ALLIANCE TECHNOLOGY FUND
SEMI-ANNUAL REPORT
MAY 31, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
July 27, 1998
Dear Shareholder:
We are pleased to provide an update of Alliance Technology Fund's performance
for the semi-annual reporting period ended May 31, 1998.
INVESTMENT RESULTS
The following table provides performance data for your Fund over the six and
12-month periods ended May 31, 1998. For comparison, performance data is also
provided for the Fund's benchmark, the Pacific Stock Exchange (PSE) High Tech
Index, which is a measure of the U.S. technology sector, and for the S&P 500
Stock Index (S&P 500), a measure of the broad U.S. stock market, and the Lipper
Science & Technology Fund Index (Lipper Index), a representation of the Fund's
peer group.
As you can see, Alliance Technology Fund has outperformed its benchmark for
both the six and 12-month periods ended May 31, 1998. In our last letter to you
(November 30, 1997), we indicated that while the technology sector continued to
underperform the S&P 500, performance which also continued through the end of
May, we felt that our confidence in the Fund's major holdings would be
rewarded. This has been the case as your Fund's outperformance can be
attributed to the success of maintaining relatively large positions in the
networking and personal computer sectors. This consistent strategy and our
commitment to these sectors has also contributed to very positive relative
performance versus other technology mutual funds as measured by the Lipper
Index. For the six-month period ending June 30, 1998, your Fund posted a return
of 28.25%, exceeding that of the Lipper Index, which posted a return of 17.46%.
INVESTMENT RESULTS*
Periods Ended May 31, 1998
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE TECHNOLOGY
FUND
Class A 12.25% 19.29%
Class B 11.87% 18.46%
Class C 11.86% 18.44%
PACIFIC STOCK EXCHANGE
(PSE) HIGH TECH
INDEX 9.43% 18.01%
S&P 500 STOCK INDEX 15.07% 30.66%
LIPPER SCIENCE AND
TECHNOLOGY FUND
INDEX 5.76% 13.20%
* THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE
NET ASSET VALUE AS OF MAY 31, 1998. 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. TOTAL
RETURNS FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT EXPENSES
ASSOCIATED WITH THAT CLASS. RETURNS FOR THE FUND AND ITS COMPARATIVE BENCHMARKS
INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE PERIOD. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE PACIFIC STOCK EXCHANGE (PSE) HIGH TECH INDEX IS A PRICE-WEIGHTED,
BROAD BASED INDEX, REPRESENTING 100 LISTED AND OVER-THE-COUNTER U.S. STOCKS
DESIGNED TO MIRROR THE U.S. TECHNOLOGY SECTOR. THE PSE HIGH TECH INDEX IS
DESIGNED TO REPRESENT THE ENTIRE U.S. TECHNOLOGY AND SCIENCE SECTOR, INCLUDING
SUCH INDUSTRY GROUPS AS COMPUTER SOFTWARE PRODUCTS, INFORMATION PROCESSING
SERVICES, MEDICAL TECHNOLOGY, BIOTECHNOLOGY, AMONG OTHERS. THE S&P 500 STOCK
INDEX IS AN UNMANAGED INDEX OF 500 U.S. COMPANIES. THE LIPPER SCIENCE AND
TECHNOLOGY FUND INDEX IS AN EQUALLY-WEIGHTED PERFORMANCE INDEX, ADJUSTED FOR
CAPITAL GAINS DISTRIBUTIONS AND INCOME DIVIDENDS, OF THE LARGEST QUALIFYING
FUNDS THAT HAVE A SCIENCE AND TECHNOLOGY INVESTMENT OBJECTIVE (ACCORDING TO
LIPPER, THIS INVESTMENT OBJECTIVE INCLUDES THOSE FUNDS THAT INVEST AT LEAST 65%
OF THEIR EQUITY PORTFOLIOS IN SCIENCE AND TECHNOLOGY STOCKS). AN INVESTOR
CANNOT INVEST DIRECTLY IN AN INDEX.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3.
PORTFOLIO DISCUSSION
Following a difficult fourth quarter in 1997, tech stocks have recovered
strongly in the first half of 1998.
