-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HERZRqyCUkPk1Jf6UxP2h7U782U7uJgO96kyK49QLmDZq+VQPZ7buX/SikDfM+Yr WTepKsaMhdjbILBT8le4Vw== 0000936772-99-000055.txt : 19990205 0000936772-99-000055.hdr.sgml : 19990205 ACCESSION NUMBER: 0000936772-99-000055 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981130 FILED AS OF DATE: 19990204 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE TECHNOLOGY FUND INC CENTRAL INDEX KEY: 0000350181 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133056623 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-03131 FILM NUMBER: 99520767 BUSINESS ADDRESS: STREET 1: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 2013194104 MAIL ADDRESS: STREET 1: ALLIANCE CAPITAL MANAGEMENT LP STREET 2: 1345 AVENUE OF THE AMERICAS 31ST FL CITY: NEW YORK STATE: NY ZIP: 10105 N-30D 1 ALLIANCE TECHNOLOGY FUND ANNUAL REPORT NOVEMBER 30, 1998 ALLIANCE CAPITAL LETTER TO SHAREHOLDERS ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ January 25, 1999 Dear Shareholder: We are pleased to provide an update of the Alliance Technology Fund's performance and investment activity for the annual reporting period ended November 30, 1998. INVESTMENT RESULTS As you can see from the following table, Alliance Technology Fund has outperformed the broad U.S. stock market, as measured by the Standard & Poor's 500 Stock Index (S&P 500) for the twelve months ended November 30, 1998. However, for the same period your Fund underperformed the overall technology sector, as measured by the Pacific Stock Exchange (PSE) High Technology Index, as did its peer group of funds, as represented by the Lipper Science and Technology Fund Index (Lipper Index). 1998 was a year of high volatility and uncertainty. In the last twelve months, the market has experienced a dramatic correction only to see an even stronger rally which has continued into 1999. As such, your Fund's calendar 1998 results are worth highlighting. Alliance Technology Fund's consistent style of focusing on quality and long-term fundamentals has been rewarded during this unique time by preserving capital while still being positioned to participate fully in the market's recent recovery. For the twelve months ending December 31, 1998, Alliance Technology Fund's Class A Shares have appreciated 63.14%. This performance compares quite favorably to the returns of the S&P 500, the PSE High Technology Index and the Lipper Index, which appreciated 28.74%, 54.6% and 46.9%, respectively, for the same period. INVESTMENT RESULTS* Periods Ended November 30, 1998 TOTAL RETURNS 6 MONTHS 12 MONTHS ---------- ---------- ALLIANCE TECHNOLOGY FUND Class A 13.46% 27.36% Class B 13.03% 26.44% Class C 13.03% 26.44% S&P 500 7.48% 23.68% PSE HIGH TECHNOLOGY INDEX 19.51% 30.78% LIPPER SCIENCE AND TECHNOLOGY FUND INDEX 13.98% 20.55% * THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE NET ASSET VALUE AS OF NOVEMBER 30, 1998. ALL FEES AND EXPENSES RELATED TO THE OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT NO ADJUSTMENT HAS BEEN MADE FOR SALES CHARGES THAT MAY APPLY WHEN SHARES ARE PURCHASED OR REDEEMED. TOTAL RETURNS FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT EXPENSES ASSOCIATED WITH THAT CLASS. RETURNS FOR THE FUND INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE PERIOD. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THE S&P 500 IS AN UNMANAGED INDEX OF 500 U.S. COMPANIES. THE PSE HIGH TECH INDEX IS A PRICE-WEIGHTED, BROAD-BASED INDEX, REPRESENTING 100 LISTED AND OVER-THE-COUNTER U.S. STOCKS DESIGNED TO MIRROR THE U.S. TECHNOLOGY SECTOR. THE PSE HIGH TECHNOLOGY INDEX IS DESIGNED TO REPRESENT THE ENTIRE U.S. TECHNOLOGY AND SCIENCE SECTOR, INCLUDING SUCH INDUSTRY GROUPS AS COMPUTER SOFTWARE PRODUCTS, INFORMATION PROCESSING SERVICES, MEDICAL TECHNOLOGY, BIOTECHNOLOGY, AMONG OTHERS. THE 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 YOUR FUND, ALTHOUGH INVESTMENT POLICIES FOR THE VARIOUS FUNDS MAY DIFFER. FOR THE SIX- AND 12-MONTH PERIODS ENDED NOVEMBER 30, 1998, THE LIPPER INDEX CONSISTED OF 81 AND 70 FUNDS, RESPECTIVELY. ALL COMPARATIVE INDICES ARE UNMANAGED AND REFLECT NO FEES OR EXPENSES. AN INVESTOR CANNOT INVEST DIRECTLY IN AN INDEX. ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3. INVESTMENT DISCUSSION We have commented in the past about how technology product cycles keep getting shorter, that they are measured in months now rather than years. Lately, it seems 1 ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ the same thing is happening with investor perceptions about technology--sharp emotional shifts in short periods of time. In the last two quarters, for example, we have gone from unbridled enthusiasm to rampant pessimism back to jubilation. If people are not worried about the Y2K issue, problems in Asia, the government's case vs. Microsoft or the decline in PC prices, they are enthusiastic about the strong earnings shown in the recent third quarter, recovery in Asia, a seasonally strong finish to 1998 or the excitement (mania?) surrounding Internet stocks. These rapid changes in perception make portfolio management more difficult. It is always tempting to join the crowd and rush into a stock going up every day or panic out of one doing the reverse. The brokerage community reinforces the importance of these short-term swings in their effort to maximize trade commissions. We have long felt, however, that too much emphasis on short-term issues and the high portfolio turnover, which is part of that approach, often leads to a "churn and burn" experience--high transaction costs, more capital gains taxes and too much emphasis on