-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RsG/1xDPTNc8V/R+46DFM2cShLXpedpM4tRjVm1tgMhVcUEkHeK6JBHfj4S8EYFk PCLwKKTNb8HeH0Q6hv8oWA== 0000936772-02-000274.txt : 20020802 0000936772-02-000274.hdr.sgml : 20020802 20020802161309 ACCESSION NUMBER: 0000936772-02-000274 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020531 FILED AS OF DATE: 20020802 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE TECHNOLOGY FUND INC CENTRAL INDEX KEY: 0000350181 IRS NUMBER: 133056623 STATE OF INCORPORATION: NY FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-03131 FILM NUMBER: 02718486 BUSINESS ADDRESS: STREET 1: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 2013194105 MAIL ADDRESS: STREET 1: ALLIANCE CAPITAL MANAGEMENT LP STREET 2: 1345 AVENUE OF THE AMERICAS 31ST FL CITY: NEW YORK STATE: NY ZIP: 10105 N-30D 1 edg8033.txt - -------------------------------------------------------------------------------- SPECIALTY EQUITY - -------------------------------------------------------------------------------- Alliance Technology Fund Semi-Annual Report May 31, 2002 [GRAPHIC OMITTED] Alliance Capital [LOGO](R) The Investment Professional's Choice Investment Products Offered --------------------------- o Are Not FDIC Insured o May Lose Value o Are Not Bank Guaranteed --------------------------- This shareholder report must be preceded or accompanied by the Fund's prospectus for individuals who are not current shareholders of the Fund. Alliance Fund Distributors, Inc., the principal underwriter of the Alliance mutual funds and an affiliate of Alliance Capital Management L.P., the manager of the funds, is a member of the NASD. ---------------------- LETTER TO SHAREHOLDERS ---------------------- LETTER TO SHAREHOLDERS July 22, 2002 Dear Shareholder: This report contains the investment results, market commentary and outlook for Alliance Technology Fund (the "Fund") for the semi-annual reporting period ended May 31, 2002. Investment Objective and Policies This open-end fund 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 The following table provides performance results for the Fund for the six- and 12-month periods ended May 31, 2002. Also included is the performance of the Standard & Poor's (S&P) 500 Stock Index, a standard measure of the performance of the overall U.S. stock market, the NASDAQ Composite Index (NASDAQ), which measures all NASDAQ domestic and non-U.S. based common stocks listed on the NASDAQ Stock Market, and the Lipper Science and Technology Fund Index (the "Lipper Index"), a performance index of the largest qualifying funds that have a science and technology investment objective. INVESTMENT RESULTS* Periods Ended May 31, 2002 ------------------------- Total Returns ------------------------- 6 Months 12 Months - -------------------------------------------------------------------------------- Alliance Technology Fund Class A -19.63% -31.04% - -------------------------------------------------------------------------------- Class B -19.91% -31.55% - -------------------------------------------------------------------------------- Class C -19.90% -31.54% - -------------------------------------------------------------------------------- S&P 500 Stock Index -5.67% -13.84% - -------------------------------------------------------------------------------- NASDAQ Composite Index -16.31% -23.44% - -------------------------------------------------------------------------------- Lipper Science and Technology Fund Index -22.08% -36.09% - -------------------------------------------------------------------------------- * The Fund's investment results are total returns for the periods shown and are based on the net asset value (NAV) of each class of shares as of May 31, 2002. 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 include the reinvestment of any distributions paid during each period. Returns for Advisor Class shares will vary due to different expenses associated with this class. Past performance is no guarantee of future results. The unmanaged Standard & Poor's (S&P) 500 Stock Index is comprised of 500 U.S. companies and is a common measure of the performance of the overall U.S. stock market. The unmanaged NASDAQ Composite Index measures all NASDAQ domestic - -------------------------------------------------------------------------------- ALLIANCE TECHNOLOGY FUND o 1 - ---------------------- LETTER TO SHAREHOLDERS - ---------------------- and non-U.S. based common stocks listed on the NASDAQ Stock Market. The Index is market-value weighted and includes over 5,000 companies. The unmanaged 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.) These funds have generally similar investment objectives to the Fund, although investment policies for the various funds may differ. All comparative indices reflect no fees or expenses. An investor cannot invest directly in an index, and its results are not indicative of any specific investment, including Alliance Technology Fund. Additional investment results appear on pages 4-8. For the six-month period ended May 31, 2002, the Fund underperformed the S&P 500 Stock Index and the NASDAQ Composite Index as technology stocks (measured by the Goldman Sachs Technology Index, which returned -23.34% during the six-month period under review) underperformed the overall market. However, the Fund outperformed the Lipper Index during this period. From a portfolio perspective, the Fund benefited from stock selection and a more conservative posture. A significant exposure to semiconductor companies such as Microchip Technology, Taiwan Semiconductor Manufacturing and Applied Materials, as well as computer services companies such as Affiliated Computer Services and First Data, helped offset declines in contract manufacturing companies as well as in communications and applications software companies. Relative performance has also been helped by an above average cash position. The Fund's 12-month return reflects a similar pattern of relative performance as the Fund underperformed the S&P 500 Stock Index and technology stocks in general underperformed. Once again, however, the Fund outperformed the Lipper Index during this period. Market Review and Outlook Technology stocks have corrected during the first half of 2002 as company fundamentals have been unable to substantiate the broader improvement in macroeconomic trends. While the tone in some technology sectors sounds better, most commentary remains mixed or negative. The best tone of business comes from the semiconductor sector, the group with the most leverage to economic improvement, where there is evidence of an inventory replenishment cycle. Meanwhile, the semiconductor equipment companies are seeing better orders because their customers still see the need to invest in leading edge technologies. Telecommunications stocks remain disappointing as pressure on capital budgets looks to continue through 2002 and maybe into next year as well. As the second quarter of 2002 closes, expectations for revenue and earnings are low, but so is visibility and the - -------------------------------------------------------------------------------- 2 o ALLIANCE TECHNOLOGY FUND ---------------------- LETTER TO SHAREHOLDERS ---------------------- market's increased volatility reflects this in the short term. With this in mind, we remain focused on a balanced approach to risk management, seeking opportunity in the operating leverage of the semiconductor sector and the customer priority of software spending while being positioned to benefit from the visibility and predictable growth of the computer services sector. Looking ahead, we are encouraged by the fact that an economic recovery is happening, orders have troughed and there are signs of stabilization in many sub-sectors of technology. As corporate profits improve, so too should technology's fundamentals. Thank you for your continued interest in Alliance Technology Fund. We look forward to reporting the market activity and the Fund's investment results in the ensuing periods. Sincerely, /s/ John D. Carifa John D. Carifa Chairman and President /s/ Gerald T. Malone Gerald T. Malone Senior Vice President [PHOTO] John D. Carifa [PHOTO] Gerald T. Malone Gerald T. Malone, Portfolio Manager, has over 24 years of investment experience. - -------------------------------------------------------------------------------- ALLIANCE