ALLIANCE TECHNOLOGY FUND
ANNUAL REPORT
NOVEMBER 30, 1996
LETTER TO SHAREHOLDERS ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
January 15, 1997
Dear Shareholder:
We are pleased to provide an update of the Alliance Technology Fund's
performance and investment activity for the fiscal year ended November 30,
1996. The returns of the technology sector did not match those of the overall
U.S. stock market as can be seen in the table below by the performance of the
unmanaged Pacific Stock Exchange (PSE) High Tech Index and the S&P 500 Stock
Index, also unmanaged. Technology stocks in general underwent a correction in
late 1995 and early 1996, which resulted in underperformance compared to the
broad U.S. market, represented here by the S&P 500.
While the Fund underperformed the PSE High Tech Index, the Fund outperformed
its peer group average for the fiscal year. The 52 funds tracked by the Lipper
Science and Technology Fund Average, which have investment objectives similar
to that of the Alliance Technology Fund, had an average annual return of 13.76%
for the 12-month period ended November 30, 1996.
INVESTMENT RESULTS*
TOTAL RETURNS FOR THE PERIOD ENDED
NOVEMBER 30, 1996
6 MONTHS 12 MONTHS
------------ -------------
ALLIANCE TECHNOLOGY FUND 8.71% 16.05%
PSE HIGH TECH INDEX 11.00 22.97
S&P 500 STOCK INDEX 14.37 27.87
* THE FUND'S INVESTMENT RESULTS ARE CUMULATIVE TOTAL RETURNS FOR EACH PERIOD
AND ARE BASED ON THE NET ASSET VALUE OF CLASS A SHARES AS OF 11/30/96. TOTAL
RETURNS FOR CLASS B, CLASS C, AND ADVISOR CLASS SHARES WILL DIFFER DUE TO
DIFFERENT EXPENSES. RETURNS FOR THE FUND AND ITS COMPARATIVE INDICES INCLUDE
THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE PERIOD. ADDITIONAL
PERFORMANCE RESULTS APPEAR ON PAGE 3.
As of this writing, the early phase of fourth quarter earnings reports are
encouraging, resulting in a strong relative start for Fund holdings in 1997.
ECONOMIC CONDITIONS
The most notable characteristic of the U.S. economy today is the longevity of
the current economic upswing. In addition to helping to reelect President
Clinton, it has popularized the thought that the business cycle has been tamed
and that we are now destined for that promised land of steady growth and low
inflation, with almost everything in balance as far as the eye can see. Good
things don't last forever and neither will this propitious set of economic
circumstances. However, several factors are at work which could extend this
friendly environment for a while longer. These include: more sophisticated
information technologies and more efficient manufacturing methods; better
inventory control; the growing importance of the service sector; growth in
world trade and investment; and some learning experience from past cycles on
the part of the business community as well as consumers. Most of these things
are also extending beyond the U.S., including that first driver which we are
most familiar with (information technologies) and expand on below.
TECHNOLOGY COMMENTARY
Perhaps we are too close to our subject, but our conviction that technology is
fundamentally transforming almost every aspect of corporate and social life has
never been greater. The author Jeremy Rifkin puts it well: "The global economy
is undergoing a fundamental transformation that will reshape civilization in
the twenty-first century. Sophisticated computers, telecommunications,
robotics, and other information age technologies are fast replacing human
beings in virtually every sector and industry. The hard reality that economists
and politicians are reluctant to acknowledge is that manufacturing and much of
the service sector are undergoing a transformation as profound as the one
experienced by the agricultural sector earlier in this century, when machines
boosted production and displaced millions of farmers. The chairman of the
Federal Reserve Board, Alan Greenspan, also understands that something big is
going on. "The advent of the transistor and the integrated circuit and, as a
consequence, the emergence of the modern computer, telecommunication and
satellite technologies have fundamentally changed the structure of the American
economy..."