tactical rather than strategic considerations. It is possible that some of this trading myopia may have become a permanent part of the investment scene, at least with respect to technology stocks. Many people are chasing these stocks without an understanding of their underlying business and they show a readiness to unload positions at the slightest sign of weakness. More involvement with tech stocks amongst the retail community partly explains this instability. The non professional investor now has access, through the Internet, to quotes, charts, press releases, conference calls, chat rooms and even Wall Street analysis. Momentum is the buzzword of this new kind of investor, electronic day trading is the style and myopic group-think is the result. The extraordinary run-up in Internet stocks is the best example of this phenomenon. This worldwide network, allowing consumers and businesses to connect to almost anyone or anything, marks a new era in technology and it has profound implications. The secular growth opportunity for dozens of new companies in this area is clear. Nevertheless, too much of the activity in Internet stocks is amongst retail day traders who seem to believe that the higher a stock goes, the more attractive it becomes. Some of the Fund's strong performance this year has come from its exposure to several names in this Internet space and we hope to capitalize further on the secular business opportunity which lies ahead in this new "dot com" era. Shorter term, however, we are somewhat concerned about an old fashioned issue called valuation--some Internet stocks seem ahead of themselves and we are cautiously waiting for better opportunities than exist today to further build our positions in this exciting new wave of technology. Finally, we wish to thank everyone again for their involvement in the Alliance Technology Fund. The road ahead seems as exciting as ever and we are confident that our disciplined approach will continue to serve our shareholders well. Sincerely, John D. Carifa President and Chairman Peter Anastos Portfolio Manager Gerald T. Malone Portfolio Manager SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. 2 INVESTMENT OBJECTIVE AND POLICIES ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ Alliance Technology Fund is a diversified investment company that emphasizes growth of capital and invests for capital appreciation, and only incidentally for current income. The Fund may seek income by writing listed call options. The Fund invests primarily in securities of companies expected to benefit from technological advances and improvements. The Fund normally will have substantially all of its assets invested in equity securities, but it also invests in debt securities offering appreciation potential. The Fund may invest in listed and unlisted U.S. and foreign securities and has the flexibility to invest both in well-known, established companies and in new, unseasoned companies. The Fund's policy is to invest in any company and industry and in any type of security with potential for capital appreciation. INVESTMENT RESULTS NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF NOVEMBER 30, 1998 CLASS A SHARES WITHOUT WITH SALES CHARGE SALES CHARGE ------------ ------------ One Year 27.36% 21.94% Five Years 26.63% 25.54% Ten Years 22.77% 22.24% CLASS B SHARES WITHOUT WITH SALES CHARGE SALES CHARGE ------------ ------------ One Year 26.44% 22.44% Five Years 25.76% 25.76% Since Inception* 26.88% 26.88% CLASS C SHARES WITHOUT WITH SALES CHARGE SALES CHARGE ------------ ------------ One Year 26.44% 25.44% Five Years 25.75% 25.75% Since Inception* 26.88% 26.88% SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END (SEPTEMBER 30, 1998) CLASS A CLASS B CLASS C ------------ ------------ ------------ 1 Year -6.70% -7.08% -4.23% 5 Years 21.94% 22.16% 22.15% 10 Years 19.20% n/a n/a The Fund's investment results represent Average Annual Total Returns. The NAV and SEC returns reflect reinvestment of dividends and/or capital gains distributions in additional shares without (NAV) and with (SEC) the effect of the 4.25% maximum front-end sales charge for Class A or applicable contingent deferred sales charge for Class B (4% year 1, 3% year 2, 2% year 3, 1% year 4); and for Class C shares (1% year 1). Returns for Class A shares do not reflect the imposition of the 1 year 1% contingent deferred sales charge for accounts over $1,000,000. Total returns for Advisor Class shares will differ due to different expenses associated with that class. Past performance does not guarantee future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. * Inception: 5/3/93 Class B and Class C. n/a: not applicable. 3 ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ ALLIANCE TECHNOLOGY FUND GROWTH OF A $10,000 INVESTMENT 11/30/88 TO 11/30/98 $75,000 $64,000 $53,000 $42,000 $31,000 $20,000 $10,000 $9,000 11/30/88 11/30/89 11/30/90 11/30/91 11/30/92 11/30/93 11/30/94 11/30/95 11/30/96 11/30/97 11/30/98 ALLIANCE TECHNOLOGY FUND CLASS A: $74,480 PSE HIGH TECH INDEX: $73,302 S&P 500: $55,667 This chart illustrates the total value of an assumed $10,000 investment in Alliance Technology Fund Class A shares (from 11/30/88 to 11/30/98) as compared to the performance of appropriate broad-based indices. The chart reflects the deduction of the maximum 4.25% sales charge from the initial $10,000 investment in the Fund and assumes the reinvestment of dividends and capital gains. Performance for Class B, Class C and Advisor Class shares will vary from the results shown above due to differences in expenses charged to those classes. Past performance is