ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
SEMI-ANNUAL REPORT
FEBRUARY 28, 1997
LETTER TO SHAREHOLDERS
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
April 14, 1997
Dear Shareholder:
As you probably know, your Fund began operations on December 16, 1996. During
its first 10 weeks of operation, the Fund showed a 3.60% return, compared with
5.01% for the S&P 500 Stock Index. This short-term underperformance stems
largely from the sector positioning of the Fund, which is intended to reflect
longer-term judgments about the growth prospects of individual industries.
INVESTMENT RESULTS*
TOTAL RETURNS
DECEMBER 16, 1996-
FEBRUARY 28, 1997
------------------
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
Class A 3.60%
Class B 3.60%
Class C 3.60%
S&P 500 STOCK INDEX 5.01%
* THE FUND'S INVESTMENT RESULTS REPRESENT CUMULATIVE TOTAL RETURNS FOR THE
PERIOD SHOWN AND ARE BASED ON THE NET ASSET VALUE OF EACH SHARE CLASS AS OF
FEBRUARY 28, 1997. TOTAL RETURNS FOR ADVISOR CLASS SHARES WERE ALSO 3.60% FROM
INCEPTION THROUGH 2/28/97.
U.S. ECONOMIC AND STOCK MARKET OUTLOOK
U.S. financial markets have been relatively turbulent thus far in 1997, with
frequent single-day stock market declines of one percent or more. Meanwhile,
inflation concerns have driven long-term bond yields substantially higher.
Comments by Federal Reserve Chairman Alan Greenspan in December led to concerns
that stock prices had simply risen too far. As a result, uncertainty over the
course of Fed policy has continued to weigh on both stocks and bonds.
Despite this turbulence, we believe that the economic background for U.S.
stocks remains highly positive. The economy continues to grow without serious
inflation. For example, even with robust growth early this year and in late
1996, the core inflation rate fell to 2.5% for the year through February. The
non-inflationary nature of U.S. growth today is the result of several long term
trends which should remain in place for years to come. Rapid technological
change and strong capital spending continue to spur productivity gains, while
fierce global competition continues to restrain price increases. Combined with
a muted inventory cycle and greater flexibility in labor markets, this improved
inflation performance has, in turn, helped make the U.S. economy more stable by
preventing the emergence of once-typical cyclical excesses. As a result, we see
little reason why the current business expansion, despite its
greater-than-average length, should not continue through this year and beyond.
In the short-term, however, economic activity has become more robust than the
Federal Reserve would like. This has prompted a monetary tightening which the
Fed views as pre-emptive. However, even if the Fed does raise short-term rates
further, we do not expect a major shift in monetary policy along the lines of
the 3% 1994-95 tightening. This is because short-term interest rates are
already relatively high in inflation-adjusted terms. At the same time, a modest
tightening, such as we expect, poses relatively little risk of recession,
particularly when the forces driving economic growth are as global, as diverse,
and as deeply rooted as they are today.
Thus, our view of the economy remains relatively optimistic. We expect
continued growth with moderate inflation. While the Fed may tighten further, it
is unlikely to choke the expansion or seriously threaten earnings. On balance,
the economy should continue to provide a favorable context for stocks.
OPPORTUNITY AMID TURBULENCE
We believe that stocks as a whole, as measured by the S&P 500, are now close to
fair value relative to consensus growth expectations. Some sectors and many
individual stocks have declined far more than these averages, despite strong
long-term fundamentals in many cases. Many of these issues clearly offer
attractive opportunities.
The challenge over the remainder of 1997 is likely to be one of finding the
right balance between a positive long-term outlook and a more clouded
short-term picture. For example, the two sectors which have benefited most from
the structural changes driving growth today, technology
1
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
and finance, are both vulnerable to rising interest rates. The outlook for
economically sensitive stocks also becomes less clear when
stronger-than-expected growth is leading the Fed toward a tighter stance. Such
divergences between long-term and short-term forces can produce both volatility
and opportunity.
INVESTMENT STRATEGY
Despite these uncertainties, we continue to position your Fund to benefit from
a relatively robust economy. There are two main reasons for this. First, our
economic forecast calls for continued growth, with strength in both consumer
spending and business investment. Second, we believe that economically
sensitive stocks are undervalued. In our view, the market consensus still
underestimates the potential longevity of the current business expansion and
overestimates the risk of recession. Therefore, we believe the market has
overvalued stocks such as food and beverage companies whose earnings are viewed
as recession resistant, while creating opportunity in more economically
sensitive sectors.
