ALLIANCE TECHNOLOGY FUND
SEMI-ANNUAL REPORT
MAY 31, 1996
LETTER TO SHAREHOLDERS ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
July 8, 1996
Dear Shareholder:
We are pleased to report to you on the performance and investment activity of
Alliance Technology Fund for the six months ended May 31, 1996. The correction
among technology stocks that began in September 1995 persisted through January
1996, causing both the Fund and the overall technology sector, as represented
by the Pacific Stock Exchange (PSE) High-Tech Index, to underperform the
broader S&P 500-Stock Index this period (see the table below).
INVESTMENT RESULTS*
SIX MONTHS ENDED MAY 31, 1996
CUMULATIVE
TOTAL RETURN ENDING NAV
------------ ----------
ALLIANCE TECHNOLOGY FUND
Class A 6.75% $47.05
Class B 6.36% $45.94
Class C 6.33% $45.94
S&P 500-STOCK INDEX 11.76%
PSE HIGH-TECH INDEX 7.58%
* THE FUND'S INVESTMENT RESULTS ARE CUMULATIVE TOTAL RETURNS FOR THE PERIOD
AND ARE BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES AS OF 5/31/96. 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 AND ITS COMPARATIVE INDICES INCLUDE
THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE PERIOD. ALL COMPARATIVE
INDICES ARE UNMANAGED.
ADDITIONAL PERFORMANCE INFORMATION APPEARS ON PAGE 4.
With many technology stocks posting sharp price declines, we positioned the
portfolio less aggressively and took advantage of buying opportunities to
increase our holdings of reasonably valued issues. These actions helped to
preserve the gains of the previous 12 months while laying the groundwork for
future appreciation. We are pleased to report that our strategy has proved
effective so far in 1996. The Fund's 12.97% cumulative total return on Class A
shares (12.65%-Class B; 12.68%-Class C) from December 31, 1995, through May 31,
1996, compares favorably with the 9.22% return for the S&P 500 stocks and the
10.78% return for the PSE High-Tech Index for the same period.
ECONOMIC OVERVIEW
Technology spending continues to be robust worldwide. Technology products and
services in the United States are being supported by strong consumer and
capital spending as well as strengthening industrial production. In
international markets, infrastructure building, productivity gains, and price
elasticity are more important underpinnings for technology than overall
economic growth. As technology products and services become more pervasive,
spending on the sector is exerting an increasingly important influence on
economic activity. For example, according to the U.S. Bureau of Economic
Analysis, technology expenditures as a percentage of gross domestic product in
the United States are approaching 10%, more than double the level achieved in
the late 1970s. Similar dynamics exist in international markets, where, in many
cases, acceptance and deployment of technology has been even more rapid. Simply
put, technology is becoming an important driver of economic growth around the
world.
PORTFOLIO STRATEGY
The tactics of near-term portfolio implementation-cash usage, specific stock
selection, industry weightings, and sensitivity to valuation parameters, among
other things-are always changing. However, a portfolio manager's investment
approach or the "style" used to maximize returns in a responsible way over the
long term should change infrequently, if at all. Several years ago, we adopted
and continue to follow strategies which we believe have benefited the Fund in
two ways: higher returns and reduced volatility. These strategies are fairly
straightforward and include the following:
RESEARCH ANALYSIS. Rather than react to constant "sound bites" that
presumably describe important short-term change, we believe that for consistent
results over time, selecting (and selling) stocks on the basis of fundamental
research analysis and frequent contact with corporate managements is the best
way to maximize long-term investment returns.
1
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
CASH. Raising large amounts of cash seems like an easy way to protect a
portfolio if one is concerned about the stock market's trend or near-term
valuation levels. Nevertheless, timing the market is a dangerous practice, so
we don't do it. However, we do adjust individual holdings or the mix of
particular sectors within technology when valuation levels seem to dictate
those changes.
