ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
ANNUAL REPORT
AUGUST 31, 1998
LETTER TO SHAREHOLDERS ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
October 28, 1998
Dear Shareholder:
This past summer we informed you of Alliance's determination that it would be
in the shareholders' best interests to dissolve the Alliance/Regent Sector
Opportunity Fund. In our letter dated July 17, 1998, we advised you that the
Fund had been unable to grow to an asset size sufficient to maintain a
competitive expense ratio, that there was little prospect for growing the Fund
in the foreseeable future, and that the Fund's relatively small asset size made
its continued operation unfeasible. We therefore encouraged shareholders to
exchange or redeem their shares as soon as possible. We noted that all
shareholders had the opportunity to exchange out of the Fund and into one of
Alliance's other mutual funds with no sales charge. We also noted that, of
course, shareholders had the option to redeem their shares for cash and to
invest in other investment vehicles.
Since our July letter, almost all of the shareholders of the Fund have either
redeemed their shares or exchanged into other Alliance funds. Only a few
shareholders, including yourself, have yet to take action. Subsequent to the
Fund's fiscal year end, your Fund moved almost entirely to a cash position.
Because of the Fund's extremely small current asset size, presently $1.8
million, and because of the Fund's need to remain in cash in order to satisfy
continuing redemption requests, it is very important for you to take action on
your investment now. It will be necessary for the Fund to continue to maintain
its portfolio in cash to satisfy redemptions, and therefore the Fund will be
unable to take advantage of equity investment opportunities. Please feel free
to contact Alliance Fund Services, Inc. at 1-(800) 221-5672 if you have any
questions or if we can assist you in any way with your investment. Thank you.
Sincerely yours,
Alliance Capital Management
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.
1
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
_______________________________________________________________________________
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF AUGUST 31, 1998
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 13.70% 8.86%
Since Inception* 20.86% 17.85%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 12.90% 8.90%
Since Inception* 20.13% 18.58%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
Since Inception* 20.13% 20.13%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END
(JUNE 30, 1998)
CLASS A CLASS B CLASS C
------- ------- -------
One Year 29.55% 30.48% 33.40%
Since Inception* 29.92% 31.20% 32.82%
The Fund's investment results represent average annual total returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) the effect of
the 4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (4% year 1, 3% year 2, 2% year 3, 1% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000. Total return for Advisor Class shares will differ due to
different expenses associated with that class.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception: 12/16/96 for all share classes.
2
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
GROWTH OF A $10,000 INVESTMENT
12/31/96* TO 8/31/98
$14,000
$13,000
$12,000
$11,000
$10,000
$9,000
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND CLASS A: $13,397
S&P500: $13,288
12/31/96 8/31/97 8/31/98
This chart illustrates the total value of an assumed $10,000 investment in
Alliance/Regent Sector Opportunity Fund Class A shares (from 12/31/96 to
8/31/98) as compared to the performance of an appropriate broad-based index.
The chart reflects the deduction of the maximum 4.25% sales charge from the
initial $10,000 investment in the Fund and assumes the reinvestment of
dividends and capital gains. Performance for Class B, Class C and Advisor Class
shares will vary from the results shown above due to differences in expenses
charged to those classes. Past performance is not indicative of future results,
and is not representative of future gain or loss in capital value or dividend
income.
The unmanaged Standard &Poor's 500 Stock Index includes 500 U.S. stocks and is
a common measure of the performance of the overall U.S. stock market.
When comparing Alliance/Regent Sector Opportunity Fund to the index shown
above, you should note that no charges or expenses are reflected in the
performance of the index.
Alliance/Regent Sector Opportunity Fund
Standard & Poor's 500 Stock Index
* Month-end nearest to Fund's inception date of 12/16/96.