As a result, we have increased positions in such consumer cyclical industries
as retailing and media, while retaining overweight positions in capital
equipment and related manufacturing industries. We have more moderately
overweighted positions in financial services and technology, although both
groups have struggled in the face of rising interest rates. The prospect of
more intense competition in some high-tech industries, like networking
equipment, has heightened uncertainty in technology. Our energy holdings are
roughly in line with the market. While the 1996 oil price increase has now
largely reversed itself, strong exploration activity and consolidation in
downstream operations should continue to drive strong earnings growth for oil
and oil service companies. We are underweighted in other commodity-related
industries such as paper and metals because we foresee little upward pressure
on basic commodity prices. We are maintaining well below market positions in
consumer non-durables (food, beverage, tobacco, household products, etc.). As
mentioned above, we believe these groups are largely overvalued.
Thank you for your interest and investment in Alliance/Regent Sector
Opportunity Fund. We look forward to reporting its progress to you in future
periods.
Sincerely,
John D. Carifa
Chairman and President
Gene Lancaric
Senior Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
2
INVESTMENT OBJECTIVE AND POLICIES
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
Alliance/Regent Sector Opportunity Fund seeks long-term growth of capital
through investment in U.S. equity securities. The Fund utilizes a "top-down"
investment approach focusing on economic analysis to determine portfolio
allocation among market sectors and industries, and pursues its objective by
investing in a diversified portfolio of securities of U.S. issuers that have a
market capitalization of at least one billion dollars.
INVESTMENT RESULTS
_______________________________________________________________________________
TOTAL RETURNS AS OF FEBRUARY 28, 1997
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* 3.60% -0.77%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* 3.60% -0.40%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* 3.60% 2.60%
The average annual total returns reflect reinvestment of dividends and/or
capital gain distributions in additional shares, with and without the effect of
the 4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (4% year 1; 3% year 2; 2% year 3; 1% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000. Total returns for Advisor Class shares may differ due to
different expenses associated with that class.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception date for Class A, B and C shares was 12/16/96.
3
TEN LARGEST HOLDINGS
FEBRUARY 28, 1997 (UNAUDITED)
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
COMPANY VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
NationsBank Corp. $ 155,675 4.4%
Travelers Group, Inc. 139,425 4.0
BankAmerica Corp. 113,750 3.2
Intel Corp. 113,500 3.2
Philip Morris Cos., Inc. 108,100 3.1
Phillips Petroleum Co. 103,437 2.9
Merck & Co., Inc. 101,200 2.9
American Express Co. 98,063 2.8
Johnson Controls, Inc. 92,675 2.6
General Electric Co. 92,588 2.6
$1,118,413 31.7%
MAJOR PORTFOLIO CHANGES
DECEMBER 16, 1996* TO FEBRUARY 28, 1997 (UNAUDITED)
_______________________________________________________________________________
SHARES
--------------------------------------
PURCHASES BOUGHT HOLDINGS 2/28/97
- -------------------------------------------------------------------------------
American Express Co. 1,500 1,500
BankAmerica Corp. 1,000 1,000
General Electric Co. 900 900
Intel Corp. 800 800
Johnson Controls, Inc. 1,100 1,100
Merck & Co., Inc. 1,100 1,100
NationsBank Corp. 2,600 2,600
Philip Morris Cos., Inc. 800 800
Phillips Petroleum Co. 2,500 2,500
Travelers Group, Inc. 2,600 2,600
* Commencement of operations.