Unfortunately, all this change will not occur smoothly. As Rifkin argues, the
opposite is a more likely scenario. What is different now, however, is that the
disruption and change which technology companies have always known
1
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
is extending to other industries. Many sectors of our economy--finance,
manufacturing, education, retailing and communications, to name a few--will be
restructured. Some companies will fail, certain jobs will be lost forever and
income will be redistributed. Nevertheless, the digital age is a locomotive
with gathering momentum. It is not stoppable. Fortunately, this also means that
the wind is at our backs in managing this portfolio. The inevitable changes
which lie ahead will present a steady source of new investment opportunities.
Although as portfolio managers we are constantly challenged by this change--the
number of corporations which cannot accomodate it will be increasing--we must
embrace change whenever it is prudent to do so. Experience has taught us that
resisting it is usually a losing proposition.
CURRENT OUTLOOK
Convergence is an overused term in the technology field but it seems
appropriate at present. Several factors are coming together in a positive way,
including:
. availability of Microsoft's Win NT 4.0 operating system;
. declines in the price of Pentium-based computers and servers and computer
memory (DRAMs);
. completion of an inventory depletion cycle in semiconductors and peripherals;
. upgrade of obsolete corporate Pcs;
. buildup of corporate data networks and the rich applications which can take
advantage of them;
. growth in Internet use by consumers and Internet/Intranet use by
corporations.
These developments are translating themselves into more favorable fundamentals
at many of the companies in the portfolio. Intel, for example, has twice
announced better-than-expected trends in its microprocessor business, while
COMPAQ Computer and Dell Computer have experienced similar growth. In
networking, Cisco Systems and 3Com both claim that the overall networking
business is growing in excess of 40% annually. Altera and Microchip Technology
are additional examples of companies seeing an acceleration in customer orders.
The third calendar quarter of 1996 saw fewer disappointments than in previous
reporting periods and we are poised for a strong finish to a year of uneven
technology profit growth. At this point, 1997 also appears favorable for many
technology companies. What puzzles us is the growing popularity in the
investment community of a smaller number of technology firms. While we admit
that the strong have a tendency to get stronger, technology is also a universe
of diversity and impressive growth in many places. Further narrowing of
leadership, should it continue, will motivate us to look more diligently for
those companies which are improving their growth prospects but are not yet
enjoying the attention of most investors.
As always, we appreciate your support of our efforts.
Sincerely,
John D. Carifa
Chairman
Peter Anastos
Senior Vice President
Gerald T. Malone
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 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 RETURNS AS OF NOVEMBER 30, 1996
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year 16.05% 11.12%
. Five Years 29.68% 28.56%
. Ten Years 19.66% 19.14%
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. Total returns for Class B,
Class C, and Advisor Class shares will differ due to different expenses
associated with those classes.
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.
3
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
ALLIANCE TECHNOLOGY FUND
GROWTH OF A $10,000 INVESTMENT:
11/30/86 TO 11/30/96
$59,000
$54,000
$49,000
$44,000
$39,000
$34,000
$29,000
$24,000
$19,000
$14,000
$9,000
TECHNOLOGY FUND CLASS A: $57,638
PSE HIGH TECH INDEX
S&P 500 STOCK INDEX
11/30/86 11/30/96
This chart illustrates the total value of a hypothetical $10,000 investment in
Class A shares as compared to the performance of appropriate broad-based
indices. The chart reflects the deduction of the maximum 4.25% sales charge
from an initial $10,000 investment and assumes the reinvestment of 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. Results should not be considered representative of future gains or
losses.
Both the S&P 500 Stock Index and the Pacific Stock Exchange High Tech Index are
unmanaged. The S&P 500 tracks 500 companies and is a common measure of the
overall U.S. stock market. The Pacific Stock Exchange High Tech Index measures
the performance of technology stocks traded on the Pacific Stock Exchange.
When comparing Alliance Technology Fund to the indices shown above, remember
that sales charges and expenses are not reflected in the performance of
indices.