3
TEN LARGEST HOLDINGS
AUGUST 31, 1998 ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
Cisco Systems, Inc. $ 45,031 2.1%
Tyco International, Ltd. 44,400 2.1
First Union Corp. 43,650 2.0
Home Depot, Inc. 42,350 2.0
Bristol-Myers Squibb Co. 39,150 1.8
Philip Morris Cos., Inc. 37,406 1.8
United Technologies Corp. 36,281 1.7
Merck & Co., Inc. 34,781 1.6
NationsBank Corp. 34,200 1.6
General Electric Co. 32,000 1.5
$389,249 18.2%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED AUGUST 31, 1998
_______________________________________________________________________________
SHARES*
HOLDINGS
PURCHASES BOUGHT 8/31/98
- -------------------------------------------------------------------------------
Associates First Capital Corp. Cl.A 250 250
Guidant Corp. 200 200
H.F. Ahmanson & Co. 500 500
HOLDINGS
SALES SOLD 8/31/98
- -------------------------------------------------------------------------------
Ameritech Corp. 7,000 600
Bell Atlantic Corp. 3,400 -0-
Dell Computer Corp. 1,100 300
General Electric Co. 6,100 400
Home Depot, Inc. 5,700 1,100
Merck & Co., Inc. 2,800 300
Microsoft Corp. 4,500 300
Pfizer, Inc. 2,900 200
Travelers Group, Inc. 5,400 600
Tyco International, Ltd. 5,100 800
* Adjusted for stock splits.
4
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1998 ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-51.8%
FINANCE-11.2%
BANKING - MONEY CENTER-2.1%
BankAmerica Corp. 300 $ 19,219
Chase Manhattan Corp. 500 26,500
------------
45,719
BANKING - REGIONAL-5.1%
First Union Corp. 900 43,650
Mellon Bank Corp. 600 31,200
NationsBank Corp. 600 34,200
------------
109,050
INSURANCE-1.2%
Travelers Group, Inc. 600 26,625
MORTGAGE BANKING-1.3%
H.F. Ahmanson & Co. 500 26,656
MISCELLANEOUS-1.5%
Associates First Capital Corp. Cl.A 250 14,781
MBNA Corp. 750 17,625
------------
32,406
------------
240,456
TECHNOLOGY-10.4%
COMMUNICATIONS EQUIPMENT-0.8%
Lucent Technologies, Inc. 100 7,088
Northern Telecom, Ltd. 200 9,550
------------
16,638
COMPUTER HARDWARE-2.5%
Compaq Computer Corp. 800 22,350
Dell Computer Corp. (a) 300 30,000
------------
52,350
COMPUTER SOFTWARE-4.0%
Computer Associates International, Inc. 350 9,450
HBO & Co. 1,200 25,500
Microsoft Corp. (a) 300 28,781
PeopleSoft, Inc. (a) 800 22,500
------------
86,231
NETWORKING SOFTWARE-2.1%
Cisco Systems, Inc. (a) 550 45,031
SEMI-CONDUCTOR COMPONENTS-1.0%
Intel Corp. 300 21,356
------------
221,606
CONSUMER SERVICES-6.5%
AIRLINES-0.9%
Delta Air Lines, Inc. 200 20,400
BROADCASTING & CABLE-1.0%
Cox Communications, Inc. Cl.A (a) 500 21,000
PRINTING & PUBLISHING-0.7%
New York Times Co. Cl.A 500 14,500
RETAIL - GENERAL MERCHANDISE-3.9%
Dayton Hudson Corp. 800 28,800
Federated Department Stores, Inc. (a) 300 13,069
Home Depot, Inc. 1,100 42,350
------------
84,219
------------
140,119
HEALTH CARE-6.2%
DRUGS-4.3%
Bristol-Myers Squibb Co. 400 39,150
Merck & Co., Inc. 300 34,781
Pfizer, Inc. 200 18,600
------------
92,531
MEDICAL PRODUCTS-1.5%
Guidant Corp. 200 12,350
Medtronic, Inc. 400 20,550
------------
32,900
5
