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: 811-3131
ALLIANCEBERNSTEIN 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, 2004
Date of reporting period: July 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
[LOGO] ALLIANCEBERNSTEIN (SM)
Investment Research and Management
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AllianceBernstein Technology Fund
Annual Report--July 31, 2004
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Specialty Equity
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Investment Products Offered
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
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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 Alliance 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 (click on Investors/ Products & Services/
Mutual Funds).
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 Alliance Capital's web site at
www.alliancebernstein.com (click on Investors, then the "Proxy voting policies"
link or "Proxy voting records" link on the left side of the page), or go to the
Securities and Exchange Commission's (The "Commission") web site at
www.sec.gov, or call Alliance Capital 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. Alliance publishes full
portfolio holdings for the Fund monthly at www.alliancebernstein.com.
AllianceBernstein Investment Research and Management, Inc., is an affiliate of
Alliance Capital Management L.P., the manager of the funds, and is a member of
the NASD.
September 27, 2004
Annual Report
This report provides management's discussion of fund performance for
AllianceBernstein Technology Fund (the "Fund") for the annual reporting period
ended July 31, 2004.
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
Goldman Sachs Technology Index, for the six- and 12-month periods ended July
31, 2004. This Index is a modified capitalization-weighted index of over 200
technology stocks. Also included is the performance of the NASDAQ Composite
Index, which measures all NASDAQ domestic and non-U.S. based common stocks
listed on the NASDAQ Stock Market, 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.
For the 12-month period ended July 31, 2004, the Fund underperformed the
Goldman Sachs Technology Index, the NASDAQ Composite Index and the Lipper
Index. For the six-month period ended July 31, 2004, the Fund underperformed
the Goldman Sachs Technology Index and the NASDAQ Composite Index, which is a
more diversified benchmark, and outperformed the Lipper Index.
For the six-month period ended July 31, 2004, relative to the Goldman Sachs
Technology Index, from a sub-sector perspective, the Fund's stock selection in
semiconductor components and communication equipment contributed positively,
while the Fund's poor stock selection and weighting in contract manufacturing,
storage and software hurt performance.
For the 12-month period ended July 31, 2004, relative to the Goldman Sachs
Technology Index, the Fund's weighting in broadcasting and cable hurt
performance, as did both stock and sector selection in computer services. Stock
and sector selection in the Internet space helped relative and absolute
performance.
Market Review and Investment Strategy
The 12-month period ended July 31, 2004 can be characterized as a near
full-circle market, with technology stocks rallying through mid-January 2004,
and then declining through July 2004. Stocks were driven higher early in the
period as an improving economic environment led to better-than-expected demand
for technology products. Technology stocks have traded lower through the more
recent six-month
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ALLIANCEBERNSTEIN TECHNOLOGY FUND o 1
period on largely macroeconomic and geopolitical concerns including rising U.S.
Federal Reserve interest rates, attempts to slow China's economy, the potential
impact of rising oil prices on consumer behavior and renewed terrorist threats.
In addition, for technology companies in particular, investors have grown
concerned about peaking sales growth rates and growing component inventory
levels.
As previously reported, effective September 30, 2003, I, Janet Walsh, assumed
responsibility for the day-to-day management of the Fund. During the period
from September 30, 2003 through July 31, 2004, we decreased the Fund's
positions in broadcasting and cable, contract manufacturing and semiconductor
capital equipment. Meanwhile, we increased the Fund's holdings in communication
equipment and Internet-related names.
We continue to manage the Fund as a diversified technology portfolio with
multiple sector exposures. Across sectors, we continue to focus on companies
that we believe have a strong secular story within the global marketplace for
technology products and services, with an emphasis on growing broadband
deployments and an outlook for improved enterprise IT spending.
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2 o ALLIANCEBERNSTEIN 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
(click on Investors/Products & Services/Mutual Funds).
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 Alliance 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 Class R and Advisor Class shares will
vary due to different expenses associated with these classes. Performance
assumes reinvestment of distributions and does not account for taxes.
Benchmark Disclosures
The unmanaged Goldman Sachs Technology Index and the unmanaged NASDAQ Composite
Index do not reflect fees and expenses associated with the active management of
a mutual fund portfolio. The Goldman Sachs Technology Index measures the
performance of over 200 U.S.-based technology companies. The NASDAQ Composite
Index measures all NASDAQ domestic and non-U.S. based common stocks listed on
the NASDAQ Stock Market. The NASDAQ Composite Index is market-value weighted
and includes over 5,000 companies. The unmanaged Lipper Science and Technology
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.) The funds in the Lipper
Science and Technology Index have generally similar investment objectives to
the Fund, although some may have different investment policies and sales and
management fees. Investors cannot invest directly in an index, and its results
are not indicative 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 prospectus.
(Historical Performance continued on next page)
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ALLIANCEBERNSTEIN TECHNOLOGY FUND o 3
HISTORICAL PERFORMANCE
(continued from previous page)
THE FUND VS. ITS BENCHMARK
PERIODS ENDED JULY 31, 2004
Returns
6 Months 12 Months
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AllianceBernstein Technology Fund
Class A -13.32% 3.58%
Class B -13.64% 2.81%
Class C -13.62% 2.83%
Advisor Class -13.17% 3.92%
Class R -13.38% -9.40%*
Goldman Sachs Technology Index -12.90% 9.15%
NASDAQ Composite Index -8.65% 8.78%
Lipper Science and Technology Index -14.65% 4.99%
* Since inception of the Fund's Class R shares on 11/3/03.
GROWTH OF A $10,000 INVESTMENT IN THE FUND
7/31/94 TO 7/31/04
[THE FOLLOWING TABLE WAS DEPICTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL.]
AllianceBernstein Goldman Sachs NASDAQ Composite
Technology Fund Class A Technology Index Index
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7/31/94 9,575 10,000 10,000
7/31/95 18,927 17,783 13,864
7/31/96 17,753 18,588 14,963
7/31/97 26,188 33,350 22,070
7/31/98 29,538 38,478 25,927
7/31/99 42,310 62,871 36,537
7/31/00 68,592 95,528 52,164
7/31/01 38,007 45,479 28,069
7/31/02 21,972 25,355 18,391
7/31/03 25,136 32,396 24,022
7/31/04 26,036 35,361 26,131
AllianceBernstein Technology Fund Class A: $26,036
GoldmanSachs Technology Index: $35,361
NASDAQ Composite Index: $26,131
This chart illustrates the total value of an assumed $10,000 investment in
AllianceBernstein Technology Fund Class A shares (from 7/31/94 to 7/31/04) as
compared to the performance of appropriate indices.
See Historical Performance and Benchmark disclosures on previous page.
