ALLIANCE ALL-MARKET ADVANTAGE FUND
ANNUAL REPORT
SEPTEMBER 30, 1996
LETTER TO SHAREHOLDERS ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
_______________________________________________________________________________
October 31, 1996
Dear Shareholder:
We are pleased to provide the annual report for the Alliance All-Market
Advantage Fund, a closed-end fund trading under the New York Stock Exchange
symbol "AMO." Your Fund's investment objective is to seek long-term growth of
capital through all market conditions. AMO invests a majority of its total
assets in a core portfolio of equity securities of large, intensely researched,
high quality companies that we believe are likely to achieve superior earnings
growth. The core portfolio will typically consist of the equity securities of
the 25 companies that are the most highly regarded at any point in time. The
balance of the portfolio may be invested in equity securities of other domestic
and foreign companies that we believe have exceptional growth potential.
FUND PERFORMANCE
The following pages include information that covers the fiscal year from
October 1, 1995 through September 30, 1996. In accordance with the Fund's
policy of distributing 2% of net asset value quarterly, distributions of
$0.4756, $0.4360, $0.4524, and $0.4514 per share were paid to shareholders of
record as of December 31, 1995, March 31, 1996, June 30, 1996, and September
30, 1996, respectively. In accordance with federal tax requirements, the Fund
made an additional distribution of $1.155 per share in January 1996.
The table below shows how the Fund performed on a net asset value basis during
the periods ended September 30, 1996. For comparison, we've shown returns for
the S&P 500 Stock Index, a measure of the overall U.S. stock market, and the
Russell 1000 Growth Index, which tracks performance of growth-oriented,
large-cap U.S. stocks.
TOTAL RETURN
PERIODS ENDED SEPTEMBER 30, 1996
6-MONTH PERIOD 12-MONTH PERIOD
-------------- ---------------
ALLIANCE ALL-MARKET ADVANTAGE FUND 2.60% 8.10%
S&P 500 STOCK INDEX 7.71% 20.32%
RUSSELL 1000 GROWTH INDEX 10.19% 21.40%
THE YEAR IN REVIEW
During the past year, the U.S. financial markets were dominated by a strong
domestic equity market. Unfortunately, several of the Fund's largest holdings
did not participate with the market. Specifically, Philip Morris, the Fund's
largest holding for most of the year, was negatively impacted by increased
litigation concerns even though the underlying fundamentals remained strong. At
current prices, we believe Philip Morris is one of the most undervalued
large-cap stocks available. Communication stocks (cellular and cable) also
negatively impacted AMO's performance. Our large holding in AirTouch
Communications disappointed as investors worried about additional competition
coming domestically from PCS (personal communication services) providers.
However, we are maintaining our position in AirTouch because subscriber and
cash flow growth, both domestically and internationally, continues to exceed
expectations.
AMO benefited from its overweight positions in the technology and finance
sectors, particularly from positions in Intel, Microsoft, Cisco Systems,
Merrill Lynch, Fannie Mae, MBNA, and Norwest. However, holdings in Applied
Materials and Hewlett-Packard suffered due to slowing demand and slower product
transitions, offsetting gains from the Fund's stronger performers.
Pharmaceutical holdings Merck and Pfizer significantly outperformed the market
due to strong sales and new product introductions. Our recently-eliminated
position in United Healthcare negatively impacted the Fund when the company
announced disappointing earnings due to increased margin pressures.
Stock selections in the consumer products and services sector also detracted
from performance. Gains in Gillette were more than offset by our losses in
Philip Morris and PepsiCo. Holdings in Northwest and United Airlines suffered
as earnings were affected by rising fuel prices, reinstatement of the excise
tax, and the dollar's rise against the Japanese yen. However, due to
improvement in the underlying fundamentals, we have recently added to these
airline positions.
The estimated earnings growth for the companies in the portfolio continues to
be more than twice the market's average growth rate while valuations of
portfolio hold ings are slightly below the market's average valuation. This is
consistent with our investment objective of buying future growth stocks at
reasonable valuations.
1
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
_______________________________________________________________________________
MARKET ENVIRONMENT AND OUTLOOK
As we have stated before, U.S. corporations have experienced robust operating
earnings and cash flow while the economic backdrop remains one of moderate
growth and moderate inflation. The position of U.S. companies in the world
economy is strong, underpinned by technology leadership and many years of
corporate cost cutting. Finally, there is nothing in the fiscal or monetary
policy arenas to cause significant concern. By our calculation, the
price-to-earnings ratio for the market is in the mid-range for normal market
environments. While some increase in this ratio is possible, we expect
consistent, moderately-rising corporate earnings to result in higher equity
prices. We believe that well-chosen growth equities can still provide a
comfortable average annual return in excess of the 7% yield of long U.S.
Treasury bonds.
Our bullishness does not ignore the potential for interim volatility, nor the
possibility of a major market shock due to unforeseen developments. However,
there is a trade-off between pursuing high returns and positioning the Fund to
weather market corrections.
For this reason, as noted in our last few letters, we have sought holdings with
reasonable valuations and have substantially increased diversification. We see
nothing inconsistent in being bullish and yet acting with this extra degree of
caution which we recognize might lead to modest underperformance in the current
bull market. Admittedly, this "insurance" is unlikely to allow the portfolio to
escape a downturn unscathed, but it will help dampen the effects of a market
decline.
We appreciate your investment in the Alliance All-Market Advantage Fund and
look forward to reporting further developments in the future.