not indicative of future results, and is not representative of future gain or loss in capital value or dividend income. The unmanaged Standard & Poor's 500 Stock Index (S&P 500) includes 500 U.S. stocks and is a common measure of the performance of the overall U.S. stock market. The unmanaged Pacific Stock Exchange (PSE) High Tech Index measures the performance of technology stocks traded on the Pacific Stock Exchange. When comparing Alliance Technology Fund to the indices shown above, you should note that no charges or expenses are reflected in the performance of the indices. Alliance Technology Fund S&P 500 PSE High Tech Index 4 TEN LARGEST HOLDINGS NOVEMBER 30, 1998 ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ PERCENT OF COMPANY VALUE NET ASSETS - ------------------------------------------------------------------------------- Cisco Systems, Inc. $ 173,437,875 6.2% America Online, Inc. 158,523,150 5.6 Dell Computer Corp. (a) 158,237,675 5.6 Compaq Computer Corp. 125,125,000 4.5 HBO & Co. 115,166,362 4.1 Network Associates, Inc. 111,670,625 4.0 Solectron Corp. 110,136,000 3.9 Sanmina Holdings Corp. 108,175,316 3.8 Intuit, Inc. 95,534,262 3.4 Intel Corp. 93,418,500 3.3 $1,249,424,765 44.4% MAJOR PORTFOLIO CHANGES SIX MONTHS ENDED NOVEMBER 30, 1998 _______________________________________________________________________________ SHARES* - ------------------------------------------------------------------------------- HOLDINGS PURCHASES BOUGHT 11/30/98 - ------------------------------------------------------------------------------- 3Com Corp. 1,135,000 1,135,000 America Online, Inc. 1,810,400 1,810,400 Ceridian Corp. 777,000 777,000 Galileo International, Inc. 692,000 1,319,600 HBO & Co. 3,344,800 4,618,200 Ingram Micro, Inc. Cl.A 498,100 1,624,700 Microsoft Corp. 160,000 640,000 Network Associates, Inc. 1,009,500 2,195,000 Texas Instruments, Inc. 342,600 931,000 Uniphase Corp. 895,300 895,300 HOLDINGS SALES SOLD 11/30/98 - ------------------------------------------------------------------------------- Alcathel Alsthom Maroc (ADR) 1,260,000 -0- Ascend Communications, Inc. 1,734,000 -0- Bay Networks, Inc. 1,391,400 -0- Cadence Design Systems, Inc. 1,113,800 -0- CIENA Corp. 500,000 -0- First Data Corp. 2,000,300 -0- Fore Systems, Inc. 1,704,400 1,389,700 Nokia Corp. (ADR) 422,000 881,000 PeopleSoft, Inc. 936,700 -0- Tellabs, Inc. 1,274,000 -0- (a) Adjusted for market value of call options written. * Adjusted for stock splits. 5 PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1998 ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ COMPANY SHARES VALUE - ------------------------------------------------------------------------- COMMON STOCKS-91.5% TECHNOLOGY-89.3% COMMUNICATION EQUIPMENT-4.8% Nokia Corp. (ADR) (a) 881,000 $ 86,338,000 Uniphase Corp. (b) 895,300 48,514,069 ------------ 134,852,069 COMPUTER HARDWARE-10.8% Apex PC Solutions, Inc. (b) 840,900 21,758,287 Compaq Computer Corp. 3,850,000 125,125,000 Dell Computer Corp. (b) (c) 2,603,600 158,331,425 ------------ 305,214,712 COMPUTER PERIPHERALS-2.4% Lexmark International Group, Inc. Cl.A (b) 885,200 67,607,150 COMPUTER SERVICES-13.3% Ceridian Corp. (b) 777,000 50,553,562 Computer Sciences Corp. 1,260,200 71,988,925 DST Systems, Inc. (b) 1,125,800 60,933,925 Fiserv, Inc. (b) 1,175,050 51,922,522 Galileo International, Inc. 1,319,600 52,784,000 Gartner Group, Inc. Cl.A (b) 1,181,600 25,552,100 Renaissance Worldwide, Inc. (b) 827,200 5,893,800 SunGard Data Systems, Inc. (b) 1,748,600 55,955,200 ------------ 375,584,034 COMPUTER SOFTWARE-15.6% Actuate Software Corp. (b) 33,500 305,688 BEA Systems, Inc. (b) 425,000 5,100,000 HBO & Co. 4,618,200 115,166,362 Health Management Systems, Inc. (b) 793,700 5,456,688 I2 Technologies, Inc. (b) 278,800 6,900,300 Interplay Entertainment Corp.(b) 923,100 1,875,047 Intuit, Inc. (b) 1,650,700 95,534,262 J.D. Edwards & Co. (b) 347,400 12,072,150 Microsoft Corp. (b) 640,000 78,080,000 Network Associates, Inc. (b) 2,195,000 111,670,625 Rational Software Corp. (b) 340,000 7,713,750 ------------ 439,874,872 NETWORKING SOFTWARE-14.1% 3Com Corp. (b) 1,135,000 43,910,312 America Online, Inc. 1,810,400 158,523,150 Cisco Systems, Inc. (b) 2,301,000 173,437,875 Fore Systems, Inc. (b) 1,389,700 21,019,213 ------------ 396,890,550 SEMI-CONDUCTOR CAPITAL EQUIPMENT-4.2% Amkor Technology, Inc. (b) 1,964,000 12,397,750 Applied Materials, Inc. (b) 948,130 36,740,038 KLA-Tencor Corp. (b) 1,116,100 38,017,156 Teradyne, Inc. (b) 977,300 31,334,681 ------------ 118,489,625 SEMI-CONDUCTOR COMPONENTS-12.5% Altera Corp. (b) 1,727,000 84,730,937 Intel Corp. 868,000 93,418,500 PMC-Sierra, Inc. (b) 876,500 47,221,438 Texas Instruments, Inc. 931,000 71,105,125 Xilinx, Inc. (b) 1,074,000 54,505,500 ------------ 350,981,500 MISCELLANEOUS-11.6% Ingram Micro, Inc. Cl.A (b) 1,624,700 69,049,750 Sanmina Corp. (b) 2,171,650 108,175,316 6 ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ SHARES OR PRINCIPAL AMOUNT COMPANY (000) VALUE - ------------------------------------------------------------------------- Solectron Corp. (b) 1,664,000 $ 110,136,000 Tech Data Corp. (b) 979,000 39,404,750 -------------- 326,765,816 UTILITIES-1.8% TELEPHONE UTILITY-1.8% MCI WorldCom, Inc. (b) 867,850 51,203,150 CONSUMER SERVICES-0.4% MISCELLANEOUS-0.4% Equifax, Inc. 267,000 11,080,500 Total Common Stocks (cost $1,642,453,471) 2,578,543,978 PRIVATE PLACEMENT-0.0% Interactive Light Holdings, Inc. 8.00%, 2/07/99 (d) (cost $500,000) $ 500 500,000 SHORT-TERM INVESTMENTS-9.3% COMMERCIAL PAPER-9.3% American Express Co. 4.90%, 12/15/98 30,000 29,942,833 Ford Motor Credit Corp. 4.88%, 12/02/98 