------- Patterson-UTI Energy, Inc. 363,600 -0- - -------------------------------------------------------------------------------- PEC Solutions, Inc. 432,700 -0- - -------------------------------------------------------------------------------- Performance Food Group Co. 247,800 -0- - -------------------------------------------------------------------------------- Tetra Tech., Inc. 341,300 -0- - -------------------------------------------------------------------------------- * Adjusted for a Stock Split. - -------------------------------------------------------------------------------- ALLIANCE QUASAR FUND o 9 - ------------------------ PORTFOLIO OF INVESTMENTS - ------------------------ PORTFOLIO OF INVESTMENTS March 31, 2002 (unaudited) Company Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS-99.5% Technology-25.3% Communication Equipment-0.3% Sirenza Microdevices, Inc.(a) .................. 328,900 $ 1,782,638 ----------- Computer Peripherals-0.8% Pericom Semiconductor Corp.(a) ................. 374,200 5,291,188 ----------- Computer Services-0.9% Anteon International Corp.(a) .................. 305,300 6,350,240 ----------- Computer Software-6.3% Actuate Corp.(a) ............................... 579,700 4,185,434 Advent Software, Inc.(a) ....................... 83,900 4,963,524 F5 Networks, Inc.(a) ........................... 175,400 4,076,296 Hyperion Solutions Corp.(a) .................... 278,100 7,511,481 Informatica Corp.(a) ........................... 532,800 3,857,472 MatrixOne, Inc.(a) ............................. 331,900 2,960,548 NetIQ Corp.(a) ................................. 195,700 4,268,217 Retek, Inc.(a) ................................. 339,900 8,922,375 Tier Technologies, Inc. Cl.B(a) ................ 196,500 3,468,225 ----------- 44,213,572 ----------- Contract Manufacturing-1.7% DDI Corp.(a) ................................... 637,600 5,438,728 Semtech Corp.(a) ............................... 181,300 6,617,450 ----------- 12,056,178 ----------- Internet Infrastructure-0.1% Internet Security Systems, Inc.(a) ............. 26,000 594,100 ----------- Networking Software-0.4% SonicWALL, Inc.(a) ............................. 207,600 2,707,104 ----------- Semi-Conductor Capital Equipment-2.1% MKS Instruments, Inc.(a) ....................... 225,700 7,727,968 Varian Semiconductor Equipment Associates, Inc.(a) ......................... 149,500 6,727,500 ----------- 14,455,468 ----------- Semi-Conductor Components-6.3% Alpha Industries, Inc.(a) ...................... 300,100 4,576,525 ANADIGICS, Inc.(a) ............................. 358,700 4,426,358 Brooks Automation, Inc.(a) ..................... 131,200 5,961,728 Elantec Semiconductor, Inc.(a) ................. 198,500 8,489,845 GlobespanVirata, Inc.(a) ....................... 436,098 6,506,582 Integrated Circuit Systems, Inc.(a) ............ 408,000 8,323,200 Micrel, Inc.(a) ................................ 234,000 5,901,480 ----------- 44,185,718 ----------- - -------------------------------------------------------------------------------- 10 o ALLIANCE QUASAR FUND ------------------------ PORTFOLIO OF INVESTMENTS ------------------------ Company Shares Value - -------------------------------------------------------------------------------- Miscellaneous-6.4% 02Micro International, Ltd.(a) ................. 396,500 $ 6,926,855 Aeroflex, Inc.(a) .............................. 582,500 7,490,950 Amphenol Corp. Cl.A(a) ......................... 183,200 8,573,760 Exar Corp.(a) .................................. 389,300 7,996,222 Plantronics, Inc.(a) ........................... 169,100 3,537,572 Power-One, Inc.(a) ............................. 441,500 3,611,470 Precise Software Solutions, Ltd.(a) ............ 268,200 6,246,378 ----------- 44,383,207 ----------- 176,019,413 ----------- Consumer Services-24.8% Advertising-1.0% Getty Images, Inc.(a) .......................... 221,600 6,639,136 ----------- Broadcasting & Cable-2.1% Entravision Communications Corp. Cl.A(a) ....... 347,200 5,138,560 Insight Communications Co., Inc.(a) ............ 233,500 4,891,825 ValueVision International, Inc. Cl.A(a) ........ 227,200 4,714,400 ----------- 14,744,785 ----------- Entertainment & Leisure-3.0% Action Performance Cos., Inc.(a) ............... 161,600 7,958,800 Hot Topic, Inc.(a) ............................. 251,700 5,260,530 Take-Two Interactive Software, Inc.(a) ......... 387,400 7,786,740 ----------- 21,006,070 ----------- Gaming-0.4% Station Casinos, Inc.(a) ....................... 149,300 2,485,845 ----------- Retail - General Merchandise-8.1% AnnTaylor Stores Corp.(a) ...................... 125,300 5,415,466 Electronics Boutique Holdings Corp.(a) ......... 228,300 7,883,199 Fred's, Inc. Cl.A .............................. 130,212 4,687,614 Galyan's Trading Co.(a) ........................ 453,400 6,937,020 Group 1 Automotive, Inc.(a) .................... 79,300 3,096,665 MSC Industrial Direct Co., Inc. Cl.A(a) ........ 418,400 9,581,360 Rent-A-Center, Inc.(a) ......................... 104,300 5,328,687 THQ, Inc.(a) ................................... 158,300 7,772,530 Ultimate Electronics, Inc.(a) .................. 215,300 6,039,165 ----------- 56,741,706 ----------- ALLIANCE QUASAR FUND o 11 - ------------------------ PORTFOLIO OF INVESTMENTS - ------------------------ Company Shares Value - -------------------------------------------------------------------------------- Miscellaneous-10.2% Career Education Corp.(a) ...................... 160,000 $ 6,336,000 Copart, Inc.(a) ................................ 311,700 5,591,898 Edison Schools, Inc. Cl.A(a) ................... 500,300 6,954,170 Insight Enterprises, Inc.