THEMES. There are now thousands of publicly traded technology companies in
the U.S., in dozens of different business areas; tracking even a large minority
of these situations has become impractical. Important trends within technology
can be analyzed, however, and these secular themes do not change frequently.
Identifying those trends as early as possible and selecting the companies which
benefit from them is a central part of our investment philosophy. Examples of
some current themes include wireless communications, the Internet and
Intranets, outsourcing, networking, storage, custom semiconductors,
client/server software, software tools, database technology, and personal
computers.
FRANCHISE COMPANIES. With so many companies in technology to choose from,
portfolio managers can be very selective about the types of corporations in
which they invest. Large and fairly conservative companies with modest growth
rates represent one extreme; emerging companies exploiting a new theme and
growing rapidly but still building their management, distribution, and
technology infrastructures would be another. We generally avoid the first type
but do invest in the second. The majority of the Fund's assets, however, are
focused between those extremes-"sophomore" companies with above-average growth
rates which have demonstrated both management excellence and staying power.
These are companies which have built a brand image or meaningful customer base,
are exploiting an emerging theme, and have the opportunity to become the large
companies of tomorrow.
TURNOVER. Each of the portfolio management characteristics mentioned above
leads to one other important factor: lower portfolio turnover. An important
benefit of this over time is a real commitment to the secular themes our
research has identified and the companies best positioned to benefit from those
themes. We believe that limited portfolio turnover should continue to yield
superior results over time.
FUNDAMENTAL OUTLOOK
"We believe that as the technology sector becomes more diverse and impacts a
larger number of end markets while expanding internationally, the vicious
profit cycles of the past should become more moderate (though this is not
necessarily the consensus view)." This quote is from our shareholder letter of
six months ago. It's worth revisiting because commentary in the media and the
investment community since then has focused on the slowdown of the
semiconductor business (particularly the weakness in memory pricing), the fear
of PC saturation, and the potentially disruptive effect of the Internet on many
established technology companies. Do we still subscribe to this view that
technology profits are becoming somewhat more stable while also expecting
superior growth in this area over the next five years? Definitely.
The recent semiconductor industry slowdown is a case in point. While the
commodity portion of this business (DRAMs) IS suffering from excess capacity
and memory prices are falling rapidly, the larger and more proprietary logic
business appears to be slowly recovering. If this current period does in fact
mark the bottom, the 1995-96 semiconductor cycle for these proprietary
semiconductor companies will be less painful than the 1990-91 cycle, which in
turn was less difficult than the downturn in 1984-85. PCs are another
example-rumors of their death have proven to be premature. Once again, the
combination of greater functionality (in both hardware and software), lower
prices, and an increasingly obsolete installed base is at work in the PC
sector, and 1996 will be another strong year. In fact, the PC is beginning to
transform itself from a computation device to a communications platform, from
something understood by a minority to something everyone can use. The revenue
potential behind that shift is potentially very significant and, in our view,
not fully appreciated. Finally, the Internet DOES represent an important
change, the kind of change which occurs infrequently and which spawns dozens of
new companies. However, many established companies will also be beneficiaries
of this innovation as they help build the infrastructure of this technology and
offer Internet-enabled solutions to large corporations. The Internet will not
be a zero sum game.
2
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
Individual companies within the technology sector will always fail, as they
have in the past. In fact, since so many of these companies are now public,
there will probably be a greater incidence of failure in the future-a
diversified and professionally managed approach to technology opportunities
still makes sense. Nevertheless, we continue to believe that the boom/bust
nature of this industry is waning and that a more consistent, albeit uneven,
pattern of growth lies ahead. Our challenge, as always, is to prudently select
tomorrow's leaders at an early stage.
We appreciate your continued support and look forward to reporting to you again
on the Fund's progress in the year.
Sincerely,
John D. Carifa
Chairman
Peter Anastos
Portfolio Manager
Gerald T. Malone
Portfolio Manager
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.