(Historical Performance continued on next page)
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4 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF JULY 31, 2004
NAV Returns SEC Returns
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Class A Shares
1 Year 3.58% -0.83%
5 Years -9.26% -10.04%
10 Years 10.52% 10.04%
Class B Shares
1 Year 2.81% -1.19%
5 Years -9.94% -9.94%
10 Years(a) 9.89% 9.89%
Class C Shares
1 Year 2.83% 1.83%
5 Years -9.92% -9.92%
10 Years 9.72% 9.72%
Advisor Class Shares
1 Year 3.92%
5 Years -8.98%
Since Inception* 3.28%
Class R Shares
Since Inception* -9.40%
SEC AVERAGE ANNUAL RETURNS (WITH SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (JUNE 30, 2004)
Class A Shares
1 Year 18.10%
5 Years -8.31%
10 Years 11.53%
Class B Shares
1 Year 18.42%
5 Years -8.20%
10 Years(a) 11.38%
Class C Shares
1 Year 21.49%
5 Years -8.19%
10 Years 11.21%
(a) Assumes conversion of Class B shares into Class A shares after eight years.
* Inception Dates: 10/1/96 Advisor Class shares; 11/3/03 Class R shares.
See Historical Performance disclosures on page 3.
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ALLIANCEBERNSTEIN TECHNOLOGY FUND o 5
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 first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, 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
in the first line 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 second line of the table below 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 second line of the table 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
February 1, 2004 July 31, 2004 During Period*
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Class A
Actual $1,000 $ 866.83 $ 7.06
Hypothetical
(5% return
before expenses) $1,000 $1,017.30 $ 7.62
Class B
Actual $1,000 $ 863.62 $10.56
Hypothetical
(5% return
before expenses) $1,000 $1,013.53 $11.41
Class C
Actual $1,000 $ 863.83 $10.38
Hypothetical
(5% return
before expenses) $1,000 $1,013.72 $11.22
Class R
Actual $1,000 $ 866.21 $ 7.93
Hypothetical
(5% return
before expenses) $1,000 $1,016.36 $ 8.57
Advisor Class
Actual $1,000 $ 868.34 $ 5.67
Hypothetical
(5% return
before expenses) $1,000 $1,018.80 $ 6.12
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* Expenses are equal to the classes' annualized expense ratios of 1.52%, 2.28%,
2.24%, 1.71% and 1.22%, respectively, multiplied by the average account value
over the period, multiplied by the number of days in the most recent fiscal
half-year/366 (to reflect the one-half year period).
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6 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
PORTFOLIO SUMMARY
July 31, 2004
PORTFOLIO STATISTICS
Net Assets ($mil): $2,606.6
SECTOR BREAKDOWN*
Technology
o 21.6% Semi-Conductor Components
o 21.5% Computer Software
o 14.4% Communication Equipment
o 9.8% Computer Services
o 7.8% Computer Hardware/Storage
o 7.2% Internet
o 3.3% Contract Manufacturing
o 1.7% Semi-Conductor Capital Equipment
o 1.6% Miscellaneous
o 0.8% Computer Peripherals
Consumer Services
o 3.4% Cellular Communications
o 2.8% Broadcasting & Cable
Capital Goods
o 0.9% Electrical Equipment
o 0.4% Miscellaneous
o 2.8% Short-Term
* All data is as of July 31, 2004. The Fund's sector breakdown is expressed as
a percentage of total investments (excluding security lending collateral) and
may vary over time.
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ALLIANCEBERNSTEIN TECHNOLOGY FUND o 7
TEN LARGEST HOLDINGS
July 31, 2004
Percent of
Company Value Net Assets
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Microsoft Corp. $ 179,118,702 6.9%
Intel Corp. 130,286,720 5.0
QUALCOMM, Inc. 119,297,706 4.6
Yahoo!, Inc. 106,238,440 4.1
Dell, Inc. 102,534,902 3.9
Oracle Corp. 87,600,850 3.3
Juniper Networks, Inc. 82,793,760 3.2
Marvell Technology Group, Ltd.
(Bermuda) 79,607,448 3.1
Broadcom Corp. Cl.A 78,495,664 3.0
Samsung Electronics Co., Ltd. (GDR)
(South Korea) 71,639,917 2.7
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$1,037,614,109 39.8%
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8 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
PORTFOLIO OF INVESTMENTS
July 31, 2004
Company Shares Value
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COMMON STOCKS & OTHER INVESTMENTS-99.0%
Technology-91.3%
Communication Equipment-14.7%
3Com Corp.(a) 3,996,400 $ 19,702,252
Cisco Systems, Inc.(a) 3,132,250 65,338,735
Corning, Inc.(a)* 4,857,900 60,043,644
Juniper Networks, Inc.(a)* 3,606,000 82,793,760
Motorola, Inc. 2,171,800 34,596,774
QUALCOMM, Inc. 1,726,950 119,297,706
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381,772,871
Computer Hardware/Storage-7.9%
Dell, Inc.(a)* 2,890,750 102,534,902
EMC Corp.(a) 5,355,834 58,753,499
Hewlett-Packard Co.* 1,337,100 26,942,565
Western Digital Corp.(a)* 2,519,000 17,658,190
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205,889,156
Computer Peripherals-0.8%
Network Appliance, Inc.(a)* 1,039,900 20,080,469
Computer Services-10.0%
Accenture Ltd. Cl.A (Bermuda)(a)* 1,751,400 43,136,982
BearingPoint, Inc.(a)* 1,374,049 11,349,645
Computer Sciences Corp.(a)* 990,850 46,817,662
First Data Corp. 1,452,400 64,791,564
Fiserv, Inc.(a)* 765,150 26,214,039
Infosys Technologies, Ltd. (ADR) (India)* 1,037,200 52,119,300
Manhattan Associates, Inc.(a)* 634,300 16,466,428
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260,895,620
Computer Software-21.9%
Cognos, Inc. (Canada)(a)* 798,600 26,896,848
Electronic Arts, Inc.(a)* 1,133,000 56,797,290
Mercury Interactive Corp.(a)* 1,487,700 54,390,312
Microsoft Corp.* 6,293,700 179,118,702
Oracle Corp.(a) 8,335,000 87,600,850
SAP AG (ADR) (Germany)* 1,348,300 53,945,483
Symantec Corp.(a)* 1,353,700 63,299,012
TIBCO Software, Inc.(a)* 2,231,700 15,778,119
VERITAS Software Corp.(a) 1,446,000 27,560,760
webMethods, Inc.(a)* 1,061,500 5,063,355
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570,450,731
Contract Manufacturing-3.4%
Flextronics International, Ltd.
(Singapore)(a)* 2,806,650 35,279,591
Hon Hai Precision Industry Co., Ltd.
Citigroup Global Markets warrants,
expiring 01/17/07 (Taiwan)(a)(b) 10,789,401 38,723,160
Sanmina Corp.(a)* 1,976,100 14,504,574
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88,507,325
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ALLIANCEBERNSTEIN TECHNOLOGY FUND o 9
Company Shares Value
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Internet-7.3%
eBay, Inc.(a)* 587,600 $ 46,026,708
SINA Corp. (Hong Kong)(a)* 1,384,900 39,261,915
Yahoo!, Inc.(a)* 3,449,300 106,238,440
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191,527,063
Semi-Conductor Capital Equipment-1.7%
Applied Materials, Inc.(a)* 1,501,900 25,487,243
KLA-Tencor Corp.(a)* 488,550 20,133,146
------------
45,620,389
Semi-Conductor Components-22.0%
Altera Corp.(a) 1,342,450 27,949,809
Broadcom Corp. Cl.A(a)* 2,219,900 78,495,664
Intel Corp. 5,344,000 130,286,720
Linear Technology Corp. 1,749,000 68,385,900
Marvell Technology Group, Ltd.