(a) ................... 354,500 8,025,880 Iron Mountain, Inc.(a) ......................... 273,050 8,661,146 PC Connection, Inc.(a) ......................... 236,700 2,499,552 Resources Connection, Inc.(a) .................. 259,800 7,516,014 ScanSource, Inc.(a) ............................ 118,600 7,129,580 SmartForce Public Ltd., Co. ADR (Ireland)(a) ... 440,400 4,624,200 Strayer Education, Inc. ........................ 135,800 6,667,780 West Corp.(a) .................................. 228,200 7,220,248 ----------- 71,226,468 ----------- 172,844,010 ----------- Health Care-21.2% Biotechnology-5.8% Affymetrix, Inc.(a) ............................ 181,500 5,259,870 Charles River Laboratories International, Inc.(a) 207,000 6,417,000 CV Therapeutics, Inc.(a) ....................... 111,400 4,032,680 Exelixis, Inc.(a) .............................. 149,400 2,060,226 The Medicines Co.(a) ........................... 540,200 7,703,252 Transkaryotic Therapies, Inc.(a) ............... 140,600 6,052,830 Trimeris, Inc.(a) .............................. 94,300 4,073,760 United Therapeutics Corp.(a) ................... 374,600 5,042,116 ----------- 40,641,734 ----------- Drugs-3.8% Axcan Pharma, Inc.(a) .......................... 258,900 3,264,729 ICN Pharmaceuticals, Inc. ...................... 221,800 7,042,150 SICOR, Inc.(a) ................................. 635,500 10,854,340 Taro Pharmaceutical Industries, Ltd.(a) ........ 174,900 4,958,415 ----------- 26,119,634 ----------- Medical Products-7.0% Align Technology, Inc.(a) ...................... 788,600 4,179,580 American Medical Systems Holdings, Inc.(a) ..... 337,100 7,588,121 CryoLife, Inc.(a) .............................. 13,800 288,420 Cytyc Corp.(a) ................................. 388,100 10,447,652 INAMED Corp.(a) ................................ 92,300 3,036,670 Integra LifeSciences Holdings(a) ............... 268,800 7,561,344 Novavax, Inc.(a) ............................... 419,900 4,803,656 OraSure Technologies, Inc.(a) .................. 358,200 2,167,110 Therasense, Inc.(a) ............................ 188,000 3,553,200 Wilson Greatbatch Technologies, Inc.(a) ........ 201,700 5,185,707 ----------- 48,811,460 ----------- - -------------------------------------------------------------------------------- 12 o ALLIANCE QUASAR FUND ------------------------ PORTFOLIO OF INVESTMENTS ------------------------ Company Shares Value - -------------------------------------------------------------------------------- Medical Services-4.6% AMN Healthcare Services, Inc.(a) ............... 132,800 $ 3,572,320 LifePoint Hospitals, Inc.(a) ................... 121,000 4,472,160 Option Care, Inc.(a) ........................... 353,900 5,842,889 Priority Healthcare Corp. Cl.B(a) .............. 368,300 9,579,483 Stericycle, Inc.(a) ............................ 133,800 8,370,662 ----------- 31,837,514 ----------- 147,410,342 ----------- Finance-9.5% Banking - Money Centers-1.1% UCBH Holdings, Inc. ............................ 221,800 7,980,364 ----------- Banking - Regional-0.7% Westamerica Bancorp ............................ 113,500 4,852,125 ----------- Brokerage & Money Management-2.1% Affiliated Managers Group, Inc.(a) ............. 73,100 5,250,773 Southwest Bancorporation of Texas, Inc.(a) ..... 280,100 9,338,534 ----------- 14,589,307 ----------- Insurance-3.7% Arthur J. Gallagher & Co. ...................... 139,300 4,564,861 PMA Capital Corp. Cl. A ........................ 282,700 6,485,138 Reinsurance Group of America, Inc. ............. 110,700 3,466,017 RenaissanceRe Holdings, Ltd. (Bermuda) ......... 37,300 3,841,900 StanCorp Financial Group, Inc. ................. 130,300 7,166,500 ----------- 25,524,416 ----------- Miscellaneous-1.9% Investors Financial Services Corp. ............. 94,600 7,194,330 The InterCept Group, Inc.(a) ................... 160,200 5,807,250 ----------- 13,001,580 ----------- 65,947,792 ----------- Energy-5.9% Domestic Integrated-0.6% Tesoro Petroleum Corp.(a) ...................... 285,800 4,015,490 ----------- Domestic Producers-1.0% Newfield Exploration Co.(a) .................... 186,300 6,891,237 ----------- Oil Service-2.1% Spinnaker Exploration Co.(a) ................... 174,900 7,284,585 W-H Energy Services, Inc.(a) ................... 363,000 7,840,800 ----------- 15,125,385 ----------- Pipelines-2.2% Cal Dive International, Inc.(a) ................ 282,900 7,044,210 Hydril Co.(a) .................................. 340,100 8,288,237 ----------- 15,332,447 ----------- 41,364,559 ----------- - -------------------------------------------------------------------------------- ALLIANCE QUASAR FUND o 13 - ------------------------ PORTFOLIO OF INVESTMENTS - ------------------------ Company Shares Value - -------------------------------------------------------------------------------- Capital Goods-4.0% Electrical Equipment-2.7% DRS Technologies, Inc.(a) ...................... 16,800 $ 697,032 EDO Corp. ...................................... 276,500 7,468,265 L-3 Communications Holdings, Inc.(a) ........... 42,300 4,737,600 United Defense Industries, Inc.(a) ............. 226,900 6,080,920 ----------- 18,983,817 ----------- Machinery-0.5% Regal Beloit Corp. ............................. 133,000 3,398,150 ----------- Miscellaneous-0.8% Champion Enterprises, Inc.(a) .................. 531,900 4,255,200 WCI Communities, Inc.(a) ....................... 53,200 1,298,080 ----------- 5,553,280 ----------- 27,935,247 ----------- Basic Industry-3.7% Chemicals-2.1% Georgia Gulf Corp. ............................. 336,300 9,029,655 OM Group, Inc. ................................. 