24,100 24,096,733 4.92%, 12/11/98 24,000 23,967,200 5.10%, 12/01/98 34,700 34,700,000 CONTRACTS (E) OR PRINCIPAL AMOUNT COMPANY (000) VALUE - ------------------------------------------------------------------------- General Electric Capital Corp. 4.85%, 12/07/98 $ 59,700 $ 59,651,743 Prudential Funding 4.78%, 12/04/98 50,000 49,980,083 4.90%, 12/09/98 26,100 26,071,580 5.10%, 12/01/98 13,400 13,400,000 Total Short-Term Investments (cost $261,810,172) 261,810,172 TOTAL INVESTMENTS-100.8% (cost $1,904,763,643) 2,840,854,150 OUTSTANDING CALL OPTIONS WRITTEN-0.0% Dell Computer Corp. expiring December 1998 @ $70.00 (premiums received $670,477) (1,500) (93,750) TOTAL INVESTMENTS NET OF OUTSTANDING CALL OPTIONS WRITTEN -100.8% (cost $1,904,093,166) 2,840,760,400 Other assets less liabilities-(0.8%) (23,931,716) NET ASSETS-100% $2,816,828,684 (a) Country of origin--Finland. (b) Non-income producing security. (c) Security on which options are written (shares subject to call have an aggregate market value of $9,121,875). (d) Illiquid security, valued at fair value (see Notes A & F). (e) One contract relates to 100 shares. Glossary: ADR - American Depositary Receipt. See notes to financial statements. 7 STATEMENT OF ASSETS AND LIABILITIES NOVEMBER 30, 1998 ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ ASSETS Investments in securities, at value (cost $1,904,763,643) $2,840,854,150 Cash 297,398 Receivable for capital stock sold 14,787,674 Receivable for investment securities sold 1,104,963 Interest and dividends receivable 323,523 Total assets 2,857,367,708 LIABILITIES Outstanding call options written, at value (premium received $670,477) 93,750 Payable for capital stock redeemed 31,552,675 Advisory fee payable 7,042,072 Distribution fee payable 451,344 Accrued expenses and other liabilities 1,399,183 Total liabilities 40,539,024 NET ASSETS $2,816,828,684 COMPOSITION OF NET ASSETS Capital stock, at par $ 421,538 Additional paid-in capital 1,664,445,613 Accumulated net realized gain on investment transactions 215,294,299 Net unrealized appreciation of investments and options written 936,667,234 $2,816,828,684 CALCULATION OF MAXIMUM OFFERING PRICE CLASS A SHARES Net asset value and redemption price per share ($824,635,770 / 12,021,759 shares of capital stock issued and outstanding) $68.60 Sales charge--4.25% of public offering price 3.04 Maximum offering price $71.64 CLASS B SHARES Net asset value and offering price per share ($1,490,578,099 / 22,669,099 shares of capital stock issued and outstanding) $65.75 CLASS C SHARES Net asset value and offering price per share ($271,320,384 / 4,127,242 shares of capital stock issued and outstanding) $65.74 ADVISOR CLASS SHARES Net asset value, redemption and offering price per share ($230,294,431 / 3,335,647 shares of capital stock issued and outstanding) $69.04 See notes to financial statements. 8 STATEMENT OF OPERATIONS YEAR ENDED NOVEMBER 30, 1998 ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ INVESTMENT INCOME Interest $ 9,210,748 Dividends (net of foreign taxes withheld of $210,455) 2,889,745 $ 12,100,493 EXPENSES Advisory fee 24,166,681 Distribution fee - Class A 2,133,012 Distribution fee - Class B 12,466,009 Distribution fee - Class C 2,200,065 Transfer agency 6,242,631 Printing 1,052,902 Custodian 269,935 Registration 185,697 Taxes 179,175 Audit and legal 128,813 Administrative 121,000 Directors' fees 116,000 Miscellaneous 130,646 Total expenses 49,392,566 Less: expense offset arrangement (see Note B) (380,030) Net expenses 49,012,536 Net investment loss (36,912,043) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investment transactions 222,974,632 Net realized loss on written option transactions (116,057) Net change in unrealized appreciation of: Investments 400,681,474 Written options 576,727 Net gain on investments 624,116,776 NET INCREASE IN NET ASSETS FROM OPERATIONS $587,204,733 See notes to financial statements. 9 STATEMENT OF CHANGES IN NET ASSETS ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ YEAR ENDED YEAR ENDED NOVEMBER 30, NOVEMBER 30, 1998 1997 --------------- --------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment loss $ (36,912,043) $ (23,986,074) Net realized gain on investments and written option transactions 222,858,575 14,764,297 Net change in unrealized appreciation of investments and options 401,258,201 133,346,847 Net increase in net assets from operations 587,204,733 124,125,070 DISTRIBUTIONS TO SHAREHOLDERS FROM: Net realized gain on investments Class A (6,722,769) (4,879,329) Class B (11,607,315) (5,671,805) Class C (2,036,454) (916,491) Advisor Class (1,788,297) (4,489) CAPITAL STOCK TRANSACTIONS Net increase 222,313,081 551,976,958 Total increase 787,362,979 664,629,914 NET ASSETS Beginning of year 2,029,465,705 1,364,835,791 End of year $2,816,828,684 $2,029,465,705 See notes to financial statements. 