1
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
Throughout the 1990s, these stocks continued along this up-and-down pattern of
strong price gains which were then interrupted by one or two price corrections
in most years. The most recent of these corrections was prompted by concerns
about many Asian economies and their importance to the overall growth of the
technology sector. The subsequent recovery in technology stocks reflected
several factors. These include the realization that the Asian situation was
more of a longer term challenge than a sudden implosion, the continued
impressive growth in many technology companies and simple bargain hunting as
valuations became more reasonable.
Volatility has probably become a permanent characteristic of technology stocks.
Therefore, whenever possible, and assuming valuations are reasonable, we place
strong emphasis on those companies which are most dominant in their industry.
The correctness of this approach is being reinforced by the fact that
consolidation in many areas of technology is helping the strong companies
become even stronger. Intense competition, short product cycles, rapid change
and increased complexity make the average investor intolerant of earnings
shortfalls, all of which place a premium on intelligent stock selection.
MARKET ENVIRONMENT AND OUTLOOK
The secular outlook for the technology sector remains impressive. The
transition in the U.S. to a digital-based economy is evident and very much
underway. Information technology is increasingly becoming a necessary
competitive tool, and the "on-line economy" will change the way business is
conducted in many industries. The same can be said for the ways in which
consumers will be adjusting their behavior with respect to shopping,
entertainment, financial decision making and general information access. All
this sets the stage for the rest of the world to do the same--that is, to
emulate something which is working very much in favor of the U.S. economy and
for U.S.-based companies. The fact that information technology, as a percentage
of U.S. Gross Domestic Product, has gone from 2.5% in 1990, to 8.5% in early
1998 could be a prelude for similar and perhaps even more rapid adoption rates
in many other countries. Technology is now easier to use and much more
affordable. In addition, many companies are currently offering integrated and
total solutions to customers who need this information resource today more than
ever. In our opinion, all this bodes particularly well for many of the
companies in your Fund's portfolio.
As always, we remain appreciative of your continued support of Alliance
Technology Fund. We look forward to reporting to you on future investment
results and market activity.
Sincerely,
John D. Carifa
President and 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.
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
substantially 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-known, 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
_______________________________________________________________________________
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF MAY 31, 1998
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 19.29% 14.23%
Five Years 25.43% 24.34%
Ten Years 19.20% 18.68%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 18.46% 14.46%
Five Years 24.57% 24.57%
Since Inception* 26.80% 26.80%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 18.44% 17.44%
Five Years 24.57% 24.57%
Since Inception* 26.79% 26.79%
SEC AVERAGE ANNUAL TOTAL RETURNS
AS OF THE MOST RECENT QUARTER-END (MARCH 31, 1998)
CLASS A CLASS B CLASS C
--------- --------- ---------
1 Year 33.38% 34.37% 37.34%
5 Years 25.31% n/a n/a
10 Years 18.75% n/a n/a
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 returns 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: 5/3/93 Class B and Class C.
n/a: not applicable.