80,900 5,849,070 ----------- 14,878,725 ----------- Paper & Forest Products-1.6% Moore Corp., Ltd. .............................. 241,800 3,145,818 Pactiv Corp.(a) ................................ 404,400 8,096,088 ----------- 11,241,906 ----------- 26,120,631 ----------- Transportation-2.8% Air Freight-0.7% Expeditors International of Washington, Inc. ... 81,800 4,989,800 ----------- Shipping-0.6% Kirby Corp.(a) ................................. 138,300 4,135,170 ----------- Trucking-0.7% P.A.M. Transportation Services, Inc.(a) ........ 63,100 1,596,430 Swift Transportation Co., Inc.(a) .............. 155,300 3,404,176 ----------- 5,000,606 ----------- Miscellaneous-0.8% Tower Automotive, Inc.(a) ...................... 382,300 5,348,377 ----------- 19,473,953 ----------- Aerospace & Defense-1.4% Defense Electronics-1.4% Engineered Support Systems, Inc. ............... 206,900 9,569,125 ----------- Multi-Industry Companies-0.6% Martek Biosciences Corp.(a) .................... 140,400 4,419,651 ----------- - -------------------------------------------------------------------------------- 14 o ALLIANCE QUASAR FUND ------------------------ PORTFOLIO OF INVESTMENTS ------------------------ Shares or Principal Amount Company (000) Value - -------------------------------------------------------------------------------- Consumer Manufacturing-0.3% Auto & Related-0.3% Asbury Automotive Group, Inc.(a) ............. 132,800 $ 2,025,200 ------------- Total Common Stocks (cost $646,794,315) ....................... 693,129,923 ------------- SHORT-TERM INVESTMENT-1.0% Time Deposit-1.0% State Street Euro Dollar 1.25%, 4/01/02 (amortized cost $7,003,000) ............... $7,003 7,003,000 ------------- Total Investments-100.5% (cost $653,797,315) ....................... 700,132,923 Other assets less liabilities-(0.5%) ......... (3,412,896) ------------- Net Assets-100% .............................. $ 696,720,027 ============= (a) Non-income producing security. Glossary: ADR - American Depositary Receipt See notes to financial statements. - -------------------------------------------------------------------------------- ALLIANCE QUASAR FUND o 15 - --------------------------------- STATEMENT OF ASSETS & LIABILITIES - --------------------------------- STATEMENT OF ASSETS & LIABILITIES March 31, 2002 (unaudited) Assets Investments--securities, at value (cost $653,797,315) ........ $ 700,132,923 Cash ......................................................... 788 Collateral held for securities loaned ........................ 93,187,700 Receivable for investment securities sold .................... 3,206,689 Dividends and interest receivable ............................ 280,397 Receivable for capital stock sold ............................ 225,666 ------------- Total Assets ................................................. 797,034,163 ------------- Liabilities Payable for collateral received on securities loaned ......... 93,187,700 Payable for investment securities purchased .................. 2,858,471 Advisory fee payable ......................................... 1,763,830 Payable for capital stock redeemed ........................... 1,295,199 Distribution fee payable ..................................... 357,419 Accrued expenses ............................................. 851,517 ------------- Total Liabilities ............................................ 100,314,136 ------------- Net Assets ................................................... $ 696,720,027 ============= Composition of Net Assets Shares of capital stock, at par .............................. $ 74,980 Additional paid-in capital ................................... 928,686,474 Accumulated net investment loss .............................. (7,318,127) Accumulated net realized loss on investment transactions ..... (271,058,908) Net unrealized appreciation of investments ................... 46,335,608 ------------- $ 696,720,027 ============= Calculation of Maximum Offering Price Class A Shares Net asset value and redemption price per share ($268,277,537 / 13,405,952 shares of capital stock issued and outstanding) ............................. $20.01 Sales charge--4.25% of public offering price ................. .89 ====== Maximum offering price ....................................... $20.90 ====== Class B Shares Net asset value and offering price per share ($283,737,859 / 16,394,297 shares of capital stock issued and outstanding) ............................. $17.31 ====== Class C Shares Net asset value and offering price per share ($68,128,802 / 3,931,750 shares of capital stock issued and outstanding) ............................. $17.33 ====== Advisor Class Shares Net asset value, redemption and offering price per share ($76,575,829 / 3,758,154 shares of capital stock issued and outstanding) ............................. $20.38 ====== See notes to financial statements - -------------------------------------------------------------------------------- 16 o ALLIANCE QUASAR FUND ----------------------- STATEMENT OF OPERATIONS ----------------------- STATEMENT OF OPERATIONS Six Months Ended March 31, 2002 (unaudited) Investment Income Dividends ........................................ $ 373,162 Interest ......................................... 183,688 $ 556,850 ------------ Expenses Advisory fee ..................................... 3,589,667 Distribution fee--Class A ........................ 354,437 Distribution fee--Class B ........................ 1,426,836 Distribution fee--Class C ........................ 342,903 Transfer agency .................................. 1,757,610 Custodian ........................................ 