TECHNOLOGY FUND o 3 - ------------------ PERFORMANCE UPDATE - ------------------ PERFORMANCE UPDATE ALLIANCE TECHNOLOGY FUND GROWTH OF A $10,000 INVESTMENT 5/31/92 TO 5/31/02 [THE FOLLOWING TABLE WAS DEPICTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL.] Alliance Technology Fund Class A: $41,381 S&P 500 Stock Index: $31,283 NASDAQ Composite Index: $27,605 $9,574 $10,000 $10,000 $12,589 $11,969 $11,159 $14,361 $12,561 $11,633 $21,957 $14,771 $13,978 $29,836 $21,244 $17,949 $32,759 $23,924 $23,234 $39,077 $30,392 $30,356 $56,822 $42,209 $36,741 $94,788 $58,104 $40,587 $60,010 $36,058 $36,306 $41,381 $27,605 $31,283 This chart illustrates the total value of an assumed $10,000 investment in Alliance Technology Fund Class A shares (from 5/31/92 to 5/31/02) as compared to the performance of appropriate broad-based indices. The chart reflects the deduction of the maximum 4.25% sales charge from the initial $10,000 investment in the Fund and assumes the reinvestment of dividends and capital gains. Performance for Class B, Class C and Advisor Class shares will vary from the results shown above due to differences in expenses charged to these classes. Past performance is not indicative of future results, and is not representative of future gain or loss in capital value or dividend income. The unmanaged Standard & Poor's (S&P) 500 Stock Index includes 500 U.S. stocks and is a common measure of the performance of the overall U.S. stock market. The unmanaged NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on the NASDAQ Stock Market. The Index is market-value weighted and includes over 5,000 companies. When comparing Alliance Technology Fund to the indices shown above, you should note that no charges or expenses are reflected in the performance of the indices. An investor cannot invest directly in an index, and its results are not indicative of any specific investment, including Alliance Technology Fund. - -------------------------------------------------------------------------------- 4 o ALLIANCE TECHNOLOGY FUND ------------------ PERFORMANCE UPDATE ------------------ PERFORMANCE UPDATE ALLIANCE TECHNOLOGY FUND HISTORY OF RETURNS YEARLY PERIODS ENDED 5/31 [BAR CHART OMITTED] Alliance Technology Fund--Yearly Periods Ended 5/31 - -------------------------------------------------------------------------------- NASDAQ Alliance Technology Fund Composite Index - -------------------------------------------------------------------------------- 5/31/93 31.49% 19.69% 5/31/94 14.08% 4.95% 5/31/95 52.89% 17.60% 5/31/96 35.89% 43.82% 5/31/97 9.79% 12.62% 5/31/98 19.29% 27.03% 5/31/99 45.41% 38.88% 5/31/00 66.82% 37.66% 5/31/01 -36.69% -37.94% 5/31/02 -31.04% -23.44% Past performance is no guarantee of future results. The Fund's investment results represent total returns for Class A shares and are based on the net asset value (NAV). Total returns for Class B, Class C and Advisor Class shares will vary due to different expenses associated with these classes. 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 include the reinvestment of any distributions paid during each period. The unmanaged NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on the NASDAQ Stock Market. The Index is market-value weighted and includes over 5,000 companies. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including Alliance Technology Fund. - -------------------------------------------------------------------------------- ALLIANCE TECHNOLOGY FUND o 5 - ----------------- PORTFOLIO SUMMARY - ----------------- PORTFOLIO SUMMARY May 31, 2002 (unaudited) INCEPTION DATES PORTFOLIO STATISTICS Class A Shares Net Assets ($ mil): $4,473 3/1/82 Average Market Capitalization ($mil): $12,103 Class B Shares 5/3/93 Class C Shares 5/3/93 SECTOR BREAKDOWN Technology 21.4% Computer Services 20.0% Semi-Conductor Components 14.4% Computer Software 7.1% Communication Equipment [PIE CHART OMITTED] 7.0% Computer Hardware/Storage 6.7% Semi-Conductor Capital Equipment 6.5% Contract Manufacturing 5.2% Internet Infrastructure Consumer Services 3.5% Broadcasting & Cable 2.0% Cellular Communications 0.5% Entertainment & Leisure 5.7% Short-Term All data as of May 31, 2002. The Fund's sector breakdown is expressed as a percentage of total investments and may vary over time. - -------------------------------------------------------------------------------- 6 o ALLIANCE TECHNOLOGY FUND ----------------- PORTFOLIO SUMMARY ----------------- PORTFOLIO SUMMARY May 31, 2002 (unaudited) SECURITY TYPE BREAKDOWN 94.3% Equity 5.7% Short-Term [PIE CHART OMITTED] COUNTRY BREAKDOWN 81.4% United States 5.2% Taiwan 1.8% Singapore 1.2% Bermuda 1.2% Finland [PIE CHART OMITTED] 1.0% United Kingdom 0.9% France 0.9% Canada 0.7% Guernsey 5.7% Short-Term All data as of May 31, 2002. The Fund's security type and country breakdowns are expressed as a percentage of total investments and may vary over time. - -------------------------------------------------------------------------------- ALLIANCE TECHNOLOGY FUND o 7 - ------------------ INVESTMENT RESULTS - ------------------ INVESTMENT RESULTS AVERAGE ANNUAL TOTAL RETURNS AS OF MAY 31, 2002 Class A Shares - -------------------------------------------------------------------------------- Without Sales Charge With Sales Charge 1 Year -31.04% -33.97% 5 Years 4.78% 3.88% 10 Years 15.76% 15.26% Class B Shares - -------------------------------------------------------------------------------- Without Sales Charge With Sales Charge 1 Year -31.55% -34.29% 5 Years 4.03% 4.03% Since Inception*(a) 14.69% 14.69% Class C Shares - -------------------------------------------------------------------------------- Without Sales Charge With Sales Charge 1 Year -31.54% -32.22% 5 Years 4.02% 4.02% Since Inception* 14.58% 14.58% SEC AVERAGE ANNUAL TOTAL RETURNS (WITH SALES CHARGES) AS OF THE MOST RECENT QUARTER-END (JUNE 30, 2002) Class A Class B Class C Shares Shares Shares - -------------------------------------------------------------------------------- 1 Year -41.71% -41.99% -40.17% 5 Years 1.09% 1.24% 1.23% 10 Years 14.68% n/a n/a Since Inception* 15.34% 12.87%(a) 12.76% The Fund's investment results represent average annual total returns. The returns reflect reinvestment of dividends and/or capital gains distributions in additional shares without and with 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 vary due to different expenses associated with this class. The Fund can invest in foreign securities, which may magnify fluctuations due to changes in foreign exchange rates and the possibility of substantial volatility due to political and economic uncertainties in foreign countries. Many equity stocks, and technology stocks in particular, have experienced significant gains in recent years. There is no assurance that these gains will continue. Technology stocks, especially those of smaller, less-seasoned companies, tend to be more volatile than the overall stock market. Past performance does not guarantee future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. * Inception date of Class B and C is 5/3/93. (a) Assumes the conversion of Class B shares into Class A shares after 8 years. n/a: not available - -------------------------------------------------------------------------------- 8 o ALLIANCE TECHNOLOGY FUND -------------------- TEN LARGEST HOLDINGS -------------------- TEN LARGEST HOLDINGS May 31, 2002 (unaudited) Percent of Company Value Net Assets - -------------------------------------------------------------------------------- First Data Corp. $ 234,483,480 5.2% - -------------------------------------------------------------------------------- eBay, Inc. 231,363,026 5.2 - -------------------------------------------------------------------------------- Dell Computer Corp. 219,273,210 4.9 - -------------------------------------------------------------------------------- Taiwan Semiconductor Manufacturing Co., Ltd. (ABN Amro Bank) warrants, expiring 1/10/03 186,392,451 4.2 - -------------------------------------------------------------------------------- Fiserv, Inc. 175,372,724 3.9 - -------------------------------------------------------------------------------- Microsoft Corp. 168,148,093 3.8 - -------------------------------------------------------------------------------- DST Systems, Inc. 144,909,648 3.2 - -------------------------------------------------------------------------------- Affiliated Computer Services, Inc. Cl.A 141,603,800 3.2 - -------------------------------------------------------------------------------- Concord EFS, Inc. 138,311,900 3.1 - -------------------------------------------------------------------------------- Electronic Arts, Inc. 129,724,800 2.9 - -------------------------------------------------------------------------------- $1,769,583,132 39.6% MAJOR PORTFOLIO CHANGES Six Months Ended May 31, 2002 (unaudited) ------------------------------- Shares ------------------------------- Purchases Bought Holdings 5/31/02 - ------------------------------------------------------------------------------- Accenture, Ltd. Cl.A 2,557,700 2,557,700 - ------------------------------------------------------------------------------- Brocade Communications Systems, Inc. 1,885,800 1,885,800 - ------------------------------------------------------------------------------- Business Objects S.A. (ADR) 1,430,650 1,430,650 - ------------------------------------------------------------------------------- CIENA Corp. 7,152,950 7,152,950 - ------------------------------------------------------------------------------- Cox Communications, Inc. Cl.A 1,996,350 1,996,350 - ------------------------------------------------------------------------------- Mercury Interactive Corp. 1,315,200 1,315,200 - ------------------------------------------------------------------------------- Motorola, Inc. 4,799,800 4,823,100 - ------------------------------------------------------------------------------- PeopleSoft, Inc. 1,505,750 3,555,850 - ------------------------------------------------------------------------------- Taiwan Semiconductor Manufacturing Co., Ltd. (ABN Amro Bank) warrants, expiring 1/10/03 75,677,000 75,677,000 - ------------------------------------------------------------------------------- Viacom, Inc. 1,831,050 1,831,050 - ------------------------------------------------------------------------------- Sales Sold Holdings 5/31/02 - ------------------------------------------------------------------------------- Altera Corp. 2,549,400 4,385,100 - ------------------------------------------------------------------------------- Amdocs, Ltd. 3,709,600 1,770,500 - ------------------------------------------------------------------------------- AOL Time Warner, Inc. 6,037,500 -0- - ------------------------------------------------------------------------------- Cisco Systems, Inc. 3,991,700 7,307,500 - ------------------------------------------------------------------------------- DST Systems, Inc. 2,408,100 2,932,800 - ------------------------------------------------------------------------------- Electronic Data Systems Corp. 3,132,400 10,000 - ------------------------------------------------------------------------------- First Data Corp. 1,158,450 2,960,650 - ------------------------------------------------------------------------------- Nokia Corp. (ADR) 2,743,050 3,757,950 - ------------------------------------------------------------------------------- Taiwan Semiconductor Manufacturing Co., Ltd. (ABN Amro Bank) warrants, expiring 1/24/02 81,878,400 -0- - ------------------------------------------------------------------------------- Xilinx, Inc. 2,238,900 2,553,550 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ALLIANCE TECHNOLOGY FUND o 9 - ------------------------ PORTFOLIO OF INVESTMENTS - ------------------------ PORTFOLIO OF INVESTMENTS May 31, 2002 (unaudited) Company Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS & OTHER INVESTMENTS-94.5% Technology-88.4% Communication Equipment-7.1% ADC Telecommunications, Inc.(a) ................... 100,000 $ 335,000 CIENA Corp.(a) .................................... 7,152,950 40,485,697 Cisco Systems, Inc.(a) ............................ 7,307,500 115,312,350 Juniper Networks, Inc.(a) ......................... 3,393,700 31,459,599 Motorola, Inc. .................................... 4,823,100 77,121,369 Nokia Corp. (ADR) (Finland) ....................... 3,757,950 52,160,346 ------------ 316,874,361 ------------ Computer Hardware/Storage-7.0% Avocent Corp.(a) .................................. 2,418,579 54,659,886 Brocade Communications Systems, Inc.(a) ........... 1,885,800 37,055,970 Dell Computer Corp.(a) ............................ 8,166,600 219,273,210 EMC Corp. ......................................... 20,000 145,000 Hewlett-Packard Co. ............................... 45,603 870,561 International Business Machines Corp. ............. 10,000 804,500 Mentor Graphics Corp.(a) .......................... 20,000 325,000 Tech Data Corp.(a) ................................ 20,000 805,400 Unisys Corp.(a) ................................... 60,000 686,400 ------------ 314,625,927 ------------ Computer Services-21.5% Accenture, Ltd. Cl.A (Bermuda)(a) ................. 2,557,700 53,328,045 Affiliated Computer Services, Inc. Cl.A(a) ........ 2,545,000 141,603,800 Computer Sciences Corp.(a) ........................ 1,052,950 49,878,241 Concord EFS, Inc.(a) .............................. 4,423,150 138,311,900 DST Systems, Inc.(a) .............................. 2,932,800 144,909,648 Electronic Data Systems Corp. ..................... 10,000 528,200 Exult, Inc.(a) .................................... 2,090,300 14,527,585 First Data Corp. .................................. 2,960,650 234,483,480 Fiserv, Inc.(a) ................................... 4,122,537 175,372,724 IONA Technologies Plc (ADR) (Ireland)(a) .......... 25,000 249,500 KPMG Consulting, Inc.(a) .......................... 20,000 310,800 Sapient Corp.(a) .................................. 3,636,950 5,346,317 Sun Microsystems, Inc.(a) ......................... 60,000 413,400 Xerox Corp. ....................................... 50,000 448,500 ------------ 959,712,140 ------------ Computer Software-14.4% Adaptec, Inc. ..................................... 40,000 518,800 Amdocs, Ltd. (Guernsey)(a) ........................ 1,770,500 32,931,300 BEA Systems, Inc.(a) .............................. 20,000 215,200 Business Objects S.A. (ADR) (France)(a) ........... 1,430,650 40,816,445 Check Point Software Technologies, Ltd. (Israel)(a) 20,000 325,200 Compuware Corp.(a) ................................ 60,000 442,200 Electronic Arts, Inc.(a) .......................... 2,026,950 129,724,800 I2 Technologies, Inc.(a) .......................... 4,409,850 17,418,908 Informatica Corp.(a) .............................. 2,629,750 23,588,858 - -------------------------------------------------------------------------------- 10 o ALLIANCE TECHNOLOGY FUND ------------------------ PORTFOLIO OF INVESTMENTS ------------------------ Company Shares Value - -------------------------------------------------------------------------------- Lucent Technologies, Inc. ......................... 120,000 $ 558,000 Macrovision Corp.(a) .............................. 1,874,450 30,234,879 Mercury Interactive Corp.(a) ...................... 1,315,200 44,532,672 Microsoft Corp.(a) ................................ 3,302,850 168,148,093 Oracle Corp.(a) ................................... 2,223,750 17,567,625 PeopleSoft, Inc.(a) ............................... 3,555,850 73,001,600 Rational Software Corp.(a) ........................ 20,000 227,600 VERITAS Software Corp.(a) ......................... 2,886,250 65,431,287 -------------- 645,683,467 -------------- Contract Manufacturing-6.5% Celestica, Inc. (Canada)(a) ....................... 1,323,850 39,080,052 DDi Corp.(a) ...................................... 2,088,200 5,742,550 Flextronics International, Ltd. (Singapore)(a) .... 6,153,300 81,408,159 Sanmina Corp.(a) .................................. 10,221,150 117,543,225 Solectron Corp.(a) ................................ 6,077,900 49,109,432 -------------- 292,883,418 -------------- Internet Infrastructure-5.2% eBay, Inc.(a) ..................................... 4,190,600 231,363,026 -------------- Semi-Conductor Capital Equipment-6.7% Applied Materials, Inc.(a) ........................ 5,217,950 115,734,131 ASM Lithography Holding N.V.(Netherlands)(a) ...... 20,000 370,800 KLA-Tencor Corp.(a) ............................... 1,827,580 95,271,745 Teradyne, Inc.(a) ................................. 