(Bermuda)(a)* 3,428,400 79,607,448
Maxim Integrated Products, Inc.* 564,950 27,174,095
Novatek Microelectronics Corp., Ltd.
UBS warrants, expiring 4/13/05
(Taiwan)(a) 3,600,000 9,468,000
Samsung Electronics Co., Ltd. (GDR)
(South Korea)(b) 400,223 71,639,917
Taiwan Semiconductor Manufacturing Co.,
Ltd. ABN Amro Bank warrants,
expiring 01/14/05 (Taiwan)(a)(b) 35,789,522 44,951,639
United Microelectronics Corp. (ADR)
(Taiwan)* 5,350,104 19,795,385
Vishay Intertechnology, Inc.(a)* 1,060,700 16,440,850
------------
574,195,427
Miscellaneous-1.6%
Hoya Corp. (Japan)(a) 410,000 42,150,393
------------
2,381,089,444
Consumer Services-6.4%
Broadcasting & Cable-2.9%
The News Corp., Ltd., pfd. (ADR)
(Australia) 1,213,200 38,543,364
Time Warner, Inc.(a)* 2,119,000 35,281,350
------------
73,824,714
Cellular Communications-3.5%
Nextel Communications, Inc. Cl.A(a) 2,864,600 65,198,296
Vodafone Group Plc (ADR)
(United Kingdom)* 1,231,973 26,770,774
------------
91,969,070
------------
165,793,784
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10 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
Shares or
Principal
Amount
Company (000) Value
- -------------------------------------------------------------------------------
Capital Goods-1.3%
Electrical Equipment-0.9%
AU Optronics Corp. (ADR) (Taiwan) 448,900 $ 5,274,575
LG Philips LCD Co., Ltd. (ADR)
(South Korea)(a)* 1,270,100 17,908,410
------------
23,182,985
Miscellaneous-0.4%
Nitto Denko Corp. (Japan) 281,700 11,786,505
------------
34,969,490
Total Common Stocks & Other Investments
(cost $2,238,479,685) 2,581,852,718
SHORT-TERM INVESTMENT-2.9%
Time Deposit-2.9%
State Street Euro Dollar
0.65%, 8/02/04
(cost $74,424,000) $ 74,424 74,424,000
Total Investments Before Security
Lending Collateral--101.9%
(cost $2,312,903,685) 2,656,276,718
INVESTMENT OF CASH COLLATERAL
FOR SECURITIES LOANED**-28.3%
Short-Term Investments
Allstate Financial
1.20%, 8/16/04 10,000 10,028,260
Barclays Bank
1.31%, 9/04/04-12/03/04 45,000 45,017,172
Bayerische Landesbank
1.54%, 9/30/04 5,000 5,002,991
Bradford
1.34%, 8/09/04 60,000 59,957,567
Concord
1.30 %, 8/06/04-8/09/04 125,000 124,875,417
Crestar Financial Corp.
1.65%, 11/15/04 2,000 2,071,918
Deutsche Bank
1.16%-1.20%, 9/15/04-10/14/04 44,760 45,306,737
Federal Home Loan Bank
1.27%-1.44%, 3/8/05-4/26/05 45,000 45,000,000
Federal Home Loan Mortgage Corp.
1.14%-1.37%, 8/10/04-9/09/05 28,800 28,800,000
Goldman Sachs
1.42%, 10/20/04 50,000 50,000,000
Gotham Funding
1.33%-1.35%, 8/02/04-8/05/04 111,000 110,880,921
Market Street Funding Corp.
1.30%, 8/10/04 50,000 49,954,861
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ALLIANCEBERNSTEIN TECHNOLOGY FUND o 11
Shares or
Principal
Amount
(000) Value
- -------------------------------------------------------------------------------
Morgan Stanley
1.39%, 12/6/04-4/19/05 $ 70,000 $ 70,000,000
Sigma Finance
1.22%, 12/03/04 45,000 45,000,000
Wells Fargo
1.50%, 3/24/05 9,000 9,028,690
------------
700,924,534
UBS Private Money Market Fund, LLC,
1.27% 36,036,657 36,036,657
Total Investment of Cash Collateral
for Securities Loaned
(cost $736,961,191) 736,961,191
Total Investments-130.2%
(cost $3,049,864,876) 3,393,237,909
Other assets less liabilities-(30.2%) (786,615,041)
Net Assets-100% $ 2,606,622,868
* 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 July 31, 2004, the aggregate market value of these securities
amounted to $155,314,716 or 6.0% of net assets.
Glossary of Terms:
ADR - American Depositary Receipt.
GDR - Global Depositary Receipt.
See notes to financial statements.
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12 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
STATEMENT OF ASSETS & LIABILITIES
July 31, 2004
Assets
Investments in securities, at value (cost $3,049,864,876--
including investment of cash collateral for securities
loaned of $736,961,191) $ 3,393,237,909(a)
Cash 734
Foreign cash, at value (cost $139,866) 139,430
Receivable for capital stock sold 9,179,809
Receivable for investment securities sold 5,426,366
Dividends and interest receivable 553,727
Total assets 3,408,537,975
Liabilities
Payable for collateral on securities loaned 736,961,191
Payable for investment securities purchased 42,542,107
Payable for capital stock redeemed 15,147,839
Advisory fee payable 4,863,309
Transfer Agent fee payable 780,725
Distribution fee payable 283,654
Accrued expenses and other liabilities 1,336,282
Total liabilities 801,915,107
Net Assets $2,606,622,868
Composition of Net Assets
Capital stock, at par $558,529
Additional paid-in capital 5,347,536,712
Accumulated net investment loss (195,077)
Accumulated net realized loss on investment
and foreign currency transactions (3,084,649,893)
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities 343,372,597
$2,606,622,868
Calculation of Maximum Offering Price
Class A Shares
Net asset value and redemption price per share
($1,112,173,415 / 22,634,315 shares of capital stock
issued and outstanding) $49.14
Sales charge--4.25% of public offering price 2.18
Maximum offering price $51.32
Class B Shares
Net asset value and offering price per share
($1,100,839,904 / 24,621,873 shares of capital stock
issued and outstanding) $44.71
Class C Shares
Net asset value and offering price per share
($313,165,690 / 7,000,631 shares of capital stock
issued and outstanding) $44.73
Class R Shares
Net asset value, redemption and offering price per share
($23,422 / 477.241 shares of capital stock
issued and outstanding) $49.08
Advisor Class Shares
Net asset value, redemption and offering price per share
($80,420,437 / 1,595,622 shares of capital stock
issued and outstanding) $50.40
(a) Includes securities on loan with a value of $709,366,942 (see Note E).
