N-CSRS 1 edg11647_sr.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-03131 ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND, INC. (Exact name of registrant as specified in charter) 1345 Avenue of the Americas, New York, New York 10105 (Address of principal executive offices) (Zip code) Mark R. Manley Alliance Capital Management L.P. 1345 Avenue of the Americas New York, New York 10105 (Name and address of agent for service) Registrant's telephone number, including area code: (800) 221-5672 Date of fiscal year end: July 31, 2006 Date of reporting period: January 31, 2006 ITEM 1. REPORTS TO STOCKHOLDERS. AllianceBernstein Global Technology Fund Semi-Annual Report January 31, 2006 [LOGO] ALLIANCEBERNSTEIN INVESTMENTS Investment Products Offered ----------------------------- o Are Not FDIC Insured o May Lose Value o Are Not Bank Guaranteed ----------------------------- The investment return and principal value of an investment in the Fund will fluctuate as the prices of the individual securities in which it invests fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund's prospectus, which contains this and other information, visit our web site at www.alliancebernstein.com or call your financial advisor or AllianceBernstein(R) at (800) 227-4618. Please read the prospectus carefully before you invest. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com. This shareholder report must be preceded or accompanied by the Fund's prospectus for individuals who are not current shareholders of the Fund. You may obtain a description of the Fund's proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AllianceBernstein's web site at www.alliancebernstein.com, or go to the Securities and Exchange Commission's (the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800) 227-4618. The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the Commission's Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. AllianceBernstein publishes full portfolio holdings for the Fund monthly at www.alliancebernstein.com. AllianceBernstein Investments, Inc. is an affiliate of AllianceBernstein L.P., the manager of the funds, and is a member of the NASD. AllianceBernstein(R) and the AB Logo are registered trademarks and service marks used by permission of the owner, AllianceBernstein L.P. March 16, 2006 Semi-Annual Report This report provides management's discussion of fund performance for AllianceBernstein Global Technology Fund (the "Fund") for the semi-annual reporting period ended January 31, 2006. 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 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 table on page 4 shows the Fund's performance compared to its benchmark, the Morgan Stanley Capital International (MSCI) World Information Technology Index, for the six- and 12-month periods ended January 31, 2006. Also included is the performance of the MSCI World Index, and the Lipper Science and Technology Index (the "Lipper Index"), a performance index of the largest qualifying funds that have a science and technology investment objective. The Fund achieved positive investment returns during both the six- and 12-month periods ended January 31, 2006. These positive returns were driven primarily by strong industry allocation decisions and good stock selection. During the six-month period ended January 31, 2006, the Fund outperformed its benchmark, the MSCI World Information Technology Index (MWIT) and its peer group, as reflected by the Lipper Index. Exceptionally strong stock selection among semiconductor components resulted in positive portfolio results as the Fund's analyst team identified the winners in the industry. Selected positions among cellular services and Internet companies also contributed positively. Weak stock selection among software, computer services and telephone utility companies hurt relative results. During the 12-month period ended January 31, 2006, the Fund solidly outperformed the MSCI World Information Technology Index, but lagged the Lipper peer group slightly. Outperformance against the MWIT was driven primarily by good industry allo- ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 1 cation decisions, although stock selection was also positive. In particular, stock selection among semiconductor component and cellular services names, and overweight allocations toward electronic component and Internet stocks, drove positive relative performance. Poor stock selection among software and communication equipment companies, and allocation to broadcast and media stocks, hurt relative results. Market Review and Investment Strategy Technology stocks in aggregate traded higher, though technology continued to underperform the broader market, during the six- and 12-month periods ended January 31, 2006. Such economically-sensitive sectors as energy, aerospace/defense, basic industrials and transportation all posted significantly higher returns compared to technology again in 2005, as those cyclical companies reported strong profit growth fueled by the global economic cycle. Within the technology sector, electronic components, Internet, semiconductor capital equipment, and computer services stocks outperformed, while contract manufacturing, hardware, and semiconductor component stocks lagged. During the six-month period ended January 31, 2006, the Fund's positions in communication equipment, Internet, computer services, and electronics were increased. Meanwhile, holdings in the hardware/storage, electronic components, and telecommunications sectors were cut. Also, some semiconductor component positions were trimmed in favor of adding to semiconductor capital equipment exposures. The Fund focuses on companies where AllianceBernstein's analyst team has identified potential to exceed expectations through strong product cycles, market share gains or sustained or accelerating growth. The Fund continues to diversify across multiple industries within the technology sector and to take a global perspective on the technology market. 2 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND HISTORICAL PERFORMANCE An Important Note About the Value of Historical Performance The performance shown on the following pages represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com. The investment return and principal value of an investment in the Fund will fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund's prospectus, which contains this and other information, visit our web site at www.alliancebernstein.com or call your financial advisor or AllianceBernstein at (800) 227-4618. You should read the prospectus carefully before you invest. Returns are annualized for periods longer than one year. All fees and expenses related to the operation of the Fund have been deducted. NAV returns do not reflect sales charges; if sales charges were reflected, the Fund's quoted performance would be lower. SEC returns reflect the applicable sales charges for each share class: a 4.25% maximum front-end sales charge for Class A shares; the applicable contingent deferred sales charge for Class B shares (4% year 1, 3% year 2, 2% year 3, 1% year 4); a 1% 1 year contingent deferred sales charge for Class C shares. Returns for the different share classes will vary due to different expenses associated with each class. Performance assumes reinvestment of distributions and does not account for taxes. Benchmark Disclosure Neither the unmanaged Morgan Stanley Capital International (MSCI) World Information Technology Index nor the MSCI World Index reflects fees and expenses associated with the active management of a mutual fund portfolio. The MSCI World Information Technology Index is a capitalization-weighted index that monitors the performance of technology stocks from around the world. The MSCI World Index is a free float-adjusted market capitalization index that is designed to measure global developed market equity performance. 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 some may have different investment policies and sales and management fees. An investor cannot invest directly in an index, and its results are not indicative of the performance of any specific investment, including the Fund. A Word About Risk The Fund concentrates its investments in technology-related stocks and may therefore be subject to greater risks and volatility than a fund with a more diversified portfolio. Technology stocks, especially those of smaller, less-seasoned companies, tend to be more volatile than the overall stock market. The Fund can invest in foreign securities. Foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, market or economic developments. In addition, because the Fund will invest in foreign currency denominated securities, fluctuations in the value of the Fund's investments may be magnified by changes in foreign exchange rates. While the Fund invests principally in common stocks and other equity securities, in order to achieve its investment objectives, the Fund may at times use certain types of investment derivatives, such as options, futures, forwards and swaps. These instruments involve risks different from, and in certain cases, greater than the risks presented by more traditional investments. These risks are fully discussed in the Fund's prospectus. (Historical Performance continued on next page) ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 3 HISTORICAL PERFORMANCE (continued from previous page) Returns THE FUND VS. ITS BENCHMARK --------------------------- PERIODS ENDED JANUARY 31, 2006 6 Months 12 Months ------------------------------------------------------------------------------- AllianceBernstein Global Technology Fund Class A 11.91% 18.16% ------------------------------------------------------------------------------- Class B 11.48% 17.22% ------------------------------------------------------------------------------- Class C 11.51% 17.29% ------------------------------------------------------------------------------- Advisor Class 12.08% 18.50% ------------------------------------------------------------------------------- Class R 11.98% 18.22% ------------------------------------------------------------------------------- Class K** 12.12% 17.31%* ------------------------------------------------------------------------------- Class I** 12.30% 17.63%* ------------------------------------------------------------------------------- MSCI World Information Technology Index 10.51% 14.84% ------------------------------------------------------------------------------- MSCI World Index 11.29% 17.01% ------------------------------------------------------------------------------- Lipper Science & Technology Index 11.32% 18.99% ------------------------------------------------------------------------------- * Since Inception. (See inception dates below.) ** Please note that this is a new share class offering for investors purchasing shares through institutional pension plans. The inception date for Class K and Class I shares is 3/1/05. See Historical Performance and Benchmark Disclosures on previous page. (Historical Performance continued on next page) 4 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND HISTORICAL PERFORMANCE (continued from previous page) AVERAGE ANNUAL RETURNS AS OF JANUARY 31, 2006 ------------------------------------------------------------------------------- NAV Returns SEC Returns Class A Shares 1 Year 18.16% 13.14% 5 Years -8.84% -9.63% 10 Years 6.22% 5.76% Class B Shares 1 Year 17.22% 13.22% 5 Years -9.54% -9.54% 10 Years(a) 5.59% 5.59% Class C Shares 1 Year 17.29% 16.29% 5 Years -9.51% -9.51% 10 Years 5.44% 5.44% Advisor Class Shares+ 1 Year 18.50% 18.50% 5 Years -8.57% -8.57% Since Inception* 5.62% 5.62% Class R Shares+ 1 Year 18.22% 18.22% Since Inception* 7.11% 7.11% Class K Shares+ Since Inception* 17.31% 17.31% Class I Shares+ Since Inception* 17.63% 17.63% (a) Assumes conversion of Class B shares into Class A shares after eight years. * Inception Dates: 10/1/96 for Advisor Class shares; 11/3/03 for Class R shares; 3/1/05 for Class K and Class I shares. + These share classes are offered at net asset value (NAV) to eligible investors and their SEC returns are the same as the NAV returns. Please note that Class K and Class I shares are new share class offerings for investors purchasing shares through institutional pension plans. The inception date for Class K and Class I shares is listed above. See Historical Performance disclosures on page 3. (Historical Performance continued on next page) ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 5 HISTORICAL PERFORMANCE (continued from previous page) SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (DECEMBER 31, 2005) ------------------------------------------------------------------------------- SEC Returns Class A Shares 1 Year 0.50% 5 Years -8.78% 10 Years 5.24% Class B Shares 1 Year 0.16% 5 Years -8.68% 10 Years(a) 5.07% Class C Shares 1 Year 3.21% 5 Years -8.65% 10 Years 4.93% Advisor Class Shares 1 Year 5.28% 5 Years -7.70% Since Inception* 5.03% Class R Shares 1 Year 5.01% Since Inception* 4.65% Class K Shares+ Since Inception* 10.87% Class I Shares+ Since Inception* 11.15% (a) Assumes conversion of Class B shares into Class A shares after eight years. * Inception Dates: 10/1/96 for Advisor Class shares; 11/3/03 for Class R shares; 3/1/05 for Class K and Class I shares. Since inception returns for Class K and Class I shares are cumulative, not annualized. + Please note that this is a new share class offering for investors purchasing shares through institutional pension plans. The inception date for Class K and Class I shares is listed above. See Historical Performance disclosures on page 3. 6 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND FUND EXPENSES As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below. Actual Expenses The table below provides information about actual account values and actual expenses. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the hypothetical example is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Ending Account Value Account Value Expenses Paid August 1, 2005 January 31, 2006 During Period* ---------------------- ---------------------- ----------------------- Actual Hypothetical Actual Hypothetical** Actual Hypothetical -------- ------------ --------- ----------- -------- ------------ Class A $1,000 $1,000 $1,119.14 $1,015.98 $9.77 $9.30 ----------------------------------------------------------------------------------------- Class B $1,000 $1,000 $1,114.78 $1,012.10 $13.86 $13.19 ----------------------------------------------------------------------------------------- Class C $1,000 $1,000 $1,115.07 $1,012.30 $13.65 $12.98 ----------------------------------------------------------------------------------------- Advisor Class $1,000 $1,000 $1,120.83 $1,017.49 $8.18 $7.78 ----------------------------------------------------------------------------------------- Class R $1,000 $1,000 $1,119.78 $1,016.18 $9.56 $9.10 ----------------------------------------------------------------------------------------- Class K $1,000 $1,000 $1,121.18 $1,017.85 $7.81 $7.43 ----------------------------------------------------------------------------------------- Class I $1,000 $1,000 $1,122.97 $1,019.31 $6.26 $5.96 -----------------------------------------------------------------------------------------