PORTFOLIO OF INVESTMENTS (CONTINUED)
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
MEDICAL SERVICES-0.4%
United Healthcare Corp. 200 $ 7,225
------------
132,656
CAPITAL GOODS-5.7%
ELECTRICAL EQUIPMENT-2.7%
General Electric Co. 400 32,000
Johnson Controls, Inc. 600 25,688
------------
57,688
MISCELLANEOUS-3.0%
Allied-Signal, Inc. 800 27,450
United Technologies Corp. 500 36,281
------------
63,731
------------
121,419
CONSUMER STAPLES-3.9%
COSMETICS-1.5%
Avon Products, Inc. 500 31,438
HOUSEHOLD PRODUCTS-0.7%
Colgate-Palmolive Co. 200 14,425
TOBACCO-1.7%
Philip Morris Cos., Inc. 900 37,406
------------
83,269
ENERGY-2.2%
INTERNATIONAL-0.8%
Texaco, Inc. 300 16,669
OIL SERVICE-0.8%
Baker Hughes, Inc. 500 9,125
Schlumberger, Ltd. 200 8,762
------------
17,887
PIPELINES-0.6%
Enron Corp. 300 12,694
------------
47,250
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
MULTI-INDUSTRY COMPANY-2.1%
Tyco International, Ltd. 800 $ 44,400
UTILITIES-1.9%
ELECTRIC & GAS UTILITY-0.6%
Texas Utilities Co. 300 12,750
TELEPHONE UTILITY-1.3%
Ameritech Corp. 600 28,275
------------
41,025
TRANSPORTATION-1.1%
AIR FREIGHT-0.7%
FDX Corp. (a) 300 15,019
RAILROAD-0.4%
Burlington Northern Santa Fe Corp. 100 9,306
------------
24,325
CONSUMER MANUFACTURING-0.6%
AUTO & RELATED-0.6%
Ford Motor Co. 300 13,200
Total Common Stocks (cost $1,173,450) 1,109,725
TIME DEPOSIT-58.4%
State Street Cayman Islands
5.25%, 9/01/98
(amortized cost $1,250,000) $1,250 1,250,000
TOTAL INVESTMENTS-110.2%
(cost $2,423,450) 2,359,725
Other assets less liabilities-(10.2%) (218,217)
NET ASSETS-100% $2,141,508
(a) Non-income producing security.
See notes to financial statements.
6
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998 ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $2,423,450) $2,359,725
Cash 274
Deferred organization expenses 164,517
Dividends and interest receivable 3,483
Receivable due from Adviser 2,335
Total assets 2,530,334
LIABILITIES
Organization expense payable 220,308
Payable for capital stock redeemed 82,264
Distribution fee payable 2,084
Accrued expenses 84,170
Total liabilities 388,826
NET ASSETS $2,141,508
COMPOSITION OF NET ASSETS
Capital stock, at par $159
Additional paid-in capital (740,988)
Undistributed net investment income 3,620
Accumulated net realized gain on investment transactions 2,942,442
Net unrealized depreciation of investments (63,725)
$2,141,508
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($78,225/5,749 shares of capital stock issued
and outstanding) $13.61
Sales charge--4.25% of public offering price .60
Maximum offering price $14.21
CLASS B SHARES
Net asset value and offering price per share
($1,718,637/127,549 shares of capital stock issued
and outstanding) $13.47
CLASS C SHARES
Net asset value and offering price per share
($205,975/15,295 shares of capital stock issued
and outstanding)
$13.47
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($138,671/10,149 shares of capital stock issued
and outstanding)
$13.66
See notes to financial statements.