3
TEN LARGEST HOLDINGS
MAY 31, 1998 (UNAUDITED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
Dell Computer Corp. $151,363,800 6.4%
Cisco Systems, Inc. 146,069,687 6.2
Compaq Computer Corp. 95,593,750 4.1
Tellabs, Inc. 87,547,687 3.7
Nokia, Corp. (ADR) 84,613,563 3.6
Intuit, Inc. 78,201,913 3.3
Ascend Communications, Inc. 74,887,125 3.2
HBO & Co. 73,499,056 3.1
Network Associates, Inc. 72,611,875 3.1
Fore Systems, Inc. 68,070,200 2.9
$932,458,656 39.6%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED)
_______________________________________________________________________________
SHARES
-----------------------------------
HOLDINGS
PURCHASES BOUGHT 5/31/98
- -------------------------------------------------------------------------------
Alcatel Alsthom Maroc (ADR) 1,260,000 1,260,000
Ascend Communications, Inc. 1,734,000 1,734,000
First Data Corp. 1,331,000 2,000,300
Fiserv, Inc. 427,900 742,700
Fore Systems, Inc. 2,208,100 3,094,100
Glenayre Technologies, Inc. 1,755,500 1,755,500
Intuit, Inc. 1,650,700 1,650,700
KLA-Tencor Corp. 1,140,000 1,324,000
Lexmark International Group, Inc. Cl.A 701,200 701,200
Network Associates, Inc. 522,500 1,185,500
HOLDINGS
SALES SOLD 5/31/98
- -------------------------------------------------------------------------------
3Com Corp. 581,000 -0-
ACC Corp. 484,900 -0-
Bay Networks, Inc. 739,090 1,391,400
Ericsson (L.M.) Telephone Co. Cl.B (ADR) 900,000 -0-
Lucent Technologies, Inc. 360,000 -0-
Microchip Technology, Inc. 737,845 -0-
Motorola, Inc. 307,690 -0-
National Semiconductor Corp. 1,119,100 -0-
Oracle Corp. 2,105,550 -0-
Taiwan Semiconductor Manufacturing
Co., Ltd. (ADR) 906,200 1,258,500
4
PORTFOLIO OF INVESTMENTS
MAY 31, 1998 (UNAUDITED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-98.9%
TECHNOLOGY-97.2%
COMMUNICATION EQUIPMENT-11.2%
Alcatel Alsthom Maroc (ADR) 1,260,000 $ 54,495,000
Glenayre Technologies, Inc. (a) 1,755,500 26,881,094
Nokia Corp. (ADR) (b) 1,303,000 84,613,563
PairGain Technologies, Inc. (a) 616,600 9,634,375
Tellabs, Inc. (a) 1,274,000 87,547,687
------------
263,171,719
COMPUTER HARDWARE-11.4%
Apex PC Solutions, Inc. (a) 840,900 21,127,612
Compaq Computer Corp. 3,500,000 95,593,750
Dell Computer Corp. (a) 1,836,800 151,363,800
------------
268,085,162
COMPUTER PERIPHERALS-1.6%
Lexmark International Group, Inc. Cl.A (a) 701,200 38,916,600
COMPUTER SERVICES-14.3%
Computer Sciences Corp. 1,010,200 52,467,262
DST Systems, Inc. (a) 1,025,800 54,239,175
First Data Corp. 2,000,300 66,509,975
Fiserv, Inc. (a) 742,700 43,796,091
Galileo International, Inc. 627,600 24,711,750
Gartner Group, Inc. Cl.A (a) 945,600 31,263,900
Renaissance Worldwide, Inc. (a) 827,200 15,561,700
SunGard Data Systems, Inc. (a) 1,398,600 47,727,225
------------
336,277,078
COMPUTER SOFTWARE-17.4%
Cadence Design Systems, Inc. (a) 1,113,800 39,261,450
HBO & Co. 1,273,400 73,499,056
Health Management Systems, Inc. (a) 1,714,300 18,857,300
I2 Technologies, Inc. (a) 139,400 8,303,013
Industri-Matematik International Corp. (a) 739,600 11,879,825
Intuit, Inc. (a) 1,650,700 78,201,913
J.D. Edwards & Co. (a) 347,400 12,777,806
Microsoft Corp. (a) 480,000 40,710,000
Network Associates, Inc. (a) 1,185,500 72,611,875
Pegasystems, Inc. (a) 600,500 13,004,578
PeopleSoft, Inc. (a) 936,700 40,922,081
------------
410,028,897
NETWORKING SOFTWARE-15.7%
Ascend Communications, Inc. (a) 1,734,000 74,887,125
Bay Networks, Inc. (a) 1,391,400 38,524,388
CIENA Corp. (a) 500,000 26,000,000
Cisco Systems, Inc. (a) 1,931,500 146,069,687
Fore Systems, Inc. (a) 3,094,100 68,070,200
Newbridge Networks Corp. (a) 610,000 17,308,750
------------
370,860,150
SEMI-CONDUCTOR CAPITAL EQUIPMENT-5.4%
Amkor Technology, Inc. (a) 1,164,000 12,076,500
Applied Materials, Inc. (a) 1,323,130 42,340,160
ISS Group, Inc. (a) 88,300 3,333,325
KLA-Tencor Corp. (a) 1,324,000 44,850,500
Teradyne, Inc. (a) 782,300 24,055,725
------------
126,656,210
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
SEMI-CONDUCTOR COMPONENTS-11.4%
Altera Corp. (a) 1,957,000 $ 65,804,125
Cirrus Logic, Inc. (a) 1,679,000 16,790,000
Cypress Semiconductor Corp. (a) 1,400,000 11,987,500
Intel Corp. 750,000 53,578,125
PMC-Sierra, Inc. (a) 671,700 26,154,319
Taiwan Semiconductor
Manufacturing Co., Ltd.