3,194,250 86,500,290 -------------- 297,876,966 -------------- Semi-Conductor Components-20.0% Agere Systems, Inc. Cl.A(a) ....................... 68,300 213,096 Altera Corp.(a) ................................... 4,385,100 79,063,353 AU Optronics Corp. (ADR) (Taiwan)(a) .............. 1,433,400 16,914,120 Avnet, Inc. ....................................... 15,000 346,950 Fairchild Semiconductor Corp. Cl.A(a) ............. 1,640,250 41,252,288 Intel Corp. ....................................... 3,825,000 105,646,500 Intersil Holding Corp. Cl.A(a) .................... 20,000 480,400 Maxim Integrated Products, Inc.(a) ................ 1,776,800 81,732,800 Microchip Technology, Inc.(a) ..................... 3,706,025 110,810,147 Micron Technology, Inc.(a) ........................ 2,522,050 59,469,939 STMicroelectronics N.V. (Netherlands) ............. 30,000 807,000 Taiwan Semiconductor Manufacturing Co., Ltd. (ABN Amro Bank) warrants, expiring 1/10/03 (a)(b) .............. 75,677,000 186,392,451 Texas Instruments, Inc. ........................... 3,195,600 91,617,852 United Microelectronics Corp. (ADR) (Taiwan) ...... 3,605,850 30,649,725 Xilinx, Inc.(a) ................................... 2,553,550 90,038,173 -------------- 895,434,794 -------------- Miscellaneous-0.0% Ingram Micro, Inc. Cl.A(a) ........................ 30,000 432,000 -------------- 3,954,886,099 -------------- - -------------------------------------------------------------------------------- ALLIANCE TECHNOLOGY FUND o 11 - ------------------------ PORTFOLIO OF INVESTMENTS - ------------------------ Company Shares or Value Principal Amount (000) - -------------------------------------------------------------------------------- Consumer Services-6.1% Broadcasting & Cable-3.5% Cox Communications, Inc. Cl.A(a) .................. 1,996,350 $ 67,157,214 Viacom, Inc.(a) ................................... 1,831,050 89,648,208 -------------- 156,805,422 -------------- Cellular Communications-2.0% Sprint Corp.-PCS Group Cl.A(a) .................... 4,265,900 44,535,996 Vodafone Group Plc (ADR) (United Kingdom) ......... 3,058,073 45,657,030 -------------- 90,193,026 -------------- Entertainment & Leisure-0.6% THQ, Inc.(a) ...................................... 747,250 23,912,000 -------------- 270,910,448 -------------- Total Common Stocks & Other Investments (cost $4,512,526,755) .......................... 4,225,796,547 -------------- SHORT-TERM INVESTMENT-5.7% Time Deposit-5.7% State Street Euro Dollar 1.25%, 6/03/02 (amortized cost $257,640,000) .................. $ 257,640 257,640,000 -------------- Total Investments-100.2% (cost $4,770,166,755) .......................... 4,483,436,547 Other assets less liabilities-(0.2%) .............. (10,603,259) -------------- Net Assets-100% ................................... $4,472,833,288 ============== (a) Non-income producing security. (b) Security exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to certain qualified buyers. At May 31, 2002, the aggregate market value of this security amounted to $186,392,451 representing 4.2% of net assets. Glossary: ADR - American Depositary Receipt See notes to financial statements. - -------------------------------------------------------------------------------- 12 o ALLIANCE TECHNOLOGY FUND --------------------------------- STATEMENT OF ASSETS & LIABILITIES --------------------------------- STATEMENT OF ASSETS & LIABILITIES May 31, 2002 (unaudited) Assets Investments in securities, at value (cost $4,770,166,755) . $ 4,483,436,547 Cash ...................................................... 603 Collateral held for securities loaned ..................... 909,255,900 Receivable for investment securities sold ................. 14,516,104 Receivable for capital stock sold ......................... 1,222,561 Interest and dividends receivable ......................... 97,218 --------------- Total assets .............................................. 5,408,528,933 --------------- Liabilities Payable for collateral received on securities loaned ...... 909,255,900 Advisory fee payable ...................................... 11,332,969 Payable for capital stock redeemed ........................ 8,484,388 Payable for investment securities purchased ............... 4,500,179 Distribution fee payable .................................. 745,752 Accrued expenses and other liabilities .................... 1,376,457 --------------- Total liabilities ......................................... 935,695,645 --------------- Net Assets ................................................ $ 4,472,833,288 =============== Composition of Net Assets Capital stock, at par ..................................... $ 872,194 Additional paid-in capital ................................ 6,954,099,916 Accumulated net investment loss ........................... (54,098,555) Accumulated net realized loss on investments .............. (2,141,310,059) Net unrealized depreciation of investments ................ (286,730,208) --------------- $ 4,472,833,288 =============== Calculation of Maximum Offering Price Class A Shares Net asset value and redemption price per share ($1,512,202,289 / 28,058,854 shares of capital stock issued and outstanding) ................................ $53.89 Sales charge--4.25% of public offering price .............. 2.39 ------ Maximum offering price .................................... $56.28 ====== Class B Shares Net asset value and offering price per share ($2,251,509,016 / 45,149,757 shares of capital stock issued and outstanding) ................................ $49.87 ====== Class C Shares Net asset value and offering price per share ($594,236,447 / 11,918,859 shares of capital stock issued and outstanding) ................................ $49.86 ====== Advisor Class Shares Net asset value, redemption and offering price per share ($114,885,536 / 2,091,944 shares of capital stock issued and outstanding) ................................ $54.92 ====== See notes to financial statements. - -------------------------------------------------------------------------------- ALLIANCE TECHNOLOGY FUND o 13 - ----------------------- STATEMENT OF OPERATIONS - ----------------------- STATEMENT OF OPERATIONS Six Months Ended May 31, 2002 (unaudited) Investment Income Interest .................................. $ 2,763,601 Dividends (net of foreign taxes withheld of $166,603) ........................... 1,894,449 $ 4,658,050 ----------- Expenses Advisory fee .............................. 23,873,869 Distribution fee--Class A ................. 2,748,417 Distribution fee--Class B ................. 13,845,794 Distribution fee--Class C ................. 3,692,589 Transfer agency ........................... 12,906,902 Printing .................................. 1,010,114 Custodian ................................. 263,140 Audit and legal ........................... 85,698 Registration .............................. 78,814 Administrative ............................ 71,750 Directors' fees ........................... 52,000 Miscellaneous ............................. 127,518 ----------- Total expenses ............................ 58,756,605 --------------- Net investment loss ....................... (54,098,555) --------------- Realized and Unrealized Loss on Investments Net realized loss on investment transactions ........................... (516,286,936) Net change in unrealized appreciation/depreciation of investments ............................ (533,315,976) --------------- Net loss on investments ................... (1,049,602,912) --------------- Net Decrease in Net Assets from Operations ............................. $(1,103,701,467) =============== See notes to financial statements. - -------------------------------------------------------------------------------- 14 o ALLIANCE TECHNOLOGY FUND ---------------------------------- STATEMENT OF CHANGES IN NET ASSETS ---------------------------------- STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended Year Ended May 31, 2002 November 30, (unaudited) 2001 =============== =============== Decrease in Net Assets from Operations Net investment loss ........................ $ (54,098,555) $ (112,655,040) Net realized loss on investment and written options transactions ............ (516,286,936) (1,584,178,750) Net change in unrealized appreciation/depreciation of investments ............................. (533,315,976) (571,500,103) --------------- --------------- Net decrease in net assets from operations ......................... (1,103,701,467) (2,268,333,893) Distributions to Shareholders from Net realized gain on investments Class A ................................. -0- (160,639,037) Class B ................................. -0- (306,607,828) Class C ................................. -0- (81,314,221) Advisor Class ........................... -0- (17,326,175) Distributions in excess of net realized gain on investments Class A ................................. -0- (11,905,786) Class B ................................. -0- (22,724,283) Class C ................................. -0- (6,026,615) Advisor Class ........................... -0- (1,284,132) Capital Stock Transactions Net increase (decrease) .................... (509,457,722) 68,030,329 --------------- --------------- Total decrease ............................. (1,613,159,189) (2,808,131,641) Net Assets Beginning of period ........................ 6,085,992,477 8,894,124,118 --------------- --------------- End of period .............................. $ 4,472,833,288 $ 6,085,992,477 =============== ===============