117,103 Printing ......................................... 107,376 Administrative ................................... 66,806 Audit and legal .................................. 52,093 Registration ..................................... 33,622 Directors' fees .................................. 14,000 Miscellaneous .................................... 12,194 ------------ Total expenses ................................... 7,874,647 ------------ Net investment loss .............................. (7,317,797) ------------ Realized and Unrealized Gain (Loss) on Investments Net realized loss on investment transactions .................................. (80,222,147) Net change in unrealized appreciation/depreciation of investments ................................ 226,471,133 ------------ Net gain on investments .......................... 146,248,986 ------------ Net Increase in Net Assets from Operations ............................... $138,931,189 ============ See notes to financial statements. - -------------------------------------------------------------------------------- ALLIANCE QUASAR FUND o 17 - ---------------------------------- STATEMENT OF CHANGES IN NET ASSETS - ---------------------------------- STATEMENT OF CHANGES IN NET ASSETS Six Months Ended Year Ended March 31, 2002 September 30, (unaudited) 2001 ================ =============== Increase (Decrease) in Net Assets from Operations Net investment loss ....................... $ (7,317,797) $ (17,866,615) Net realized loss on investment transactions ........................... (80,222,147) (104,553,326) Net change in unrealized appreciation/depreciation of investments ......................... 226,471,133 (368,065,304) --------------- --------------- Net increase (decrease) in net assets from operations ........................ 138,931,189 (490,485,245) Distributions to Shareholders from: Net realized gain on investments Class A ................................ -0- (10,594,187) Class B ................................ -0- (14,207,984) Class C ................................ -0- (3,545,369) Advisor Class .......................... -0- (3,070,698) Distributions in excess of net realized gain on investments Class A ................................ -0- (29,171,770) Class B ................................ -0- (39,122,600) Class C ................................ -0- (9,762,403) Advisor Class .......................... -0- (8,455,365) Capital Stock Transactions Net decrease .............................. (61,483,417) (49,277,329) --------------- --------------- Total increase (decrease) ................. 77,447,772 (657,692,950) Net Assets Beginning of period ....................... 619,272,255 1,276,965,205 --------------- --------------- End of period ............................. $ 696,720,027 $ 619,272,255 =============== =============== See notes to financial statements. - -------------------------------------------------------------------------------- 18 o ALLIANCE QUASAR FUND ----------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- NOTES TO FINANCIAL STATEMENTS March 31, 2002 (unaudited) 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. Ad visor 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. - -------------------------------------------------------------------------------- ALLIANCE QUASAR FUND o 19 - ----------------------------- NOTES TO FINANCIAL STATEMENTS - ----------------------------- 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 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. 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 $66,806 to the Adviser representing the cost of certain legal and accounting services provided to the Fund by the Adviser for the six months ended March 31, 2002. The Fund compensates Alliance Global Investor Services, Inc. (AGIS), 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 compensa- - -------------------------------------------------------------------------------- 20 o ALLIANCE QUASAR FUND ----------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- tion amounted to $1,170,625 for the six months ended March 31, 2002. For the six months ended March 31, 2002, the Fund's expenses were reduced by $6,182 under an expense offset arrangement with AGIS. 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 charge of $88,093 from the sale of Class A shares and $6,931, $249,562 and $5,297 in contingent deferred sales charges imposed upon redemptions by shareholders of Class A, Class B and Class C shares, respectively, for the six months ended March 31, 2002. Brokerage commissions paid on investment transactions for the six months ended March 31, 2002 amounted to $929,116, of which $660 was paid to Sanford C. Bernstein & Co. LLC, an affiliate of the Adviser. NOTE C Distribution Services Agreement The Fund has adopted a Distribution Services Agreement (the "Agreement") pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Agreement, the Fund pays 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 $23,982,655 and $2,066,674 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 $359,459,230 and $413,223,594 respectively, for the six months ended March 31, 2002. There were no purchases or sales of U.S. government and government agency obligations for the six months ended March 31, 2002. - -------------------------------------------------------------------------------- ALLIANCE QUASAR FUND o 21 - ----------------------------- NOTES TO FINANCIAL STATEMENTS - ----------------------------- At March 31, 2002, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes. Accordingly, gross unrealized appreciation of investments was $113,924,050 and gross unrealized depreciation of in vestments was $67,588,442, resulting in net unrealized appreciation of $46,335,608. At September 30, 2001, the Fund had a net capital loss carryforward for federal income tax purposes of $108,609,712, all of which expires in 2009. 