10 NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1998 ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ NOTE A: SIGNIFICANT ACCOUNTING POLICIES Alliance Technology Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund offers Class A, Class B, Class C and Advisor Class shares. Class A shares are sold with a front-end sales charge of up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A shares redeemed within one year of purchase will be subject to a contingent deferred sales charge of 1%. Class B shares are currently sold with a contingent deferred sales charge which declines from 4% to zero depending on the period of time the shares are held. Class B shares will automatically convert to Class A shares eight years after the end of the calendar month of purchase. Class C shares are subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase. Advisor Class shares are sold without an initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. Advisor Class shares are offered to investors participating in fee-based programs and to certain retirement plan accounts. All four classes of shares have identical voting, dividend, liquidation and other rights, except that each class bears different distribution expenses and has exclusive voting rights with respect to its distribution plan. The financial statements have been prepared in conformity with generally accepted accounting principles which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Fund. 1. SECURITY VALUATION Portfolio securities traded on a national securities exchange or on a foreign securities exchange (other than foreign securities exchanges whose operations are similar to those of the United States over-the-counter market) are generally valued at the last reported sales price or if no sale occurred, at the mean of the closing bid and asked prices on that day. Readily marketable securities traded in the over-the-counter market, securities listed on a foreign securities exchange whose operations are similar to the U.S. over-the-counter market, and securities listed on a national securities exchange whose primary market is believed to be over-the-counter, are valued at the mean of the current bid and asked prices. U.S. government and fixed income securities which mature in 60 days or less are valued at amortized cost, unless this method does not represent fair value. Securities for which current market quotations are not readily available are valued at their fair value as determined in good faith by, or in accordance with procedures adopted by, the Board of Directors. Fixed income securities may be valued on the basis of prices obtained from a pricing service when such prices are believed to reflect the fair market value of such securities. 2. TAXES It is the Fund's policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its investment company taxable income and net realized gains, if any, to shareholders. Therefore, no provisions for federal income or excise taxes are required. 3. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS Dividend income is recorded on the ex-dividend date. Interest income is accrued daily. Investment transactions are accounted for on the date the securities are purchased or sold. The Fund accretes discounts as adjustments to interest income. Investment gains and losses are determined on the identified cost basis. 4. INCOME AND EXPENSES All income earned and expenses incurred by the Fund are borne on a pro-rata basis by each outstanding class of shares, based on the proportionate interest in the Fund represented by the net assets of such class, except that the Fund's Class B and Class C shares bear higher distribution and transfer agent fees than Class A shares and the Advisor Class shares have no distribution fees. 5. DIVIDENDS AND DISTRIBUTIONS Dividends and distributions to shareholders are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with generally accepted accounting principles. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal 11 NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ tax basis treatment; temporary differences, do not require such reclassification. During the current fiscal year, permanent differences, primarily due to net investment losses, resulted in a net decrease in accumulated net investment loss and a corresponding decrease in additional paid in capital. This reclassification had no effect on net assets. NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of an investment advisory agreement, the Fund pays Alliance Capital Management L.P. (the "Adviser"), an advisory fee at a quarterly rate equal to .25% (approximately 1% on an annual basis) of the net assets of the Fund valued on the last business day of the previous quarter. Pursuant to the advisory agreement, the Fund paid $121,000 to the Adviser representing the cost of certain legal and accounting services provided to the Fund by the Adviser for the year ended November 30, 1998. The Fund compensates Alliance Fund Services, Inc., a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Fund. Such compensation amounted to $3,983,058 for the year ended November 30, 1998. In addition, for the year ended November 30, 1998, the Fund's expenses were reduced by $380,030 under an expense offset arrangement with Alliance Fund Services. Transfer agency fees reported in the statement of operations exclude these credits. Alliance Fund Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary of the Adviser, serves as the Distributor of the Fund's shares. The Distributor received front-end sales charges of $288,114 from the sales of Class A shares and $44,368, $2,709,296 and $122,105 in contingent deferred sales charges imposed upon redemptions by shareholders of Class A, Class B and Class C shares, respectively, for the year ended November 30, 1998. Brokerage commissions paid on investment transactions for the year ended November 30, 1998 amounted to $1,999,318 of which $4,800 was paid to Donaldson, Lufkin & Jenrette Securities Corp., an affiliate of the Adviser. NOTE C: DISTRIBUTION SERVICES AGREEMENT The Fund has adopted a Distribution Services Agreement (the "Agreement") pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Agreement, the Fund pays a distribution fee to the Distributor at an annual rate of up to .30% of the Fund's average daily net assets attributable to Class A shares