* Expenses are equal to the classes' annualized expense ratios of 1.83%, 2.60%, 2.56%, 1.53%, 1.79%, 1.46% and 1.17%, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). ** Assumes 5% return before expenses. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 7 PORTFOLIO SUMMARY January 31, 2006 (unaudited) PORTFOLIO STATISTICS Net Assets ($mil): $2,192.4 SECTOR BREAKDOWN* Technology O 17.0% Software O 16.7% Communication Equipment O 13.3% Semi-Conductor Components O 11.2% Computer Hardware/Storage O 8.5% Internet O 6.6% Computer Services O 5.8% Miscellaneous O 4.2% Semi-Conductor Capital Equipment O 1.7% Computer Peripherals O 1.4% Contract Manufacturing O 1.0% Internet Infrastructure O 0.5% Electronic Components O 0.5% Communication Services Consumer Services O 4.3% Cellular Communications O 1.1% Broadcasting & Cable [PIE CHART OMITTED] O 1.1% Advertising O 1.0% Retail O 0.6% Entertainment & Leisure Capital Goods O 0.9% Miscellaneous O 0.2% Electrical Equipment Consumer Manufacturing O 0.6% Household Durables Utilities O 0.5% Telephone Utility O 1.3% Short-Term * All data are as of January 31, 2006. The Fund's sector breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. Please note: The sector classifications presented herein are based on the sector categorization methodology of the Adviser. 8 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND PORTFOLIO SUMMARY January 31, 2006 (unaudited) Portfolio Summary and Ten Largest Holdings COUNTRY BREAKDOWN* O 64.2% United States O 7.3% Japan O 4.0% Bermuda O 3.8% Mexico O 3.3% Germany O 2.6% France O 2.4% Taiwan O 2.1% South Korea O 2.0% India [PIE CHART OMITTED] O 1.7% Finland O 1.3% Sweden O 1.1% Netherlands O 1.0% Italy O 0.8% Channel Islands O 0.5% Russia O 0.3% Israel O 0.3% China O 1.3% Short-Term TEN LARGEST HOLDINGS January 31, 2006 (unaudited) Percent of Company U.S. $ Value Net Assets ------------------------------------------------------------------------------- Microsoft Corp. $156,336,655 7.2% ------------------------------------------------------------------------------- Google, Inc. Cl.A 133,007,750 6.1 ------------------------------------------------------------------------------- QUALCOMM, Inc. 114,336,640 5.2 ------------------------------------------------------------------------------- International Business Machines Corp. 112,730,580 5.1 ------------------------------------------------------------------------------- Broadcom Corp. Cl.A 96,509,820 4.4 ------------------------------------------------------------------------------- America Movil S.A. de C.V. 81,572,632 3.8 ------------------------------------------------------------------------------- Apple Computer, Inc. 80,168,967 3.6 ------------------------------------------------------------------------------- SAP AG (ADR) 72,149,165 3.3 ------------------------------------------------------------------------------- Motorola, Inc. 66,213,276 3.0 ------------------------------------------------------------------------------- Hoya Corp. 66,021,625 3.0 ------------------------------------------------------------------------------- $979,047,110 44.7% * All data are as of January 31, 2006. The Fund's country breakdown is expressed as a percentage of total investments (excluding security lending collateral) and may vary over time. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 9 PORTFOLIO OF INVESTMENTS January 31, 2006 (unaudited) Company Shares U.S. $ Value ------------------------------------------------------------------------------- COMMON STOCKS & OTHER INVESTMENTS-97.9% Technology-87.6% Communication Equipment-16.6% Cisco Systems, Inc.(a) 2,952,900 $ 54,835,353 Corning, Inc.(a)* 1,251,000 30,461,850 Juniper Networks, Inc.(a)* 1,722,400 31,227,112 Motorola, Inc. 2,915,600 66,213,276 Nokia Oyj 2,040,920 37,438,669 QUALCOMM, Inc. 2,384,000 114,336,640 Telefonaktiebolaget LM Ericsson 7,973,209 29,004,753 ------------ 363,517,653 ------------ Communication Services-0.5% NeuStar, Inc. Cl.A(a)* 382,600 11,099,226 ------------ Computer Hardware/Storage-11.1% Apple Computer, Inc.(a) 1,061,700 80,168,967 EMC Corp.(a) 3,740,234 50,119,136 International Business Machines Corp. 1,386,600 112,730,580 ------------ 243,018,683 ------------ Computer Peripherals-1.6% Electronics for Imaging, Inc.(a)* 386,600 10,689,490 QLogic Corp.(a) 643,700 25,535,579 ------------ 36,225,069 ------------ Computer Services-6.6% Accenture, Ltd. Cl.A* 766,200 24,158,286 Alliance Data Systems Corp.(a)* 303,700 12,831,325 Cap Gemini SA(a) 644,672 29,471,137 Fiserv, Inc.(a)* 756,070 33,251,959 Infosys Technologies, Ltd. (ADR)* 543,300 41,437,491 Patni Computer Systems, Ltd. (ADR)(a) 135,800 3,143,770 ------------ 144,293,968 ------------ Contract Manufacturing-1.4% Hon Hai Precision Industry Co., Ltd. Citigroup Global Markets warrants, expiring 1/17/07(a)(b) 4,509,128 30,310,358 ------------ Electronic Components-0.5% LG Philips LCD Co., Ltd. (ADR)(a)* 510,200 11,658,070 ------------ Internet-8.5% Google, Inc. Cl.A(a)* 307,000 133,007,750 Yahoo!, Inc.(a)* 1,531,500 52,591,710 ------------ 185,599,460 ------------ Internet Infrastructure-1.0% Fastweb(a) 439,832 21,291,329 ------------ 10 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND Company Shares U.S. $ Value ------------------------------------------------------------------------------- Semiconductor Capital Equipment-4.1% Applied Materials, Inc.* 1,980,000 $37,719,000 ASML Holding N.V.(a) 1,043,095 23,530,510 KLA-Tencor Corp.* 563,450 29,288,131 -------------- 90,537,641 -------------- Semiconductor Components-13.2% Advanced Micro Devices, Inc.(a)* 741,300 31,030,818 Broadcom Corp. Cl.A(a)* 1,415,100 96,509,820 Intersil Corp. Cl.A 496,700 14,434,102 Marvell Technology Group, Ltd.(a)* 900,400 61,605,368 Samsung Electronics Co., Ltd. 20,369 15,554,088 Samsung Electronics Co., Ltd. (GDR)(b) 50,191 19,223,153 SiRF Technology Holdings, Inc.(a)* 398,400 13,422,096 Tawain Semiconductor Manufacturing Co., Ltd. Merrill Lynch International & Co. warrants, expiring 11/08/10(a) 11,460,947 22,761,441 Texas Instruments, Inc. 507,500 14,834,225 -------------- 289,375,111 -------------- Software-16.8% Amdocs, Ltd.(a)* 504,900 16,257,780 Autodesk, Inc.* 784,100 31,826,619 Business Objects S.A.(a) 631,370 26,171,300 Check Point Software Technologies, Ltd.(a) 313,500 6,784,140 Citrix Systems, Inc.(a)* 803,000 24,764,520 McAfee, Inc.(a)* 391,100 9,069,609 Microsoft Corp. 5,553,700 156,336,655 NAVTEQ(a)* 203,000 9,116,730 Salesforce.com, Inc.(a)* 390,300 16,021,815 SAP AG (ADR)* 1,404,500 72,149,165 -------------- 368,498,333 -------------- Miscellaneous-5.7% Canon, Inc. 1,002,300 60,300,538 Hoya Corp. 1,650,500 66,021,625 -------------- 126,322,163 -------------- 1,921,747,064 -------------- Consumer Services-8.1% Advertising-1.1% aQuantive, Inc.(a)* 672,600 17,494,326 Focus Media Holding, Ltd. (ADR)(a) 123,300 6,730,947 -------------- 24,225,273 -------------- Broadcasting & Cable-1.1% Time Warner, Inc. 1,419,800 24,889,094 -------------- Cellular Communications-4.3% America Movil S.A. de C.V. (ADR)* 2,418,400 81,572,632 OAO Vimpel-Communications (ADR)(a)* 249,300 11,667,240 -------------- 93,239,872 -------------- ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 11 Shares or Principal Amount Company (000) U.S. $ Value ------------------------------------------------------------------------------- Entertainment & Leisure-0.7% Activision, Inc.(a)* 987,533 $14,161,223 ------------ Retail-General Merchandise-0.9% eBay, Inc.(a)* 480,300 20,700,930 ------------ 177,216,392 ------------ Capital Goods-1.1% Electrical Equipment-0.2% iRobot Corp.(a)* 92,900 3,302,595 ------------ Miscellaneous-0.9% Nitto Denko Corp. 241,900 20,438,487 ------------ 23,741,082 ------------ Consumer Manufacturing-0.6% Household Durables-0.6% Sony Corp. 255,100 12,392,958 ------------ Utilities-0.5% Telephone Utility-0.5% Sprint Corp. 467,980 10,712,062 ------------ Total Common Stocks & Other Investments (cost $1,661,362,168) 2,145,809,558 -------------- SHORT-TERM INVESTMENT-1.3% Time Deposit-1.3% State Street Euro Dollar 3.60%, 2/01/06 (cost $28,096,000) $ 28,096 28,096,000 -------------- Total Investments Before Security Lending Collateral-99.2% (cost $1,689,458,168) 2,173,905,558 -------------- INVESTMENT OF CASH COLLATERAL FOR SECURITIES LOANED-23.9% Short-Term Investments Britania Finance 4.61%, 4/26/06 40,000 39,544,000 Deutsche Bank 4.55%, 2/26/06 25,000 25,018,850 Goldman Sachs 4.60%-4.61%, 9/01/06-10/18/06 75,000 75,000,000 Morgan Stanley 4.57%-4.59%, 3/03/06-10/17/06 145,000 145,012,458 Sigma Funding 4.56%-4.61%, 3/06/06-7/25/06 63,500 63,911,347 ------------ 348,486,655 ------------ 12 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND Company Shares U.S. $ Value ------------------------------------------------------------------------------- UBS Private Money Market Fund, LLC, 4.35% 176,266,739 $176,266,739 --------------- Total Investment of Cash Collateral for Securities Loaned (cost $524,753,394) 524,753,394 --------------- Total Investments-123.1% (cost $2,214,211,562) 2,698,658,952 Other assets less liabilities-(23.1%) (506,216,680) --------------- Net Assets-100% $2,192,442,272 --------------- * Represents entire or partial securities out on loan. See Note E for securities lending information. (a) Non-income producing security. (b) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities are considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At January 31, 2006, the aggregate market value of these securities amounted to $49,533,511 or 2.3% of net assets. Glossary of Terms: ADR - American Depositary Receipt. GDR - Global Depositary Receipt. See notes to financial statements. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 13 STATEMENT OF ASSETS & LIABILITIES January 31, 2006 (unaudited) Assets Investments in securities, at value (cost $2,214,211,562--including investment of cash collateral for securities loaned of $524,753,394) $2,698,658,952(a) Cash 152 Foreign cash, at value (cost $25,309,910) 25,155,467 Receivable for investment securities sold 58,691,573 Receivable for capital stock sold 9,828,437 Dividends and interest receivable 675,665 Other assets 2,064 -------------- Total assets 2,793,012,310 -------------- Liabilities Payable for collateral on securities loaned 524,753,394 Payable for investment securities purchased 47,822,398 Payable for capital stock redeemed 15,505,360 Advisory fee payable 4,112,505 Transfer Agent fee payable 1,208,180 Distribution fee payable 333,213 Administrative fee payable 47,233 Accrued expenses 6,787,755 -------------- Total liabilities 600,570,038 -------------- Net Assets $2,192,442,272 -------------- Composition of Net Assets Capital stock, at par $364,202 Additional paid-in capital 4,331,033,469 Accumulated net investment loss (20,565,216) Accumulated net realized loss on investment and foreign currency transactions (2,602,664,187) Net unrealized appreciation of investments and foreign currency denominated assets and liabilities 484,274,004 -------------- $2,192,442,272 -------------- Calculation of Maximum Offering Price Per Share Net Asset Value and: --------------------- Shares Offering Redemption Class Net Assets Outstanding Price Price ------------------------------------------------------------------------------- A $ 1,111,774,503 17,564,334 $66.11* $63.30 ------------------------------------------------------------------------------- B $ 771,684,953 13,557,388 $56.92 -- ------------------------------------------------------------------------------- C $ 253,298,101 4,444,410 $56.99 -- ------------------------------------------------------------------------------- Advisor $ 55,356,349 848,916 $65.21 $65.21 ------------------------------------------------------------------------------- R $ 304,788 4,822.59 $63.20 $63.20 ------------------------------------------------------------------------------- K $ 11,816 185.87 $63.57 $63.57 ------------------------------------------------------------------------------- I $ 11,762 184.54 $63.74 $63.74 ------------------------------------------------------------------------------- * Represents the maximum offering price per share which includes a sales charge of 4.25%. (a) Includes securities on loan with a value of $509,080,205 (see Note E). See notes to financial statements. 14 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND STATEMENT OF OPERATIONS Six Months Ended January 31, 2006 (unaudited) Investment Income Dividends (net of foreign taxes withheld of $356,078) $6,283,191 Interest 751,803 $7,034,994 -------------- Expenses Advisory fee 8,015,118 Distribution fee--Class A 1,608,088 Distribution fee--Class B 4,007,808 Distribution fee--Class C 1,272,061 Distribution fee--Class R 273 Distribution fee--Class K 14 Transfer Agency--Class A 2,777,525 Transfer Agency--Class B 2,344,332 Transfer Agency--Class C 689,087 Transfer Agency--Advisor Class 139,743 Transfer Agency--Class R 135 Transfer Agency--Class K 16 Transfer Agency--Class I 7 Printing 4,532,787 Custodian 324,719 Administrative 70,552 Legal 67,739 Directors' fees 57,142 Registration 52,076 Audit 33,904 Miscellaneous 82,643 -------------- Total expenses 26,075,769 Less: expense offset arrangement (see Note B) (95,503) -------------- Net expenses 25,980,266 -------------- Net investment loss (18,945,272) -------------- Realized and Unrealized Gain (Loss) on Investment and Foreign Currency Transactions Net realized gain (loss) on: Investment transactions 164,166,873 Foreign currency transactions (372,328) Net change in unrealized appreciation/depreciation of: Investments 93,629,967 Foreign currency denominated assets and liabilities 184,482 -------------- Net gain on investment and foreign currency transactions 257,608,994 -------------- Net Increase in Net Assets from Operations $238,663,722 -------------- See notes to financial statements. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 15 STATEMENT OF CHANGES IN NET ASSETS Six Months Ended Year Ended January 31, 2006 July 31, (unaudited) 2005 ------------- ------------- Increase (Decrease) in Net Assets from Operations Net investment loss $(18,945,272) $(25,420,506) Net realized gain on investment and foreign currency transactions 163,794,545 316,348,623 Net change in unrealized appreciation/depreciation of investments and foreign currency denominated assets and liabilities 93,814,449 47,086,958 ------------- ------------- Net increase in net assets from operations 238,663,722 338,015,075 Capital Stock Transactions Net decrease (309,677,978) (681,181,415) ------------- ------------- Total decrease (71,014,256) (343,166,340) Net Assets Beginning of period 2,263,456,528 2,606,622,868 ------------- ------------- End of period, (including accumulated net investment loss of ($20,565,216) and ($1,619,944), respectively) $2,192,442,272 $2,263,456,528 ------------- ------------- See notes to financial statements. 16 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND NOTES TO FINANCIAL STATEMENTS January 31, 2006 (unaudited) NOTE A Significant Accounting Policies AllianceBernstein Global 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, Advisor Class, Class R, Class K and Class I 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. Class R and Class K shares are sold without an initial or contingent deferred sales charge. Advisor Class and Class I shares are sold without an initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. All seven 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 U.S. 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. Additional information about some of the items discussed in these Notes to Financial Statements is contained in the Fund's Statement of Additional Information, which is available upon request. The following is a summary of significant accounting policies followed by the Fund. 1. Security Valuation Portfolio securities are valued at their current market value determined on the basis of market quotations or, if market quotations are not readily available or are deemed unreliable, at "fair value" as determined in accordance with procedures established by and under the general supervision of the Fund's Board of Directors. In general, the market value of securities which are readily available and deemed reliable are determined as follows. Securities listed on a national securities exchange or on a foreign securities exchange are valued at the last sale price at the close of the exchange or foreign securities exchange. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices on such day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities not listed on an exchange but traded on The NASDAQ Stock Market, Inc. ("NASDAQ") are valued in accordance with the NASDAQ Official Closing ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 17 Price; listed put or call options are valued at the last sale price. If there has been no sale on that day, such securities will be valued at the closing bid prices on that day; open futures contracts and options thereon are valued using the closing settlement price or, in the absence of such a price, the most recent quoted bid price. If there are no quotations available for the day of valuation, the last available closing settlement price is used; securities traded in the over-the-counter market, ("OTC") (but excluding securities traded on NASDAQ) are valued at the mean of the current bid and asked prices as reported by the National Quotation Bureau or other comparable sources; U.S. Government securities and other debt instruments having 60 days or less remaining until maturity are valued at amortized cost if their original maturity was 60 days or less; or by amortizing their fair value as of the 61st day prior to maturity if their original term to maturity exceeded 60 days; fixed-income securities, including mortgage backed and asset backed securities, may be valued on the basis of prices provided by a pricing service or at a price obtained from one or more of the major broker/dealers. In cases where broker/dealer quotes are obtained, Alliance Capital Management, L.P. (the "Adviser") (see Note K) may establish procedures whereby changes in market yields or spreads are used to adjust, on a daily basis, a recently obtained quoted price on a security; and OTC and other derivatives are valued on the basis of a quoted bid price or spread from a major broker/dealer in such security. Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer's financial statements or other available documents. In addition, the Fund may use fair value pricing for securities primarily traded in non-U.S. markets because, most foreign markets close well before the Fund values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Fund may frequently value many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available. 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 prices of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated into U.S. dollars at the rates of exchange prevailing when such securities were acquired or sold. Income and expenses are translated into U.S. dollars at rates of exchange prevailing when accrued. 18 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND Net realized gain or loss on foreign currency transactions represents foreign exchange gains and losses from sales and maturities of foreign fixed income investments, foreign currency exchange contracts, holding of foreign currencies, currency gains or losses realized between the trade and settlement dates on foreign investment transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent 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. The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned. 4. Investment Income and Investment Transactions Dividend income is recorded on the ex-dividend date, or as soon as the Fund is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the trade date the securities are purchased or sold. Investment gains and losses are determined on the identified cost basis. The Fund amortizes premiums and accretes discounts as adjustments to interest income. 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 for class specific expenses which are allocated to the respective class. Realized and unrealized gains and losses are allocated among the various share classes based on their relative net assets. 6. Dividends and Distributions Dividends and distributions to shareholders, if any, 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 U.S. generally accepted accounting principles. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 19 NOTE B Advisory Fee and Other Transactions With Affiliates Under the terms of the investment advisory agreement, the Fund pays 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 .75% of the first $2.5 billion, .25 of .65% of the next $2.5 billion, and .25 of .60% of the net assets in excess of $5 billion. Prior to September 7, 2004, the Fund paid 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 $70,552 to the Adviser representing the cost of certain legal and accounting services provided to the Fund by the Adviser for the six months ended January 31, 2006. 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 (see Note K). AGIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. Such compensation retained by AGIS amounted to $2,884,460 for the six months ended January 31, 2006. For the six months ended January 31, 2006 the Fund's expenses were reduced by $95,503 under an expense offset arrangement with AGIS. AllianceBernstein Investment Research and Management, Inc. (the "Distributor"), a wholly-owned subsidiary of the Adviser, serves as the distributor of the Fund's shares (see Note K). The Distributor has advised the Fund that it has retained front-end sales charges of $11,394 from the sales of Class A shares and received $17,162, $216,721, and $9,010 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 January 31, 2006. Brokerage commissions paid on investment transactions for the six months ended January 31, 2006 amounted to $3,105,976, of which $63,124 and $0, respectively, was paid to Sanford C. Bernstein & Co. LLC and Sanford C. Bernstein Limited, affiliates of the Adviser. 20 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND 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, 1% of the Fund's average daily net assets attributable to both Class B and Class C shares, .50% of the Fund's average daily net assets attributable to Class R shares and .25% of the fund's average daily net assets attributable to Class K shares. There are no distribution and servicing fees on the Advisor Class and Class I 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 amounts of $73,202,125, $7,278,427, $872 and $35 for Class B, Class C, Class R and Class K 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) for the six months ended January 31, 2006, were as follows: Purchases Sales -------------- -------------- Investment securities (excluding U.S. government securities) $1,157,513,482 $1,482,202,996 U.S. government securities -0- -0- The cost of investments for federal income tax purposes, was substantially the same as the cost for financial reporting purposes. Accordingly, gross unrealized appreciation and unrealized depreciation (excluding foreign currency transactions) are as follows: Gross unrealized appreciation $497,050,804 Gross unrealized depreciation (12,603,414) ------------ Net unrealized appreciation $484,447,390 ------------ Option Transactions For hedging and investment purposes, the Fund may purchase and write (sell) put and call options on U.S. and foreign government securities and foreign currencies that are traded on U.S. and foreign securities exchanges and over-the-counter markets. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 21 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 written options which expire unexercised are recorded by the Fund on the expiration date as realized gains from options written. 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. In writing an option, the Fund bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Fund could result in the Fund selling or buying a security or currency at a price different from the current market value. For the six months ended January 31, 2006, the Fund had no transactions in written options. 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 or it retains a portion of interest on the investment of any cash received as collateral. The Fund also continues to receive dividends or interest on the securities loaned. Unrealized gain or loss on the value of the securities loaned that may occur during the term of the loan will be reflected in the accounts of the Fund. 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 may invest the cash collateral received in accordance with the investment restrictions of the Fund in one or more of the following investments: U.S. government or U.S. government agency obligations, bank obligations, corporate debt obligations, asset-backed securities, investment funds, structured products, repurchase agreements and an eligible money market fund. The Lending Agent will indemnify the Fund for any loss resulting from a borrower's failure to return a loaned security when due. As of 22 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND January 31, 2006, the Fund had loaned securities with a value of $509,080,205 and received cash collateral which was invested in short-term securities valued at $524,753,394 as included in the accompanying portfolio of investments. For the six months ended January 31, 2006, the Fund earned fee income of $338,172 which is included in interest income in the accompanying statement of operations. NOTE F Capital Stock There are 21,000,000,000 shares of $0.01 par value capital stock authorized, divided into seven classes, designated Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I 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 January 31, 2006 July 31, January 31, 2006 July 31, (unaudited) 2005 (unaudited) 2005 ------------ ------------ -------------- -------------- Class A Shares sold 913,810 2,456,834 $53,948,466 $130,037,929 ------------------------------------------------------------------------------- Shares converted from Class B 823,990 1,682,744 48,360,717 89,617,305 ------------------------------------------------------------------------------- Shares redeemed (3,041,176) (7,906,183) (178,663,688) (419,749,339) ------------------------------------------------------------------------------- Net decrease (1,303,376) (3,766,605) $ (76,354,505) $(200,094,105) ------------------------------------------------------------------------------- Class B Shares sold 214,068 660,395 $11,377,097 $31,510,524 ------------------------------------------------------------------------------- Shares converted to Class A (914,734) (1,857,510) (48,360,717) (89,617,305) ------------------------------------------------------------------------------- Shares redeemed (2,274,183) (6,892,521) (119,859,755) (330,712,326) ------------------------------------------------------------------------------- Net decrease (2,974,849) (8,089,636) $(156,843,375) $(388,819,107) ------------------------------------------------------------------------------- Class C Shares sold 101,053 295,876 $5,407,417 $14,147,220 ------------------------------------------------------------------------------- Shares redeemed (774,673) (2,178,477) (40,922,137) (104,653,626) ------------------------------------------------------------------------------- Net decrease (673,620) (1,882,601) $(35,514,720) $(90,506,406) ------------------------------------------------------------------------------- Advisor Class Shares sold 56,925 246,857 $3,516,260 $13,650,297 ------------------------------------------------------------------------------- Shares redeemed (764,935) (285,553) (44,696,374) (15,474,015) ------------------------------------------------------------------------------- Net decrease (708,010) (38,696) $ (41,180,114) $(1,823,718) ------------------------------------------------------------------------------- ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 23 Shares Amount --------------------------- ------------------------------ Six Months Ended Year Ended Six Months Ended Year