4
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1997 (UNAUDITED)
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-96.5%
TECHNOLOGY-19.7%
COMPUTER HARDWARE-4.6%
COMPAQ Computer Corp. (a) 900 $ 71,325
Dell Computer Corp. (a) 700 49,787
Sun Microsystems, Inc. (a) 1,400 43,225
------------
164,337
COMPUTER SOFTWARE-8.0%
HBO & Co. 600 34,575
Informix Corp. (a) 1,400 24,325
Microsoft Corp. (a) 800 78,000
Netscape Communications Corp. (a) 900 26,213
Oracle Corp. (a) 1,900 74,575
Peoplesoft, Inc. (a) 1,100 43,862
------------
281,550
NETWORK SOFTWARE-1.9%
Cisco Systems, Inc. (a) 1,200 66,750
SEMI-CONDUCTOR CAPITAL EQUIPMENT-2.0%
Applied Materials, Inc. (a) 1,400 70,875
SEMI-CONDUCTOR COMPONENTS-3.2%
Intel Corp. 800 113,500
------------
697,012
FINANCE-17.8%
BANKING - MONEY CENTER-3.2%
BankAmerica Corp. 1,000 113,750
BANKING - REGIONAL-6.9%
Mellon Bank Corp. 1,100 88,412
NationsBank Corp. 2,600 155,675
------------
244,087
INSURANCE-4.9%
General Reinsurance Corp. 200 33,925
Travelers Group, Inc. 2,600 139,425
------------
173,350
MISCELLANEOUS-2.8%
American Express Co. 1,500 98,063
------------
629,250
CONSUMER SERVICES-15.8%
APPAREL-2.5%
Nike, Inc. Cl.B 1,200 86,250
BROADCASTING & CABLE-0.9%
Cox Communications, Inc. Cl.A (a) 1,500 30,187
ENTERTAINMENT & LEISURE-1.5%
Eastman Kodak Co. 600 53,775
PRINTING & PUBLISHING-4.3%
McGraw-Hill Cos., Inc. 1,400 72,625
New York Times Co. Cl.A 1,800 80,100
------------
152,725
RETAIL - GENERAL MERCHANDISE-6.6%
Federated Department Stores, Inc. (a) 2,200 76,450
Home Depot, Inc. 1,600 87,200
Sears, Roebuck & Co. 1,300 70,525
------------
234,175
------------
557,112
HEALTH CARE-9.1%
DRUGS-4.7%
Merck & Co., Inc. 1,100 101,200
Pfizer, Inc. 700 64,138
------------
165,338
MEDICAL PRODUCTS-1.3%
Medtronic, Inc. 700 45,325
MEDICAL SERVICES-3.1%
Columbia/HCA Healthcare Corp. 1,700 71,400
United Healthcare Corp. 800 39,900
------------
111,300
------------
321,963
5
PORTFOLIO OF INVESTMENTS
(CONTINUED)
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
ENERGY-8.2%
DOMESTIC INTEGRATED-2.9%
Phillips Petroleum Co. 2,500 $ 103,437
INTERNATIONAL-2.0%
Texaco, Inc. 700 69,212
OIL SERVICE-1.6%
Baker Hughes, Inc. 800 28,400
Schlumberger, Ltd. 300 30,188
------------
58,588
PIPELINES-1.7%
Enron Corp. 1,500 59,813
------------
291,050
CONSUMER STAPLES-6.6%
COSMETICS-2.3%
Avon Products, Inc. 1,400 81,550
HOUSEHOLD PRODUCTS-1.2%
Colgate-Palmolive Co. 400 41,400
TOBACCO-3.1%
Philip Morris Cos., Inc. 800 108,100
------------
231,050
CAPITAL GOODS-6.3%
ELECTRICAL EQUIPMENT-5.3%
General Electric Co. 900 92,588
Johnson Controls, Inc. 1,100 92,675
------------
185,263
MACHINERY-1.0%
Allied-Signal, Inc. 500 36,125
------------
221,388
TRANSPORTATION-3.3%
AIR FREIGHT-1.9%
Federal Express Corp. (a) 1,300 66,950
RAILROAD-1.4%
Burlington Northern Santa Fe 600 49,950
------------
116,900
AEROSPACE & DEFENSE-3.3%
AEROSPACE-3.3%
General Dynamics Corp. 500 33,625
United Technologies Corp. 1,100 82,775
------------
116,400
CONSUMER MANUFACTURING-2.0%
AUTO & RELATED-2.0%
Chrysler Corp. 1,100 37,263
General Motors Corp. 600 34,725
------------
71,988
MULTI INDUSTRY COMPANIES-1.8%
Tyco International, Ltd. 1,100 64,900
UTILITIES-1.4%
Texas Utilities Co. 1,200 48,450
BASIC INDUSTRY-1.2%
CHEMICALS-1.2%
Dow Chemical Co. 500 40,500
Total Common Stocks (cost $3,293,730) 3,407,963
TOTAL INVESTMENTS-96.5%
(cost $3,293,730) 3,407,963
Other assets less liabilities-3.5% 124,609
NET ASSETS-100% $3,532,572
(a) Non-income producing securities.
See notes to financial statements.
6
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997 (UNAUDITED)
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $3,293,730) $3,407,963
Cash 183,558
Deferred organization expenses 287,645
Receivable for capital stock sold 77,006
Receivable due from Advisor 17,983
Dividend receivable 5,218
Total assets 3,979,373
LIABILITIES
Organization expense payable 299,203
Payable for investment securities purchased 98,590
Distribution fee payable 546
Accrued expenses and other liabilities 48,462
Total liabilities 446,801
NET ASSETS $3,532,572
COMPOSITION OF NET ASSETS
Capital stock, at par $ 341
Additional paid-in capital 3,448,449
Accumulated net investment loss (30,049)
Accumulated net realized loss on investments (402)
Net unrealized appreciation of investments 114,233
$3,532,572
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share($544,413/
52,560 shares of capital stock issued and outstanding) $10.36
Sales charge--4.25% of public offering price .46
Maximum offering price $10.82
CLASS B SHARES
Net asset value and offering price per share($786,397/
75,916 shares of capital stock issued and outstanding) $10.36
CLASS C SHARES
Net asset value and offering price per share($5,137/
496 shares of capital stock issued and outstanding) $10.36
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share($2,196,625
/212,070 shares of capital stock issued and outstanding) $10.36
See notes to financial statements.