Technology Fund
S&P 500 Stock Index
PSE High-Tech Index
4
TEN LARGEST HOLDINGS
NOVEMBER 30, 1996 ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
COMPANY VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
3Com Corp. $ 63,856,250 4.7%
Cisco Systems, Inc. 62,852,250 4.6
Oracle Systems Corp. 58,800,000 4.3
Intel Corp. 55,825,000 4.1
COMPAQ Computer Corp. 52,384,250 3.8
Dell Computer Corp. 50,670,225 3.7
Altera Corp. 49,150,500 3.6
First Data Corp. 36,286,250 2.7
Solectron Corp. 33,637,500 2.5
Seagate Technology, Inc. 32,832,400 2.4
$496,294,625 36.4%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED NOVEMBER 30, 1996
_______________________________________________________________________________
SHARES*
------------------------------------
PURCHASES BOUGHT HOLDINGS 11/30/96
- ---------------------------------------------------------------------------
3Com Corp. 200,200 850,000
Ascend Communications, Inc. 421,300 421,300
Atmel Corp. 307,400 821,000
Forte Software, Inc. 231,800 231,800
Integrated Systems, Inc. Cl.A 398,100 447,800
LSI Logic Corp. 507,500 507,500
MFS Communications, Inc. 234,500 234,500
Microchip Technology, Inc. 269,535 423,770
Netscape Communications Corp. 520,000 520,000
PairGain Technologies, Inc. 129,900 129,900
SALES SOLD HOLDINGS 11/30/96
- ---------------------------------------------------------------------------
Applied Materials, Inc. 193,600 401,400
Bay Networks, Inc. 530,000 -0-
Broadway & Seymour, Inc. 332,600 370,000
Compu Serve Corp. 136,700 -0-
Diamond Multimedia Systems 103,400 -0-
H & R Block, Inc. 305,000 -0-
Hewlett-Packard Co. 350,000 -0-
Quantum Corp. 500,000 -0-
Silicon Graphics, Inc. 200,000 -0-
Standard Microsystems Corp. 274,300 -0-
* Adjusted for stock splits.
5
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-92.2%
TECHNOLOGY-91.3%
COMMUNICATION EQUIPMENT-0.2%
Farallon Communications, Inc. (a) 270,000 $ 3,172,500
COMMUNICATIONS-8.9%
DSP Communications, Inc. (a) 337,900 13,135,862
Ericsson (L.M.) Telephone Co. Cl.B (ADR) (b) 880,000 27,170,000
Gandalf Technologies, Inc. (a) 855,000 3,045,938
General Instrument Corp. (a) 400,000 8,850,000
Glenayre Technologies, Inc. (a) 965,000 23,039,375
Nokia Corp. (ADR) (c) 358,000 20,092,750
PairGain Technologies, Inc. (a) 129,900 8,297,363
Picturetel Corp. (a) 150,000 4,162,500
Scientific-Atlanta, Inc. 855,000 13,252,500
------------
121,046,288
COMPUTER HARDWARE-8.5%
COMPAQ Computer Corp. (a) 661,000 52,384,250
Dell Computer Corp. (a) 498,600 50,670,225
Sun Microsystems, Inc. (a) 220,000 12,815,000
------------
115,869,475
COMPUTER PERIPHERALS-4.1%
Seagate Technology, Inc. (a) 831,200 32,832,400
Stormedia, Inc. (a) 503,550 6,420,263
Western Digital Corp. (a) 304,400 16,361,500
------------
55,614,163
COMPUTER SERVICES-10.6%
Affiliated Computer Services, Inc. Cl.A (a) 264,000 7,656,000
Broadway & Seymour, Inc. (a) 370,000 3,515,000
Computer Sciences Corp. (a) 157,500 12,383,437
DST Systems, Inc. (a) 293,000 9,485,875
Electronic Data Systems Corp. 673,600 32,585,400