7
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1998 ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $72) $ 101,060
Interest 11,326 $ 112,386
EXPENSES
Advisory fee 63,218
Distribution fee - Class A 2,607
Distribution fee - Class B 26,413
Distribution fee - Class C 3,814
Administrative 122,000
Custodian 97,403
Amortization of organization expenses 51,252
Audit and legal 39,033
Registration 33,738
Printing 30,078
Directors' fees 24,000
Transfer agency 22,575
Miscellaneous 380
Total expenses 516,511
Less: expenses waived and reimbursed
by Adviser (see Note B) (256,092)
Net expenses 260,419
Net investment loss (148,033)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on investment transactions 3,128,104
Net change in unrealized appreciation of investments (1,048,688)
Net gain on investments 2,079,416
NET INCREASE IN NET ASSETS FROM OPERATIONS $1,931,383
See notes to financial statements.
8
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
YEAR ENDED DEC. 16, 1996(A)
AUGUST 31, TO
1998 AUGUST 31, 1997
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (148,033) $ (75,149)
Net realized gain on
investment transactions 3,128,104 164,809
Net change in unrealized
appreciation of investments (1,048,688) 984,963
Net increase in net assets
from operations 1,931,383 1,074,623
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (13,835) -0-
Class B (40,054) -0-
Class C (5,448) -0-
Advisor Class (71,572) -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) (6,992,568) 6,158,679
Total increase (decrease) (5,192,094) 7,233,302
NET ASSETS
Beginning of period 7,333,602 100,300
End of period (including undistributed
net investment income of $3,620 and
$2,935, respectively) $ 2,141,508 $ 7,333,602
(a) Commencement of operations.
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998 ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance/Regent Sector Opportunity Fund, Inc. (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 to investors participating in fee based programs and to
certain retirement plan accounts. All four classes of shares have identical
voting, dividend, liquidation and other rights, except that each class bears
different distribution expenses and has exclusive voting rights with respect to
its distribution plan. The financial statements have been prepared in
conformity with generally accepted accounting principles which require
management to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities in the financial statements and amounts of
income and expenses during the reporting period. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange are generally
valued at the last reported sales price or if no sale occurred, at the mean of
the closing bid and asked prices on that day. Securities traded in the
over-the-counter market, including securities traded on a national securities
exchange whose primary market is believed to be over-the-counter, are valued at
the mean of the current bid and asked prices. Readily marketable debt
securities are valued at the last sale price. Securities which mature in 60
days or less are valued at amortized cost, unless this method does not
represent fair value. Securities for which current market quotations are not
readily available are valued at their fair value as determined in good faith
by, or in accordance with procedures adopted by, the Board of Directors. Fixed
income securities may be valued on the basis of prices obtained from a pricing
service when such prices are believed to reflect the fair market value of such
securities.
2. ORGANIZATION EXPENSES
Organization expenses of approximately $258,000 have been deferred and are
being amortized on a straight-line basis through December, 2001.
3. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued daily. Dividend income is recorded on ex-dividend
date. Investment transactions are accounted for on the date securities are
purchased or sold. The Fund accretes discount as adjustment to interest income.
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 any, to its
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
5. 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.
10
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Income dividends and capital gains distributions are determined in accordance
with federal tax regulations and may differ from those determined in accordance
with generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts based
on their federal tax basis treatment; temporary differences, do not require
such reclassification. During the current fiscal year, permanent differences,
primarily due to a net operating loss, resulted in a net decrease in
accumulated net investment loss and a corresponding decrease in accumulated net
realized gains on investment transactions. This reclassification had no effect
on net assets.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser") an advisory fee at 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 year ended
August 31, 1998, such waiver and reimbursement amounted to $116,092.
Pursuant to the advisory agreement, the Adviser provides certain legal and
accounting services for the Fund. For the year ended August 31, 1998, the
Adviser voluntarily agreed to waive its fees in the amount of $122,000 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. For the year ended
August 31, 1998 the transfer agent agreed to waive fees of $18,000 for such
services.
Alliance Fund Distributors, Inc., (the "Distributor"), a wholly-owned
subsidiary of the Adviser, serves as the Distributor of the Fund's shares. The
Distributor received front-end sales charges of $30,402 and $138 in contingent
deferred sales charges imposed upon redemptions by shareholders of Class B and
Class C shares for the year ended August 31, 1998.