7
STATEMENT OF OPERATIONS
DECEMBER 16, 1996* TO FEBRUARY 28, 1997 (UNAUDITED)
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends $ 6,487
Interest 3,051 $ 9,538
EXPENSES
Advisory fee 3,507
Distribution fee - Class A 230
Distribution fee - Class B 579
Administrative 24,900
Custodian 19,341
Audit and legal 17,735
Amortization of organization expenses 11,808
Printing 8,732
Directors' fees 8,656
Transfer agency 6,319
Registration 828
Miscellaneous 1,481
Total expenses 104,116
Less: expenses waived and assumed by adviser
(See Note B) (64,529)
Net expenses 39,587
Net investment loss (30,049)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment transactions (402)
Net unrealized appreciation of investments 114,233
Net gain on investments 113,831
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 83,782
* Commencement of operations.
See notes to financial statements.
8
STATEMENT OF CHANGES IN NET ASSETS
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
DECEMBER 16, 1996*
TO
FEBRUARY 28, 1997
(UNAUDITED)
------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (30,049)
Net realized loss on investment transactions (402)
Net unrealized appreciation of investments 114,233
Net increase in net assets from operations 83,782
CAPITAL STOCK TRANSACTIONS
Net increase 3,348,490
Total increase 3,432,272
NET ASSETS
Beginning of period 100,300
End of period $3,532,572
* Commencement of operations.
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1997 (UNAUDITED)
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance/Regent Sector Opportunity Fund (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. Prior to commencement of operations on December 16, 1996, the Fund had
no operations other than the sale to Alliance Capital Management L.P. (the
"Adviser") of 10 shares each of Class A, Class B and Class C and 10,000 shares
of Advisor Class for the aggregate amount of $100 each on Class A, Class B and
Class C shares and $100,000 on the Advisor Class shares on October 7, 1996. The
fund offers Class A, Class B, Class C and Advisor Class shares. Class A shares
are sold with a front-end sales charge of up to 4.25% for purchases not
exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A
shares redeemed within one year of purchase will be subject to a contingent
deferred sales charge of 1%. Class B shares are currently sold with a
contingent deferred sales charge which declines from 4% to zero depending on
the period of time the shares are held. Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Class C shares are subject to a contingent deferred sales charge of
1% on redemptions made within the first year after purchase. Advisor Class
shares are sold without an initial or contingent deferred sales charge and are
not subject to ongoing distribution expenses. Advisor Class shares are offered
solely to investors participating in fee based programs. All four classes of
shares have identical voting, dividend, liquidation and other rights, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The following is a summary of
significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Securities traded on national securities exchanges are valued at the last
reported sales price, or, if no sale occurred, at the mean of the bid and asked
price at the close of such exchange. Over-the-counter securities not traded on
national securities exchanges are valued at the closing bid price. Debt
securities are valued at the mean of the bid and asked price except that debt
securities maturing within 60 days are valued at amortized cost which
approximates market value. Securities for which current market quotations are
not readily available (including investments which are subject to limitations
as to their sale) are valued at their fair value as determined in good faith by
the Board of Directors.
2. ORGANIZATION EXPENSES
Organization expenses of approximately $299,453 have been deferred and are
being amortized on a straight-line basis through December, 2001.
3. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Investment transactions are accounted for on the trade date and dividend income
is recorded on the ex-dividend date. Interest income is recorded on the accrual
basis. The Fund accretes discounts on debt securities owned. Investment gains
and losses are determined on the identified cost basis.
4. 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 applicable, to its
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles.
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 an annual rate of
.75% of the Fund's average daily net assets. Such fee is accrued daily and paid
monthly. As of January 13, 1997, the Adviser has agreed to voluntarily waive
its fees and bear certain expenses so that total expenses do not exceed on an
annual basis 3.00%, 3.70%, 3.70% and 2.70% of average net assets, respectively,
for the Class A, Class B, Class C and Advisor Class shares. For the period
ended February 28, 1997, such reimbursement amounted to $36,629.