3
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
Alliance Technology Fund is a diversified investment company that emphasizes
growth of capital and invests for capital appreciation, and only incidentally
for current income. The Fund may seek income by writing listed call options.
The Fund invests primarily in securities of companies expected to benefit from
technological advances and improvements. The Fund normally will have
substanially all of its assets invested in equity securities, but it also
invests in debt securities offering appreciation potential. The Fund may invest
in listed and unlisted U.S. and foreign securities and has the flexibility to
invest both in well-know, established companies and in new, unseasoned
companies. The Fund's policy is to invest in any company and industry and in
any type of security with potential for capital appreciation.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF MAY 31, 1996
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year 35.89% 30.10%
. Five Years 28.50% 27.39%
. Ten Years 17.94% 17.43%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year 35.00% 31.00%
. Since Inception* 36.12% 35.94%
CLASS C SHARES
. One Year 35.00%
. Since Inception* 36.11%
Average annual total returns reflect investment 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);
Class C shares purchased prior to July 1, 1996, are not subject to front-end or
contingent deferred sales charges. Class C shares purchased on or after July 1,
1996, are subject to a contingent deferred sales charge of 1% on redemptions
made within the first year after purchase.
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 B and Class C.
4
TEN LARGEST HOLDINGS
MAY 31, 1996 (UNAUDITED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
COMPANY VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
cisco Systems, Inc. $ 50,151,000 4.7%
Oracle Systems Corp. 39,750,000 3.7
Hewlett-Packard Co. 37,362,500 3.5
First Data Corp. 34,292,500 3.2
General Motors Corp. Cl.E 33,825,000 3.1
3Com Corp. 32,002,650 3.0
Glenayre Technologies, Inc 31,520,000 2.9
Intel Corp. 30,955,000 2.9
Altera Corp. 30,374,663 2.8
Dell Computer Corp. 27,609,975 2.5
$347,843,288 32.3%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED MAY 31, 1996 (UNAUDITED)
_______________________________________________________________________________
SHARES
-------------------------------
PURCHASES BOUGHT HOLDINGS 5/31/96
- --------------------------------------------------------------------------
Altera Corp. 332,600 627,900
Bay Networks, Inc. 530,000 530,000
Cabletron Systems, Inc. 161,700 321,700
Cascade Communications Corp. 347,600 347,600
General Motors Corp. Cl. E 200,000 600,000
H & R Block, Inc. 305,000 305,000
Hewlett-Packard Co. 225,000 350,000
Oracle Systems Corp. 675,000 1,200,000
Seagate Technology 318,900 468,900
Teradyne, Inc. 500,000 500,000
SALES SOLD HOLDINGS 5/31/96
- ---------------------------------------------------------------------------
Broadway & Seymour, Inc. 150,000 702,600
Cerner Corp. 184,000 -0-
Cirrus Logic, Inc. 180,000 -0-
Discreet Logic, Inc. 366,800 -0-
Itron, Inc. 225,000 -0-
Jabil Circuit, Inc. 114,500 -0-
Komag, Inc. 77,000 -0-
Micron Technology, Inc. 302,000 -0-
Read-Rite Corp. 160,000 -0-
Sierra On-Line, Inc. 333,400 174,100
5
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-91.0%
TECHNOLOGY-90.6%
COMMUNICATIONS-12.4%
Cabletron Systems, Inc.* 321,700 $ 23,403,675
DSP Communications, Inc.* 253,900 9,584,725