See notes to financial statements. - -------------------------------------------------------------------------------- ALLIANCE TECHNOLOGY FUND o 15 - ----------------------------- NOTES TO FINANCIAL STATEMENTS - ----------------------------- NOTES TO FINANCIAL STATEMENTS May 31, 2002 (unaudited) 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 may 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 accounting principles generally accepted in the United States, 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 ex change, on a foreign securities exchange (other than foreign securities exchanges whose operations are similar to those of the United States over-the-counter market) or on The Nasdaq Stock Market, Inc. 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 (but excluding securities traded on The Nasdaq Stock Market, Inc.) 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. - -------------------------------------------------------------------------------- 16 o ALLIANCE TECHNOLOGY FUND ----------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- 2. Currency Translation Assets and liabilities denominated in foreign currencies and commitments under forward exchange currency contracts are translated into U.S. dollars at the mean of the quoted bid and asked price of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated at the rates of exchange prevailing when such securities were acquired or sold. Income and expenses are translated at rates of exchange prevailing when accrued. Net realized gain or loss on foreign currency transactions represents foreign exchange gains and losses from sales and maturities of investments and foreign currency contracts, the holding of foreign currencies, currency gains or losses realized between the trade and settlement dates on foreign security transactions, and the difference between the amounts of dividends, interest and foreign taxes receivable recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized currency gains and losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of net unrealized appreciation or depreciation of investments and foreign currency denominated assets and liabilities. 3. 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. 4. 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. 5. Income and Expenses All income earned and expenses incurred by the Fund are borne on a pro-rata basis by each outstanding class of shares, based on the proportionate interest in the Fund represented by the net assets of such class, except that the Fund's Class B and Class C shares bear higher distribution and transfer agent fees than Class A shares and the Advisor Class shares have no distribution fees. 6. Dividends and Distributions Dividends and distributions to shareholders are recorded on the ex-dividend date. Income dividends and capital gain distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with accounting principles generally accepted in the United States. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification. - -------------------------------------------------------------------------------- ALLIANCE TECHNOLOGY FUND o 17 - ----------------------------- NOTES TO FINANCIAL STATEMENTS - ----------------------------- 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"), a quarterly advisory fee equal to the following percentages of the value of the Fund's aggregate net assets at the close of business on the last business day of the previous quarter: .25 of 1.00% of the first $10 billion, .25 of .975% of the next $2.5 billion, .25 of .95% of the next $2.5 billion, .25 of .925% of the next $2.5 billion, .25 of .90% of the next $2.5 billion, .25 of .875% of the next $2.5 billion and .25 of .85% of the net assets in excess of $22.5 billion. Pursuant to the advisory agreement, the Fund paid $71,750 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, 2002. The Fund compensates Alliance Global Investor Services, Inc. (AGIS), 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 $6,966,700 for the six months ended May 31, 2002. For the six months ended May 31, 2002, the Fund's expenses were reduced by $37,698 under an expense offset arrangement with AGIS. Alliance Fund Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary of the Adviser, serves as the distributor of the Fund's shares. The Distributor has advised the Fund that it has received front-end sales charges of $231,156 from the sales of Class A shares and $36,160, $2,662,314 and $54,995 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, 2002. Brokerage commissions paid on investment transactions for the six months ended May 31, 2002 amounted to $5,855,947, of which $334,408 was paid to Sanford C. Bernstein & Co. LLC, 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 distribution and servicing fees 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 are no distribution and servicing fees 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 advised the Fund that it has incurred expenses in excess of the distribution costs reimbursed by the Fund in the amount of $96,068,440 and $6,846,068 for Class B and Class C - -------------------------------------------------------------------------------- 18 o ALLIANCE TECHNOLOGY FUND ----------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- 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 $1,819,551,668 and $2,294,989,652, respectively, for the six months ended May 31, 2002. There were no purchases or sales of U.S. government and government agency obligations for the six months ended May 31, 2002. At May 31, 2002, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes. Accordingly, gross unrealized appreciation of investments was $747,009,613 and gross unrealized depreciation of investments was $1,033,739,821 resulting in net unrealized depreciation of $286,730,208. At November 30, 2001, the Fund had a capital loss carryforward of $1,492,777,530 which expires in 2009. 