See notes to financial statements.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN TECHNOLOGY FUND o 13
STATEMENT OF OPERATIONS
Year Ended July 31, 2004
Investment Income
Dividends (net of foreign taxes withheld
of $893,482) $7,577,516
Securities lending income 1,203,057
Interest 360,478 $9,141,051
Expenses
Advisory fee 30,657,619
Distribution fee--Class A 3,819,335
Distribution fee--Class B 14,093,564
Distribution fee--Class C 3,891,381
Distribution fee--Class R 55
Transfer agency 15,149,830
Printing 1,743,680
Custodian 574,867
Audit and legal 196,107
Directors' fees 129,810
Registration 117,816
Administrative 113,293
Miscellaneous 187,682
Total expenses 70,675,039
Less: expenses waived by the Adviser
and the Transfer Agent (see Note B) (4,976,169)
Less: expense offset arrangement
(see Note B) (1,460)
Net expenses 65,697,410
Net investment loss (56,556,359)
Realized and Unrealized Gain (Loss)
on Investment and Foreign Currency
Transactions
Net realized gain (loss) on:
Investment transactions 592,486,836
Foreign currency transactions (297,730)
Net change in unrealized
appreciation/depreciation of:
Investments (384,374,533)
Foreign currency denominated assets
and liabilities (436)
Net gain on investment and foreign
currency transactions 207,814,137
Net Increase in Net Assets
from Operations $151,257,778
See notes to financial statements.
- -------------------------------------------------------------------------------
14 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
STATEMENT OF CHANGES IN NET ASSETS
December 1, Year Ended
Year Ended 2002 to November 30,
July 31, 2004 July 31, 2003* 2002
- -------------------------------------------------------------------------------
Increase (Decrease)
in Net Assets from
Operations
Net investment loss $(56,556,359) $(45,820,513) $(91,576,655)
Net realized gain (loss) on
investment and foreign
currency transactions 592,189,106 (156,606,266) (1,895,821,648)
Net change in unrealized
appreciation/depreciation
of investments and
foreign currency
denominated assets
and liabilities (384,374,969) 448,104,681 33,057,117
Net increase in
net assets
from operations 151,257,778 245,677,902 (1,954,341,186)
Capital Stock
Transactions
Net decrease (674,559,162) (245,308,289) (1,002,096,652)
Total increase
(decrease) (523,301,384) 369,613 (2,956,437,838)
Net Assets
Beginning of period 3,129,924,252 3,129,554,639 6,085,992,477
End of period, (including
accumulated net
investment loss of
$195,077, $0 and $0,
respectively) $2,606,622,868 $3,129,924,252 $3,129,554,639
* The Fund changed its fiscal year end from November 30 to July 31.
See notes to financial statements.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN TECHNOLOGY FUND o 15
NOTES TO FINANCIAL STATEMENTS
July 31, 2004
NOTE A
Significant Accounting Policies
AllianceBernstein 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, Class R and Advisor Class
shares. Class A shares are sold with a front-end sales charge of up to 4.25%
for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000
or more, Class A shares redeemed within one year of purchase may be subject to
a contingent deferred sales charge of 1%. Class B shares are currently sold
with a contingent deferred sales charge which declines from 4% to zero
depending on the period of time the shares are held. Class B shares will
automatically convert to Class A shares eight years after the end of the
calendar month of purchase. Class C shares are subject to a contingent deferred
sales charge of 1% on redemptions made within the first year after purchase.
Class R shares are sold without an initial or contingent deferred sales charge
and are offered to certain group retirement plans. 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 five 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
In accordance with Pricing Policies adopted by the Board of Directors of the
Fund (the "Pricing Policies") and applicable law, portfolio securities are
valued at current market value or at fair value. The Board of Directors has
delegated to Alliance Capital Mangement, L.P. (the "Adviser"), subject to the
Board's continuing oversight, certain responsibilities with respect to the
implementation of the Pricing Policies. Pursuant to the Pricing Policies,
securities for which market quotations are readily available are valued at
their current market value. In general, the market value of these securities is
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. If no bid or asked prices are quoted on such day, then the security is
valued in good faith at fair value
- -------------------------------------------------------------------------------
16 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
in accordance with the Pricing Policies. 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 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 valuations, the last available closing settlement price is used;
securities traded in the over-the-counter market, (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, the Pricing Policies provide that the
Adviser 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 are valued at fair value in
accordance with the Pricing Policies.
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.
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.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN TECHNOLOGY FUND o 17
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 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 that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A, Class R and Advisor Class shares. Advisor Class shares have no
distribution fees.
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.
7. Change of Fiscal Year End
During 2003, the Fund changed its fiscal year end from November 30 to July 31.
Accordingly, the statement of changes in net assets and financial highlights
include the period from December 1, 2002 to July 31, 2003.
NOTE B
Advisory Fee and Other Transactions With Affiliates
Under the terms of an 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 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
- -------------------------------------------------------------------------------
18 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
and .25 of .85% of the net assets in excess of $22.5 billion. Such fee is
accrued daily and paid quarterly.
Effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee so as to charge the Fund at the reduced annual rate of .75% of the first
$2.5 billion, .65% of the next $2.5 billion, and .60% in excess of $5 billion,
of the Fund's aggregate net asset at the close of business on the last business
day of the previous quarter. Through July 31, 2004, such waiver amounted to
$4,456,402. The waiver was made in contemplation of the final agreement with
the Office of the New York Attorney General ("NYAG") described in "Legal
Proceedings" below.
For the year ended July 31, 2004, the Adviser voluntarily agreed to reimburse a
portion of certain audit fees related to the investigations described under
"Legal Proceeding" below in the amount of $3,000.
Pursuant to the advisory agreement, the Fund paid $113,293 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the year ended July 31, 2004.
The Fund compensates Alliance Global Investor Services, Inc. (AGIS), a
wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for
providing personnel and facilities to perform transfer agency services for the
Fund. Such compensation amounted to $9,278,821 for the year ended July 31,
2004. In addition, AGIS voluntarily agreed to waive a portion of its fees for
the year ended July 31, 2004. Such waiver amounted to $516,767.
For the year ended July 31, 2004 the Fund's expenses were reduced by $1,460
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. The Distributor has advised the Fund that it has retained
front-end sales charges of $41,489 from the sales of Class A shares and
received $54,447, $1,467,248, and $19,267 in contingent deferred sales charges
imposed upon redemptions by shareholders of Class A, Class B and Class C
shares, respectively, for the year ended July 31, 2004.
Brokerage commissions paid on investment transactions for the year ended July
31, 2004 amounted to $12,723,356, of which $360,381 was paid to Sanford C.
Bernstein & Co. LLC, an affiliate of the Adviser.