and 1% of the average daily net assets attributable to both Class B and Class C shares. There is no distribution fee on the Advisor Class shares. The fees are accrued daily and paid monthly. The Agreement provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Distributor has incurred expenses in excess of the distribution costs reimbursed by the Fund in the amount of $36,599,949 and $2,027,794 for Class B and Class C shares, respectively; such costs may be recovered from the Fund in future periods so long as the Agreement is in effect. In accordance with the Agreement, there is no provision for recovery of unreimbursed distribution costs incurred by the Distributor beyond the current fiscal year for Class A shares. The Agreement also provides that the Adviser may use its own resources to finance the distribution of the Fund's shares. NOTE D: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments and U.S. government securities) aggregated $1,566,851,672 and $1,464,543,659, respectively, for the year ended November 30, 1998. There were no purchases or sales of U.S. government and government agency obligations for the year ended November 30, 1998. 12 ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ At November 30, 1998, the cost of investments for federal income tax purposes was $1,908,057,093. Accordingly, gross unrealized appreciation of investments was $971,345,573 and gross unrealized depreciation of investments was $38,548,516 resulting in net unrealized appreciation of $932,797,057. OPTION TRANSACTIONS For hedging and investment purposes, the Fund purchases and writes call options listed on national securities exchanges and purchases listed put options, including put options on market indices. The risk associated with purchasing an option is that the Fund pays a premium whether or not the option is exercised. Additionally, the Fund bears the risk of loss of premium and change in market value should the counterparty not perform under the contract. Put and call options purchased are accounted for in the same manner as portfolio securities. The cost of securities acquired through the exercise of call options is increased by premiums paid. The proceeds from securities sold through the exercise of put options are decreased by the premiums paid. When the Fund writes an option, the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options which expire unexercised are recorded by the Fund on the expiration date as realized gains from option transactions. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium received is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium received is added to the proceeds from the sale of the underlying security or currency in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Fund. The risk involved in writing an option is that, if the option was exercised the underlying security could then be purchased or sold by the Fund at a disadvantageous price. Transactions in options written for the year ended November 30, 1998 were as follows: NUMBER OF CONTRACTS PREMIUMS --------- ------------ Options outstanding at beginning of the year -0- $ -0- Options written 8,436 2,669,059 Options terminated in closing purchase transactions (5,036) (1,472,642) Options expired (1,900) (525,940) Options outstanding at November 30, 1998 1,500 $ 670,477 13 NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ NOTE E: CAPITAL STOCK There are 12,000,000,000 shares of $0.01 par value capital stock authorized, divided into four classes, designated Class A, Class B, Class C and Advisor Class shares. Each class consists of 3,000,000,000 authorized shares. Transactions in capital stock were as follows:
SHARES AMOUNT ---------------------------- ------------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, 1998 1997 1998 1997 ------------- ------------- ---------------- -------------- CLASS A Shares sold 18,339,548 10,236,552 $ 1,112,007,521 $ 542,859,733 Shares issued in reinvestment of distributions 111,053 78,573 5,938,826 3,946,887 Shares converted from Class B 126,597 125,065 7,557,381 6,591,693 Shares redeemed (18,030,124) (10,594,530) (1,098,740,276) (567,186,149) Net increase (decrease) 547,074 (154,340) $ 26,763,452 $ (13,787,836) CLASS B Shares sold 6,726,295 9,702,206 $ 384,268,932 $ 491,739,865 Shares issued in reinvestment of distributions 209,384 90,233 10,806,491 4,406,275 Shares converted to Class A (131,650) (129,230) (7,557,381) (6,591,693) Shares redeemed (4,169,685) (2,910,995) (239,143,056) (148,766,672) Net increase 2,634,344 6,752,214 $ 148,374,986 $ 340,787,775 CLASS C Shares sold 12,127,622 4,659,352 $ 691,867,198 $ 244,912,719 Shares issued in reinvestment of distributions 35,117 11,825 1,812,439 577,411 Shares redeemed (11,539,122) (3,347,816) (662,671,845) (179,818,433) Net increase 623,617 1,323,361 $ 31,007,792 $ 65,671,697 ADVISOR CLASS Shares sold 3,484,871 4,033,381 $ 207,978,384 $ 216,794,442 Shares issued in reinvestment of distributions 32,400 89 1,738,611 4,489 Shares redeemed (3,240,614) (985,537) (193,550,144) (57,493,609) Net increase 276,657 3,047,933 $ 16,166,851 $ 159,305,322