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 $72,690,376 during the fiscal year 2001. 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 Securities Lending The Fund has entered into a securities lending agreement with UBS/Paine Webber, Inc. (the "Lending Agent"). Under the terms of the agreement, the Lending Agent, on behalf of the Fund, administers the lending of portfolio securities to certain broker-dealers. In return, the Fund receives fee income from the lending transactions. All loans are continuously secured by collateral exceeding the value of the securities loaned. All collateral consists of either cash or U.S. Government securities. The Lending Agent invests the cash collateral in an eligible money market vehicle in accordance with the investment restrictions of the Fund. UBS/Paine Webber will indemnify the Fund for any loss resulting from a borrower's failure to return a loaned security when due. As of March 31, 2002, the Fund had loaned securities with a value of $89,477,431 and received cash collateral of $93,187,700. For the six months ended March 31, 2002, the Fund received fee income of $68,159 which is included in interest income in the accompanying statement of operations. NOTE F 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 - -------------------------------------------------------------------------------- 22 o ALLIANCE QUASAR FUND ----------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- consists of 3,000,000,000 authorized shares. Transactions in capital stock were as follows:
-------------------------------- ------------------------------------ Shares Amount -------------------------------- ------------------------------------ Six Months Ended Year Ended Six Months Ended Year Ended March 31, September 30, March 31, September 30, (unaudited) 2001 (unaudited) 2001 ------------------------------------------------------------------------ Class A Shares sold 2,619,806 7,111,614 $ 49,573,801 $ 153,464,725 - ----------------------------------------------------------------------------------------- Shares issued in reinvestment of distributions -0- 1,501,955 -0- 37,278,216 - ----------------------------------------------------------------------------------------- Shares converted from Class B 95,001 70,946 1,851,364 1,610,077 - ----------------------------------------------------------------------------------------- Shares redeemed (3,614,888) (9,267,139) (68,437,883) (201,469,898) - ----------------------------------------------------------------------------------------- Net decrease (900,081) (582,624) $ (17,012,718) $ (9,116,880) ========================================================================================= Class B Shares sold 797,192 1,950,555 $ 13,276,397 $ 37,583,730 - ----------------------------------------------------------------------------------------- Shares issued in reinvestment of distributions -0- 2,268,280 -0- 49,221,600 - ----------------------------------------------------------------------------------------- Shares converted to Class A (109,068) (86,173) (1,851,364) (1,610,077) - ----------------------------------------------------------------------------------------- Shares redeemed (2,519,799) (5,919,036) (41,750,069) (110,669,443) - ----------------------------------------------------------------------------------------- Net decrease (1,831,675) (1,786,374) $ (30,325,036) $ (25,474,190) ========================================================================================= Class C Shares sold 484,846 797,584 $ 8,032,659 $ 15,558,688 - ----------------------------------------------------------------------------------------- Shares issued in reinvestment of distributions -0- 566,471 -0- 12,309,456 - ----------------------------------------------------------------------------------------- Shares redeemed (866,246) (2,073,468) (14,381,159) (39,538,054) - ----------------------------------------------------------------------------------------- Net decrease (381,400) (709,413) $ (6,348,500) $ (11,669,910) ========================================================================================= Advisor Class Shares sold 371,333 1,242,926 $ 7,079,755 $ 26,711,352 - ----------------------------------------------------------------------------------------- Shares issued in reinvestment of distributions -0- 438,884 -0- 11,020,368 - ----------------------------------------------------------------------------------------- Shares redeemed (772,779) (1,880,852) (14,876,918) (40,748,069) - ----------------------------------------------------------------------------------------- Net decrease (401,446) (199,042) $ (7,797,163) $ (3,016,349) =========================================================================================
- -------------------------------------------------------------------------------- ALLIANCE QUASAR FUND o 23 - ----------------------------- NOTES TO FINANCIAL STATEMENTS - ----------------------------- NOTE G 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 six months ended March 31, 2002. - -------------------------------------------------------------------------------- 24 o ALLIANCE QUASAR FUND -------------------- FINANCIAL HIGHLIGHTS -------------------- FINANCIAL HIGHLIGHTS Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