Ericsson (L.M.) Telephone Co.Cl.B (ADR)(a) 737,000 16,997,062
Gandalf Technologies, Inc.* 855,000 11,863,125
General Instrument Corp.* 400,000 12,350,000
Glenayre Technologies, Inc.* 640,000 31,520,000
Nokia Corp. (ADR)(b) 358,000 15,573,000
Scientific-Atlanta, Inc. 665,000 12,551,875
------------
133,843,462
COMPUTER HARDWARE-10.1%
COMPAQ Computer Corp.* 561,000 27,278,625
Dell Computer Corp.* 498,600 27,609,975
Hewlett-Packard Co. 350,000 37,362,500
Silicon Graphics, Inc.* 200,000 5,500,000
Sun Microsystems, Inc.* 169,000 10,583,625
------------
108,334,725
COMPUTER PERIPHERALS-5.4%
Quantum Corp.* 500,000 11,937,500
Seagate Technology* 468,900 27,547,875
Stormedia, Inc.* 503,550 12,903,469
Western Digital Corp.* 210,000 5,460,000
------------
57,848,844
COMPUTER SERVICES-12.6%
Broadway & Seymour, Inc.* 702,600 10,890,300
Computer Sciences Corp.* 126,000 9,938,250
DST Systems, Inc.* 293,000 10,218,375
First Data Corp. 430,000 34,292,500
Gartner Group* 400,000 14,300,000
General Motors Corp. Cl.E 600,000 33,825,000
Nova Corp.* 45,100 1,713,800
PMT Services, Inc.* 295,800 10,057,200
Renaissance Solutions, Inc.* 290,300 10,305,650
------------
135,541,075
COMPUTER SOFTWARE-15.2%
I2 Technologies, Inc.* 129,400 5,208,350
Applix, Inc.* 220,000 7,205,000
Aspect Development, Inc.* 67,100 2,029,775
Diamond Multimedia Systems* 103,400 1,664,094
Edify Corp.* 10,300 432,600
HBO & Co. 217,000 27,097,875
Informix Corp.* 895,800 20,379,450
Macromedia, Inc.* 120,000 5,115,000
Maxis, Inc.* 175,000 4,112,500
Mechanical Dynamics, Inc.* 44,300 786,325
Microsoft Corp.* 110,000 13,062,500
Open Market, Inc.* 23,000 730,250
Oracle Systems Corp.* 1,200,000 39,750,000
Planning Sciences International Plc.* 23,800 630,700
Rational Software Corp.* 299,400 18,600,225
Software 2000, Inc.* 169,200 2,918,700
Spectrum Holobyte, Inc.* 400,000 2,950,000
Spyglass, Inc.* 355,000 9,629,375
Transition Systems, Inc.* 43,100 1,314,550
------------
163,617,269
MISCELLANEOUS-4.0%
Sanmina Holdings Corp.* 506,600 18,680,875
Solectron Corp.* 575,000 24,940,625
------------
43,621,500
NETWORK SOFTWARE-17.1%
3Com Corp.* 649,800 32,002,650
Bay Networks, Inc.* 530,000 15,370,000
Cascade Communications Corp.* 347,600 19,595,950
cisco Systems, Inc.* 916,000 50,151,000
Compu Serve Corporation* 136,700 3,383,325
Fore Systems* 200,000 16,200,000
H & R Block, Inc. 305,000 10,636,875
Newbridge Networks Corp.* 161,000 11,451,125
Shiva Corporation* 178,000 13,305,500
Sierra On-Line, Inc.* 174,100 7,834,500
Standard Microsystems Corp.* 274,300 4,285,937
------------
184,216,862
6
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
SEMI-CONDUCTOR COMPONENTS-8.9%
Altera Corp.* 627,900 $30,374,663
Atmel Corp.* 513,600 18,232,800
Intel Corp. 410,000 30,955,000
Microchip Technology, Inc.* 154,235 3,971,551
National Semiconductor Corp.* 500,000 8,125,000
Oak Technology, Inc.* 328,000 4,182,000
------------
95,841,014
SEMI-CONDUCTOR EQUIPMENT-4.9%
Applied Materials, Inc.* 595,000 22,163,750
Lam Research Corp.* 369,230 14,676,893
Silicon Valley Group, Inc.* 236,000 5,664,000
Teradyne, Inc.* 500,000 10,062,500
------------
52,567,143
------------
975,431,894
CONSUMER SERVICES-0.2%
ADVERTISING-0.0%
CKS Group, Inc.* 14,500 560,062
MISCELLANEOUS-0.2%
Integrated Systems, Inc.* 49,700 1,689,800
------------
2,249,862
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
FINANCE-0.2%
MISCELLANEOUS-0.2%
Security First Network Bank* 44,300 $ 1,777,538
Total Common Stocks
(cost $707,200,412) 979,459,294
PRIVATE PLACEMENT-0.0%
Interactive Light Holdings, Inc.