NOTE C
Distribution Services Agreement
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays distribution and servicing fees to the Distributor at
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN TECHNOLOGY FUND o 19
an annual rate of up to .30% of the Fund's average daily net assets
attributable to Class A shares and 1% of the Fund's average daily net assets
attributable to both Class B and Class C shares and .50% of the Fund's average
daily net assets attributable to Class R shares. There are no distribution and
servicing fees on the Advisor Class shares. The fees are accrued daily and paid
monthly. The Agreement provides that the Distributor will use such payments in
their entirety for distribution assistance and promotional activities. The
Distributor has advised the Fund that it has incurred expenses in excess of the
distribution costs reimbursed by the Fund in the amount of $81,079,506 and
$7,046,021 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)
for the year ended July 31, 2004, were as follows:
Purchases Sales
- -------------------------------------------------------------------------------
Investment securities (excluding
U.S. government securities) $2,467,805,726 $3,172,721,065
U.S. government securities -0- -0-
The cost of investments for federal income tax purposes, gross unrealized
appreciation and unrealized depreciation (excluding foreign currency
transactions) are as follows:
Cost $3,169,321,770
Gross unrealized appreciation $337,134,767
Gross unrealized depreciation (113,218,628)
Net unrealized appreciation $223,916,139
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.
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
- -------------------------------------------------------------------------------
20 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
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.
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 July 31, 2004, the Fund had loaned
securities with a value of $709,366,942 and received cash collateral which was
invested in short-term securities valued at $736,961,191 as included in the
accompanying portfolio of investments. For the year ended July 31, 2004, the
Fund earned fee income of $1,203,057 which is included in the accompanying
statement of operations.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN TECHNOLOGY FUND o 21
NOTE F
Capital Stock
There are 15,000,000,000 shares of $0.01 par value capital stock authorized,
divided into five classes, designated Class A, Class B, Class C, Advisor Class
and Class R shares. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
Shares
-------------------------------------------------
Year Ended December 1, Year Ended
July 31, 2002 to July 31, November 30,
2004 2003(a) 2002
- -------------------------------------------------------------------------------
Class A
Shares sold 5,185,412 74,462,637 241,078,290
Shares converted
from Class B 2,127,361 1,034,592 900,354
Shares redeemed (9,686,757) (75,715,354) (245,484,494)
Net decrease (2,373,984) (218,125) (3,505,850)
Class B
Shares sold 1,476,123 1,670,161 3,483,088
Shares converted
to Class A (2,305,939) (1,126,550) (963,780)
Shares redeemed (7,966,434) (5,542,690) (13,771,576)
Net decrease (8,796,250) (4,999,079) (11,252,268)
Class C
Shares sold 548,863 1,677,962 4,504,111
Shares redeemed (2,662,309) (2,812,996) (7,675,024)
Net decrease (2,113,446) (1,135,034) (3,170,913)
Advisor Class
Shares sold 363,853 565,245 934,323
Shares redeemed (696,202) (508,743) (2,451,696)
Net increase
(decrease) (332,349) 56,502 (1,517,373)
November 3,
2003(b) to
July 31, 2004
- ---------------------------------------------
Class R
Shares sold 539
Shares redeemed (62)
Net increase 477
(a) The Fund changed its fiscal year end from November 30 to July 31.
(b) Commencement of distributions.
- -------------------------------------------------------------------------------
22 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
Amount
-------------------------------------------------
Year Ended December 1, Year Ended
July 31, 2002 to July 31, November 30,
2004 2003(a) 2002
- -------------------------------------------------------------------------------
Class A
Shares sold $272,184,753 $ 2,939,404,972 $ 12,214,506,149
Shares converted
from Class B 112,659,496 43,501,551 44,799,543
Shares redeemed (512,074,234) (3,001,651,818) (12,505,261,596)
Net decrease $(127,229,985) $ (18,745,295) $ (245,955,904)
Class B
Shares sold $71,526,650 $ 63,313,428 $ 173,936,751
Shares converted
to Class A (112,659,496) (43,501,551) (44,799,543)
Shares redeemed (385,253,557) (206,573,042) (647,747,503)
Net decrease $(426,386,403) $ (186,761,165) $ (518,610,295)
Class C
Shares sold $26,563,961 $ 61,825,025 $ 222,615,217
Shares redeemed (129,071,486) (104,090,061) (374,107,034)
Net decrease $(102,507,525) $ (42,265,036) $ (151,491,817)
Advisor Class
Shares sold $19,837,797 $ 23,824,296 $ 53,921,257
Shares redeemed (38,298,227) (21,361,089) (139,959,893)
Net increase
(decrease) $(18,460,430) $ 2,463,207 $ (86,038,636)
November 3,
2003(b) to
July 31, 2004
- ---------------------------------------------
Class R
Shares sold $ 28,510
Shares redeemed (3,329)
Net increase $ 25,181
(a) The Fund changed its fiscal year end from November 30 to July 31.
(b) Commencement of distributions.
NOTE G
Risks Involved in Investing in the Fund
The investments in technology companies may be subject to a greater risk
because technology stocks, especially those of smaller, less seasoned
companies, tend to be more volatile than the overall market. Market or economic
factors affecting the technology industry could have a major effect on the
value of the Fund's investments.
In the ordinary course of business, the Fund enters into contracts that contain
a variety of indemnifications. The Fund's maximum exposure under these arrange-
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN TECHNOLOGY FUND o 23
ments 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 $500 million revolving credit facility (the "Facility")
intended to provide short-term financing if necessary, subject to certain
restrictions in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended July 31, 2004.
NOTE I
Components of Accumulated Earnings (Deficit)
As of July 31, 2004, the components of accumulated earnings/(deficit) on a tax
basis were as follows:
Accumulated capital and other losses $(2,965,388,076)(a)
Unrealized appreciation/(depreciation) 223,915,703
Total accumulated earnings/(deficit) $(2,741,472,373)(b)
(a) On July 31, 2004, the Fund had a net capital loss carryforward for federal
income tax purposes of $2,965,192,999, of which $1,183,573,611 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, 2004,
the Fund deferred to August 1, 2004, post-October currency losses of $195,077.
During the fiscal year, the Fund utilized capital loss carryforwards of
$308,735,173.
(b) The differences between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the tax deferral of
losses on wash sales.
During the current fiscal year, permanent differences primarily due to a net
investment loss, and the tax treatment of foreign currency gains and losses,
resulted in a net decrease in accumulated net investment loss and a decrease in
accumulated net realized loss on investments and a decrease in additional
paid-in capital. This reclassification had no effect on net assets.
NOTE J
Legal Proceedings
As has been previously reported in the press, 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
- -------------------------------------------------------------------------------
24 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
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
Assurrance 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 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. For more information on this waiver, 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.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN TECHNOLOGY FUND o 25
On October 2, 2003, a putative class action complaint entitled Hindo et al. v.
AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed
against the Adviser; Alliance Capital Management Holding L.P.; Alliance Capital
Management Corporation; AXA Financial, Inc.; certain of the AllianceBernstein
Mutual Funds, including the Fund; Gerald Malone; Charles Schaffran
(collectively, the "Alliance Capital defendants"); and certain other defendants
not affiliated with the Adviser. 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 Mutual Funds. The Hindo Complaint
alleges that certain of the Alliance Capital 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 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
similar to those in the Hindo Complaint were filed against the Adviser and
certain other defendants, some of which name the Fund as a defendant. All of
these lawsuits seek an unspecified amount of damages.
As a result of the matters discussed above, investors in the AllianceBernstein
Mutual Funds may choose to redeem their investments. 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.