(ADR) (a)(c) 1,258,500 23,754,188
Texas Instruments, Inc. 588,400 30,229,050
Xilinx, Inc. (a) 1,074,000 40,845,562
------------
269,142,869
MISCELLANEOUS-8.8%
Com21, Inc. (a) 62,000 906,750
Ingram Micro, Inc. Cl.A (a) 1,126,600 49,640,812
Sanmina Holdings Corp. (a) 866,400 67,470,900
Solectron Corp. (a) 1,419,400 58,727,675
Tech Data Corp. (a) 779,000 31,646,875
------------
208,393,012
------------
2,291,531,697
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
UTILITIES-1.3%
TELEPHONE UTILITY-1.3%
WorldCom, Inc. (a) 674,850 $ 30,705,675
CONSUMER SERVICES-0.4%
MISCELLANEOUS-0.4%
Equifax, Inc. 267,000 9,712,125
Total Common Stocks
(cost $1,704,586,260) 2,331,949,497
PRIVATE PLACEMENT-0.0%
Interactive Light Holdings, Inc.
8.00%, 2/07/99 (d)
(cost $500,000) $500 500,000
TOTAL INVESTMENTS-98.9%
cost $1,705,086,260) 2,332,449,497
Other assets less liabilities-1.1% 25,172,509
NET ASSETS-100% $2,357,622,006
(a) Non-income producing security.
(b) Country of origin--Finland.
(c) Country of origin--Taiwan.
(d) Illiquid security, valued at fair value (see Notes A & F).
Glossary:
ADR - American Depositary Receipt
See notes to financial statements.
6
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998 (UNAUDITED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $1,705,086,260) $2,332,449,497
Receivable for investment securities sold 36,411,631
Receivable for capital stock sold 5,343,947
Interest and dividends receivable 221,257
Prepaid expenses 85,868
Total assets 2,374,512,200
LIABILITIES
Due to custodian 4,348,651
Advisory fee payable 5,894,055
Payable for investment securities purchased 3,763,249
Payable for capital stock redeemed 2,147,432
Distribution fee payable 281,435
Accrued expenses and other liabilities 455,372
Total liabilities 16,890,194
NET ASSETS $2,357,622,006
COMPOSITION OF NET ASSETS
Capital stock, at par $ 399,385
Additional paid-in capital 1,573,244,873
Net investment loss (16,165,131)
Accumulated net realized gain on investment transactions 172,779,642
Net unrealized appreciation of investments 627,363,237
$2,357,622,006
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($720,674,493 / 11,919,729 shares of capital stock
issued and outstanding) $60.46
Sales charge--4.25% of public offering price 2.68
Maximum offering price $63.14
CLASS B SHARES
Net asset value and offering price per share
($1,248,322,912 / 21,461,230 shares of capital stock
issued and outstanding) $58.17
CLASS C SHARES
Net asset value and offering price per share
($219,120,319 / 3,767,545 shares of capital stock
issued and outstanding) $58.16
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($169,504,282 / 2,789,903 shares of capital stock issued
and outstanding) $60.76
See notes to financial statements.
7
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 4,527,265
Dividends (net of foreign taxes withheld
of $210,455) 1,718,052 $ 6,245,317
EXPENSES
Advisory fee 11,788,508
Distribution fee - Class A 1,018,467
Distribution fee - Class B 5,804,477
Distribution fee - Class C 1,007,257
Transfer agency 2,328,624
Printing 208,213
Custodian 129,859
Registration 86,057
Administrative 61,000
Taxes 50,613
Audit and legal 48,704
Directors' fees 43,000
Miscellaneous 33,873
Total expenses 22,608,652
Less: expense offset arrangement
(see Note B) (198,204)
Net expenses 22,410,448
Net investment loss (16,165,131)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 180,343,918
Net change in unrealized appreciation of
investments 91,954,204
Net gain on investments 272,298,122
NET INCREASE IN NET ASSETS FROM OPERATIONS $256,132,991
See notes to financial statements.