8.00%, 2/07/99 (c)
(cost $500,000) $ 500 500,000
COMMERCIAL PAPER-9.9%
American Express Co.
5.28%, 6/06/96 15,500 15,488,633
Ford Motor Credit Corp.
5.23%, 6/04/96 25,630 25,618,830
General Electric Capital Corp.
5.30%, 6/07/96 21,230 21,211,247
Merrill Lynch & Co., Inc.
5.28%, 6/05/96 23,730 23,716,078
Prudential Funding
5.27%, 6/03/96 20,000 19,994,145
Total Commercial Paper
(amortized cost $106,028,933) 106,028,933
TOTAL INVESTMENTS-100.9%
(cost $813,729,345) 1,085,988,227
Other assets less liabilities-(0.9%) (9,559,490)
NET ASSETS-100% $1,076,428,737
* Non-income producing security.
(a) Country of origin - Sweden.
(b) Country of origin - Finland.
(c) Illiquid security, valued at fair value (see Notes A & F).
Glossary:
ADR - American Depository Receipt
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $813,729,345) $1,085,988,227
Receivable for capital stock sold 7,142,279
Receivable for investment securities sold 343,125
Dividends and interest receivable 206,218
Prepaid expenses 172,891
Total assets 1,093,852,740
LIABILITIES
Due to custodian 95,548
Payable for investment securities purchased 13,481,658
Advisory fee payable 2,644,464
Distribution fee payable 589,430
Payable for capital stock redeemed 534,979
Accrued expenses and other liabilities 59,889
Income distribution payable 18,035
Total liabilities 17,424,003
NET ASSETS $1,076,428,737
COMPOSITION OF NET ASSETS
Capital stock, at par $ 231,709
Additional paid-in capital 792,293,908
Accumulated net investment loss (4,223,659)
Accumulated net realized gain on investments 15,867,897
Net unrealized appreciation of investments 272,258,882
---------------
$1,076,428,737
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share($507,135,151/
10,778,049 shares of capital stock issued and outstanding) $47.05
Sales charge-4.25% of public offering price 2.09
Maximum offering price $49.14
CLASS B SHARES
Net asset value and offering price per share($486,752,371/
10,595,974 shares of capital stock issued and outstanding) $45.94
CLASS C SHARES
Net asset value, redemption and offering price per share($82,541,215
/1,796,908 shares of capital stock issued and outstanding) $45.94
See notes to financial statements.