Ended January 31, 2006 July 31, January 31, 2006 July 31, (unaudited) 2005 (unaudited) 2005 ------------ ------------ -------------- -------------- Class R Shares sold 3,983 1,152 $243,117 $57,709 ------------------------------------------------------------------------------- Shares redeemed (475) (314) (27,870) (15,860) ------------------------------------------------------------------------------- Net increase 3,508 838 $215,247 $41,849 ------------------------------------------------------------------------------- March 1, March 1, 2005(a) to 2005(a) to July 31, 2005 July 31, 2005 ------------ -------------- Class K Shares sold -0- 186 $-0- $10,072 ------------------------------------------------------------------------------- Net increase -0- 186 $-0- $10,072 ------------------------------------------------------------------------------- Class I Shares sold 434 185 $24,518 $10,000 ------------------------------------------------------------------------------- Shares redeemed (434) -0- (25,029) -0- ------------------------------------------------------------------------------- Net increase (decrease) -0- 185 $ (511) $10,000 ------------------------------------------------------------------------------- (a) Commencement of distribution. NOTE G Risks Involved in Investing in the Fund Foreign Securities Risk--Investing in securities of foreign companies or foreign governments involves special risks which include changes in foreign exchange rates and the possibility of the future political and economic developments which could adversely affect the value of such securities. Moreover, securities of many foreign companies or foreign governments and their markets may be less liquid and their prices more volatile than those of comparable United States companies or of the United States Government. Indemnification Risk--In the ordinary course of business, the Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote. NOTE H Joint Credit Facility A number of open-end mutual funds managed by the Adviser, including the Fund, participate in a $250 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 miscella- 24 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND neous expenses in the statement of operations. The Fund did not utilize the Facility during the six months ended January 31, 2006. NOTE I Components of Accumulated Earnings (Deficit) The tax character of distributions to be paid for the year ending July 31, 2006 will be determined at the end of the current fiscal year. As of July 31, 2005, the components of accumulated earnings/(deficit) on a tax basis were as follows: Accumulated capital and other losses $(2,727,380,430)(a) Unrealized appreciation/(depreciation) 349,761,309 -------------- Total accumulated earnings/(deficit) $(2,377,619,121)(b) -------------- (a) On July 31, 2005, the Fund had a net capital loss carryforward for federal income tax purposes of $2,725,760,486, of which $944,141,098 expires in the year 2009, $1,330,398,762 expires in the year 2010, and $451,220,626 expires in the year 2011. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. Net capital loss incurred after October 31, and within the taxable year are deemed to arise on the first business day of the Funds next taxable year. For the year ended July 31, 2005, the Fund deferred to August 1, 2004, post-October currency losses of $1,619,944. During the fiscal year, the Fund utilized capital loss carryforwards of $239,432,513. (b) The differences between book-basis and tax-basis unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses on wash sales. NOTE J Legal Proceedings As has been previously reported, the staff of the U.S. Securities and Exchange Commission ("SEC") and the NYAG have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is memorialized in an Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 25 on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds until December 31, 2008; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order and the NYAG Order contemplate that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation of the NYAG Order and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. On September 7, 2004, the Fund's investment advisory agreement was amended to reflect the reduced advisory fee. For more information on this waiver and amendment to the Fund's investment advisory agreement , please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, is continuing to direct and oversee an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Directors of the Fund ("the Independent Directors") have initiated an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. The Independent Directors have formed a special committee to supervise the investigation. On October 2, 2003, a purported class action complaint entitled Hindo, et al. v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint") was filed against the Adviser, Alliance Capital Management Holding L.P. ("Alliance Holding"), Alliance Capital Management Corporation, AXA Financial, Inc., the AllianceBernstein Funds, certain officers of the Adviser ("Alliance defendants"), and certain other defendants not affiliated with the Adviser, as well as unnamed Doe defendants. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Funds. The Hindo Complaint alleges that certain of the Alliance defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in "late trading" and "market timing" of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act and Sections 206 26 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Since October 2, 2003, numerous additional lawsuits making factual allegations generally similar to those in the Hindo Complaint were filed in various federal and state courts against the Adviser and certain other defendants, and others may be filed. The plaintiffs in such lawsuits have asserted a variety of theories for recovery including, but not limited to, violations of the Securities Act, the Exchange Act, the Advisers Act, the Investment Company Act, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), certain state securities laws and common law. All state court actions against the Adviser either were voluntarily dismissed or removed to federal court. On February 20, 2004, the Judicial Panel on Multidistrict Litigation transferred all federal actions to the United States District Court for the District of Maryland (the "Mutual Fund MDL"). All of the actions removed to federal court were also transferred to the Mutual Fund MDL. The plaintiffs in the removed actions have since moved for remand, and that motion is pending. On September 29, 2004, plaintiffs filed consolidated amended complaints with respect to four claim types: mutual fund shareholder claims; mutual fund derivative claims; derivative claims brought on behalf of Alliance Holding; and claims brought under ERISA by participants in the Profit Sharing Plan for Employees of the Adviser. All four complaints include substantially identical factual allegations, which appear to be based in large part on the SEC Order and the NYAG Order. The claims in the mutual fund derivative consolidated amended complaint are generally based on the theory that all fund advisory agreements, distribution agreements and 12b-1 plans between the Adviser and the AllianceBernstein Funds should be invalidated, regardless of whether market timing occurred in each individual fund, because each was approved by fund trustees on the basis of materially misleading information with respect to the level of market timing permitted in funds managed by the Adviser. The claims asserted in the other three consolidated amended complaints are similar to those that the respective plaintiffs asserted in their previous federal lawsuits. All of these lawsuits seek an unspecified amount of damages. The Alliance defendants have moved to dismiss the complaints, and those motions are pending. On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the Office of the Attorney General of the State of West Virginia and (ii) a request for information from West Virginia's Office of the State Auditor, Securities Commission (the "West Virginia Securities Commission") (together, the "Information Requests"). Both Information Requests require the Adviser to produce documents concerning, among other things, any market timing or late trading in the Adviser's sponsored mutual funds. The Adviser responded to the Information Requests and has been cooperating fully with the investigation. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 27 On April 11, 2005, a complaint entitled The Attorney General of the State of West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed against the Adviser, Alliance Holding, and various other defendants not affiliated with the Adviser. The WVAG Complaint was filed in the Circuit Court of Marshall County, West Virginia by the Attorney General of the State of West Virginia. The WVAG Complaint makes factual allegations generally similar to those in the Hindo Complaint. On May 31, 2005, defendants removed the WVAG Complaint to the United States District Court for the Northern District of West Virginia. On July 12, 2005, plaintiff moved to remand. On October 19, 2005, the WVAG Complaint was transferred to the Mutual Fund MDL. On August 30, 2005, the deputy commissioner of securities of the West Virginia Securities Commission signed a "Summary Order to Cease and Desist, and Notice of Right to Hearing" addressed to the Adviser and Alliance Holding. The Summary Order claims that the Adviser and Alliance Holding violated the West Virginia Uniform Securities Act, and makes factual allegations generally similar to those in the Commission Order and the NYAGOrder. On January 26, 2006, the Adviser, Alliance Holding, and various unaffiliated defendants filed a Petition for Writ of Prohibition and Order Suspending Proceedings in West Virginia state court seeking to vacate the Summary Order and for other relief. The Adviser intends to vigorously defend against the allegations in the WVAG Complaint. On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v. Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against the Adviser, Alliance Holding, Alliance Capital Management Corporation, AXA Financial, Inc., AllianceBernstein Investment Research & Management, Inc., certain current and former directors of the AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin Complaint names certain of the AllianceBernstein mutual funds as nominal defendants. The Aucoin Complaint was filed in the United States District Court for the Southern District of New York by an alleged shareholder of an AllianceBernstein mutual fund. The Aucoin Complaint alleges, among other things, (i) that certain of the defendants improperly authorized the payment of excessive commissions and other fees from fund assets to broker-dealers in exchange for preferential marketing services, (ii) that certain of the defendants misrepresented and omitted from registration statements and other reports material facts concerning such payments, and (iii) that certain defendants caused such conduct as control persons of other defendants. The Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections 206 and 215 of the Advisers Act, breach of common law fiduciary duties, and aiding and abetting breaches of common law fiduciary duties. Plaintiffs seek an unspecified amount of compensatory damages and punitive damages, rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts, an accounting of all fund-related fees, commissions and soft dollar payments, and restitution of all unlawfully or discriminatorily obtained fees and expenses. 28 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND Since June 22, 2004, nine additional lawsuits making factual allegations substantially similar to those in the Aucoin Complaint were filed against the Adviser and certain other defendants. All nine of the lawsuits (i) were brought as class actions filed in the United States District Court for the Southern District of New York, (ii) assert claims substantially identical to the Aucoin Complaint, and (iii) are brought on behalf of shareholders of the Funds. On February 2, 2005, plaintiffs filed a consolidated amended class action complaint ("Aucoin Consolidated Amended Complaint") that asserts claims substantially similar to the Aucoin Complaint and the nine additional lawsuits referenced above. On October 19, 2005, the District Court dismissed each of the claims set forth in the Aucoin Consolidated Amended Complaint, except for plaintiff's claim under Section 36(b) of the Investment Company Act. On January 11, 2006, the District Court granted defendants' motion for reconsideration and dismissed the remaining Section 36(b) claim. Plaintiffs have moved for leave to amend their consolidated complaint. It is possible that these matters and/or other developments resulting from these matters could result in increased redemptions of the AllianceBernstein Mutual Funds' shares or other adverse consequences to the AllianceBernstein Mutual Funds. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. However, the Adviser believes that these matters are not likely to have a material adverse effect on its ability to perform advisory services relating to the AllianceBernstein Mutual Funds. NOTE K Subsequent Event Effective February 24, 2006, the names of Alliance Capital Management L.P., AllianceBernstein Investment Research and Management, Inc. and Alliance Global Investor Services, Inc. were changed to AllianceBernstein L.P., AllianceBernstein Investments, Inc. and AllianceBernstein Investor Services, Inc., respectively. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 29 FINANCIAL HIGHLIGHTS Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A ----------------------------------------------------------------------------------------- Six Months Ended December 1, January 31, Year Ended July 31, 2002 to Year Ended November 30, 2006 ------------------------ July 31, ------------------------------------- (unaudited) 2005 2004 2003(a) 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $56.56 $49.14 $47.44 $43.48 $67.05 $95.32 $111.46 ------------------------------------------------------------------------------------------ Income From Investment Operations Net investment loss(b) (.41) (.34)(c) (.72)(c)(d) (.54) (.87) (.82) (1.35) Net realized and unrealized gain (loss) on investment and foreign currency transactions 7.15 7.76 2.42 4.50 (22.70) (21.17) (10.75) ------------------------------------------------------------------------------------------ Net increase (decrease) in net asset value from operations 6.74 7.42 1.70 3.96 (23.57) (21.99) (12.10) ------------------------------------------------------------------------------------------- Less: Distributions Distributions from net realized gain on investment transactions -0- -0- -0- -0- -0- (5.86) (4.04) Distributions in excess of net realized gain on investment transactions -0- -0- -0- -0- -0- (.42) -0- ------------------------------------------------------------------------------------------- Total distributions -0- -0- -0- -0- -0- (6.28) (4.04) ------------------------------------------------------------------------------------------- Net asset value, end of period $63.30 $56.56 $49.14 $47.44 $43.48 $67.05 $95.32 ------------------------------------------------------------------------------------------- Total Return Total investment return based on net asset value(e) 11.91% 15.10% 3.58% 9.11% (35.15)% (24.90)% (11.48)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $1,111,774 $1,067,072 $1,112,174 $1,186,488 $1,096,744 $1,926,473 $2,650,904 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.83%(f)(g) 1.66% 1.65% 2.24%(f) 1.85% 1.58% 1.50% Expenses, before waivers/ reimbursements 1.83%(f)(g) 1.68% 1.81% 2.24%(f) 1.85% 1.58% 1.50% Net investment loss (1.19)%(f)(g) (.65)%(c) (1.36)%(c)(d) (1.95)%(f) (1.64)% (1.08)% (.98)% Portfolio turnover rate 55% 80% 80% 127% 117% 55% 46%