8
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1998 NOVEMBER 30,
(UNAUDITED) 1997
---------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (16,165,131) $ (23,986,074)
Net realized gain on investment
transactions 180,343,918 14,764,297
Net change in unrealized appreciation
of investments 91,954,204 133,346,847
Net increase in net assets from
operations 256,132,991 124,125,070
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (6,722,769) (4,879,329)
Class B (11,607,315) (5,671,805)
Class C (2,036,454) (916,491)
Advisor Class (1,788,297) (4,489)
CAPITAL STOCK TRANSACTIONS
Net increase 94,178,145 551,976,958
Total increase 328,156,301 664,629,914
NET ASSETS
Beginning of year 2,029,465,705 1,364,835,791
End of period $2,357,622,006 $2,029,465,705
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998 (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, 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 or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) 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. Readily marketable
securities traded in the over-the-counter market, securities listed on a
foreign securities exchange whose operations are similar to the U.S.
over-the-counter market, and securities listed 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. U.S. government and fixed income
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. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date the securities are
purchased or sold. The Fund accretes discounts as adjustments to interest
income. Investment gains and losses are determined on the identified cost basis.
4. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the net assets of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A shares and the Advisor Class shares have no distribution fees.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Income dividends and capital gains distributions are determined in accordance
with federal tax regulations and may differ from those determined in accordance
with generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts based
on their federal
10
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
tax basis treatment; temporary differences, do not require such
reclassification.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser"), an advisory fee at a quarterly rate
equal to .25% (approximately 1% on an annual basis) of the net assets of the
Fund valued on the last business day of the previous quarter.
Pursuant to the advisory agreement, the Fund paid $61,000 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, 1998.
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 $1,500,673 for the six months ended May 31, 1998.
In addition, for the six months ended May 31, 1998, the Fund's expenses were
reduced by $198,204 under an expense offset arrangement with Alliance Fund
Services. Transfer agency fees reported in the statement of operations exclude
these credits.
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 $154,285 from the sales of Class A shares
and $36,464, $1,439,243 and $66,277 in contingent deferred sales charges
imposed upon redemptions by shareholders of Class A, Class B and Class C
shares, respectively, for the six months ended May 31, 1998.
Brokerage commissions paid on investment transactions for the six months ended
May 31, 1998 amounted to $874,048 of which $4,800 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.
The fees are accrued daily and paid monthly. The Agreement provides that the
Distributor will use such payments in their entirety for distribution
assistance and promotional activities. The Distributor has incurred expenses in
excess of the distribution costs reimbursed by the Fund in the amount of
$34,864,082 and $1,619,211 for Class B and Class C shares, respectively; such
costs may be recovered from the Fund in future periods so long as the Agreement
is in effect. In accordance with the Agreement, there is no provision for
recovery of unreimbursed distribution costs incurred by the Distributor beyond
the current fiscal year for Class A shares. The Agreement also provides that
the Adviser may use its own resources to finance the distribution of the Fund's
shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $846,148,152 and $639,269,723,
respectively, for the six months ended May 31, 1998. There were no purchases or
sales of U.S. government and government agency obligations for the six months
ended May 31, 1998.
At May 31, 1998, the cost of investments for federal income tax purposes was
$1,709,334,238. Accordingly, gross unrealized appreciation of investments was
$682,121,973 and gross unrealized depreciation of investments was $59,006,714
resulting in net unrealized appreciation of $623,115,259.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
OPTION TRANSACTIONS
For hedging and investment purposes, the Fund purchases and writes call options
listed on national securities exchanges and purchases listed put options,
including put options on market indices.