8
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1996 (UNAUDITED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $4,006,673
Dividends(net of foreign taxes withheld of $28,232) 561,680 $4,568,353
EXPENSES
Advisory fee 4,814,114
Distribution fee - Class A 646,623
Distribution fee - Class B 1,768,024
Distribution fee - Class C 294,566
Transfer agency 712,447
Registration 214,899
Custodian 82,925
Administrative 74,544
Directors' fees 49,665
Audit and legal 36,833
Taxes 32,892
Printing 31,849
Miscellaneous 32,631
Total expenses 8,792,012
Net investment loss (4,223,659)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities transactions 20,237,175
Net realized loss on options transactions (6,455,147)
Net change in unrealized appreciation of investments 65,108,436
Net gain on investments 78,890,464
NET INCREASE IN NET ASSETS FROM OPERATIONS $74,666,805
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SIX MONTHS ENDED
MAY 31,1996 YEAR ENDED
(UNAUDITED) NOV. 30,1995
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (4,223,659) $ (4,284,876)
Net realized gain on investments and options
transactions 13,782,028 44,181,728
Net change in unrealized appreciation of
investments 65,108,436 135,347,622
Net increase in net assets from operations 74,666,805 175,244,474
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (20,562,502) (20,080,339)
Class B (14,815,677) (1,920,276)
Class C (2,300,695) (617,474)
CAPITAL STOCK TRANSACTIONS
Net increase 320,907,000 337,111,623
Total increase 357,894,931 489,738,008
NET ASSETS
Beginning of year 718,533,806 228,795,798
End of period $1,076,428,737 $718,533,806
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 (UNAUDITED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Technology 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 and Class C shares. Class A shares are sold
with a front-end sales charge of up to 4.25%. Class B shares are 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 currently sold without an initial or contingent
deferred sales charge. Class C shares purchased on or after July 1, 1996 are
subject to a contingent deferred sales charge of 1% on redemptions made within
the first year after purchase. All three 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
Portfolio securities traded on a national securities exchange and
over-the-counter securities listed on the NASDAQ National Market System are
valued at the last reported sales price at the regular close of the New York
Stock Exchange. Over-the-counter securities not listed on the NASDAQ National
Market System are valued at the mean of the closing bid and asked price.
Securities for which current market quotations are not readily available
(including investments which are subject to limitations as to their resale) are
valued at their fair value as determined in good faith by the Board of
Directors. Securities which mature in 60 days or less are valued at amortized
cost, which approximates market value.
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 applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Security transactions are accounted for on the date the securities are
purchased or sold. Security gains and losses are determined on the identified
cost basis. The Fund accretes discounts as adjustments to interest income.
4. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
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 of 1% (approximately 1% on an annual basis) of the net assets of
the Fund valued on the last business day of the previous quarter. The Adviser
has agreed, under the terms of the investment advisory agreement, to reimburse
the Fund to the extent that its aggregate expenses (exclusive of interest,
taxes, brokerage, distribution fee, and extraordinary expenses) exceed the
limits prescribed by any state in which the Fund's shares are qualified for
sale. The Adviser believes that the most restrictive expense ratio limitation
imposed by any state is 2.5% of the first $30 million of its average daily net
assets, 2.0% of the next $70 million of its average daily net assets and 1.5%
of its average daily net assets in excess of $100 million. No reimbursement was
required for the six months ended May 31, 1996.
Pursuant to the advisory agreement, the Fund paid $74,544 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the six months ended May 31, 1996.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Adviser) under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $528,658 for the six months ended May 31, 1996.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
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 $300,045 from the sale of Class A shares and
$490,680 in contingent deferred sales charges imposed upon redemption by
shareholders of Class B shares for the six months ended May 31, 1996.
Brokerage commissions paid for the six months ended May 31, 1996 on securities
transactions amounted to $373,423, none of which was paid to brokers utilizing
the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp. ("DLJ") nor to DLJ directly, 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 1% 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. 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 $16,170,897 and $545,493, 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.
NOTE D: INVESTMENT TRANSACTIONS
Total purchases and sales of investment securities, (excluding short-term
investments and options) aggregated $415,298,295 and $136,209,472,
respectively, for the six months ended May 31, 1996. At May 31, 1996, 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 $295,164,295 and gross unrealized depreciation of investments
was $22,905,413 resulting in net unrealized appreciation of $272,258,882.
For investment and hedging purposes, the Fund purchases put and call options on
stock and stock indices that are traded on U.S. securities exchanges and
over-the-counter markets. The risk associated with purchasing an option is that
the Fund pays a premium whether or not the option is exercised. Additionally,
the Fund bears the risk of loss of premium and change in market value should
the counterparty not perform under the contract. Put and call options purchased
are accounted for in the same manner as portfolio securities. The cost of
securities acquired through the exercise of call options is increased by
premiums paid. The proceeds from securities sold through the exercise of put
options are decreased by the premiums paid. For the six months ended May 31,
1996, the Fund realized losses of $6,455,147 in options transactions.