Brokerage commissions paid on investment transactions for the year ended August
31, 1998, amounted to $12,051, none of which was paid to Donaldson, Lufkin &
Jenrette Securities Corp., an affiliate of the Adviser.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30% of the Fund's average daily net assets attributable to Class
A shares and 1% of the average daily net assets attributable to both Class B
and Class C shares. There is no distribution fee on the Advisor Class shares.
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
$436,975 and $84,918, 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 Adviser
may use its own resources to finance the distribution of the Fund's shares.
11
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $4,615,062 and $12,840,300,
respectively, for the year ended August 31, 1998. There were no purchases or
sales of U.S. government or government agency obligations for the year ended
August 31, 1998.
At August 31, 1998, 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 $85,661 and gross
unrealized depreciation of investments was $149,386 resulting in net unrealized
depreciation of $63,725.
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 shares. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
DECEMBER 16, DECEMBER 16,
1996(A) 1996(A)
YEAR ENDED TO YEAR ENDED TO
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
1998 1997 1998 1997
------------ ------------ -------------- --------------
CLASS A
Shares sold 10,495 67,868 $ 134,361 $ 691,960
Shares issued in
reinvestment of
distributions 1,113 -0- 13,715 -0-
Shares redeemed (70,196) (3,541) (1,024,838) (40,439)
Net increase
(decrease) (58,588) 64,327 $ (876,762) $ 651,521
CLASS B
Shares sold 29,379 200,255 $ 388,611 $ 2,105,855
Shares issued in
reinvestment of
distributions 1,272 -0- 15,609 -0-
Shares redeemed (99,951) (3,416) (1,505,655) (41,258)
Net increase
(decrease) (69,300) 196,839 $ (1,101,435) $ 2,064,597
CLASS C
Shares sold 14,002 18,204 $ 179,778 $ 191,273
Shares issued in
reinvestment of
distributions 401 -0- 4,923 -0-
Shares redeemed (17,092) (230) (252,736) (2,537)
Net increase
(decrease) (2,689) 17,974 $ (68,035) $ 188,736
ADVISOR CLASS
Shares sold 79,188 314,221 $ 999,501 $ 3,256,599
Shares issued in
reinvestment of
distributions 5,631 -0- 69,601 -0-
Shares redeemed (398,668) (223) (6,015,438) (2,774)
Net increase
(decrease) (313,849) 313,998 $ (4,946,336) $ 3,253,825
(a) Commencement of operations.
12
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
NOTE F: BANK BORROWING
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility") 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 the
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended August 31, 1998.
13
FINANCIAL HIGHLIGHTS ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A
---------------------------------
DECEMBER 16,
1996(A)
YEAR ENDED TO
AUGUST 31, AUGUST 31,
1998 1997
------------- -------------
Net asset value, beginning of period $12.16 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (.24) (.21)
Net realized and unrealized gain on
investment transactions 1.89 2.37
Net increase in net asset value from
operations 1.65 2.16
LESS: DISTRIBUTIONS
Distributions from net realized gains (.20) -0-
Net asset value, end of period $13.61 $12.16
TOTAL RETURN
Total investment return based on net
asset value (c) 13.70% 21.60%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $78 $783
Ratios to average net assets of:
Expenses, under current cap (d) 3.00% 3.00%(e)
Expenses, net of waivers/reimbursements (f) 3.00% 4.13%(e)
Net investment loss (1.69)% (2.51)%(e)
Portfolio turnover rate 58% 27%
See footnote summary on page 17.