See footnote summary on page 36. 30 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B ----------------------------------------------------------------------------------------- Six Months Ended December 1, January 31, Year Ended July 31, 2002 to Year Ended November 30, 2006 ------------------------ July 31, -------------------------------------- (unaudited) 2005 2004 2003(a) 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $51.06 $44.71 $43.49 $40.06 $62.27 $89.59 $105.73 -------------------------------------------------------------------------------------------- Income From Investment Operations Net investment loss(b) (.57) (.68)(c) (1.03)(c)(d) (.69) (1.16) (1.28) (2.17) Net realized and unrealized gain (loss) on investment and foreign currency transactions 6.43 7.03 2.25 4.12 (21.05) (19.76) (9.93) -------------------------------------------------------------------------------------------- Net increase (decrease) in net asset value from operations 5.86 6.35 1.22 3.43 (22.21) (21.04) (12.10) -------------------------------------------------------------------------------------------- Less: Distributions Distributions from net realized gain on investment transactions -0- -0- -0- -0- -0- (5.86) (4.04) Distributions in excess of net realized gain on investment transactions -0- -0- -0- -0- -0- (.42) -0- -------------------------------------------------------------------------------------------- Total distributions -0- -0- -0- -0- -0- (6.28) (4.04) -------------------------------------------------------------------------------------------- Net asset value, end of period $56.92 $51.06 $44.71 $43.49 $40.06 $62.27 $89.59 -------------------------------------------------------------------------------------------- Total Return Total investment return based on net asset value(e) 11.48% 14.20% 2.81% 8.56% (35.67)% (25.46)% (12.12)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $771,685 $844,111 $1,100,840 $1,453,453 $1,539,144 $3,092,947 $4,701,567 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 2.60%(f)(g) 2.43% 2.42% 3.02%(f) 2.58% 2.31% 2.20% Expenses, before waivers/ reimbursements 2.60%(f)(g) 2.46% 2.58% 3.02%(f) 2.58% 2.31% 2.20% Net investment loss (1.96)%(f)(g) (1.42)%(c) (2.13)%(c)(d) (2.73)%(f) (2.37)% (1.80)% (1.68)% Portfolio turnover rate 55% 80% 80% 127% 117% 55% 46%
See footnote summary on page 36. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 31 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C ----------------------------------------------------------------------------------------- Six Months Ended December 1, January 31, Year Ended July 31, 2002 to Year Ended November 30, 2006 ------------------------ July 31, ------------------------------------- (unaudited) 2005 2004 2003(a) 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $51.11 $44.73 $43.50 $40.07 $62.25 $89.55 $105.69 ------------------------------------------------------------------------------------------- Income From Investment Operations Net investment loss(b) (.56) (.66)(c) (1.02)(c)(d) (.68) (1.15) (1.28) (2.19) Net realized and unrealized gain (loss) on investment and foreign currency transactions 6.44 7.04 2.25 4.11 (21.03) (19.74) (9.91) -------------------------------------------------------------------------------------------- Net increase (decrease) in net asset value from operations 5.88 6.38 1.23 3.43 (22.18) (21.02) (12.10) -------------------------------------------------------------------------------------------- Less: Distributions Distributions from net realized gain on investment transactions -0- -0- -0- -0- -0- (5.86) (4.04) Distributions in excess of net realized gain on investment transactions -0- -0- -0- -0- -0- (.42) -0- -------------------------------------------------------------------------------------------- Total distributions -0- -0- -0- -0- -0- (6.28) (4.04) -------------------------------------------------------------------------------------------- Net asset value, end of period $56.99 $51.11 $44.73 $43.50 $40.07 $62.25 $89.55 -------------------------------------------------------------------------------------------- Total Return Total investment return based on net asset value(e) 11.51% 14.26% 2.83% 8.56% (35.63)% (25.45)% (12.13)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $253,298 $261,596 $313,166 $396,472 $410,649 $835,406 $1,252,765 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 2.56%(f)(g) 2.39% 2.39% 3.01%(f) 2.55% 2.30% 2.21% Expenses, before waivers/ reimbursements 2.56%(f)(g) 2.41% 2.55% 3.01%(f) 2.55% 2.30% 2.21% Net investment loss (1.91)%(f)(g) (1.37)%(c) (2.10)%(c)(d) (2.72)%(f) (2.34)% (1.80)% (1.69)% Portfolio turnover rate 55% 80% 80% 127% 117% 55% 46%
See footnote summary on page 36. 32 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class ----------------------------------------------------------------------------------------- Six Months Ended December 1, January 31, Year Ended July 31, 2002 to Year Ended November 30, 2006 ------------------------ July 31, -------------------------------------- (unaudited) 2005 2004 2003(a) 2002 2001 2000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net asset value, beginning of period $58.19 $50.40 $48.50 $44.36 $68.21 $96.60 $112.59 -------------------------------------------------------------------------------------------- Income From Investment Operations Net investment loss(b) (.30) (.20)(c) (.58)(c)(d) (.46) (.72) (.60) (.91) Net realized and unrealized gain (loss) on investment and foreign currency transactions 7.32 7.98 2.48 4.60 (23.13) (21.51) (11.04) -------------------------------------------------------------------------------------------- Net increase (decrease) in net asset value from operations 7.02 7.78 1.90 4.14 (23.85) (22.11) (11.95) -------------------------------------------------------------------------------------------- Less: Distributions Distributions from net realized gain on investment transactions -0- -0- -0- -0- -0- (5.89) (4.04) Distributions in excess of net realized gain on investment transactions -0- -0- -0- -0- -0- (.39) -0- -------------------------------------------------------------------------------------------- Total distributions -0- -0- -0- -0- -0- (6.28) (4.04) -------------------------------------------------------------------------------------------- Net asset value, end of period $65.21 $58.18 $50.40 $48.50 $44.36 $68.21 $96.60 -------------------------------------------------------------------------------------------- Total Return Total investment return based on net asset value(e) 12.08% 15.44% 3.92% 9.33% (34.96)% (24.68)% (11.22)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $55,356 $90,583 $80,420 $93,511 $83,018 $231,167 $288,889 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.53%(f)(g) 1.35% 1.35% 1.94%(f) 1.49% 1.27% 1.19% Expenses, before waivers/ reimbursements 1.53%(f)(g) 1.38% 1.51% 1.94%(f) 1.49% 1.27% 1.19% Net investment loss (.86)%(f)(g) (.36)%(c) (1.06)%(c)(d) (1.65)%(f) (1.29)% (.78)% (.66)% Portfolio turnover rate 55% 80% 80% 127% 117% 55% 46%
See footnote summary on page 36. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 33 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class R ------------------------------------- Six Months November 3, Ended Year 2003(h) January 31, Ended to 2006 July 31, July 31, (unaudited) 2005 2004 ------------------------------------- Net asset value, beginning of period $56.44 $49.08 $54.17 ------------------------------------- Income From Investment Operations Net investment loss(b) (.36) (.38)(c) (.77)(c)(d) Net realized and unrealized gain (loss) on investment and foreign currency transactions 7.12 7.74 (4.32) ------------------------------------- Net increase (decrease) in net asset value from operations 6.76 7.36 (5.09) ------------------------------------- Net asset value, end of period $63.20 $56.44 $49.08 ------------------------------------- Total Return Total investment return based on net asset value(e) 11.98% 15.00% (9.40)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $305 $74 $23 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.79%(f)(g) 1.71% 1.73%(f) Expenses, before waivers/reimbursements 1.79%(f)(g) 1.74% 1.97%(f) Net investment loss (1.17)%(f)(g) (.70)%(c) (1.42)%(f) Portfolio turnover rate 55% 80% 80%
See footnote summary on page 36. 34 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period Class K ------------------------- Six Months Ended March 1, January 31, 2005(h) to 2006 July 31, (unaudited) 2005 ------------------------- Net asset value, beginning of period $56.70 $54.19 ------------------------- Income From Investment Operations Net investment loss(b) (.30) (.03) Net realized and unrealized gain on investment and foreign currency transactions 7.17 2.54 ------------------------- Net increase in net asset value from operations 6.87 2.51 ------------------------- Net asset value, end of period $63.57 $56.70 ------------------------- Total Return Total investment return based on net asset value(e) 12.12% 4.63% Ratios/Supplemental Data Net assets, end of period (000's omitted) $12 $11 Ratio to average net assets of: Expenses(f) 1.46%(g) 1.05% Net investment loss(f) (.82)%(g) (.15)% Portfolio turnover rate 55% 80% See footnote summary on page 36. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 35 Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period Class I ------------------------- Six Months Ended March 1, January 31, 2005(h) to 2006 July 31, (unaudited) 2005 ------------------------- Net asset value, beginning of period $56.76 $54.19 ------------------------- Income From Investment Operations Net investment income (loss)(b) (.17) .02 Net realized and unrealized gain on investment and foreign currency transactions 7.15 2.55 ------------------------- Net increase in net asset value from operations 6.98 2.57 ------------------------- Net asset value, end of period $63.74 $56.76 ------------------------- Total Return Total investment return based on net asset value(e) 12.30% 4.75% Ratios/Supplemental Data Net assets, end of period (000's omitted) $12 $10 Ratio to average net assets of: Expenses(f) 1.17%(g) .81% Net investment income (loss)(f) (.53)%(g) .10% Portfolio turnover rate. 55% 80% (a) The Fund changed its fiscal year end from November 30 to July 31. (b) Based on average shares outstanding. (c) Net of fees and expenses waived/reimbursed by the Adviser. (d) Net of fees and expenses waived/reimbursed by the Transfer Agent. (e) 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 return does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Total investment return calculated for a period of less than one year is not annualized. (f) Annualized. (g) The ratio includes expenses attributable to estimated costs of proxy solicitation. (h) Commencement of distributions. 36 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND RESULTS OF SHAREHOLDERS MEETING (unaudited) A Special Meeting of the AllianceBernstein Global Technology Fund (the "Fund") was held on November 15, 2005 and adjourned until December 6, 2005, December 19, 2005, December 21, 2005 and December 22, 2005. At the November 15, 2005 Meeting, with respect to the first item of business, the election of Directors, the required number of outstanding shares were voted in favor of the proposal, and the proposal was approved. At the December 21, 2005 Meeting, with respect to the third item of business, the amendment, elimination, or reclassification as non-fundamental of the fundamental investment restrictions, and the fourth item of business, the reclassification of the Fund's fundamental investment objective as non-fundamental with changes to the Fund's investment objectives, the required number of outstanding shares voted in favor of each proposal, and each proposal was approved. With respect to the second item of business, the approval to amend and restate the Charter of the Fund, an insufficient number of required outstanding shares voted in favor of the proposal and, therefore the proposal was not approved. A description of each proposal and number of shares voted at the Meetings are as follows: (the proposal numbers shown below correspond to the proposal numbers in the Fund's proxy statement)
Withheld Voted For Authority ---------- --------- 1. The election of the Directors, Ruth Block 22,256,258 566,171 each such Director to serve David H. Dievler 22,252,421 570,007 a term of an indefinite John H. Dobkin 22,262,127 560,302 duration and until his or her Michael J. Downey 22,266,945 555,484 successor is duly elected William H. Foulk, Jr. 22,254,120 568,309 and qualifies. D. James Guzy 21,667,067 1,155,362 Marc O. Mayer 22,258,015 564,414 Marshall C. Turner, Jr. 22,263,006 559,423 Voted Broker Voted For Against Abstained Non-Votes ---------- ---------- ---------- --------- 2. The amendment and 14,890,211 566,439 708,011 0 restatement of the Fund's charter, which repealed in its entirety all currently existing charter provisions and substituted in lieu thereof new provisions set forth in the Form of Articles of Amendment and Restatement attached to the Fund's Proxy Statement as Appendix D.
ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 37 3. The amendment, elimination, or reclassification as non-fundamental of the fundamental investment restrictions regarding:
Voted Broker Voted For Against Abstained Non-Votes ---------- ---------- ---------- --------- 3.A. Diversification 14,970,532 811,002 383,126 4,529,530 3.B. Issuing Senior Securities 14,889,663 895,066 379,932 4,529,530 and Borrowing Money 3.C. Underwriting Securities 14,933,111 842,667 388,883 4,529,530 3.D. Concentration of 14,962,221 814,191 388,249 4,529,530 Investments 3.E. Real Estate and 14,919,548 870,708 374,405 4,529,530 Companies that Deal in Real Estate 3.F. Commodity Contracts 14,863,698 888,843 412,120 4,529,530 and Futures Contracts 3.G. Loans 14,875,994 901,233 387,434 4,529,530 3.I. Exercising Control 14,973,828 795,682 395,150 4,529,530 3.K. Oil, Gas and Other 14,950,331 822,648 391,681 4,529,530 Types of Minerals Or Mineral Leases 3.L. Purchases of 14,847,625 924,285 392,750 4,529,530 Securities on Margin 3.N. Pledging, Hypothecating, 14,845,079 897,912 421,670 4,529,530 Mortgaging, or Otherwise Encumbering Assets 3.R. Requirement to Invest 14,942,879 822,190 398,359 4,530,763 in Specific Investments 4.b. The reclassification of 14,116,840 1,317,216 730,605 4,529,530 the Fund's fundamental investment objective as non-fundamental with changes to the Fund's investment objectives
38 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND BOARD OF DIRECTORS William H. Foulk, Jr.(1), Chairman Marc O. Mayer, President Ruth Block(1) David H. Dievler(1) John H. Dobkin(1) Michael J. Downey(1) D. James Guzy(1) Marshall C. Turner, Jr.(1) OFFICERS Philip L. Kirstein, Senior Vice President and Independent Compliance Officer Janet A. Walsh(2), Senior Vice President Thomas J. Bardong, Vice President Emilie D. Wrapp, Secretary Mark D. Gersten, Treasurer & Chief Financial Officer Vincent S. Noto, Controller Custodian State Street Bank & Trust Company One Lincoln Street Boston, MA 02111 Distributor AllianceBernstein Investments, 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 AllianceBernstein Investor Services, Inc. P.O. Box 786003 San Antonio, TX 78278-6003 Toll-free (800) 221-5672 Independent Registered Public Accounting Firm Ernst & Young LLP 5 Times Square New York, NY 10036 (1) Member of the Audit Committee, Governance and Nominating Committee and Independent Directors Committee. (2) Ms. Walsh is the person primarily responsible for the day-to-day management of and investment decisions for the Fund. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 39 Information Regarding the Review and Approval of the Fund's Advisory Agreement The Fund's disinterested directors (the "directors") unanimously approved the continuance of the Advisory Agreement between the Fund and the Adviser at a meeting held on November 8, 2005. In preparation for the meeting, the directors had requested from the Adviser and evaluated extensive materials, including performance and expense information for other investment companies with similar investment objectives as the Fund derived from data compiled by Lipper Inc. ("Lipper"), which is not affiliated with the Adviser. The directors also reviewed an independent evaluation from the Fund's Senior Officer (who is also the Fund's Independent Compliance Officer) of the reasonableness of the advisory fees in the Fund's Advisory Agreement (as contemplated by the September 2004 Assurance of Discontinuance between the Adviser and the New York Attorney General) wherein the Senior Officer concluded that such fees were reasonable. In addition, the directors received a presentation from the Adviser and had an opportunity to ask representatives of the Adviser various questions relevant to the proposed approval. The directors noted that the Senior Officer's evaluation considered the following factors: management fees charged to institutional and other clients of the Adviser for like services; management fees charged by other mutual fund companies for like services; cost to the Adviser and its affiliates of supplying services pursuant to the Advisory Agreement, excluding any intra-corporate profit; profit margins of the Adviser and its affiliates from supplying such services; possible economies of scale as the Fund grows larger; and nature and quality of the Adviser's services including the performance of the Fund. Prior to voting, the directors reviewed the proposed continuance of the Advisory Agreement with management and with experienced counsel who are independent of the Adviser and received a memorandum from such counsel discussing the legal standards for their consideration of the proposed continuance. The directors also discussed the proposed continuance in a private session at which only the directors, their independent counsel and the Fund's Independent Compliance Officer were present. In reaching their determinations relating to continuance of the Advisory Agreement, the directors considered all factors they believed relevant, including the following: 1. information comparing the performance of the Fund to other investment companies with similar investment objectives and to an index; 2. the nature, extent and quality of investment, compliance, administrative and other services rendered by the Adviser; 3. payments received by the Adviser from all sources in respect of the Fund; 40 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND 4. the costs borne by, and profitability of, the Adviser and its affiliates in providing services to the Fund; 5. comparative fee and expense data for the Fund and other investment companies with similar investment objectives; 6. the extent to which economies of scale would be realized to the extent the Fund grows and whether fee levels reflect any economies of scale for the benefit of investors; 7. the Adviser's policies and practices regarding allocation of portfolio transactions of the Fund, including the extent to which the Adviser benefits from soft dollar arrangements; 8. information about "revenue sharing" arrangements that the Adviser has entered into in respect of the Fund; 9. portfolio turnover rates for the Fund compared to other investment companies with similar investment objectives; 10. fall-out benefits that the Adviser and its affiliates receive from their relationships with the Fund; 11. the Adviser's representation that there are no institutional products managed by the Adviser which have a substantially similar investment style as the Fund; 12. the Senior Officer's evaluation of the reasonableness of the fee payable to the Adviser in the Advisory Agreement; 13. the professional experience and qualifications of the Fund's portfolio management team and other senior personnel of the Adviser; and 14. the terms of the Advisory Agreement. The directors also considered their knowledge of the nature and quality of the services provided by the Adviser to the Fund gained from their experience as directors of the Fund, their overall confidence in the Adviser's integrity and competence they have gained from that experience and the Adviser's responsiveness to concerns raised by them in the past. In their deliberations, the directors did not identify any particular information that was all-important or controlling, and the directors attributed different weights to the various factors. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 41 The directors determined that the overall arrangements between the Fund and the Adviser, as provided in the Advisory Agreement, were fair and reasonable in light of the services performed, expenses incurred and such other matters as the directors considered relevant in the exercise of their business judgment. The material factors and conclusions that formed the basis for the directors reaching their determinations to approve the continuance of the Advisory Agreement (including their determinations that the Adviser should continue to be the investment adviser for the Fund, and that the fees payable to the Adviser pursuant to the Advisory Agreement are appropriate) were separately discussed by the directors. Nature, extent and quality of services provided by the Adviser The directors noted that, under the Advisory Agreement, the Adviser, subject to the control of the directors, administers the Fund's business and other affairs. The Adviser manages the investment of the assets of the Fund, including making purchases and sales of portfolio securities consistent with the Fund's investment objective and policies. Under the Advisory Agreement, the Adviser also provides the Fund with such office space, administrative and other services (exclusive of, and in addition to, any such services provided by any others retained by the Fund) and executive and other personnel as are necessary for the Fund's operations. The Adviser pays all of the compensation of directors of the Fund who are affiliated persons of the Adviser and of the officers of the Fund. The directors also considered that the Advisory Agreement provides that the Fund will reimburse the Adviser for the cost of certain clerical, accounting, administrative and other services provided at the Fund's request by employees of the Adviser or its affiliates. Requests for these "at no more than cost" reimbursements are approved by the directors on a quarterly basis and (to the extent requested and paid) result in a higher rate of total compensation from the Fund to the Adviser than the fee rates stated in the Fund's Advisory Agreement. The directors considered the scope and quality of services provided by the Adviser under the Advisory Agreement and noted that the scope of services provided by advisers of funds had expanded over time as a result of regulatory and other developments. The directors noted, for example, that the Adviser is responsible for maintaining and monitoring its own and, to varying degrees, the Fund's compliance programs, and that these compliance programs have recently been refined and enhanced in light of new regulatory requirements. The directors considered the quality of the in-house investment research capabilities of the Adviser and the other resources it has dedicated to performing services for the Fund. The quality of administrative and other services, including the Adviser's role in coordinating the activities of the Fund's other service providers, also were considered. The directors also considered the Adviser's response to recent regulatory compliance issues affecting the Fund and a number of the other invest- 42 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND ment companies in the AllianceBernstein Funds complex. The directors concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the Fund under the Advisory Agreement. Costs of Services Provided and Profitability to the Adviser The directors reviewed a schedule of the revenues, expenses and related notes indicating the profitability of the Fund to the Adviser for calendar years 2003 and 2004. The directors also reviewed information in respect of 2004 that had been prepared with a revised expense allocation methodology. The directors noted that the revised expense allocation methodology would be used in 2005, and that it differed in various respects from the methodology used in prior years. The directors reviewed the assumptions and methods of allocation used by the Adviser in preparing fund-specific profitability data, and noted the Adviser's representation to them that it believed that the methods of allocation used in preparing the profitability information were reasonable and appropriate and that the Adviser had previously discussed with the directors that there is no generally accepted allocation methodology for information of this type. The directors recognized that it is difficult to make comparisons of profitability from fund advisory contracts because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the adviser's capital structure and cost of capital. In considering profitability information, the directors considered the effect of fall-out benefits on the Adviser's expenses, as well as the "revenue sharing" arrangements the Adviser has entered into with certain entities that distribute shares of the Fund. The directors focused on the profitability of the Adviser's relationship with the Fund before taxes and distribution expenses. The directors recognized that the Adviser should generally be entitled to earn a reasonable level of profits for the services it provides to the Fund and, based on their review, concluded that they were satisfied that the Adviser's level of profitability from its relationship with the Fund was not excessive. Fall-Out Benefits The directors considered that the Adviser benefits from soft dollar arrangements whereby it receives brokerage and research services from many of the brokers and dealers that execute purchases and sales of securities on behalf of its clients on an agency basis. They noted that the Adviser makes presentations to the directors regarding its trading practices and brokerage allocation policies, including its policies with respect to soft dollar arrangements, from time to time and had made a special presentation to the directors in May 2005 on this subject. The directors noted that the Adviser has represented to them that all of its soft dollar arrangements are consistent with applicable legal requirements including the achievement of best execution. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 43 The directors also considered that the Distributor, which is a wholly-owned subsidiary of the Adviser: receives 12b-1 fees from the Fund in respect of classes of shares of the Fund that are subject to the Fund's 12b-1 plan; retains a portion of the 12b-1 fees from the Fund; and receives all or a portion of the sales charges on sales or redemptions of certain classes of shares. The directors also noted that certain affiliates of the Adviser distribute shares of the Fund and receive compensation in that connection, that a subsidiary of the Adviser provides transfer agency services to the Fund and receives compensation from the Fund for such services, and that brokers who are affiliated with the Adviser are permitted to execute brokerage transactions for the Fund subject to satisfaction of certain requirements and receive brokerage commissions from the Fund and liquidity rebates from electronic communication networks ("ECNs") in connection with such transactions. The directors noted that the Adviser had made a recent presentation to the directors detailing liquidity rebates that Sanford C. Bernstein & Co. LLC receives in respect of transactions effected through ECNs. The directors recognized that the Adviser's profitability would be somewhat lower if it did not receive research for soft dollars or if the Adviser's affiliates did not receive the other benefits described above. The directors understood that the Adviser also might derive reputational and other benefits from its association with the Fund. Investment Results In addition to the information reviewed by the directors in connection with the meeting, the directors receive detailed comparative performance information for the Fund at each regular Board meeting during the year. At the meeting, the directors reviewed information from a report prepared by Lipper showing performance of the Class A Shares of the Fund as compared to a group of 7 to 4 funds (depending on the year) in its Lipper category selected by Lipper (the "Performance Group") and as compared to a universe of 59 to 8 funds (depending on the year) in its Lipper category selected by Lipper (the "Performance Universe") for periods ended September 30, 2005 over the 1-, 3-, 5- and 10-year periods. The directors noted that in the Performance Group comparison the Fund was in the third quintile in the 1- and 5-year periods and in the fifth quintile in the 3-year period (adjusted to 4th quintile in the 5-year period by the Senior Officer who uses a different methodology than Lipper for assigning performance to quintiles). Quintile information was not available in the 10-year period. In the Performance Universe comparison the directors noted that the Fund was in the fourth quintile in the 1- and 10-year periods, in the fifth quintile in the 3-year period and in the second quintile in the 5-year period. The directors also considered the Fund's performance compared to the Morgan Stanley Capital International World Information Technology Index (Net) (the "Index") for periods ended September 30, 2005 over the year to date ("YTD"), 1-, 3- and 5-year periods. No information was available for the 10-year and since inception periods (March 1982 inception). The comparative information 44 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND showed that the Fund outperformed the Index in the YTD and 1-year periods and underperformed the Index in the 3- and 5-year periods. Based