First Data Corp. 910,000 36,286,250
Gartner Group Inc. (a) 400,000 14,600,000
PMT Services, Inc. (a) 443,700 9,484,088
Renaissance Solutions, Inc. (a) 322,000 12,155,500
Sabre Group Holdings, Inc. Cl.A (a) 177,800 5,200,650
USCS International, Inc. (a) 64,500 1,080,375
------------
144,432,575
COMPUTER SOFTWARE-17.8%
I2 Technologies, Inc. (a) 139,400 5,297,200
Applix, Inc. (a) 330,000 6,517,500
Cognos, Inc. (a) 113,200 4,301,600
Electronic Arts, Inc. (a) 215,000 6,906,875
Forte Software, Inc. (a) 231,800 7,359,650
HBO & Co. 410,000 23,318,750
Informix Corp. (a) 995,800 23,650,250
Integrated Systems, Inc. Cl.A (a) 447,800 9,627,700
Macromedia, Inc. (a) 365,000 6,615,625
Maxis, Inc. (a) 175,000 2,625,000
Microsoft Corp. (a) 110,000 17,256,250
Netscape Communications Corp. (a) 520,000 29,055,000
Object Design, Inc. (a) 285,000 3,669,375
Oracle Systems Corp. (a) 1,200,000 58,800,000
Pegasystems, Inc. (a) 187,500 5,601,562
Rational Software Corp. (a) 598,800 21,107,700
Software 2000, Inc. (a) 648,200 5,347,650
Spectrum Holobyte, Inc. (a) 400,000 2,000,000
Spyglass, Inc. (a) 303,000 3,124,688
Storm Technology, Inc. (a) 101,300 810,400
------------
242,992,775
NETWORK SOFTWARE-18.3%
3Com Corp. (a) 850,000 63,856,250
Ascend Communications, Inc. (a) 421,300 29,964,962
Cabletron Systems, Inc. (a) 643,400 25,977,275
Cascade Communications Corp. (a) 386,800 26,737,550
Cisco Systems, Inc. (a) 926,000 62,852,250
Fore Systems (a) 600,000 23,550,000
6
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
Newbridge Networks Corp. (a) 317,000 $ 9,430,750
Shiva Corp. (a) 190,000 7,837,500
------------
250,206,537
SEMI-CONDUCTOR COMPONENTS-14.0%
Altera Corp. (a) 651,000 49,150,500
Atmel Corp. (a) 821,000 26,990,375
Intel Corp. 440,000 55,825,000
LSI Logic Corp. (a) 507,500 15,288,438
Microchip Technology, Inc. (a) 423,770 20,235,017
Micron Technology, Inc. 245,400 8,128,875
National Semiconductor Corp. (a) 500,000 12,250,000
Oak Technology, Inc. (a) 278,000 2,745,250
------------
190,613,455
SEMI-CONDUCTOR EQUIPMENT-3.6%
Applied Materials, Inc. (a) 401,400 15,303,375
Lam Research Corp. (a) 369,230 13,246,126
Silicon Valley Group, Inc. (a) 236,000 5,015,000
Teradyne, Inc. (a) 678,000 16,017,750
------------
49,582,251
TELEPHONE UTILITIES-0.8%
MFS Communications, Inc. (a) 234,500 11,314,625
MISCELLANEOUS-4.5%
Ingram Micro, Inc. Cl.A (a) 147,600 3,634,650
Sanmina Holdings Corp. (a) 556,600 24,281,675
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
Solectron Corp. (a) 575,000 $ 33,637,500
---------------
61,553,825
---------------
1,246,398,469
BUSINESS SERVICES-0.9%
COMMERCIAL SERVICES-0.9%
Abacus Direct Corp. (a) 23,300 565,025
CUC International, Inc. (a) 419,908 11,075,073
---------------
11,640,098
Total Common Stocks
(cost $855,976,381) 1,258,038,567
PRIVATE PLACEMENT-0.0%
Interactive Light Holdings, Inc.
8.00%, 2/07/99 (d)
(cost $500,000) $ 500 500,000
SHORT-TERM INVESTMENTS-7.8%
American Express Co.
5.28%, 12/04/96 35,800 35,784,248
General Electric Capital Corp.