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.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from writing options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from option
transactions. The difference between the premium received and the amount paid
on effecting a closing purchase transaction, including brokerage commissions,
is also treated as a realized gain, or if the premium received is less than the
amount paid for the closing purchase transaction, as a realized loss. If a call
option is exercised, the premium received is added to the proceeds from the
sale of the underlying security or currency in determining whether the Fund has
realized a gain or loss. If a put option is exercised, the premium received
reduces the cost basis of the security or currency purchased by the Fund. The
risk involved in writing an option is that, if the option was exercised the
underlying security could then be purchased or sold by the Fund at a
disadvantageous price.
For the six months ended May 31, 1998, the Fund did not engage in any option
transactions.
NOTE E: CAPITAL STOCK
There are 12,000,000,000 shares of $0.01 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MAY 31, 1998 NOVEMBER 30, MAY 31, 1998 NOVEMBER 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
CLASS A
Shares sold 7,788,951 10,236,552 $ 448,819,909 $ 542,859,733
Shares issued in
reinvestment of
distributions 110,995 78,573 5,935,121 3,946,887
Shares converted
from Class B 63,769 125,065 3,612,357 6,591,693
Shares redeemed (7,518,671) (10,594,530) (435,479,238) (567,186,149)
Net increase
(decrease) 445,044 (154,340) $ 22,888,149 $ (13,787,836)
CLASS B
Shares sold 3,507,048 9,702,206 $ 189,867,729 $ 491,739,865
Shares issued in
reinvestment of
distributions 209,351 90,233 10,804,657 4,406,275
Shares converted
to Class A (66,185) (129,230) (3,612,357) (6,591,693)
Shares redeemed (2,223,739) (2,910,995) (123,316,761) (148,766,672)
Net increase 1,426,475 6,752,214 $ 73,743,268 $ 340,787,775
12
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MAY 31, 1998 NOVEMBER 30, MAY 31, 1998 NOVEMBER 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
CLASS C
Shares sold 6,144,106 4,659,352 $ 337,492,531 $ 244,912,719
Shares issued in
reinvestment of
distributions 35,111 11,825 1,812,083 577,411
Shares redeemed (5,915,297) (3,347,816) (326,481,857) (179,818,433)
Net increase 263,920 1,323,361 $ 12,822,757 $ 65,671,697
ADVISOR CLASS
Shares sold 1,102,826 4,033,381 $ 62,049,444 $ 216,794,442
Shares issued in
reinvestment of
distributions 32,400 89 1,738,612 4,489
Shares redeemed (1,404,313) (985,537) (79,064,085) (57,493,609)
Net increase (decrease) (269,087) 3,047,933 $ (15,276,029) $ 159,305,322
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 May 31, 1998 was $500,000, representing .02% 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 YEAR ENDED NOVEMBER 30, 1994 TO YEAR ENDED
MAY 31, 1998 ------------------------------------- NOVEMBER 30, DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994(A) 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $54.44 $51.15 $46.64 $31.98 $26.12 $28.20
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.30)(b) (.51)(b) (.39)(b) (.30)(b) (.32) (.29)
Net realized and unrealized gain on
investment transactions 6.90 4.22 7.28 18.13 6.18 6.39
Net increase in net asset value from
operations 6.60 3.71 6.89 17.83 5.86 6.10
LESS: DISTRIBUTIONS
Distributions from net realized gains (.58) (.42) (2.38) (3.17) -0- (8.18)
Net asset value, end of period $60.46 $54.44 $51.15 $46.64 $31.98 $26.12
TOTAL RETURN
Total investment return based on net
asset value (c) 12.25% 7.32% 16.05% 61.93% 22.43% 21.63%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $720,675 $624,716 $594,861 $398,262 $202,929 $173,732
Ratio of expenses to average net assets 1.63%(d)(e) 1.67%(e) 1.74% 1.75% 1.66%(d) 1.73%
Ratio of net investment loss to average
net assets (1.04)%(d) (.97)% (.87)% (.77)% (1.22)%(d) (1.32)%
Portfolio turnover rate 31% 51% 30% 55% 55% 64%
</TABLE>
See footnote summary on page 17.