The Adviser and approximately twelve other investment management firms were
publicly mentioned in connection with the settlement by the SEC of charges that
Morgan Stanley violated federal securities laws relating to its receipt of
compensation for selling specific mutual funds and the disclosure of such
compensation. The SEC has indicated publicly that, among other things, it is
considering enforcement action in connection with mutual funds' disclosure of
such arrangements and in connection with the practice of considering mutual
fund sales in the direction of brokerage commissions from fund portfolio
transactions. The SEC has issued subpoenas to the Adviser in connection with
this matter and the Adviser has provided documents and other information to the
SEC and is cooperating fully with its investigation.
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 Capital Management Holding L.P., Alliance Capital
Management Corporation, AXA Financial, Inc., AllianceBernstein Investment
- -------------------------------------------------------------------------------
26 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
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, including the
Fund, 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 the AllianceBernstein Growth & Income 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
AllianceBernstein 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
AllianceBernstein Fund-related fees, commissions and soft dollar payments, and
restitution of all unlawfully or discriminatorily obtained fees and expenses.
Since June 22, 2004, numerous additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants, and others may be filed.
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the Fund's shares or
other adverse consequences to the Fund. However, the Adviser believes that
these matters are not likely to have a material adverse effect on the Fund or
its ability to perform advisory services relating to the Fund.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN TECHNOLOGY FUND o 27
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A
------------------------------------------------------------------------------
December 1,
Year Ended 2002 to Year Ended November 30,
July 31, July 31, --------------------------------------------------
2004 2003(a) 2002 2001 2000 1999
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $47.44 $43.48 $67.05 $95.32 $111.46 $68.60
Income From Investment
Operations
Net investment loss(b) (.72)(c) (.54) (.87) (.82) (1.35) (.99)
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions 2.42 4.50 (22.70) (21.17) (10.75) 49.02
Net increase (decrease) in
net asset value from
operations 1.70 3.96 (23.57) (21.99) (12.10) 48.03
Less: Distributions
Distributions from net realized gain
on investment transactions -0- -0- -0- (5.86) (4.04) (5.17)
Distributions in excess of net
realized gain on investment
transactions -0- -0- -0- (.42) -0- -0-
Total distributions -0- -0- -0- (6.28) (4.04) (5.17)
Net asset value, end of period $49.14 $47.44 $43.48 $67.05 $95.32 $111.46
Total Return
Total investment return based
on net asset value(d) 3.58% 9.11% (35.15)% (24.90)% (11.48)% 74.67%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $1,112,174 $1,186,488 $1,096,744 $1,926,473 $2,650,904 $2,167,060
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.65% 2.24%(e) 1.85% 1.58% 1.50% 1.68%(f)
Expenses, before waivers/
reimbursements 1.81% 2.24%(e) 1.85% 1.58% 1.50% 1.68%(f)
Net investment loss (1.36)%(c) (1.95)%(e) (1.64)% (1.08)% (.98)% (1.11)%
Portfolio turnover rate 80% 127% 117% 55% 46% 54%
See footnote summary on page 33.
- -------------------------------------------------------------------------------
28 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B
------------------------------------------------------------------------------
December 1,
Year Ended 2002 to Year Ended November 30,
July 31, July 31, --------------------------------------------------
2004 2003(a) 2002 2001 2000 1999
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $43.49 $40.06 $62.27 $89.59 $105.73 $65.75
Income From Investment
Operations
Net investment loss(b) (1.03)(c) (.69) (1.16) (1.28) (2.17) (1.54)
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions 2.25 4.12 (21.05) (19.76) (9.93) 46.69
Net increase (decrease) in
net asset value from
operations 1.22 3.43 (22.21) (21.04) (12.10) 45.15
Less: Distributions
Distributions from net realized gain
on investment transactions -0- -0- -0- (5.86) (4.04) (5.17)
Distributions in excess of net
realized gain on investment
transactions -0- -0- -0- (.42) -0- -0-
Total distributions -0- -0- -0- (6.28) (4.04) (5.17)
Net asset value, end of period $44.71 $43.49 $40.06 $62.27 $89.59 $105.73
Total Return
Total investment return based on
net asset value(d) 2.81% 8.56% (35.67)% (25.46)% (12.12)% 73.44%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $1,100,840 $1,453,453 $1,539,144 $3,092,947 $4,701,567 $3,922,584
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 2.58% 3.02%(e) 2.58% 2.31% 2.20% 2.39%(f)
Expenses, before waivers/
reimbursements 2.61% 3.02%(e) 2.58% 2.31% 2.20% 2.39%(f)
Net investment loss (2.13)%(c) (2.73)%(e) (2.37)% (1.80)% (1.68)% (1.83)%
Portfolio turnover rate 80% 127% 117% 55% 46% 54%
See footnote summary on page 33.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN TECHNOLOGY FUND o 29
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C
------------------------------------------------------------------------------
December 1,
Year Ended 2002 to Year Ended November 30,
July 31, July 31, ------------------------------------------------
2004 2003(a) 2002 2001 2000 1999
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $43.50 $40.07 $62.25 $89.55 $105.69 $65.74
Income From Investment
Operations
Net investment loss(b) (1.02)(c) (.68) (1.15) (1.28) (2.19) (1.57)
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions 2.25 4.11 (21.03) (19.74) (9.91) 46.69
Net increase (decrease) in net
asset value from operations 1.23 3.43 (22.18) (21.02) (12.10) 45.12
Less: Distributions
Distributions from net realized gain
on investment transactions -0- -0- -0- (5.86) (4.04) (5.17)
Distributions in excess of net
realized net realized gain on
investment transactions -0- -0- -0- (.42) -0- -0-
Total distributions -0- -0- -0- (6.28) (4.04) (5.17)
Net asset value, end of period $44.73 $43.50 $40.07 $62.25 $89.55 $105.69
Total Return
Total investment return based on
net asset value(d) 2.83% 8.56% (35.63)% (25.45)% (12.13)% 73.40%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $313,166 $396,472 $410,649 $835,406 $1,252,765 $907,707
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 2.39% 3.01%(e) 2.55% 2.30% 2.21% 2.41%(f)
Expenses, before waivers/
reimbursements 2.55% 3.01%(e) 2.55% 2.30% 2.21% 2.41%(f)
Net investment loss (2.10)%(c) (2.72)%(e) (2.34)% (1.80)% (1.69)% (1.85)%
Portfolio turnover rate 80% 127% 117% 55% 46% 54%
See footnote summary on page 33.