14
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS B
---------------------------------
DECEMBER 16,
1996(A)
YEAR ENDED TO
AUGUST 31, AUGUST 31,
1998 1997
------------- -------------
Net asset value, beginning of period $12.12 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (.32) (.18)
Net realized and unrealized gain on
investment transactions 1.87 2.30
Net increase in net asset value from
operations 1.55 2.12
LESS: DISTRIBUTIONS
Distributions from net realized gains (.20) -0-
Net asset value, end of period $13.47 $12.12
TOTAL RETURN
Total investment return based on net
asset value (c) 12.90% 21.20%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,719 $2,386
Ratios to average net assets of:
Expenses, under current cap (d) 3.70% 3.70%(e)
Expenses, net of waivers/reimbursements (f) 3.70% 3.70%(e)
Net investment loss (2.33)% (2.15)%(e)
Portfolio turnover rate 58% 27%
See footnote summary on page 17.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
---------------------------------
DECEMBER 16,
1996(A)
YEAR ENDED TO
AUGUST 31, AUGUST 31,
1998 1997
------------- -------------
Net asset value, beginning of period $12.12 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (.33) (.19)
Net realized and unrealized gain on
investment transactions 1.88 2.31
Net increase in net asset value from
operations 1.55 2.12
LESS: DISTRIBUTIONS
Distributions from net realized gains (.20) -0-
Net asset value, end of period $13.47 $12.12
TOTAL RETURN
Total investment return based on net
asset value (c) 12.90% 21.20%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $206 $218
Ratios to average net assets of:
Expenses, under current cap (d) 3.70% 3.70%(e)
Expenses, net of waivers/reimbursements (f) 3.70% 3.70%(e)
Net investment loss (2.33)% (2.24)%(e)
Portfolio turnover rate 58% 27%
See footnote summary on page 17.
16
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
ADVISOR CLASS
---------------------------------
DECEMBER 16,
1996(A)
YEAR ENDED TO
AUGUST 31, AUGUST 31,
1998 1997
------------- -------------
Net asset value, beginning of period $12.18 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (.19) (.19)
Net realized and unrealized gain on
investment transactions 1.87 2.37
Net increase in net asset value from
operations 1.68 2.18
LESS: DISTRIBUTIONS
Distributions from net realized gains (.20) -0-
Net asset value, end of period $13.66 $12.18
TOTAL RETURN
Total investment return based on net
asset value (c) 13.92% 21.80%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $139 $3,947
Ratios to average net assets of:
Expenses, under current cap (d) 2.70% 2.70%(e)
Expenses, net of waivers/reimbursements (f) 2.70% 3.82%(e)
Net investment loss (1.39)% (2.19)%(e)
Portfolio turnover rate 58% 27%
(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 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.
(d) Expense cap in effect as of January 13, 1997.
(e) Annualized.
(f) Net of expenses waived/reimbursed by the Adviser. Absent such
waivers/reimbursements the expense ratios would have been 6.05% and 11.77% for
Class A, 6.75% and 10.52% for Class B, 6.72% and 9.99% for Class C and 5.73%
and 11.16% for Advisor Class for the year ended August 31, 1998 and the period
December 16, 1996 to August 31, 1997.
17
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Alliance/Regent Sector Opportunity Fund, Inc., including the portfolio of
investments, as of August 31, 1998, and the related statement of operations for
the year then ended and the statement of changes in net assets and financial
highlights for the year then ended and for the period from December 16, 1996
(commencement of operations) to August 31, 1997. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1998, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance/Regent Sector Opportunity Fund, Inc. at August 31, 1998, the results
of its operations for the year then ended, and the changes in its net assets
and the financial highlights for the year then ended and for the period from
December 16, 1996 to August 31, 1997, in conformity with generally accepted
accounting principles.
New York, New York
October 12, 1998
18
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN
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
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
EUGENE J. LANCARIC, SENIOR VICE PRESIDENT
THOMAS BARDONG, VICE PRESIDENT
CHRISTOPHER R. THOMPSON, VICE PRESIDENT
DANIEL V. PANKER, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, CONTROLLER
CUSTODIAN
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, MA 02110
INDEPENDENT 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.
19
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Environment Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
GROWTH & INCOME
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Real Estate Investment Fund
Alliance Strategic Balanced Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
20