12
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 200,000,000 shares of $0.01 par value capital stock authorized,
divided into three classes, designated Class A, Class B and Class C shares.
Class A shares consist of 100,000,000 authorized shares, Class B and Class C
each consist of 50,000,000 authorized shares. Transactions in capital stock
were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MAY 31,1996 NOVEMBER 30, MAY 31,1996 NOVEMBER 30,
(UNAUDITED) 1995 (UNAUDITED) 1995
------------ ------------ -------------- --------------
CLASS A
Shares sold 3,404,275 5,476,959 $146,605,757 $217,962,229
Shares issued in
reinvestment of
distributions 444,491 650,071 18,184,138 18,676,512
Shares converted from
Class B to Class A 34,132 -0- 1,561,166 -0-
Shares redeemed (1,643,949) (3,934,390) (72,011,558) (148,687,714)
Net increase 2,238,949 2,192,640 $ 94,339,503 $ 87,951,027
CLASS B
Shares sold 5,271,025 6,758,431 $222,006,731 $273,611,720
Shares issued in
reinvestment of
distributions 288,200 50,219 11,551,039 1,424,212
Shares converted from
Class B to Class A (34,988) -0- (1,561,166) -0-
Shares redeemed (984,366) (1,334,495) (41,159,244) (54,629,325)
Net increase 4,539,861 5,474,155 $190,837,360 $220,406,607
CLASS C
Shares sold 1,322,186 1,323,714 $ 56,018,115 $ 53,165,092
Shares issued in
reinvestment of
distributions 34,075 12,351 1,366,065 350,273
Shares redeemed (502,419) (629,320) (21,654,043) (24,761,376)
Net increase 853,842 706,745 $ 35,730,137 $ 28,753,989
NOTE F: ILLIQUID SECURITY
DATE ACQUIRED COST
------------- ----------
Interactive Light Holdings, Inc.
00%, 2/07/99 1/27/94 $500,000
The security shown above is illiquid and has been valued at fair value in
accordance with the procedures described in Note A. The value of this security
at May 31, 1996 was $500,000, representing .05% of net assets.
13
FINANCIAL HIGHLIGHTS ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------------------------
SIX MONTHS JANUARY 1,
ENDED 1994
MAY 31, YEAR ENDED TO YEAR ENDED DECEMBER 31,
1996 NOV. 30, NOV. 30, -------------------------------------------------
(UNAUDITED) 1995 1994(F) 1993 1992 1991 1990
------------- ------------ ------------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $46.64 $31.98 $26.12 $28.20 $26.38 $19.44 $21.57
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.14)(a) (.30)(a) (.32) (.29) (.22)(a) (.02) (.03)
Net realized and unrealized gain
(loss) on investments 2.93 18.13 6.18 6.39 4.31 10.57 (.56)
Net increase (decrease) in net asset
value from operations 2.79 17.83 5.86 6.10 4.09 10.55 (.59)
LESS: DISTRIBUTIONS
Distributions from net realized gains (2.38) (3.17) -0- (8.18) (2.27) (3.61) (1.54)
Net asset value, end of period $47.05 $46.64 $31.98 $26.12 $28.20 $26.38 $19.44
TOTAL RETURN
Total investment return based on net
asset value (b) 6.75% 61.93% 22.43% 21.63% 15.50% 54.24% (3.08)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $507,135 $398,262 $202,929 $173,732 $173,566 $191,693 $131,843
Ratio of expenses to average net
assets 1.74%(c) 1.75% 1.66%(c) 1.73% 1.61% 1.71% 1.77%
Ratio of net investment loss to
average net assets (.65)%(c) (.77)% (1.22)%(c) (1.32)% (.90)% (.20)% (.18)%
Portfolio turnover rate 19% 55% 55% 64% 73% 134% 147%
Average commission rate (d) $.0657 $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
</TABLE>
See footnote summary on page 16.