- -------------------------------------------------------------------------------
30 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout The Period
Class R
------------
November 3,
2003(g) to
July 31,
2004
------------
Net asset value, beginning of period $54.17
Income From Investment Operations
Net investment loss(b) (.77)(c)
Net realized and unrealized loss on
investment and foreign currency
transactions (4.32)
Net decrease in net asset value
from operations (5.09)
Net asset value, end of period $49.08
Total Return
Total investment return based on
net asset value(d) (9.40)%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $23
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 1.73%(e)
Expenses, before waivers/reimbursements 1.97%(e)
Net investment loss (1.42)%(c)(e)
Portfolio turnover rate 80%
See footnote summary on page 33.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN TECHNOLOGY FUND o 31
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class
------------------------------------------------------------------------------
December 1,
Year Ended 2002 to Year Ended November 30,
July 31, July 31, -------------------------------------------------
2004 2003(a) 2002 2001 2000 1999
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $48.50 $44.36 $68.21 $96.60 $112.59 $69.04
Income From Investment
Operations
Net investment loss(b) (.58)(c) (.46) (.72) (.60) (.91) (.68)
Net realized and unrealized
gain (loss) on investment
and foreign currency
transactions 2.48 4.60 (23.13) (21.51) (11.04) 49.40
Net increase (decrease) in net
asset value from operations 1.90 4.14 (23.85) (22.11) (11.95) 48.72
Less: Distributions
Distributions from net realized gain
on investment transactions -0- -0- -0- (5.89) (4.04) (5.17)
Distributions in excess of net
realized net realized gain on
investment transactions -0- -0- -0- (.39) -0- -0-
Total distributions -0- -0- -0- (6.28) (4.04) (5.17)
Net asset value, end of period $50.40 $48.50 $44.36 $68.21 $96.60 $112.59
Total Return
Total investment return based
on net asset value(d) 3.92% 9.33% (34.96)% (24.68)% (11.22)% 75.22%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $80,420 $93,511 $83,018 $231,167 $288,889 $330,404
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.35% 1.94%(e) 1.49% 1.27% 1.19% 1.35%(f)
Expenses, before waivers/
reimbursements 1.51% 1.94%(e) 1.49% 1.27% 1.19% 1.35%(f)
Net investment loss (1.06)%(c) (1.65)%(e) (1.29)% (.78)% (.66)% (.78)%
Portfolio turnover rate 80% 127% 117% 55% 46% 54%
See footnote summary on page 33.
- -------------------------------------------------------------------------------
32 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
(a) The Fund changed its fiscal year end from November 30 to July 31.
(b) Based on average shares outstanding.
(c) Net of expenses waived by the Adviser and the Transfer Agent.
(d) 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.
(e) Annualized.
(f) Ratio reflects expenses grossed up for the expenses offset arrangement
with the Transfer Agent. For the period shown below, the net expense ratios
were as follows:
Year Ended
November 30,
1999
------------
Class A 1.66%
Class B 2.38%
Class C 2.40%
Advisor Class 1.34%
(g) Commencement of distributions.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN TECHNOLOGY FUND o 33
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of AllianceBernstein Technology
Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
AllianceBernstein Technology Fund, Inc. (the "Fund"), including the portfolio
of investments, as of July 31, 2004, and the related statement of operations
for the period then ended, the statement of changes in net assets 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 the standards of the Public Company
Accounting Oversight Board (United States). 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 and financial
highlights. Our procedures included confirmation of securities owned as of July
31, 2004, by correspondence with the custodian and others. 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
AllianceBernstein Technology Fund, Inc. at July 31, 2004, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for each of the indicated periods in conformity with U.S.
generally accepted accounting principles.
Ernst & Young LLP
New York, New York
September 10, 2004
- -------------------------------------------------------------------------------
34 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President
Robert C. Alexander(1)
David H. Dievler(1)
D. James Guzy(1)
Marshall C. Turner, Jr.(1)
OFFICERS
Janet A. Walsh(2), Senior Vice President
Thomas J. Bardong, Vice President
Mark R. Manley, 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
AllianceBernstein Investment Research and Management, Inc.
1345 Avenue of the Americas
New York, NY 10105
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
Transfer Agent
Alliance Global Investor Services, Inc.
P.O. Box 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 and Governance and Nominating Committee.
(2) Ms. Walsh is the person primarily responsible for the day-to-day
management of the Fund's investment portfolio.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN TECHNOLOGY FUND o 35
MANAGEMENT OF THE FUND
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the
Board of Directors. Certain information concerning the Fund's Directors is set
forth below.
PORTFOLIOS
IN FUND OTHER
NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY
(YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ----------------------------------------------------------------------------------------------------------------------
INTERESTED DIRECTOR
Marc O. Mayer, +, 46 Exective Vice President of 66 None
1345 Avenue of the Alliance Capital Management
Americas Corporation ("ACMC") since
New York, NY 10105 2001; prior thereto, Chief
(Elected November Executive Officer of Sanford C.
24, 2003) Bernstein & Co., LLC and its
precedessor since prior to 1999.
DISINTERESTED DIRECTORS
William H. Foulk, Jr., #, 72 Investment Adviser and an 113 None
2 Sound View Drive independent consultant. He
Suite 100 was formerly Senior Manager
Greenwich, CT 06830 (12) of Barrett Associates, Inc., a
(Chairman of the Board) registered investment adviser,
with which he had been
associated since prior to 1999.
Formerly Deputy Comptroller
and Chief Investment Officer
of the State of New York and,
prior thereto, Chief Investment
Officer of the New York Bank
for Savings.
Robert C. Alexander, #, 62 President of Alexander & 1 None
38 East 29th Street Associates, Inc. Management
New York, NY 10016 Consultants, since prior to 1999.
(10)
David H. Dievler, #, 74 Independent Consultant. Until 98 None
P.O. Box 167 December 1994, he was Senior
Spring Lake, Vice President of ACMC
NJ 07762 (14) responsible for mutual fund
administration. Prior to joining
ACMC in 1984, he was Chief
Financial Officer of Eberstadt
Asset Management since 1968.
Prior to that, he was a Senior
Manager at Price Waterhouse
& Co. Member of American
Institute of Certified Public
Accountants since 1953.
- -------------------------------------------------------------------------------
36 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
PORTFOLIOS
IN FUND OTHER
NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY
(YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ----------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
D. James Guzy, #, 68 Chairman of the Board of PLX 1 Intel Corporation,
P.O. Box 128 Technology (semi-conductors) Cirrus Logic
Glenbrook, NV 89413 (22) and of SRC Computers, Inc. Corporation,
with which he has been Novellus
associated prior to 1999. He Corporation,
is also President of the Arbor Micro Component
Company (private family Technology
investments). He is a Director of and the Davis
Intel Corporation (semi-conductors), Selected
Cirrus Logic Corporation (semi- Advisers Group
conductors), Novellus Corporation of Mutual
(semi-conductor equipment), Funds.
Micro Component Technology
(semi-conductor equipment),
the Davis Selected Advisers
Group of Mutual Funds (registered
investment companies) and Logic
Vision.
Marshall C. Turner, Jr, #, 62 Principal of Turner Venture 1 Du Pont
220 Montgomery Street Associates (venture capital Photomasks, Inc
Penthouse 10 and consulting) since prior to
San Francisco, 1999. He is a director of DuPont
CA 94104 (12) Photomasks, Inc. (semi-conductor
manufacturing services);
the George Lucas Educational
Foundation; and is Chairman
of the Board of the Smithsonian's
National Museum of Natural History.
* There is no stated term of office for the Fund's Directors.
# Member of the Audit Committee and Governance and Nominating Committee.
+ Mr. Mayer is an "Interested Director" as defined in the Investment Company
Act of 1940, due to his position as Executive Vice President of ACMC.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN TECHNOLOGY FUND o 37
Officers of The Fund
Certain information concerning the Fund's Officers is listed below.