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 NOVEMBER 30, 1994 TO 1993(F) TO
MAY 31, 1998 ------------------------------------- NOVEMBER 30, DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994(A) 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $52.58 $49.76 $45.76 $31.61 $25.98 $27.44
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.49)(b) (.88)(b) (.70)(b) (.60)(b) (.23) (.12)
Net realized and unrealized gain on
investment transactions 6.66 4.12 7.08 17.92 5.86 6.84
Net increase in net asset value from
operations 6.17 3.24 6.38 17.32 5.63 6.72
LESS: DISTRIBUTIONS
Distributions from net realized gains (.58) (.42) (2.38) (3.17) -0- (8.18)
Net asset value, end of period $58.17 $52.58 $49.76 $45.76 $31.61 $25.98
TOTAL RETURN
Total investment return based on net
asset value (c) 11.87% 6.57% 15.20% 60.95% 21.67% 24.49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,248,323 $1,053,436 $660,921 $277,111 $18,397 $1,645
Ratio of expenses to average net assets 2.35%(d)(e) 2.38%(e) 2.44% 2.48% 2.43%(d) 2.57%(d)
Ratio of net investment loss to average
net assets (1.76)%(d) (1.70)% (1.61)% (1.47)% (1.95)%(d) (2.30)%(d)
Portfolio turnover rate 31% 51% 30% 55% 55% 64%
</TABLE>
See footnote summary on page 17.
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 NOVEMBER 30, 1994 TO 1993(F) TO
MAY 31, 1998 ------------------------------------- NOVEMBER 30, DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994(A) 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $52.57 $49.76 $45.77 $31.61 $25.98 $27.44
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.48)(b) (.88)(b) (.70)(b) (.58)(b) (.24) (.13)
Net realized and unrealized gain on
investment transactions 6.65 4.11 7.07 17.91 5.87 6.85
Net increase in net asset value from
operations 6.17 3.23 6.37 17.33 5.63 6.72
LESS: DISTRIBUTIONS
Distributions from net realized gains (.58) (.42) (2.38) (3.17) -0- (8.18)
Net asset value, end of period $58.16 $52.57 $49.76 $45.77 $31.61 $25.98
TOTAL RETURN
Total investment return based on net
asset value (c) 11.86% 6.55% 15.17% 60.98% 21.67% 24.49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $219,120 $184,194 $108,488 $43,161 $7,470 $1,096
Ratio of expenses to average net assets 2.35%(d)(e) 2.38%(e) 2.44% 2.48% 2.41%(d) 2.52%(d)
Ratio of net investment loss to average
net assets (1.77)%(d) (1.70)% (1.60)% (1.47)% (1.94)%(d) (2.25)%(d)
Portfolio turnover rate 31% 51% 30% 55% 55% 64%
</TABLE>
See footnote summary on page 17.
16
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
ADVISOR CLASS
----------------------------------------
OCTOBER 2,
SIX MONTHS 1996(F)
ENDED YEAR ENDED TO
MAY 31, 1998 NOVEMBER 30, NOVEMBER 30,
(UNAUDITED) 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period $54.63 $51.17 $47.32
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (.21) (.45) (.05)
Net realized and unrealized gain on
investment transactions 6.92 4.33 3.90
Net increase in net asset value from
operations 6.71 3.88 3.85
LESS: DISTRIBUTIONS
Distributions from net realized gains (.58) (.42) -0-
Net asset value, end of period $60.76 $54.63 $51.17
TOTAL RETURN
Total investment return based on net
asset value (c) 12.41% 7.65% 8.14%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $169,504 $167,120 $566
Ratio of expenses to average net assets 1.33%(d)(e) 1.39%(e) 1.75%(d)
Ratio of net investment loss to average
net assets (.74)%(d) (.81)% (1.21)%(d)
Portfolio turnover rate 31% 51% 30%
</TABLE>
(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 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) Annualized.
(e) Ratio reflects expenses grossed up for expense offset arrangement with the
Transfer Agent. For the six months ended May 31, 1998 and the year ended
November 30, 1997, the ratios of expenses to average net assets were 1.61% and
1.66% for Class A shares, 2.33% and 2.36% for Class B shares, 2.33% and 2.37%
for Class C shares and 1.31% and 1.38% for Advisor Class shares, respectively.
(f) Commencement of distribution.
17
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
KATHLEEN A. CORBET, 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.
18
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 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 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
19
ALLIANCE TECHNOLOGY FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
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