14
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------
SIX MONTHS JANUARY 1, MAY 3,
ENDED YEAR ENDED 1994 TO 1993(E) TO
MAY 31,1996 NOVEMBER 30, NOVEMBER 30, DECEMBER 31,
(UNAUDITED) 1995 1994(F) 1993
------------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $45.76 $31.61 $25.98 $27.44
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.29)(a) (.60)(a) (.23) (.12)
Net realized and unrealized gain
on investments 2.85 17.92 5.86 6.84
Net increase in net asset
value from operations 2.56 17.32 5.63 6.72
LESS: DISTRIBUTIONS
Distributions from net realized gains (2.38) (3.17) -0- (8.18)
Net asset value, end of period $45.94 $45.76 $31.61 $25.98
TOTAL RETURN
Total investment return based on net
asset value (b) 6.36% 60.95% 21.67% 24.49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $486,752 $277,111 $18,397 $1,645
Ratio of expenses to average net assets 2.45%(c) 2.48% 2.43%(c) 2.57%(c)
Ratio of net investment loss to
average net assets (1.37)%(c) (1.47)% (1.95)%(c) (2.30)%(c)
Portfolio turnover rate 19% 55% 55% 64%
Average commission rate (d) $.0657 $ -0- $ -0- $ -0-
</TABLE>
See footnote summary on page 16.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
-------------------------------------------------------
SIX MONTHS JANUARY 1, MAY 3,
ENDED YEAR ENDED 1994 TO 1993(E) TO
MAY 31,1996 NOVEMBER 30, NOVEMBER 30, DECEMBER 31,
(UNAUDITED) 1995 1994(F) 1993
------------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $45.77 $31.61 $25.98 $27.44
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.29)(a) (.58)(a) (.24) (.13)
Net realized and unrealized gain
on investments 2.84 17.91 5.87 6.85
Net increase in net asset
value from operations 2.55 17.33 5.63 6.72
LESS: DISTRIBUTIONS
Distributions from net realized gains (2.38) (3.17) -0- (8.18)
Net asset value, end of period $45.94 $45.77 $31.61 $25.98
TOTAL RETURN
Total investment return based on net
asset value (b) 6.33% 60.98% 21.67% 24.49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $82,541 $43,161 $7,470 $1,096
Ratio of expenses to average net assets 2.44%(c) 2.48% 2.41%(c) 2.52%(c)
Ratio of net investment loss to
average net assets (1.36)%(c) (1.47)% (1.94)%(c) (2.25)%(c)
Portfolio turnover rate 19% 55% 55% 64%
Average commission rate (d) $.0657 $ -0- $ -0- $ -0-
</TABLE>
(a) Based on average shares outstanding.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales 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.
(c) Annualized.
(d) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on which
commissions are charged.
(e) Commencement of distribution.
(f) The Fund changed its fiscal year end from December 31 to November 30.
16
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
ROBERT C. ALEXANDER (1)
DAVID H. DIEVLER (1)
DR. CHARLES H. FERGUSON (1)
WILLIAM H. FOULK, JR. (1)
D. JAMES GUZY (1)
ELLIOT STEIN, JR. (1)
MARSHALL C. TURNER, JR. (1)
OFFICERS
PETER ANASTOS, SENIOR VICE PRESIDENT
THOMAS G. BARDONG, VICE PRESIDENT
GERALD T. MALONE, 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 & 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
One Battery Park Plaza
New York, NY 10004
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
(1) Member of the Audit Committee.
17
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
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 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
18
ALLIANCE TECHNOLOGY FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCECAPITAL
INVESTING WITHOUT THE MYSTERY.
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
TECSR