NAME, POSITION(S) PRINCIPAL OCCUPATION
ADDRESS* AND AGE HELD WITH FUND DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------
Marc O. Mayer, 46 President See biography above.
Janet A. Walsh, 42 Senior Vice President Senior Vice President of Alliance Capital
Management Corporation ("ACMC")**,
with which she has been associated
since prior to 1999.
Thomas J. Bardong, 59 Vice President Senior Vice President of ACMC**, with
which he has been associated since
prior to 1999.
Mark R. Manley, 41 Secretary Senior Vice President and Chief
Compliance Officer of ACMC**,
with which he has been associated since
prior to 1999.
Mark D. Gersten, 53 Treasurer and Chief Senior Vice President of AGIS**, and
Financial Officer Vice President of ABIRM**, with which
he has been associated since prior to
1999.
Vincent S. Noto, 39 Controller Vice President of AGIS**, with which
he has been associated since prior to
1999.
* The address for each of the Fund's officers, unless otherwise indicated, is
1345 Avenue of the Americas, New York, NY 10105.
** ACMC, ABIRM and AGIS are affiliates of the Fund.
The Fund's Statement of Additional Information ("SAI") has additional
information about the Fund's Directors and officers and is available without
charge upon request. Contact your financial representative or Alliance Capital
at 800-227-4618 for a free prospectus or SAI.
- -------------------------------------------------------------------------------
38 o ALLIANCEBERNSTEIN 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
Health Care Fund
Mid-Cap Growth Fund
Premier Growth Fund
Small Cap Growth Fund
Technology Fund
Global & International
All-Asia Investment Fund
Global Research Growth Fund
Global Small Cap Fund
Greater China '97 Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
Select Investor Series
Biotechnology Portfolio
Premier Portfolio
Technology Portfolio
- -------------------------------------------------------------------------------
Value Funds
- -------------------------------------------------------------------------------
Domestic
Balanced Shares
Disciplined Value Fund
Growth & Income Fund
Real Estate Investment Fund
Small Cap Value Fund
Utility Income Fund
Value Fund
Global & International
Global Value Fund
International Value Fund
- -------------------------------------------------------------------------------
Taxable Bond Funds
- -------------------------------------------------------------------------------
Americas Government Income Trust
Corporate Bond Portfolio
Emerging Market Debt Fund
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
Quality Bond Portfolio
Short Duration Portfolio
U.S. Government Portfolio
- -------------------------------------------------------------------------------
Municipal Bond Funds
- -------------------------------------------------------------------------------
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
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
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. Please read the prospectus carefully before you invest or send
money.
* Formerly Growth Investors Fund.
** Formerly Conservative Investors Fund.
+ 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 TECHNOLOGY FUND o 39
NOTES
- -------------------------------------------------------------------------------
40 o ALLIANCEBERNSTEIN TECHNOLOGY FUND
ALLIANCEBERNSTEIN TECHNOLOGY FUND
1345 Avenue of the Americas
New York, NY 10105
Toll-free 1 (800) 221-5672
(logo) AllianceBernstein(SM)
Investment Research and Management
(SM) This service mark used under license from
the owner, Alliance Capital Management L.P.
TECAR0704
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to its principal
executive officer, principal financial officer and principal accounting officer.
A copy of the registrant's code of ethics is filed herewith as Exhibit 11(a)(1).
(b) During the period covered by this report, no material amendments were made
to the provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, no implicit or explicit waivers to
the provisions of the code of ethics adopted in 2(a) above were granted.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors has determined that independent directors
David H. Dievler, William H. Foulk, Jr., D. James Guzy and Marshall C. Turner
qualify as audit committee financial experts.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The following table sets forth the aggregate fees billed by the independent
auditor, Ernst & Young LLP, for the Fund's last two fiscal years for
professional services rendered for: (i) the audit of the Fund's annual financial
statements included in the Fund's annual report to stockholders; (ii) assurance
and related services that are reasonably related to the performance of the audit
of the Fund's financial statements and are not reported under (i), which include
multi-class distribution testing, advice and education on accounting and
auditing issues, and consent letters; (iii) tax compliance, tax advice and tax
return preparation; and (iv) aggregate non-audit services provided to the Fund,
the Fund's Adviser and entities that control, are controlled by or under common
control with the Adviser that provide ongoing services to the Fund ("Service
Affiliates"), which include conducting an annual internal control report
pursuant to Statement on Auditing Standards No. 70. No other services were
provided to the Fund during this period.
All Fees for
Non-Audit Services
Provided to the
Portfolio, the
Adviser
Audit-Related and Service
Audit Fees Fees Tax Fees Affiliates
- -------------------------------------------------------------------------------
2003:* $51,000 $9,200 $14,925 $578,040
2004 $50,000 $8,558 $15,528 $861,687
* Fiscal year 2003 was comprised of only eight calendar months due to a change
in fiscal year end from November 30 to July 31.
Beginning with audit and non-audit service contracts entered into on or after
May 6, 2003, the Fund's Audit Committee policies and procedures require the
pre-approval of all audit and non-audit services provided to the Fund by the
Fund's independent auditors.
The Fund's Audit Committee policies and procedures also require pre-approval of
all audit and non-audit services provided to the Adviser and Service Affiliates
to the extent that these services are directly related to the operations or
financial reporting of the Fund. Accordingly, all of the amounts in the table
for Audit Fees, Audit-Related Fees and Tax Fees for the entire period ended 2003
and 2004 are for services pre-approved by the Fund's Audit Committee.
The amounts of the Fees for Non-Audit Services provided to the Fund, the Adviser
and Service Affiliates in the table for the Fund, that were subject to
pre-approval by the Audit Committee for the entire period ended 2003 and 2004
were as follows:
Non-Audit Services Pre-Approved
by the Audit Committee
---------------------------------------
Audit
Related Tax
Fees Fees Total
-------- ------ --------
2003 $193,100 $14,925 $208,025
2004 $255,303 $15,528 $270,831
The Audit Committee of the Fund has considered whether the provision of any
non-audit services not pre-approved by the Audit Committee provided by the
Fund's independent auditor to the Adviser and Service Affiliates is compatible
with maintaining the auditor's independence.
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. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On April 20, 2004 the Fund adopted procedures, by which shareholders may
recommend nominees to the Fund's Board of Directors. Prior thereto, the Fund's
Board did not accept shareholder recommendations for nominees to the Fund's
Board.
ITEM 10. 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 significant changes in the registrant's internal controls that
could significantly affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
ITEM 11. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
Exhibit No. DESCRIPTION OF EXHIBIT
----------- ----------------------
11 (a) (1) Code of ethics that is subject to the
disclosure of Item 2 hereof
11 (b) (1) Certification of Principal Executive Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
11 (b) (2) Certification of Principal Financial Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
11 (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 Technology Fund, Inc.
By: /s/ Marc O. Mayer
---------------------
Marc O. Mayer
President
Date: September 29, 2004
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: September 29, 2004
By: /s/ Mark D. Gersten
---------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: September 29, 2004