on their review, the directors concluded that the Fund's relative performance over time was satisfactory. Advisory Fees and Other Expenses The directors considered the advisory fee rate paid by the Fund to the Adviser and information prepared by Lipper concerning fee rates paid by other funds in the same Lipper category as the Fund at a common asset level. The directors recognized that it is difficult to make comparisons of advisory fees because there are variations in the services that are included in the fees paid by other funds. The directors reviewed information in the Adviser's Form ADV and noted that it charged institutional clients lower fees for advising comparably sized accounts using strategies that differ from those of the Fund but which involve investments in equity securities. The Adviser reviewed with the directors the significant differences in the scope of services it provides to institutional clients and to the Fund. For example, the Advisory Agreement requires the Adviser to provide, in addition to investment advice, office facilities and officers (including officers to provide required certifications). The Adviser also coordinates the provision of services to the Fund by non-affiliated service providers and is responsible for the compensation of the Fund's Independent Compliance Officer and certain related expenses. The provision of these non-advisory services involves costs and exposure to liability. The Adviser explained that many of these services normally are not provided to non-investment company clients and that fees charged to the Fund reflect the costs and risks of the additional obligations. The Adviser also noted that since the Fund is constantly issuing and redeeming its shares, it is more difficult to manage than an institutional account, where the assets are relatively stable. In light of these facts, the directors did not place significant weight on these fee comparisons. The directors also considered the total expense ratio of the Class A shares of the Fund in comparison to the fees and expenses of funds within two comparison groups created by Lipper: an Expense Group and an Expense Universe. Lipper described an Expense Group as a representative sample of comparable funds and an Expense Universe as a broader group, consisting of all funds in the investment classification/objective with a similar load type as the Fund. The Class A expense ratio of the Fund was based on the Fund's latest fiscal year expense ratio. The Lipper information included pro forma expense ratios provided by the Adviser assuming the new lower contractual advisory fees implemented in January 2004 had been in effect in the Fund's most recent fiscal year. All references to expense ratios are to the pro forma expense ratios. The directors recognized that the expense ratio information for the Fund potentially reflected on the Adviser's pro- ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 45 vision of services, as the Adviser is responsible for coordinating services provided to the Fund by others. The directors noted that it was likely that the expense ratios of some funds in the Fund's Lipper category also were lowered by waivers or reimbursements by those funds' investment advisers, which in some cases were voluntary and perhaps temporary. The directors noted that the Fund's at approximate current size contractual effective fee rate of 75 basis points was the same as the Expense Group median. The directors also noted that the Adviser advises another AllianceBernstein fund with a similar investment objective and strategies as the Fund for the same fee rate as the Fund except that the Fund's fee rate is based on the net asset value at the end of each quarter instead of "average daily net assets" and the Fund's fee is a quarterly rather than a monthly fee. The directors further noted that the Fund's total expense ratio was somewhat higher than the median for the Expense Group and somewhat lower than the median for the Expense Universe. The directors concluded that the Fund's expense ratio was satisfactory. Economies of Scale The directors noted that the advisory fee schedule for the Fund contains breakpoints so that, if assets were to increase over the breakpoint levels, the fee rates would be reduced on the incremental assets. The directors also considered a presentation by an independent consultant discussing economies of scale issues in the mutual fund industry. The directors believe that economies of scale are realized (if at all) by the Adviser across a variety of products and services, and not only in respect of a single fund. The directors noted that there is no uniform methodology for establishing breakpoints that give effect to fund-specific services provided by the Adviser and to the economies of scale that the Adviser may realize in its overall mutual fund business or those components of it which directly or indirectly affect the Fund's operations. The directors observed that in the mutual fund industry as a whole, as well as among funds similar to the Fund, there is no uniformity or pattern in the fees and asset levels at which breakpoints (if any) apply. Depending on the age and size of a particular fund and its adviser's cost structure, different conclusions can be drawn as to whether there are economies of scale to be realized at any particular level of assets, notwithstanding the intuitive conclusion that such economies exist, or will be realized at some level of total assets. Moreover, because different advisers have different cost structures and service models, it is difficult to draw meaningful conclusions from the comparison of a fund's advisory fee breakpoints with those of comparable funds. The directors also noted that the advisory agreements for many funds do not have breakpoints at all. Having taken these factors into account, the directors concluded that the Fund's breakpoint arrangements would result in a sharing of economies of scale in the event of a very significant increase in the Fund's net assets. 46 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND ALLIANCEBERNSTEIN FAMILY OF FUNDS ---------------------------------- Wealth Strategies Funds ---------------------------------- Balanced Wealth Strategy Wealth Appreciation Strategy Wealth Preservation Strategy Tax-Managed Balanced Wealth Strategy Tax-Managed Wealth Appreciation Strategy Tax-Managed Wealth Preservation Strategy ---------------------------------- Blended Style Funds ---------------------------------- U.S. Large Cap Portfolio International Portfolio Tax-Managed International Portfolio ---------------------------------- Growth Funds ---------------------------------- Domestic Growth Fund Mid-Cap Growth Fund Large Cap Growth Fund Small Cap Growth Portfolio Global & International Global Health Care Fund Global Research Growth Fund Global Technology Fund Greater China '97 Fund International Growth Fund* International Research Growth Fund* ---------------------------------- Value Funds ---------------------------------- Domestic Balanced Shares Focused Growth & Income Fund Growth & Income Fund Real Estate Investment Fund Small/Mid-Cap Value Fund Utility Income Fund Value Fund Global & International Global Value Fund International Value Fund ---------------------------------- Taxable Bond Funds ---------------------------------- Global Government Income Trust* Corporate Bond Portfolio Emerging Market Debt Fund Global Strategic Income Trust High Yield Fund Multi-Market Strategy Trust Intermediate Bond Portfolio* Short Duration Portfolio U.S. Government Portfolio ---------------------------------- Municipal Bond Funds ---------------------------------- National Michigan Insured National Minnesota Arizona New Jersey California New York Insured California Ohio Florida Pennsylvania Massachusetts Virginia ---------------------------------- Intermediate Municipal Bond Funds ---------------------------------- Intermediate California Intermediate Diversified Intermediate New York ---------------------------------- 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 Spain Fund World Dollar Government Fund World Dollar Government Fund II ---------------------------------- Retirement Strategies Funds ---------------------------------- 2000 Retirement Strategy 2005 Retirement Strategy 2010 Retirement Strategy 2015 Retirement Strategy 2020 Retirement Strategy 2025 Retirement Strategy 2030 Retirement Strategy 2035 Retirement Strategy 2040 Retirement Strategy 2045 Retirement Strategy We also offer Exchange Reserves,** which serves as the money market fund exchange vehicle for the AllianceBernstein mutual funds. For more complete information on any AllianceBernstein mutual fund, including investment objectives and policies, sales charges, expenses, risks and other matters of importance to prospective investors, visit our web site at www.alliancebernstein.com or call us at (800) 227-4618 for a current prospectus. You should read the prospectus carefully before you invest. * Prior to May 16, 2005, International Growth Fund was named Worldwide Privatization Fund and International Research Growth Fund was named International Premier Growth Fund. On June 24, 2005, All-Asia Investment Fund merged into International Research GrowthFund. On July 8, 2005, New Europe Fund merged into International Research Growth Fund. Prior to February 1, 2006, Global Government Income Trust was named Americas Government Income Trust and Intermediate Bond Portfolio was named Quality Bond Portfolio. ** An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 47 THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS. SUMMARY OF SENIOR OFFICER'S EVALUATION OF INVESTMENT ADVISORY AGREEMENT(1) The following is a summary of the evaluation of the investment advisory agreement between Alliance Capital Management L.P. (the "Adviser") and AllianceBernstein Global Technology, Inc. (the "Fund")(2), prepared by Philip L. Kirstein, the Senior Officer, for the independent directors of the Fund, as required by the Assurance of Discontinuance between the New York State Attorney General and the Adviser. The Senior Officer's evaluation of the investment advisory agreement is not meant to diminish the responsibility or authority of the Board of Directors of the Fund to perform its duties pursuant to Section 15 of the Investment Company Act of 1940 (the "40 Act") and applicable state law. The purpose of the summary is to provide shareholders with a synopsis of the independent evaluation of the reasonableness of the advisory fees which was provided to the independent directors in connection with their review of the proposed continuance of the investment advisory agreement. The Senior Officer's evaluation considered the following factors: 1. Management fees charged to institutional and other clients of the Adviser for like services. 2. Management fees charged by other mutual fund companies for like services. 3. Costs to the Adviser and its affiliates of supplying services pursuant to the advisory agreement, excluding any intra-corporate profit. 4. Profit margins of the Adviser and its affiliates from supplying such services. 5. Possible economies of scale as the Fund grows larger. 6. Nature and quality of the Adviser's services including the performance of the Fund. (1) It should be noted that the information in the fee summary was completed on November 2, 2005 and presented to the Board of Directors on November 8, 2005 in accordance with the Assurance of Discontinuance between the New York State Attorney General and the Adviser. It also should be noted that references in the fee summary pertaining to performance and expense ratios refer to Class A shares of the Fund. (2) Prior to December 15, 2004, AllianceBerstein Global Technology Fund, Inc. was known as AllianceBernstein Technology Fund, Inc. 48 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND FUND ADVISORY FEES, EXPENSE REIMBURSEMENTS & RATIOS The table below describes the Fund's advisory fee pursuant to the Investment Advisory Agreement. This fee schedule was implemented in consideration of the Adviser's settlement with the New York State Attorney General.(3) Quarterly Advisory Fee Based on % of Net Fund Assets at End of Quarter(4) ------------------------------------------------------------------------------- AllianceBernstein Global Technology Fund, Inc. First $2.5 billion1/4 of 0.75% Next $2.5 billion1/4 of 0.65% Excess of $5 billion1/4 of 0.60% The Fund's net assets as of September 30, 2005 were $2.16 billion. The effective advisory fee of the Fund at this asset level is 0.75%. The Adviser is reimbursed as specified in the Investment Advisory Agreement for certain clerical, legal, accounting, administrative and other services provided to the Fund as indicated below: As a % of average Fund Amount daily net assets ------------------------------------------------------------------------------- AllianceBernstein Global Technology Fund, Inc. $118,326 0.005% Set forth below are the Fund's expense ratios for the most recently completed fiscal year: Gross Net Fiscal Expense Expense Year Fund Ratio(5) Ratio(6) End ------------------------------------------------------------------------------- AllianceBernstein Global Class A 1.68% 1.66% July 31 Technology Fund, Inc. Class B 2.46% 2.43% Class C 2.41% 2.39% Class R 1.74% 1.71% Class K 1.05% 1.05% Class I 0.81% 0.81% Adv. Class 1.38% 1.35% (3) The advisory fee schedule implemented in January 2004 contemplates eight categories of the AllianceBernstein Mutual Funds with almost all funds in each category having the same advisory fee schedule. (4) The advisory fee is paid on a quarterly basis. (5) With respect to each of Class K and Class I shares, the gross expense ratios excludes the administrative services fee for third party record keeping services of up to 15 bp and 10 bp respectively. (6) The Adviser's settlement with the New York State Attorney General in September 7, 2004 mandated a weighted reduction of advisory fees of 20% on the Adviser's sponsored long-term open-end retail funds for a minimum of five years. Accordingly, in anticipation of the final agreement, the Adviser began waiving a portion of the advisory fees that it charged to the Fund for the period January 1, 2004 through September 6, 2004. From August 1, 2004 through September 6, 2004 such waiver amount amounted to $664,562. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 49 I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS The management fees charged to investment companies which the Adviser manages and sponsors is normally higher than those charged to similar sized institutional accounts, including pension plans and sub-advised investment companies. The fee differential reflects, among other things, different services provided to such clients, and different liabilities assumed. Services provided by the Adviser to the Fund that are not provided to non-investment company clients include providing office space and personnel to serve as Fund Officers, who among other responsibilities make the certifications required under the Sarbanes-Oxley Act of 2002, and coordinating with and monitoring the Fund's third party service providers such as Fund counsel, auditors, custodians, transfer agents and pricing services. The accounting, administrative, legal and compliance requirements for the Fund are more costly than those for institutional assets due to the greater complexities and time required for investment companies, although as previously noted, a portion of these expenses are reimbursed by the Fund to the Adviser. In addition, managing the cash flow of an investment company may be more difficult than that of a stable pool of assets, such as an institutional account with little cash movement in either direction, particularly, if the fund is in net redemption and the Adviser is frequently forced to sell securities to raise cash for redemptions. However, managing a fund with positive cash flow may be easier at times than managing a stable pool of assets. Finally, in recent years, investment advisers have been sued by institutional clients and have suffered reputational damage both by the attendant publicity and outcomes other than complete victories. Accordingly, the legal and reputational risks associated with institutional accounts are greater than previously thought, although still not equal to those related to the mutual fund industry. Notwithstanding the Adviser's view that managing an investment company is not comparable to managing other institutional accounts because the services provided are different, it is worth considering information regarding the advisory fees charged to institutional accounts with substantially similar investment styles as the Fund. However, the Adviser represented that there are no institutional products which have a substantially similar investment style as the Fund. 50 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND The Adviser manages the Global Technology Portfolio of AllianceBernstein Variable Product Series Fund, Inc. ("AVPS"), which has a comparable investment approach as the Fund. The AVPS Global Technology Portfolio has the following advisory fee schedule in place:
Advisory Fee Based on % of Fund Average Daily Net Assets(7) --------------------------------------------------------------------------------------- AllianceBernstein Variable Product Series Fund, Inc.- First $2.5 billion 0.75% Global Technology Portfolio Next $2.5 billion 0.65% Excess of $5 billion 0.60%
The Adviser also manages and sponsors retail mutual funds which are organized in jurisdictions outside the United States, generally Luxembourg, and sold to non-United States resident investors. Set forth below is the fee that the Adviser charges to an offshore mutual fund that invests in growth equities although it should be noted that while such equities include stocks of technology companies, the offshore mutual fund's investment universe is much broader than that of the Fund: Asset Class Fee(8) ------------------------------------------------------------------------------- Global Growth 1.00% The Adviser represented that it does not sub-advise any registered investment companies with a similar investment style as the Fund. II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES. Lipper, Inc., an analytical service that is not affiliated with the Adviser, compared the fees charged to the Fund with fees charged to other investment companies for similar services by other investment advisers. Lipper's analysis included the Fund's ranking with respect to the proposed management fees relative to the Lipper group median at the approximate current asset level of the Fund.(9) (7) The fee schedule of AVPS Global Technology Portfolio was also affected by the Adviser's settlement with the New York State Attorney General. Accordingly, the fee schedule of the AVPS Global Technology Portfolio is similar to the fee schedule of the Fund. The difference in the fee schedule between the two AllianceBernstein products is that the AVPS Global Technology Portfolio's advisory fee, which is paid monthly, is based on the portfolio's daily average net assets while the Fund's advisory fee, which is paid quarterly, is based on the Fund's net assets at quarter end. (8) The fee charged to the fund includes a 0.10% fee for administrative services provided by the Adviser or its affiliates. (9) It should be noted that "effective management fee" is calculated by Lipper using the Fund's contractual management fee rate at a hypothetical asset level. The hypothetical asset level is based on the combined net assets of all classes of the Fund, rounded up to the next $25 million. Lipper's total expense ratio information is based on the most recent annual report except as otherwise noted. A ranking of "1" means that the AllianceBernstein Fund has the lowest effective fee rate in the Lipper peer group. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 51 Effective Lipper Management Group Fund Fee(10) Median Rank ------------------------------------------------------------------------------- AllianceBernstein Global Technology Fund, Inc. 0.750 0.750 4/7 Lipper also analyzed the total expense ratio of the Fund in comparison to the Fund's Lipper Expense Group(11) and Lipper Expense Universe(12). Lipper describes a Lipper Expense Group as a representative sample of comparable funds and a Lipper Expense Universe as a broader group, consisting of all funds in the same investment classification/objections with a similar load type as the subject Fund. The results of that analysis are set forth below: Lipper Lipper Lipper Lipper Expense Universe Universe Group Group Fund Ratio(13) Median Rank Median Rank ------------------------------------------------------------------------------- AllianceBernstein Global Technology Fund, Inc. 1.650 1.688 23/48 1.458 7/7 Based on this analysis, the Fund has a more favorable ranking on a management fee basis than on a total expense ratio basis. This highlights an issue which the Directors are already addressing, which is lowering non-management expenses. III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO THE MANAGEMENT FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT. Members of the Adviser's Controller's Office presented to the Board of Directors the Adviser's revenue and expenses associated with providing services to the Fund. The presentation included an update on the Adviser's work with an independent consultant to align the Adviser's two profitability systems. The (10) It should be noted that the "effective management fee" rate for the Fund does not reflect the payments by the Fund to the Adviser for certain clerical, legal, accounting, administrative and other services. The dollar amount and basis point impact of such payments on the Fund is discussed in Section I. (11) Lipper uses the following criteria in screening funds to be included in the Fund's expense group: fund type, investment classification/objective, load type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, and expense components and attributes. A Lipper Expense Group will typically consist of seven to twenty funds. (12) Except for asset (size) comparability and load type, Lipper uses the same criteria for selecting a Lipper Expense Group when selecting a Lipper Expense Universe. Unlike the Lipper Expense Group, the Lipper Expense Universe allows for the same adviser to be represented by more than just one fund. (13) The total expense ratio that is shown above is the Fund's Class A share total expense ratio for fiscal year end 2004. This expense ratio does not reflect the changes to the advisory schedule discussed in page 3. Had the new advisory fee schedule been in place since the beginning of the Fund's fiscal year, the pro-forma total expense ratio as calculated by Lipper would have been 1.573% and the Fund would have had a Lipper Expense Group ranking of 7/7 and a Lipper Expense Universe ranking of 20/48. 52 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND alignment, which now is complete, produces profitability information at the Fund level which reflects the Adviser's management reporting approach. See discussion below in Section IV. IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES. The profitability information for the Fund prepared by the Adviser for the Board of Directors was reviewed by the Senior Officer. Based on the information provided, the Adviser's profitability from providing investment advisory services to the Fund decreased during calendar 2004 relative to 2003 primarily as a result of the reduction of fees in the advisory fee schedule implemented early in 2004. In addition to the Adviser's direct profits from managing the Fund, certain of the Adviser's affiliates have business relationships with the Fund and may earn a profit from providing other services to the Fund. The courts have referred to this type of business opportunity as "fall-out benefits" to the Adviser and should be factored into the evaluation of the total relationship between the Fund and the Adviser. Neither case law nor common business practice precludes the Adviser's affiliates from earning a reasonable profit on this type of relationship. These affiliates provide transfer agent, distribution, and brokerage related services to the Fund and receive transfer agent fees, Rule 12b-1 payments, front-end sales loads, contingent deferred sales charges ("CDSC") and commissions for providing brokerage services. In addition, the Adviser benefits from soft dollar arrangements which offset expenses the Adviser would otherwise incur. Additional information regarding distribution related fees can be found in the prospectus of the Fund. The Adviser's affiliate, AllianceBernstein Investment Research and Management, Inc. ("ABIRM"), is the Fund's principal underwriter. ABIRM and the Adviser have disclosed in the Fund's prospectus that they may make payments14 from their own resources, in addition to resources derived from sales loads and Rule 12b-1 fees, to firms that sell shares of the Fund. In 2004, ABIRM paid approximately 0.04% of the average monthly assets of the AllianceBernstein Mutual Funds for distribution services and educational support. For 2005, it is anticipated, ABIRM will pay approximately 0.04% of the average monthly assets of the Fund for such purposes. After payments to third party intermediaries, ABIRM retained the following amount in Class A front-end load sales charge from sales of the Fund's shares in the Fund's most recent fiscal year. (14) The total amount paid to the financial intermediary in connection with the sale of shares will generally not exceed the sum of (a) 0.25% of the current year's Fund sales by that firm and (b) 0.10% of the average daily net assets attributable to that firm over the year. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 53 Fund Amount Received ------------------------------------------------------------------------------- AllianceBernstein Global Technology Fund, Inc. $24,207 ABIRM received the amounts set forth below in Rule 12b-1 fees and CDSC for the Fund during the Fund's most recent fiscal year. A significant percentage of such amounts were paid out to third party intermediaries by ABIRM. 12b-1 Fee CDSC Fund Received Received ------------------------------------------------------------------------------- AllianceBernstein Global Technology Fund, Inc. $16,047,372 $814,835 Fees and reimbursements for out of pocket expenses charged by Alliance Global Investor Services, Inc. ("AGIS"), the affiliated transfer agent, are based on the level of the network account and the class of share held by the account. AGIS also receives a fee per shareholder sub-account for each account maintained by an intermediary on an omnibus basis. AGIS' after-tax profitability decreased in 2004 in comparison to 2003. AGIS received the following fee from the Fund in the most recent fiscal year: Fund AGIS Fee(15) ------------------------------------------------------------------------------- AllianceBernstein Global Technology Fund, Inc. $6,878,700 The Fund effected brokerage transactions through the Adviser's affiliate, Sanford C. Bernstein & Co. LLC ("SCB"), and paid commissions during the Fund's recent fiscal year. The Adviser represented that SCB's profitability from business conducted with the Fund is comparable to the profitability of SCB's dealings with other similar third party clients. In the ordinary course of business, SCB receives and pays liquidity rebates from electronic communications networks ("ECNs") derived from trading for its clients, including the Fund. These credits and charges are not being passed on to any SCB client. V. POSSIBLE ECONOMIES OF SCALE The Adviser has indicated that the breakpoints in the fee schedule in the Investment Advisory Agreement reflect a sharing of economies of scale to the extent the breakpoints are reached. Based on some of the professional literature that has considered economies of scale in the mutual fund industry it is thought that to the extent economies of scale exist, they may more often exist across a fund family as opposed to a specific fund. This is because the costs incurred by the Adviser, such as investment research or technology for trading or compliance systems can be spread across a greater asset base as the fund family increases in size. It is also possible that as the level of services required to operate a successful investment company has increased over time, and advisory firms have made such (15) During the period, the Fund's expenses were reduced by $33,298 under an expense offset arrangement with AGIS. 54 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND investments in their business to provide improved services, there may be a sharing of economies of scale without a reduction in advisory fees. An independent consultant made a presentation to the Board of Directors and the Senior Officer regarding possible economies of scale or scope in the mutual fund industry. Based on the presentation, it was evident that fund management companies benefit from economies of scale. However, due to lack of cost data, researchers had to infer facts about the costs from the behavior of fund expenses; there was a lack of consensus among researchers as to whether economies of scale were being passed on to the shareholders. It is contemplated that additional work will be performed to determine if the benefits of economies of scale or scope are being passed to shareholders by the Adviser. In the meantime, it is clear that to the extent the Fund's assets exceed the initial breakpoint its shareholders benefit from a lower fee rate. VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING THE PERFORMANCE OF THE FUND. With assets under management of $555 billion as of September 30, 2005, the Adviser has the investment experience to manage and provide non-investment services (described in Section II) to the Fund. The information prepared by Lipper showed the 1, 3, 5 and 10 year performance ranking of the Fund(16) relative to its Lipper group and universe for the periods ended September 30, 2005: AllianceBernstein Global Technology Fund, Inc. Group Universe ------------------------------------------------------------------------------- 1 year 4/7 36/59 3 year 6/7 47/53 5 year 4/6 16/43 10 year 4/4 6/8 (16) The performance rankings are for the Class A shares of the Fund. ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND o 55 Set forth below are the 1, 3, 5, 10 year and since inception performance returns of the Fund (in bold)(17) versus its benchmark(18). Periods Ending September 30, 2005 Annualized Performance (%) ------------------------------------------------------------------------------- 1 3 5 10 Since Funds Year Year Year Year Inception ------------------------------------------------------------------------------- AllianceBernstein Global 15.46 19.06 -14.42 4.58 14.31 Technology Fund, Inc. MSCI World IT Index 13.53 22.05 -14.41 N/A N/A Goldman Sachs Technology 13.83 24.39 -15.24 N/A N/A Composite Index CONCLUSION: Based on the factors discussed above the Senior Officer's conclusion is that the proposed fee for the Fund is reasonable and within the range of what would have been negotiated at arms-length in light of all the surrounding circumstances. This conclusion in respect of the Fund is based on an evaluation of all of these factors and no single factor was dispositive. Dated: December 7, 2005 (17) The Fund's performance returns are for the Class A shares of the Fund. (18) The Adviser provided Fund and benchmark performance return information for periods through September 30, 2005 in order to maintain consistency with Lipper's performance rankings in the analysis. 56 o ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY FUND 1345 Avenue of the Americas New York, NY 10105 Toll-free 1 (800) 221-5672 [LOGO] ALLIANCEBERNSTEIN INVESTMENTS GT-0152-0106 ITEM 2. CODE OF ETHICS. Not applicable when filing a semi-annual report to shareholders. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable when filing a semi-annual report to shareholders. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable when filing a semi-annual report to shareholders. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to the Registrant. ITEM 6. SCHEDULE OF INVESTMENTS. Please see Schedule of Investments contained in the Report to Shareholders included under Item 1 of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the Registrant. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the Registrant. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to the Registrant. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which shareholders may recommend nominees to the Fund's Board of Directors since the Fund last provided disclosure in response to this item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document. (b) There were no changes in the registrant's internal controls over financial reporting that occurred during the second fiscal quarter of the period that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. The following exhibits are attached to this Form N-CSR: EXHIBIT NO. DESCRIPTION OF EXHIBIT -------------- ---------------------- 12 (b) (1) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12 (b) (2) Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12 (c) Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant): AllianceBernstein Global Technology Fund, Inc. By: /s/ Marc O. Mayer -------------------- Marc O. Mayer President Date: March 31, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Marc O. Mayer -------------------- Marc O. Mayer President Date: March 31, 2006 By: /s/ Mark D. Gersten -------------------- Mark D. Gersten Treasurer and Chief Financial Officer Date: March 31, 2006