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 in- - -------------------------------------------------------------------------------- ALLIANCE TECHNOLOGY FUND o 19 - ----------------------------- NOTES TO FINANCIAL STATEMENTS - ----------------------------- volved 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. There were no transactions in options written for the six months ended May 31, 2002. NOTE E Securities Lending The Fund has entered into a securities lending agreement with AG Edwards & Sons, Inc. (the "Lending Agent"). Under the terms of the agreement, the Lending Agent, on behalf of the Fund, administers the lending of portfolio securities to certain broker-dealers. In return, the Fund receives fee income from the lending transactions. All loans are continuously secured by collateral exceeding the value of the securities loaned. All collateral consists of either cash or U.S. Government securities. The Lending Agent invests the cash collateral in an eligible money market vehicle in accordance with the investment restrictions of the Fund. AG Edwards & Sons, Inc. will indemnify the Fund for any loss resulting from a borrower's failure to return a loaned security when due. As of May 31, 2002, the Fund had loaned securities with a value of $867,276,465 and received cash collateral of $909,255,900. For the six months ended May 31, 2002, the Fund received fee income of $493,185 which is included in interest income in the accompanying statement of operations. NOTE F 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, 2002 November 30, May 31, 2002 November 30, (unaudited) 2001 (unaudited) 2001 --------------------------------------------------------------------------- Class A Shares sold 108,054,724 114,657,376 $ 6,682,025,402 $ 8,391,474,868 - ---------------------------------------------------------------------------------------------------- Shares issued in reinvestment of distributions -0- 1,731,409 -0- 160,731,393 - ---------------------------------------------------------------------------------------------------- Shares converted from Class B 529,040 397,548 29,669,857 27,497,702 - ---------------------------------------------------------------------------------------------------- Shares redeemed (109,257,184) (115,866,069) (6,803,805,780) (8,463,612,395) - ---------------------------------------------------------------------------------------------------- Net increase (decrease) (673,420) 920,264 $ (92,110,521) $ 116,091,568 ====================================================================================================
- -------------------------------------------------------------------------------- 20 o ALLIANCE TECHNOLOGY FUND ----------------------------- NOTES TO FINANCIAL STATEMENTS -----------------------------
--------------------------------- ----------------------------------- Shares Amount --------------------------------- ----------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended May 31, 2002 November 30, May 31, 2002 November 30, (unaudited) 2001 (unaudited) 2001 ----------------------------------------------------------------------- Class B Shares sold 1,967,620 6,975,289 $ 115,927,559 $ 517,657,257 - ----------------------------------------------------------------------------------------------- Shares issued in reinvestment of distributions -0- 3,510,950 -0- 304,919,477 - ----------------------------------------------------------------------------------------------- Shares converted to Class A (567,732) (426,323) (29,669,857) (27,497,702) - ----------------------------------------------------------------------------------------------- Shares redeemed (5,919,601) (12,871,990) (341,523,164) (878,975,463) - ----------------------------------------------------------------------------------------------- Net decrease (4,519,713) (2,812,074) $(255,265,462) $ (83,896,431) =============================================================================================== Class C Shares sold 2,406,484 7,149,199 $ 142,384,985 $ 532,668,338 - ----------------------------------------------------------------------------------------------- Shares issued in reinvestment of distributions -0- 942,855 -0- 81,844,636 - ----------------------------------------------------------------------------------------------- Shares redeemed (3,907,649) (8,662,332) (227,918,428) (620,382,154) - ----------------------------------------------------------------------------------------------- Net decrease (1,501,165) (570,278) $ (85,533,443) $ (5,869,180) =============================================================================================== Advisor Class Shares sold 621,236 1,679,134 $ 40,544,777 $ 136,048,692 - ----------------------------------------------------------------------------------------------- Shares issued in reinvestment of distributions -0- 188,377 -0- 17,726,534 - ----------------------------------------------------------------------------------------------- Shares redeemed (1,918,134) (1,469,384) (117,093,073) (112,070,854) - ----------------------------------------------------------------------------------------------- Net increase (decrease) (1,296,898) 398,127 $ (76,548,296) $ 41,704,372 ===============================================================================================
NOTE G Bank Borrowing A number of open-end mutual funds managed by the Adviser, including the Fund, participate in a $750 million revolving credit facility (the "Facility") intended to provide short-term financing if necessary, subject to certain restrictions in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Fund did not utilize the Facility during the six months ended May 31, 2002. - -------------------------------------------------------------------------------- ALLIANCE TECHNOLOGY FUND o 21 - -------------------- FINANCIAL HIGHLIGHTS - -------------------- FINANCIAL HIGHLIGHTS Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
------------------------------------------------------------------------------------------ Class A ------------------------------------------------------------------------------------------ Six Months Ended Year Ended November 30, May 31, 2002 ----------------------------------------------------------------------- (unaudited) 2001 2000 1999 1998 1997 ------------------------------------------------------------------------------------------ Net asset value, beginning of period ............ $ 67.05 $ 95.32 $ 111.46 $ 68.60 $ 54.44 $ 51.15 ------------------------------------------------------------------------------------------ Income From Investment Operations Net investment loss(a) ........... (.48) (.82) (1.35) (.99) (.68) (.51) Net realized and unrealized gain (loss) on investment, written options and foreign currency transactions .......... (12.68) (21.17) (10.75) 49.02 15.42 4.22 ------------------------------------------------------------------------------------------ Net increase (decrease) in net asset value from operations ..................... (13.16) (21.99) (12.10) 48.03 14.74 3.71 ------------------------------------------------------------------------------------------ Less: Distributions Distributions from net realized gain on investments ............ -0- (5.86) (4.04) (5.17) (.58) (.42) Distributions in excess of net realized gain on investments ... -0- (.42) -0- -0- -0- -0- ------------------------------------------------------------------------------------------ Total distributions .............. -0- (6.28) (4.04) (5.17) (.58) (.42) ------------------------------------------------------------------------------------------ Net asset value, end of period ... $ 53.89 $ 67.05 $ 95.32 $ 111.46 $ 68.60 $ 54.44 ========================================================================================== Total Return Total investment return based on net asset value(b) .......... (19.63)% (24.90)% (11.48)% 74.67% 27.36% 7.32% Ratios/Supplemental Data Net assets, end of period (000's omitted) ................ $1,512,202 $1,926,473 $2,650,904 $2,167,060 $824,636 $624,716 Ratio of expenses to average net assets ............. 1.68%(c) 1.58% 1.50% 1.68%(d) 1.66%(d) 1.67%(d) Ratio of net investment loss to average net assets .......... (1.51)%(c) (1.08)% (.98)% (1.11)% (1.13)% (.97)% Portfolio turnover rate .......... 36% 55% 46% 54% 67% 51%
See footnote summary on page 26. - -------------------------------------------------------------------------------- 22 o ALLIANCE TECHNOLOGY FUND -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