5.15%, 12/02/96 32,000 31,995,422
Prudential Funding
5.35%, 12/03/96 34,000 33,989,895
State Street Cayman Islands
5.00%, 12/02/96 4,080 4,080,000
Total Short-Term Investments
(amortized cost $105,849,565) 105,849,565
TOTAL INVESTMENTS-100.0%
(cost $962,325,946) 1,364,388,132
Other assets less liabilities-0.0% 447,659
NET ASSETS-100% $1,364,835,791
(a) Non-income producing security.
(b) Country of origin - Sweden.
(c) Country of origin - Finland.
(d) 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
NOVEMBER 30, 1996 ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $962,325,946) $1,364,388,132
Cash 1,624
Receivable for investment securities sold 16,164,739
Receivable for capital stock sold 6,965,525
Dividends and interest receivable 250,443
Total assets 1,387,770,463
LIABILITIES
Payable for investment securities purchased 16,482,890
Advisory fee payable 3,412,089
Payable for capital stock redeemed 1,804,761
Distribution fee payable 740,150
Accrued expenses and other liabilities 494,782
Total liabilities 22,934,672
NET ASSETS $1,364,835,791
COMPOSITION OF NET ASSETS
Capital stock, at par $ 271,029
Additional paid-in capital 950,634,306
Accumulated net realized gain on investments 11,868,270
Net unrealized appreciation of investments 402,062,186
$1,364,835,791
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share($594,861,204/
11,629,025 shares of capital stock issued and outstanding) $51.15
Sales charge--4.25% of public offering price 2.27
Maximum offering price $53.42
CLASS B SHARES
Net asset value and offering price per share($660,920,933/
13,282,541 shares of capital stock issued and outstanding) $49.76
CLASS C SHARES
Net asset value and offering price per share($108,487,855/
2,180,264 shares of capital stock issued and outstanding) $49.76
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share($565,799
/11,057 shares of capital stock issued and outstanding) $51.17
See notes to financial statements.
8
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996 ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 7,263,611
Dividends (net of foreign taxes withheld
of $28,232) 1,153,669 $ 8,417,280
EXPENSES
Advisory fee 10,945,614
Distribution fee - Class A 1,415,075
Distribution fee - Class B 4,446,418
Distribution fee - Class C 732,390
Transfer agency 2,085,004
Registration 332,851
Printing 221,172
Custodian 197,845
Administrative 135,000
Audit and legal 131,933
Directors' fees 80,000
Taxes 53,802
Miscellaneous 79,500
Total expenses 20,856,604
Net investment loss (12,439,324)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 9,777,700
Net change in unrealized appreciation of investments 194,911,740
Net gain on investments 204,689,440
NET INCREASE IN NET ASSETS FROM OPERATIONS $192,250,116
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1996 1995
--------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (12,439,324) $ (4,284,876)
Net realized gain on investment transactions 9,777,700 44,181,728
Net change in unrealized appreciation of
investments 194,911,740 135,347,622
Net increase in net assets from operations 192,250,116 175,244,474
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (20,562,397) (20,080,339)
Class B (14,814,489) (1,920,276)
Class C (2,297,287) (617,474)
CAPITAL STOCK TRANSACTIONS
Net increase 491,726,042 337,111,623
Total increase 646,301,985 489,738,008
NET ASSETS
Beginning of year 718,533,806 228,795,798
End of year $1,364,835,791 $718,533,806
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996 ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Technology Fund (the "Fund") is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
On April 15, 1996 the Board of Directors approved the creation of a fourth
class of shares, Advisor Class shares. 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%. 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
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. 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
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, unless this method does not represent
fair 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 INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date the securities are
purchased or sold. Investment 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.
5. RECLASSIFICATION OF COMPONENTS OF NET ASSETS
Net investment losses may not be utilized to offset net investment income in
future periods for tax purposes. At November 30, 1996 the Fund reclassified
$12,439,324 from accumulated net investment loss to additional paid-in capital.