NOTE F: ILLIQUID SECURITY DATE ACQUIRED COST ------------- ----------- Interactive Light Holdings, Inc. 8.00%, 2/07/99 1/27/94 $ 500,000 The security shown above is illiquid and has been valued at fair value in accordance with the procedures described in Note A. The value of this security at November 30, 1998 was $500,000, representing .02% of net assets. 14 ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ NOTE G: BANK BORROWING A number of open-end mutual funds managed by the Adviser, including the Fund, participate in a $750 million revolving credit facility (the "Facility") intended to provide short-term financing if necessary, subject to certain restrictions in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in the miscellaneous expenses in the statement of operations. The Fund did not utilize the Facility during the year ended November 30, 1998. 15 FINANCIAL HIGHLIGHTS ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A --------------------------------------------------------------------- JANUARY 1, YEAR ENDED NOVEMBER 30, 1994 TO ------------------------------------------------------ NOVEMBER 30, 1998 1997 1996 1995 1994(A) ------------ ------------ ------------ ------------ ------------- Net asset value, beginning of period $54.44 $51.15 $46.64 $31.98 $26.12 INCOME FROM INVESTMENT OPERATIONS Net investment loss (.68)(b) (.51)(b) (.39)(b) (.30)(b) (.32) Net realized and unrealized gain on investment transactions 15.42 4.22 7.28 18.13 6.18 Net increase in net asset value from operations 14.74 3.71 6.89 17.83 5.86 LESS: DISTRIBUTIONS Distributions from net realized gains (.58) (.42) (2.38) (3.17) -0- Net asset value, end of period $68.60 $54.44 $51.15 $46.64 $31.98 TOTAL RETURN Total investment return based on net asset value (c) 27.36% 7.32% 16.05% 61.93% 22.43% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $824,636 $624,716 $594,861 $398,262 $202,929 Ratio of expenses to average net assets 1.66%(d) 1.67%(d) 1.74% 1.75% 1.66%(e) Ratio of net investment loss to average net assets (1.13)% (.97)% (.87)% (.77)% (1.22)%(e) Portfolio turnover rate 67% 51% 30% 55% 55%
See footnote summary on page 19. 16 ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS B ------------------------------------------------------------------------- JANUARY 1, YEAR ENDED NOVEMBER 30, 1994 TO ---------------------------------------------------------- NOVEMBER 30, 1998 1997 1996 1995 1994(A) -------------- -------------- ------------ ------------ ------------- Net asset value, beginning of period $52.58 $49.76 $45.76 $31.61 $25.98 INCOME FROM INVESTMENT OPERATIONS Net investment loss (1.08)(b) (.88)(b) (.70)(b) (.60)(b) (.23) Net realized and unrealized gain on investment transactions 14.83 4.12 7.08 17.92 5.86 Net increase in net asset value from operations 13.75 3.24 6.38 17.32 5.63 LESS: DISTRIBUTIONS Distributions from net realized gains (.58) (.42) (2.38) (3.17) -0- Net asset value, end of period $65.75 $52.58 $49.76 $45.76 $31.61 TOTAL RETURN Total investment return based on net asset value (c) 26.44% 6.57% 15.20% 60.95% 21.67% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $1,490,578 $1,053,436 $660,921 $277,111 $18,397 Ratio of expenses to average net assets 2.39%(d) 2.38%(d) 2.44% 2.48% 2.43%(e) Ratio of net investment loss to average net assets (1.86)% (1.70)% (1.61)% (1.47)% (1.95)%(e) Portfolio turnover rate 67% 51% 30% 55% 55%
See footnote summary on page 19. 17 FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C --------------------------------------------------------------------- JANUARY 1, YEAR ENDED NOVEMBER 30, 1994 TO ------------------------------------------------------ NOVEMBER 30, 1998 1997 1996 1995 1994(A) ------------ ------------ ------------ ------------ ------------- Net asset value, beginning of period $52.57 $49.76 $45.77 $31.61 $25.98 INCOME FROM INVESTMENT OPERATIONS Net investment loss (1.08)(b) (.88)(b) (.70)(b) (.58)(b) (.24) Net realized and unrealized gain on investment transactions 14.83 4.11 7.07 17.91 5.87 Net increase in net asset value from operations 13.75 3.23 6.37 17.33 5.63 LESS: DISTRIBUTIONS Distributions from net realized gains (.58) (.42) (2.38) (3.17) -0- Net asset value, end of period $65.74 $52.57 $49.76 $45.77 $31.61 TOTAL RETURN Total investment return based on net asset value (c) 26.44% 6.55% 15.17% 60.98% 21.67% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $271,320 $184,194 $108,488 $43,161 $7,470 Ratio of expenses to average net assets 2.40%(d) 2.38%(d) 2.44% 2.48% 2.41%(e) Ratio of net investment loss to average net assets (1.87)% (1.70)% (1.60)% (1.47)% (1.94)%(e) Portfolio turnover rate 67% 51% 30% 55% 55%
See footnote summary on page 19. 18 ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD ADVISOR CLASS --------------------------------------- OCTOBER 2, 1996(F) YEAR ENDED NOVEMBER 30, TO -------------------------- NOV. 30, 1998 1997 1996 ------------ ------------ ----------- Net asset value, beginning of period $54.63 $51.17 $47.32 INCOME FROM INVESTMENT OPERATIONS Net investment loss (b) (.50) (.45) (.05) Net realized and unrealized gain on investment transactions 15.49 4.33 3.90 Net increase in net asset value from operations 14.99 3.88 3.85 LESS: DISTRIBUTIONS Distributions from net realized gains (.58) (.42) -0- Net asset value, end of period $69.04 $54.63 $51.17 TOTAL RETURN Total investment return based on net asset value (c) 27.73% 7.65% 8.14% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $230,295 $167,120 $566 Ratio of expenses to average net assets 1.37%(d) 1.39%(d) 1.75%(e) Ratio of net investment loss to average net assets (.84)% (.81)% (1.21)%(e) Portfolio turnover rate 67% 51% 30% (a) The Fund changed its fiscal year end from December 31 to November 30. (b) Based on average shares outstanding. (c) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charges or contingent deferred sales charges are not reflected in the calculation of total investment return. Total investment return calculated for a period of less than one year is not annualized. (d) Ratio reflects expenses grossed up for expense offset arrangement with the Transfer Agent. For the year ended ended November 30, 1998 and the year ended November 30, 1997, the ratios of expenses to average net assets were 1.65% and 1.66% for Class A shares, 2.38% and 2.36% for Class B shares, 2.38% and 2.37% for Class C shares and 1.36% and 1.38% for Advisor Class shares, respectively. (e) Annualized. (f) Commencement of distribution. 