--------------------------------------------------------------------------------------------- Class B --------------------------------------------------------------------------------------------- Six Months Ended Year Ended November 30, May 31, 2002 ------------------------------------------------------------------------- (unaudited) 2001 2000 1999 1998 1997 --------------------------------------------------------------------------------------------- Net asset value, beginning of period ......... $ 62.27 $ 89.59 $ 105.73 $ 65.75 $ 52.58 $ 49.76 --------------------------------------------------------------------------------------------- Income From Investment Operations Net investment loss(a) ........ (.65) (1.28) (2.17) (1.54) (1.08) (.88) Net realized and unrealized gain (loss) on investment, written options and foreign currency transactions ....... (11.75) (19.76) (9.93) 46.69 14.83 4.12 --------------------------------------------------------------------------------------------- Net increase (decrease) in net asset value from operations .................. (12.40) (21.04) (12.10) 45.15 13.75 3.24 --------------------------------------------------------------------------------------------- Less: Distributions Distributions from net realized gain on investments ......... -0- (5.86) (4.04) (5.17) (.58) (.42) Distributions in excess of net realized gain on investments -0- (.42) -0- -0- -0- -0- --------------------------------------------------------------------------------------------- Total distributions ........... -0- (6.28) (4.04) (5.17) (.58) (.42) --------------------------------------------------------------------------------------------- Net asset value, end of period $ 49.87 $ 62.27 $ 89.59 $ 105.73 $ 65.75 $ 52.58 ============================================================================================= Total Return Total investment return based on net asset value(b) ....... (19.91)% (25.46)% (12.12)% 73.44% 26.44% 6.57% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $2,251,509 $3,092,947 $4,701,567 $3,922,584 $1,490,578 $1,053,436 Ratio of expenses to average net assets .......... 2.40%(c) 2.31% 2.20% 2.39%(d) 2.39%(d) 2.38%(d) Ratio of net investment loss to average net assets ....... (2.24)%(c) (1.80)% (1.68)% (1.83)% (1.86)% (1.70)% Portfolio turnover rate ....... 36% 55% 46% 54% 67% 51%
See footnote summary on page 26. - -------------------------------------------------------------------------------- ALLIANCE TECHNOLOGY FUND o 23 - -------------------- FINANCIAL HIGHLIGHTS - -------------------- Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
---------------------------------------------------------------------------------------- Class C ---------------------------------------------------------------------------------------- Six Months Ended Year Ended November 30, May 31, 2002 -------------------------------------------------------------------- (unaudited) 2001 2000 1999 1998 1997 ---------------------------------------------------------------------------------------- Net asset value, beginning of period ......... $ 62.25 $ 89.55 $ 105.69 $ 65.74 $ 52.57 $ 49.76 ---------------------------------------------------------------------------------------- Income From Investment Operations Net investment loss(a) ........ (.64) (1.28) (2.19) (1.57) (1.08) (.88) Net realized and unrealized gain (loss) on investment, written options and foreign currency transactions ....... (11.75) (19.74) (9.91) 46.69 14.83 4.11 ---------------------------------------------------------------------------------------- Net increase (decrease) in net asset value from operations .................. (12.39) (21.02) (12.10) 45.12 13.75 3.23 ---------------------------------------------------------------------------------------- Less: Distributions Distributions from net realized gain on investments ......... -0- (5.86) (4.04) (5.17) (.58) (.42) Distributions in excess of net realized gain on investments -0- (.42) -0- -0- -0- -0- ---------------------------------------------------------------------------------------- Total distributions ........... -0- (6.28) (4.04) (5.17) (.58) (.42) ---------------------------------------------------------------------------------------- Net asset value, end of period $ 49.86 $ 62.25 $ 89.55 $ 105.69 $ 65.74 $ 52.57 ======================================================================================== Total Return Total investment return based on net asset value(b) ...... (19.90)% (25.45)% (12.13)% 73.40% 26.44% 6.55% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $594,236 $835,406 $1,252,765 $907,707 $271,320 $184,194 Ratio of expenses to average net assets .......... 2.38%(c) 2.30% 2.21% 2.41%(d) 2.40%(d) 2.38%(d) Ratio of net investment loss to average net assets ....... (2.21)%(c) (1.80)% (1.69)% (1.85)% (1.87)% (1.70)% Portfolio turnover rate ....... 36% 55% 46% 54% 67% 51%
See footnote summary on page 26. - -------------------------------------------------------------------------------- 24 o ALLIANCE TECHNOLOGY FUND -------------------- FINANCIAL HIGHLIGHTS -------------------- Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
-------------------------------------------------------------------------------------- Advisor Class -------------------------------------------------------------------------------------- Six Months Ended Year Ended November 30, May 31, 2002 ------------------------------------------------------------------ (unaudited) 2001 2000 1999 1998 1997 -------------------------------------------------------------------------------------- Net asset value, beginning of period ......... $ 68.21 $ 96.60 $ 112.59 $ 69.04 $ 54.63 $ 51.17 -------------------------------------------------------------------------------------- Income From Investment Operations Net investment loss(a) ........ (.39) (.60) (.91) (.68) (.50) (.45) Net realized and unrealized gain (loss) on investment, written options and foreign currency transactions ....... (12.90) (21.51) (11.04) 49.40 15.49 4.33 -------------------------------------------------------------------------------------- Net increase (decrease) in net asset value from operations .................. (13.29) (22.11) (11.95) 48.72 14.99 3.88 -------------------------------------------------------------------------------------- Less: Distributions Distributions from net realized gain on investments ......... -0- (5.89) (4.04) (5.17) (.58) (.42) Distributions in excess of net realized gain on investments -0- (.39) -0- -0- -0- -0- -------------------------------------------------------------------------------------- Total distributions ........... -0- (6.28) (4.04) (5.17) (.58) (.42) -------------------------------------------------------------------------------------- Net asset value, end of period $ 54.92 $ 68.21 $ 96.60 $ 112.59 $ 69.04 $ 54.63 ====================================================================================== Total Return Total investment return based on net asset value(b) ...... (19.48)% (24.68)% (11.22)% 75.22% 27.73% 7.65% Ratios/Supplemental Data Net assets, end of period (000's omitted) ............. $114,886 $231,167 $288,889 $330,404 $230,295 $167,120 Ratio of expenses to average net assets .......... 1.35%(c) 1.27% 1.19% 1.35%(d) 1.37%(d) 1.39%(d) Ratio of net investment loss to average net assets ....... (1.18)%(c) (.78)% (.66)% (.78)% (.84)% (.81)% Portfolio turnover rate ....... 36% 55% 46% 54% 67% 51%
See footnote summary on page 26. - -------------------------------------------------------------------------------- ALLIANCE TECHNOLOGY FUND o 25 - -------------------- FINANCIAL HIGHLIGHTS - -------------------- (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 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. (c) Annualized. (d) Ratio reflects expenses grossed up for expense offset arrangement with the Transfer Agent. For the periods shown below, the net expense ratios were as follows: Year Ended November 30, ------------------------------- 1999 1998 1997 ------------------------------- Class A............. 1.66% 1.65% 1.66% Class B............. 2.38% 2.38% 2.36% Class C............. 2.40% 2.38% 2.37% Advisor Class....... 