This reclassification had no effect on net investment loss, net realized gains
and losses and net assets.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. ("the Adviser"), an advisory fee at a quarterly rate
equal to .25 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.
Pursuant to the advisory agreement, the Fund paid $135,000 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the year ended November 30, 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 $1,493,231 for the year ended November 30, 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 $448,982 from the sale of Class A shares and
$1,108,455 and $12,708 in contingent deferred sales charges imposed upon
redemptions by shareholders of Class B and Class C shares, respectively for the
year ended November 30, 1996.
Brokerage commissions paid for the year ended November 30, 1996 on securities
transactions amounted to $603,145, 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. 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
$20,749,046 and $892,004, 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
Purchases and sales of investment securities, (excluding short-term investments
and U.S. Government obligations) aggregated $691,812,246 and $259,943,126,
respectively, for the year ended November 30, 1996. At November 30, 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 $467,332,172 and gross unrealized depreciation of investments
was $65,269,986 resulting in net unrealized appreciation of $402,062,186.
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 year ended November 30,
1996, the Fund realized losses of $6,455,147 in options transactions.
12
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 250,000,000 shares of $0.01 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Class A shares consist of 100,000,000 authorized shares, Class B,
Class C and Advisor Class each consist of 50,000,000 authorized shares.
Transactions in capital stock were as follows:
SHARES AMOUNT
-------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1996 1995 1996 1995
------------ ------------ -------------- --------------
Shares sold 6,739,722 5,476,959 $295,599,004 $217,962,229
Shares issued in
reinvestment of
distributions 444,491 650,071 18,184,138 18,676,512
Shares converted
from Class B 71,011 -0- 3,227,821 -0-
Shares redeemed (4,165,299) (3,934,390) (185,541,160) (148,687,714)
Net increase 3,089,925 2,192,640 $131,469,803 $ 87,951,027
CLASS B
Shares sold 9,295,231 6,758,431 $397,304,488 $273,611,720
Shares issued in
reinvestment of
distributions 288,200 50,219 11,551,039 1,424,212
Shares converted
to Class A (72,846) -0- (3,227,821) -0-
Shares redeemed (2,284,157) (1,334,495) (98,298,021) (54,629,325)
Net increase 7,226,428 5,474,155 $307,329,685 $220,406,607
CLASS C
Shares sold 2,488,614 1,323,714 $106,395,529 $ 53,165,092
Shares issued in
reinvestment of
distributions 34,075 12,351 1,366,065 350,273
Shares redeemed (1,285,491) (629,320) (55,371,330) (24,761,376)
Net increase 1,237,198 706,745 $ 52,390,264 $ 28,753,989
OCT. 2,1996* OCT. 2,1996*
TO TO
NOV. 30,1996 NOV. 30,1996
------------ -------------
ADVISOR CLASS
Shares sold 11,363 $ 551,761
Shares issued in
reinvestment of
distributions -0- -0-
Shares redeemed (306) (15,471)
Net increase 11,057 $ 536,290
* Commencement of distribution.
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
NOTE F: ILLIQUID SECURITY
DATE ACQUIRED COST
------------- ------------
Interactive Light Holdings, Inc.
8.00%, 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 November 30, 1996 was $500,000, representing .04% of net assets.