19 REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ TO THE SHAREHOLDERS AND BOARD OF DIRECTORS ALLIANCE TECHNOLOGY FUND, INC. We have audited the accompanying statement of assets and liabilities of Alliance Technology Fund, Inc. (the "Fund"), including the portfolio of investments, as of November 30, 1998, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of November 30, 1998, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Alliance Technology Fund, Inc. at November 30, 1998, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the indicated periods, in conformity with generally accepted accounting principles. New York, New York January 4, 1999 FEDERAL INCOME TAX INFORMATION (UNAUDITED) _______________________________________________________________________________ In order to meet certain requirements of the Internal Revenue Code we are advising you that $22,154,835 of the capital gain distributions paid by the Fund during the fiscal year November 30, 1998 are subject to a maximum tax rate of 20%. Shareholders should not use the above information to prepare their tax returns. The information necessary to complete your income tax returns will be included with your Form 1099 DIV which will be sent to you separately in January 1999. 20 ALLIANCE TECHNOLOGY FUND _______________________________________________________________________________ BOARD OF DIRECTORS JOHN D. CARIFA, CHAIRMAN AND PRESIDENT ROBERT C. ALEXANDER (1) DAVID H. DIEVLER (1) DR. CHARLES H. FERGUSON (1) WILLIAM H. FOULK, JR. (1) D. JAMES GUZY (1) PETER J. POWERS (1) MARSHALL C. TURNER, JR. (1) OFFICERS PETER ANASTOS, SENIOR VICE PRESIDENT KATHLEEN A. CORBET, SENIOR VICE PRESIDENT THOMAS G. BARDONG, VICE PRESIDENT GERALD T. MALONE, VICE PRESIDENT EDMUND P. BERGAN, JR., SECRETARY MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER VINCENT S. NOTO, CONTROLLER CUSTODIAN STATE STREET BANK & TRUST COMPANY 225 Franklin Street Boston, MA 02110 DISTRIBUTOR ALLIANCE FUND DISTRIBUTORS, INC. 1345 Avenue of the Americas New York, NY 10105 LEGAL COUNSEL SEWARD & KISSEL One Battery Park Plaza New York, NY 10004 TRANSFER AGENT ALLIANCE FUND SERVICES, INC. P.O. Box 1520 Secaucus, NJ 07096-1520 Toll-Free 1-(800) 221-5672 INDEPENDENT AUDITORS ERNST & YOUNG LLP 787 Seventh Avenue New York, NY 10019 (1) Member of the Audit Committee. 21 THE ALLIANCE FAMILY OF MUTUAL FUNDS _______________________________________________________________________________ FIXED INCOME Alliance Bond Fund U.S. Government Portfolio Corporate Bond Portfolio Alliance Global Dollar Government Fund Alliance Global Strategic Income Trust Alliance High Yield Fund Alliance Mortgage Securities Income Fund Alliance Limited Maturity Government Fund Alliance Multi-Market Strategy Trust Alliance North American Government Income Trust Alliance Short-Term U.S. Government Fund TAX-FREE INCOME Alliance Municipal Income Fund California Portfolio Insured California Portfolio Insured National Portfolio National Portfolio New York Portfolio Alliance Municipal Income Fund II Arizona Portfolio Florida Portfolio Massachusetts Portfolio Michigan Portfolio Minnesota Portfolio New Jersey Portfolio Ohio Portfolio Pennsylvania Portfolio Virginia Portfolio MONEY MARKET AFD Exchange Reserves GROWTH The Alliance Fund Alliance Global Environment Fund Alliance Growth Fund Alliance Premier Growth Fund Alliance/Regent Sector Opportunity Fund Select Investors Series - Premier Portfolio GROWTH & INCOME Alliance Balanced Shares Alliance Conservative Investors Fund Alliance Growth & Income Fund Alliance Growth Investors Fund Alliance Real Estate Investment Fund Alliance Utility Income Fund AGGRESSIVE GROWTH Alliance Global Small Cap Fund Alliance Quasar Fund Alliance Technology Fund INTERNATIONAL Alliance All-Asia Investment Fund Alliance Greater China '97 Fund Alliance International Fund Alliance International Premier Growth Fund Alliance New Europe Fund Alliance Worldwide Privatization Fund INSTITUTIONAL Premier Growth Quasar Real Estate Investment CLOSED-END FUNDS Alliance All-Market Advantage Fund ACM Government Income Fund ACM Government Opportunity Fund ACM Government Securities Fund ACM Government Spectrum Fund ACM Managed Dollar Income Fund ACM Managed Income Fund ACM Municipal Securities Income Fund Alliance World Dollar Government Fund Alliance World Dollar Government Fund II The Austria Fund The Korean Investment Fund The Spain Fund The Southern Africa Fund CASH MANAGEMENT SERVICES ACM Institutional Reserves Government Portfolio Prime Portfolio Tax-Free Portfolio Trust Portfolio Alliance Capital Reserves Alliance Government Reserves Alliance Insured Account Alliance Money Reserves Alliance Municipal Trust California Portfolio Connecticut Portfolio Florida Portfolio General Portfolio Massachusetts Portfolio New Jersey Portfolio New York Portfolio Virginia Portfolio Alliance Treasury Reserves Alliance Money Market Fund Prime Portfolio Government Portfolio General Municipal Portfolio 22 ALLIANCE TECHNOLOGY FUND 1345 Avenue of the Americas New York, NY 10105 (800) 221-5672 ALLIANCE CAPITAL THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS OF THE FUND. R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER, ALLIANCE CAPITAL MANAGEMENT L.P. TECAR -----END PRIVACY-ENHANCED MESSAGE-----