---------------------------------------------------------------------------------------- Class A ---------------------------------------------------------------------------------------- Six Months Ended March 31, Year Ended September 30, 2002 --------------------------------------------------------------------------- (unaudited) 2001 2000 1999 1998 1997 ---------------------------------------------------------------------------------------- Net asset value, beginning of period .......... $ 16.25 $ 30.76 $ 23.84 $ 22.27 $ 30.37 $ 27.92 ---------------------------------------------------------------------------------------- Income From Investment Operations Net investment loss(a) ......... (.17) (.35) (.38) (.22) (.17) (.24) Net realized and unrealized gain (loss) on investment transactions ................. 3.93 (11.46) 7.30 2.80 (6.70) 6.80 ---------------------------------------------------------------------------------------- Net increase (decrease) in net asset value from operations .. 3.76 (11.81) 6.92 2.58 (6.87) 6.56 ---------------------------------------------------------------------------------------- Less: Distributions Distributions from net realized gains ............... -0- (.72) -0- (1.01) (1.23) (4.11) Distributions in excess of net realized gains ........... -0- (1.98) -0- -0- -0- -0- ---------------------------------------------------------------------------------------- Total distributions ............ -0- (2.70) -0- (1.01) (1.23) (4.11) ---------------------------------------------------------------------------------------- Net asset value, end of period . $ 20.01 $ 16.25 $ 30.76 $ 23.84 $ 22.27 $ 30.37 ======================================================================================== Total Return Total investment return based on net asset value(b) ........... 23.14% (41.42)% 29.03% 11.89% (23.45)% 27.81% Ratios/Supplemental Data Net assets, end of period (000's omitted) .............. $ 268,277 $ 232,456 $ 458,008 $ 517,289 $ 495,070 $ 402,081 Ratio to average net assets of: Expenses ..................... 1.90%(d) 1.79% 1.68%(c) 1.69%(c) 1.61%(c) 1.67% Net investment loss .......... (1.74)%(d) (1.58)% (1.39)% (.90)% (.59)% (.91)% Portfolio turnover rate ........ 53% 109% 160% 91% 109% 135%
See footnote summary on page 29. - -------------------------------------------------------------------------------- ALLIANCE QUASAR FUND o 25 - -------------------- FINANCIAL HIGHLIGHTS - -------------------- Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
---------------------------------------------------------------------------------------- Class B ---------------------------------------------------------------------------------------- Six Months Ended March 31, Year Ended September 30, 2002 --------------------------------------------------------------------------- (unaudited) 2001 2000 1999 1998 1997 ---------------------------------------------------------------------------------------- Net asset value, beginning of period .......... $ 14.11 $ 27.30 $ 21.32 $ 20.17 $ 27.83 $ 26.13 ---------------------------------------------------------------------------------------- Income From Investment Operations Net investment loss(a) ......... (.21) (.45) (.52) (.37) (.36) (.42) Net realized and unrealized gain (loss) on investment transactions ................. 3.41 (10.04) 6.50 2.53 (6.07) 6.23 ---------------------------------------------------------------------------------------- Net increase (decrease) in net asset value from operations .. 3.20 (10.49) 5.98 2.16 (6.43) 5.81 ---------------------------------------------------------------------------------------- Less: Distributions Distributions from net realized gains ............... -0- (.72) -0- (1.01) (1.23) (4.11) Distributions in excess of net realized gains ........... -0- (1.98) -0- -0- -0- -0- ---------------------------------------------------------------------------------------- Total distributions ............ -0- (2.70) -0- (1.01) (1.23) (4.11) ---------------------------------------------------------------------------------------- Net asset value, end of period . $ 17.31 $ 14.11 $ 27.30 $ 21.32 $ 20.17 $ 27.83 ======================================================================================== Total Return Total investment return based on net asset value(b) ........... 22.68% (41.88)% 28.05% 11.01% (24.03)% 26.70% Ratios/Supplemental Data Net assets, end of period (000's omitted) .............. $ 283,738 $ 257,161 $ 546,302 $ 587,919 $ 625,147 $ 503,037 Ratio to average net assets of: Expenses ..................... 2.69%(d) 2.57% 2.44%(c) 2.46%(c) 2.39%(c) 2.51% Net investment loss .......... (2.53)%(d) (2.36)% (2.16)% (1.68)% (1.36)% (1.73)% Portfolio turnover rate ........ 53% 109% 160% 91% 109% 135%
See footnote summary on page 29. - -------------------------------------------------------------------------------- 26 o ALLIANCE QUASAR FUND -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