10
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
Pursuant to the Advisory agreement, the Adviser provides certain legal and
accounting services for the Fund. For the period ended February 28, 1997, the
Adviser voluntarily agreed to waive its fees for such services.
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. No such
compensation was paid for the period ended February 28, 1997.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $113 from the sales of Class A shares for the period
ended February 28, 1997.
Brokerage commissions paid on securities transactions for the period ended
February 28, 1997, amounted to $2,305, none of which was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp., ("DLJ") an affiliate of the Adviser nor to DLJ directly.
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 for Class A,
Class B and Class C. Under the Agreement, the Fund pays a distribution fee to
the Distributor at an annual rate of up to .30 of 1% of the Fund's average
daily net assets attributable to Class A shares and 1.00% of the average daily
net assets attributable to both Class B and Class C shares. There is no
distribution fee on Advisor Class shares. Such fee is accrued daily and paid
monthly. The Agreement provides that the Distributor will use such payments in
their entirety for distribution assistance and promotional activities. The
Distributor has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $76,551 and $10,125, for Class B and 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 Advisor 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 $3,362,792 and $68,660,
respectively, for the period ended February 28, 1997. There were no purchases
or sales of U.S. government or government agency obligations for the period
ended February 28, 1997. At February 28, 1997 the cost of securities for
federal income tax purposes was the same as the cost for financial reporting
purposes. Accordingly, gross unrealized appreciation of investments was
$198,128 and gross unrealized depreciation of investments was $83,895 resulting
in net unrealized appreciation of $114,233.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 12,000,000,000 shares of $.001 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class. Each class consists of 3,000,000,000 authorized shares. Transactions in
capital stock were as follows:
SHARES AMOUNT
------------------ ------------------
DECEMBER 16, 1996* DECEMBER 16, 1996*
TO TO
FEBRUARY 28, 1997 FEBRUARY 28, 1997
(UNAUDITED) (UNAUDITED)
------------------ ------------------
CLASS A
Shares sold 52,550 $ 528,369
CLASS B
Shares sold 75,906 $ 784,415
CLASS C
Shares sold 486 $ 5,043
ADVISOR CLASS
Shares sold 202,070 $2,030,663
* Commencement of operations.
12
FINANCIAL HIGHLIGHTS
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
ADVISOR
CLASS A CLASSB CLASS C CLASS
DECEMBER 16, DECEMBER 16, DECEMBER 16, DECEMBER 16,
1996(a) 1996(a) 1996(a) 1996(a)
TO TO TO TO
FEB. 28,1997 FEB. 28,1997 FEB. 28,1997 FEB. 28,1997
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (.14) (.02) (.02) (.14)
Net realized and unrealized gain on
investments .50 .38 .38 .50
Net increase in net asset value from
operations .36 .36 .36 .36
Net asset value, end of period $10.36 $10.36 $10.36 $10.36
TOTAL RETURN
Total investment return based on net
asset value (c) 3.60% 3.60% 3.60% 3.60%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $544 $786 $5 $2,197
Ratio to average net assets of:
Expenses, under current cap (d)(e) 3.00% 3.70% 3.70% 2.70%
Expenses, net of waivers/
reimbursements (d)(f) 9.30% 3.70% 13.90% 9.10%
Net investment loss (d) (7.42)% (1.59)% (10.61)% (7.04)%
Portfolio turnover rate 3% 3% 3% 3%
Average commission rate $.0500 $.0500 $.0500 $.0500
</TABLE>
(a) Commencement of operations.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(d) Annualized.
(e) Expense cap in effect as of January 13, 1997.
(f) Net of expenses waived/reimbursed by the Adviser. Absent such
waivers/reimbursements the expense ratios would have been 23.22%, 19.26%,
29.21%, and 22.57% for Class A, Class B, Class C and Advisor Class Shares,
respectively, for the period ending February 28, 1997.
13
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
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)
JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
DONALD J. ROBINSON (1)
OFFICERS
EUGENE L. LANCARIC, SENIOR VICE PRESIDENT
THOMAS BARDONG, VICE PRESIDENT
DANIEL V. PANKER, VICE PRESIDENT
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, CONTROLLER
EDMUND P. BERGAN, JR., SECRETARY
CUSTODIAN
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, MA 02110
INDEPENDANT AUDITORS
ERNST & YOUNG LLP
787 SEVENTH AVENUE
New York, NY 10019
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-free 1-(800) 221-5672
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
(1) Member of the audit committee.
Distribution of this report other than to shareholders must be preceded or
accompanied by the Fund's current prospectus, which contains further
information about the Fund.
R These registered service marks used under license from the owner, Alliance
Capital Management L.P.
14
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Small Cap Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
Alliance Global Environment Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
15