1.34% 1.36% 1.38% - -------------------------------------------------------------------------------- 26 o ALLIANCE TECHNOLOGY FUND ---------------------------- GLOSSARY OF INVESTMENT TERMS ---------------------------- GLOSSARY OF INVESTMENT TERMS benchmark A standard by which a fund's performance can be measured. A benchmark is usually an unmanaged index, such as the Standard & Poor's 500 Stock Index or the Lehman Brothers Aggregate Bond Index. equity Another term for stock. index A compilation of securities of similar types of companies that is used to measure the investment performance of securities within that specific market. An index is often used as a benchmark for a mutual fund. An investor cannot invest directly in an index. net asset value (NAV) The value of a mutual fund's total assets, minus its liabilities, divided by the number of shares outstanding. sector A group of securities that are similar with respect to maturity, type, rating, industry and/or coupon. Refers to a distinct part of the economy, for example, the technology sector. share A unit which represents ownership in a mutual fund or stock. - -------------------------------------------------------------------------------- ALLIANCE TECHNOLOGY FUND o 27 - ---------------- ALLIANCE CAPITAL - ---------------- ALLIANCE CAPITAL The Investment Professional's Choice Alliance Capital is a leading global investment management firm with approximately $412 billion in assets under management. In recognition of our far-reaching investment capabilities, Alliance Capital has been selected by employee benefit plans for 43 of the FORTUNE 100 companies and public retirement funds in 44 states as well as by hundreds of foundations, endowments and foreign institutions. By sharing this institutional money management experience with millions of mutual fund investors as well, Alliance stands out as a "manager of choice" for thousands of investment professionals around the world. At Alliance Capital, we place a premium on investment research. We carefully select securities based on our proprietary research, conducted by over 600 investment professionals in 37 cities and 19 countries. Our commitment to this process means that our mutual fund shareholders have their portfolios managed by the same experienced analysts and portfolio managers who manage the pension funds of some of America's largest institutional investors. All information on Alliance Capital is as of 6/30/02. - -------------------------------------------------------------------------------- 28 o ALLIANCE TECHNOLOGY FUND -------------------------------- ALLIANCE CAPITAL AT YOUR SERVICE -------------------------------- ALLIANCE CAPITAL AT YOUR SERVICE At Alliance Capital, shareholder satisfaction is among our top priorities. That is why we provide our shareholders with a wide variety of products and time-saving services. o Automatic Reinvestment You may choose to reinvest fund dividend and capital-gains distributions automatically at no charge. o Automatic Investment Program Build your investment account by having money automatically transferred from your bank account on a regular basis. o Dividend Direction Plans You may cross-invest dividends from one fund into the same class of shares in any other fund without incurring a sales charge--a good way to diversify your assets. o Auto Exchange You may choose to automatically exchange money from one Alliance Capital fund to another on a regular basis. This can be a good way to dollar cost average*, helping you to invest with discipline. o Systematic Withdrawals Regular checks for specified amounts can be sent to you or to your brokerage or bank account. o E-Statements and Electronic Delivery Sign up to view your quarterly mutual fund, retirement or CollegeBoundfund(SM) account statements online, rather than wait to receive paper copies in the mail. You may also sign up for electronic delivery of your legal documents so you can receive your semi-annual and annual shareholder reports, prospectuses and prospectus supplements online. It's easy, convenient and saves you time and storage space. Sign up today at www.alliancecapital.com. Simply go to Individual Investor, U.S., Account Access. o A Choice of Purchase Plans Most funds are available in A, B, and C Class shares. Many funds are also available in Advisor Class shares. o Telephone Transaction Purchases, transfers and redemptions can be made by calling (800) 221-5672. Our knowledgeable representatives are available to assist you Monday through Friday from 8:30 a.m. to 7:00 p.m. Eastern Standard Time. o Alliance Answer: 24-Hour Information For your convenience, our computerized audio response system is available to you 24-hours a day by calling (800) 251-0539. Using any touch tone phone, you can hear share prices, get account balances, review details of your last transaction, obtain dividend information, order statements/checkbooks, review fund objectives, and Watchlist information, order additional copies of statements and request additional year-end tax forms (available from February 1 to May 31). o The Alliance Advance A quarterly newsletter discussing investment strategies, economic news and other mutual fund matters. o Our Web Site at www.alliancecapital.com gives you a broad perspective of Alliance Capital. You can reach Alliance mutual fund and account information more directly from www.investor.alliancecapital.com. Either way, you'll have access to extensive Alliance fund data, answers to frequently asked questions, and financial planning tools and calculators. * Dollar cost averaging does not assure a profit nor protect against loss in a declining market. Since this strategy involves continuous investments in securities, regardless of fluctuating prices, investors should consider their financial ability to invest during periods of low price levels. - -------------------------------------------------------------------------------- ALLIANCE TECHNOLOGY FUND o 29 - ------------------ BOARD OF DIRECTORS - ------------------ BOARD OF DIRECTORS John D. Carifa, Chairman and President Robert C. Alexander(1) David H. Dievler(1) William H. Foulk, Jr.(1) D. James Guzy(1) Marshall C. Turner, Jr.(1) OFFICERS Gerald T. Malone, Senior Vice President Thomas J. Bardong, Vice President Andrew J. Frank, 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 LLP One Battery Park Plaza New York, NY 10004 Transfer Agent Alliance Global Investor Services, Inc. P.O. Box 1520 Secaucus, NJ 07096-1520 Toll-Free (800) 221-5672 Independent Auditors Ernst & Young LLP 5 Times Square New York, NY 10036 (1) Member of the Audit Committee. - -------------------------------------------------------------------------------- 30 o ALLIANCE TECHNOLOGY FUND -------------------------------- ALLIANCE CAPITAL FAMILY OF FUNDS -------------------------------- ALLIANCE CAPITAL FAMILY OF FUNDS U.S. Stock Funds Growth & Income Fund Growth Fund Health Care Fund Mid-Cap Growth Fund* Premier Growth Fund Quasar Fund Technology Fund Global & International Stock Funds All-Asia Investment Fund Global Small Cap Fund Greater China '97 Fund International Fund International Premier Growth Fund The Korean Investment Fund New Europe Fund Worldwide Privatization Fund AllianceBernstein Value Funds Disciplined Value Fund Global Value Fund International Value Fund Real Estate Investment Fund Small Cap Value Fund Utility Income Fund Value Fund Select Investor Series Biotechnology Portfolio Premier Portfolio Small Cap Growth Portfolio Technology Portfolio Asset Allocation Funds Balanced Shares Conservative Investors Fund Growth Investors Fund Taxable Bond Funds Americas Government Income Trust** Corporate Bond Portfolio Emerging Market Debt Fund*** Global Strategic Income Trust High Yield Fund Multi-Market Strategy Trust Quality Bond Portfolio U.S. Government Portfolio Tax-Exempt Bond Funds National Intermediate Diversified Insured National Arizona California Intermediate California Insured California Florida Massachusetts Michigan Minnesota New Jersey New York Intermediate New York Ohio Pennsylvania Virginia Closed-End Funds All-Market Advantage Fund ACM Income Fund ACM Government Opportunity Fund ACM Managed Dollar Income Fund ACM Managed Income Fund ACM Municipal Securities Income Fund California Municipal Income Fund National Municipal Income Fund New York Municipal Income Fund The Southern Africa Fund The Spain Fund World Dollar Government Fund World Dollar Government Fund II Alliance also offers AFD Exchange Reserves, which serves as the money market fund exchange vehicle for the Alliance mutual funds. To obtain a prospectus for any Alliance Capital fund, call your investment professional, or call Alliance at (800) 227-4618. * The Alliance Fund changed its name to Alliance Mid-Cap Growth Fund on February 1, 2002. ** Alliance North American Government Income Trust changed its name to Alliance Americas Government Income Trust on March 1, 2002. *** Alliance Global Dollar Government Fund changed its name to Alliance Emerging Market Debt Fund on March 1, 2002. - -------------------------------------------------------------------------------- ALLIANCE TECHNOLOGY FUND o 31 NOTES - -------------------------------------------------------------------------------- 32 o ALLIANCE TECHNOLOGY FUND Alliance Technology Fund 1345 Avenue of the Americas New York, NY 10105 (800) 221-5672 Alliance Capital [LOGO](R) The Investment Professional's Choice (R) These registered service marks used under license from the owner, Alliance Capital Management L.P. TECSR0502 -----END PRIVACY-ENHANCED MESSAGE-----