---------------------------------------------------------------------------------------- Class C ---------------------------------------------------------------------------------------- Six Months Ended March 31, Year Ended September 30, 2002 --------------------------------------------------------------------------- (unaudited) 2001 2000 1999 1998 1997 ---------------------------------------------------------------------------------------- Net asset value, beginning of period .......... $ 14.13 $ 27.32 $ 21.34 $ 20.18 $ 27.85 $ 26.14 ---------------------------------------------------------------------------------------- Income From Investment Operations Net investment loss(a) ......... (.21) (.45) (.52) (.36) (.35) (.42) Net realized and unrealized gain (loss) on investment transactions ................. 3.41 (10.04) 6.50 2.53 (6.09) 6.24 ---------------------------------------------------------------------------------------- Net increase (decrease) in net asset value from operations .. 3.20 (10.49) 5.98 2.17 (6.44) 5.82 ---------------------------------------------------------------------------------------- Less: Distributions Distributions from net realized gains ............... -0- (.72) -0- (1.01) (1.23) (4.11) Distributions in excess of net realized gains ........... -0- (1.98) -0- -0- -0- -0- ---------------------------------------------------------------------------------------- Total distributions ............ -0- (2.70) -0- (1.01) (1.23) (4.11) ---------------------------------------------------------------------------------------- Net asset value, end of period . $ 17.33 $ 14.13 $ 27.32 $ 21.34 $ 20.18 $ 27.85 ======================================================================================== Total Return Total investment return based on net asset value(b) ........... 22.65% (41.85)% 28.02% 11.05% (24.05)% 26.74% Ratios/Supplemental Data Net assets, end of period (000's omitted) .............. $ 68,129 $ 60,925 $ 137,242 $ 168,120 $ 182,110 $ 145,494 Ratio to average net assets of: Expenses ..................... 2.68%(d) 2.56% 2.43%(c) 2.45%(c) 2.38%(c) 2.50% Net investment loss .......... (2.52)%(d) (2.35)% (2.12)% (1.66)% (1.35)% (1.72)% Portfolio turnover rate ........ 53% 109% 160% 91% 109% 135%
See footnote summary on page 29. - -------------------------------------------------------------------------------- ALLIANCE QUASAR FUND o 27 - -------------------- FINANCIAL HIGHLIGHTS - -------------------- Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
---------------------------------------------------------------------------------------- Advisor Class ---------------------------------------------------------------------------------------- Six Months Ended October 2, March 31, Year Ended September 30, 1996(e) to 2002 ----------------------------------------------------------- September 30, (unaudited) 2001 2000 1999 1998 1997 ---------------------------------------------------------------------------------------- Net asset value, beginning of period .......... $ 16.52 $ 31.07 $ 24.01 $ 22.37 $ 30.42 $ 27.82 ---------------------------------------------------------------------------------------- Income from Investment Operations Net investment loss(a) ......... (.14) (.29) (.30) (.15) (.09) (.17) Net realized and unrealized gain (loss) on investment transactions ................. 4.00 (11.56) 7.36 2.80 (6.73) 6.88 ---------------------------------------------------------------------------------------- Net increase (decrease) in net asset value from operations .. 3.86 (11.85) 7.06 2.65 (6.82) 6.71 ---------------------------------------------------------------------------------------- Less: Distributions Distributions from net realized gains ............... -0- (.72) -0- (1.01) (1.23) (4.11) Distributions in excess of net realized gains ........... -0- (1.98) -0- -0- -0- -0- ---------------------------------------------------------------------------------------- Total distributions ............ -0- (2.70) -0- (1.01) (1.23) (4.11) ---------------------------------------------------------------------------------------- Net asset value, end of period . $ 20.38 $ 16.52 $ 31.07 $ 24.01 $ 22.37 $ 30.42 ======================================================================================== Total Return Total investment return based on net asset value(b) ........... 23.37% (41.11)% 29.40% 12.16% (23.24)% 28.47% Ratios/Supplemental Data Net assets, end of period (000's omitted) .............. $ 76,576 $ 68,730 $ 135,414 $ 164,671 $ 175,037 $ 62,455 Ratio to average net assets of: Expenses ..................... 1.63%(d) 1.52% 1.39%(c) 1.42%(c) 1.38%(c) 1.58%(d) Net investment loss .......... (1.47)%(d) (1.31)% (1.08)% (.62)% (.32)% (.74)%(d) Portfolio turnover rate ........ 53% 109% 160% 91% 109% 135%
See footnote summary on page 29. - -------------------------------------------------------------------------------- 28 o ALLIANCE QUASAR FUND -------------------- FINANCIAL HIGHLIGHTS -------------------- (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) Annualized. (e) Commencement of distribution. - -------------------------------------------------------------------------------- ALLIANCE QUASAR FUND o 29 - ---------------------------- GLOSSARY OF INVESTMENT TERMS - ---------------------------- GLOSSARY OF INVESTMENT TERMS 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. capitalization or market capitalization The absolute dollar value of a company's outstanding stock. Capitalization is determined by multiplying the amount of publicly owned shares by the stock's current market value. equity Another term for stock. index A compilation of securities of similar types of companies that is used to measure the investment performance of securities within that specific market. An index is often used as a benchmark for a mutual fund. An investor cannot invest directly in an index. net asset value (NAV) The value of a mutual fund's total assets, minus its liabilities, divided by the number of shares outstanding. portfolio The collection of securities that make up a fund's or an investor's investments. 