14
FINANCIAL HIGHLIGHTS ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------
JANUARY 1,
YEAR ENDED NOVEMBER 30, 1994 TO YEAR ENDED DECEMBER 31,
--------------------------- NOVEMBER 30, -------------------------
1996 1995 1994(A) 1993 1992
------------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $46.64 $31.98 $26.12 $28.20 $26.38
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.39)(b) (.30)(b) (.32) (.29) (.22)(b)
Net realized and unrealized gain on
investments 7.28 18.13 6.18 6.39 4.31
Net increase in net asset value from
operations 6.89 17.83 5.86 6.10 4.09
LESS: DISTRIBUTIONS
Distributions from net realized gains (2.38) (3.17) -0- (8.18) (2.27)
Net asset value, end of period $51.15 $46.64 $31.98 $26.12 $28.20
TOTAL RETURN
Total investment return based on net
asset value (c) 16.05% 61.93% 22.43% 21.63% 15.50%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $594,861 $398,262 $202,929 $173,732 $173,566
Ratio of expenses to average net assets 1.74% 1.75% 1.66%(d) 1.73% 1.61%
Ratio of net investment loss to average
net assets (.87)% (.77)% (1.22)%(d) (1.32)% (.90)%
Portfolio turnover rate 30% 55% 55% 64% 73%
Average commission rate (e) $.0612 -- -- -- --
</TABLE>
See footnote summary on page 18.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------
JANUARY 1, MAY 3,
YEAR ENDED NOVEMBER 30, 1994 TO 1993(F) TO
--------------------------- NOVEMBER 30, DECEMBER 31,
1996 1995 1994(A) 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 (.70)(b) (.60)(b) (.23) (.12)
Net realized and unrealized gain on
investments 7.08 17.92 5.86 6.84
Net increase in net asset value from
operations 6.38 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 $49.76 $45.76 $31.61 $25.98
TOTAL RETURN
Total investment return based on net
asset value (c) 15.20% 60.95% 21.67% 24.49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $660,921 $277,111 $18,397 $1,645
Ratio of expenses to average net assets 2.44% 2.48% 2.43%(d) 2.57%(d)
Ratio of net investment loss to average
net assets (1.61)% (1.47)% (1.95)%(d) (2.30)%(d)
Portfolio turnover rate 30% 55% 55% 64%
Average commission rate (e) $.0612 -- -- --
</TABLE>
See footnote summary on page 18.
16
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------------
JANUARY 1, MAY 3,
YEAR ENDED NOVEMBER 30, 1994 TO 1993(F) TO
--------------------------- NOVEMBER 30, DECEMBER 31,
1996 1995 1994(A) 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 (.70)(b) (.58)(b) (.24) (.13)
Net realized and unrealized gain on
investments 7.07 17.91 5.87 6.85
Net increase in net asset value from
operations 6.37 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 $49.76 $45.77 $31.61 $25.98
TOTAL RETURN
Total investment return based on net
asset value (c) 15.17% 60.98% 21.67% 24.49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $108,488 $43,161 $7,470 $1,096
Ratio of expenses to average net assets 2.44% 2.48% 2.41%(d) 2.52%(d)
Ratio of net investment loss to average
net assets (1.60)% (1.47)% (1.94)%(d) (2.25)%(d)
Portfolio turnover rate 30% 55% 55% 64%
Average commission rate (e) $.0612 -- -- --
</TABLE>
See footnote summary on page 18.
17
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
ADVISOR CLASS
---------------
OCT. 2,1996 (F)
TO
NOV. 30,1996
---------------
Net asset value, beginning of period $47.32
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.05)(b)
Net realized and unrealized gain on investments 3.90
Net increase in net asset value from operations 3.85
Net asset value, end of period $51.17
TOTAL RETURN
Total investment return based on net asset value (c) 8.14%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $566
Ratio of expenses to average net assets 1.75%(d)
Ratio of net investment loss to average net assets (1.21)%(d)
Portfolio turnover rate 30%
Average commission rate (e) $.0612
(a) The Fund changed its fiscal year end from December 31 to November 30.
(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) 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.
(f) Commencement of distribution.
18
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
ALLIANCE TECHNOLOGY FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Alliance Technology Fund, Inc. (the "Fund"), including the portfolio of
investments, as of November 30, 1996, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with 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
November 30, 1996, 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 Technology Fund, Inc. at November 30, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the indicated periods, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
New York, New York
January 9, 1997
FEDERAL TAX INFORMATION (UNAUDITED)
_______________________________________________________________________________
For the fiscal year ended November 30, 1996 the Fund designates $21,125,181
paid to (Class A, B and C) shareholders as capital gain dividends.
19
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)
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.
20
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
21
ALLIANCE TECHNOLOGY FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
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.
TECAR