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. share A unit which represents ownership in a mutual fund or stock. small-capitalization or small-cap company Refers to a company with a relatively small market capitalization. - -------------------------------------------------------------------------------- 30 o ALLIANCE QUASAR FUND ---------------- ALLIANCE CAPITAL ---------------- ALLIANCE CAPITAL The Investment Professional's Choice Alliance Capital is a leading global investment management firm with approximately $452 billion in assets under management. In recognition of our far-reaching investment capabilities, Alliance Capital has been selected by employee benefit plans for 45 of the FORTUNE 100 companies and public retirement funds in 43 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 605 investment professionals in 36 cities and 19 countries. 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 3/31/02. - -------------------------------------------------------------------------------- ALLIANCE QUASAR FUND o 31 - -------------------------------- ALLIANCE CAPITAL AT YOUR SERVICE - -------------------------------- ALLIANCE CAPITAL AT YOUR SERVICE At Alliance Capital, shareholder satisfaction is among our top priorities. That is why we provide our shareholders with a wide variety of products and time-saving services. 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--a good way to diversify your assets. 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 E-Statements and Electronic Delivery Sign up to view your quarterly mutual fund, retirement or CollegeBoundfund(SM) account statements online, rather than wait to receive paper copies in the mail. You may also sign up for electronic delivery of your legal documents so you can receive your semi-annual and annual shareholder reports, prospectuses and prospectus supplements online. It's easy, convenient and saves you time and storage space. Sign up today at www.alliancecapital.com. Simply go to Individual Investor, U.S., Account Access. 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, and Watchlist information, order additional copies of statements and request additional year-end tax forms (available from February 1 to May 31). o The Alliance Advance A quarterly newsletter discussing investment strategies, economic news and other mutual fund matters. o Our Website at www.alliancecapital.com gives you a broad perspective of Alliance Capital. You can reach Alliance mutual fund and account information more directly from www.investor.alliancecapital.com. Either way, you'll have access to extensive Alliance fund data, answers to frequently asked questions, and financial planning tools and calculators. * 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. - -------------------------------------------------------------------------------- 32 o ALLIANCE QUASAR FUND - ------------------ 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) Clifford L. Michel(1) Donald J. Robinson(1) OFFICERS Bruce K. Aronow, 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 Global Investor 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. - -------------------------------------------------------------------------------- ALLIANCE QUASAR FUND o 33 - -------------------------------- ALLIANCE CAPITAL FAMILY OF FUNDS - -------------------------------- ALLIANCE CAPITAL FAMILY OF FUNDS U.S. Stock Funds Growth & Income Fund Growth Fund Health Care Fund Mid-Cap Growth Fund* Premier Growth Fund Quasar Fund Technology Fund Global & International Stock Funds All-Asia Investment Fund Global Small Cap Fund Greater China '97 Fund International Fund International Premier Growth Fund The Korean Investment Fund New Europe Fund Worldwide Privatization Fund AllianceBernstein Value Funds Disciplined Value Fund Global Value Fund International Value Fund Real Estate Investment Fund Small CapValue Fund Utility Income Fund Value Fund Select Investor Series Biotechnology Portfolio Premier Portfolio Small Cap Growth Portfolio Technology Portfolio Asset Allocation Funds Balanced Shares Conservative Investors Fund Growth Investors Fund Taxable Bond Funds Americas Government Income Trust** Corporate Bond Portfolio Emerging Market Debt Fund*** Global Strategic Income Trust High Yield Fund Multi-Market Strategy Trust Quality Bond Portfolio U.S. Government Portfolio Tax-Exempt Bond Funds National Intermediate Diversified Insured National Arizona California Intermediate California Insured California Florida Massachusetts Michigan Minnesota New Jersey New York Intermediate New York Ohio Pennsylvania Virginia Closed-End Funds All-Market Advantage Fund ACM Income Fund ACMGovernment Opportunity Fund ACMManaged Dollar Income Fund ACM Managed Income Fund ACM Municipal Securities Income Fund California Municipal Income Fund National Municipal Income Fund New York Municipal Income Fund The Southern Africa Fund The Spain Fund World Dollar Government 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. * The Alliance Fund changed its name to Alliance Mid-Cap Growth Fund on February 1, 2002. ** Alliance North American Government Income Trust changed its name to Alliance Americas Government Income Trust on March 1, 2002. *** Alliance Global Dollar Government Fund changed its name to Alliance Emerging Market Debt Fund on March 1, 2002. - -------------------------------------------------------------------------------- 34 o ALLIANCE QUASAR FUND NOTES - -------------------------------------------------------------------------------- ALLIANCE QUASAR FUND o 35 NOTES - -------------------------------------------------------------------------------- 36 o ALLIANCE QUASAR FUND Alliance Quasar Fund 1345 Avenue of the Americas New York, NY 10105 (800) 221-5672 Alliance Capital [LOGO](R) The Investment Professional's Choice (R) These registered service marks used under license from the owner, Alliance Capital Management L.P. 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