Sincerely,
John D. Carifa
Chairman and President
Alfred Harrison
Senior Vice President
Michael J. Reilly
Vice President and Portfolio Manager
2
TEN LARGEST HOLDINGS*
SEPTEMBER 30, 1996 ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
_______________________________________________________________________________
COMPANY VALUE PERCENTOFNETASSETS
- -------------------------------------------------------------------------------
Intel Corp. (a) $ 2,919,012 5.2%
Federal National Mortgage Association (a) 2,727,787 4.9
Cisco Systems, Inc. 2,538,356 4.6
Philip Morris Cos., Inc. (a) 2,426,400 4.4
Compaq Computer Corp. 1,891,688 3.4
Northwest Airlines, Inc. 1,846,575 3.3
Merrill Lynch & Co., Inc. (a) 1,810,000 3.3
Microsoft Corp. 1,727,562 3.1
Columbia/HCA Healthcare Corp. 1,677,812 3.0
Walt Disney Co. (a) 1,647,438 3.0
$21,212,630 38.2%
* Excludes short-term obligations.
(a) Adjusted for market value of call options purchased.
3
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996 ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
_______________________________________________________________________________
SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHERINVESTMENTS-81.1%
TECHNOLOGY-25.5%
COMMUNICATION EQUIPMENT-4.9%
Cisco Systems, Inc. (a)(b) 40,900 $2,538,356
Lucent Technologies, Inc. 3,600 165,150
------------
2,703,506
COMPUTER HARDWARE-5.6%
BMC Industries, Inc. 20,000 572,500
Compaq Computer Corp. (a)(b) 29,500 1,891,688
Hewlett-Packard Co. 12,800 624,000
------------
3,088,188
COMPUTER SOFTWARE & SERVICES-10.6%
Electronic Data Systems Corp. 9,000 552,375
First Data Corp. 12,500 1,020,313
Microsoft Corp. (a) 13,100 1,727,562
Oracle Corp. (a) 18,000 766,125
Sterling Software, Inc. (a)(b) 5,000 381,875
3Com Corp. (a) 24,400 1,465,525
------------
5,913,775
SEMI-CONDUCTORS & EQUIPMENT-4.4%
Altera Corp. (a) 15,000 759,375
Intel Corp. (b) 11,000 1,049,812
Novellus Systems, Inc. (a) 15,000 639,375
------------
2,448,562
------------
14,154,031
CONSUMER PRODUCTS & SERVICES-22.6%
AIRLINES-5.0%
Northwest Airlines, Inc. (a) 52,200 1,846,575
UAL Corp. (a) 20,000 940,000
------------
2,786,575
APPAREL-0.9%
Nike, Inc. Cl. B 4,000 486,000
AUTOMOBILES-1.9%
Chrysler Corp. 10,000 286,250
General Motors Corp. 15,900 763,200
------------
1,049,450
BEVERAGES - SOFT DRINKS-0.1%
PepsiCo, Inc. 3,000 84,750
BROADCASTING & CABLE-3.0%
AirTouch Communications, Inc. (a) 47,000 1,298,375
Cox Communications, Inc. C1.A (a)(b) 21,000 385,875
------------
1,684,250
COSMETICS & TOILETRIES-0.8%
Gillette Co. 5,900 425,538
ENTERTAINMENT-2.1%
Walt Disney Co. 18,500 1,172,438
FOOD PROCESSING-1.8%
Campbell Soup Co. 5,000 390,000
Wrigley (WM) Jr Co. 10,000 602,500
------------
992,500
RESTAURANTS-0.3%
McDonald's Corp. (b) 3,100 146,863
RETAILING-4.9%
Federated Department Stores, Inc. (a) 24,000 804,000
Home Depot, Inc. 21,700 1,234,187
Sears, Roebuck and Co. 5,000 223,750
Wal-Mart Stores, Inc. 17,900 472,113
------------
2,734,050
TOBACCO-1.8%
Philip Morris Cos., Inc. 11,000 987,250
------------
12,549,664
FINANCE-21.3%
BANKING - REGIONAL-5.7%
Chase Manhattan Corp. 4,160 333,320
First Union Corp. 18,000 1,201,500
NationsBank Corp. (b) 12,000 1,042,500
4
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
_______________________________________________________________________________
SHARES VALUE
- -------------------------------------------------------------------------
Norwest Corp. 8,000 $ 327,000
Wells Fargo & Co. 1,000 260,000
------------
3,164,320
FINANCIAL SERVICES - DIVERSIFIED-2.6%
Merrill Lynch & Co., Inc. 22,000 1,443,750
INSURANCE-2.2%
Travelers Group, Inc. 17,450 857,231
Warrants expiring 7/31/98 (a) 11,000 401,500
------------
1,258,731
MORTGAGE BANKING-6.8%
Federal National Mortgage Association 73,700 2,570,287
Green Tree Financial Corp. 30,400 1,193,200
------------
3,763,487
MISCELLANEOUS-4.0%
Household International, Inc. 7,700 633,325
MBNA Corp. (b) 45,900 1,595,025
------------
2,228,350
------------
11,858,638
HEALTHCARE-11.7%
BIOTECHNOLOGY-0.7%
Amgen, Inc. (a)(b) 6,000 378,750
MEDICAL SERVICES-3.5%
Columbia/HCA Healthcare Corp. (b) 29,500 1,677,812
Oxford Health Plans, Inc. (a) 6,000 298,500
------------
1,976,312
MEDICAL PRODUCTS-2.1%
Johnson & Johnson 6,000 307,500
Medtronic, Inc. 13,500 865,688
------------
1,173,188
PHARMACEUTICALS-5.4%
Abbott Laboratories 13,100 645,175
Merck & Co., Inc. 13,000 914,875
Pharmacia & Upjohn, Inc. 4,000 165,000
Pfizer, Inc. 16,000 1,266,000
------------
2,991,050
------------
6,519,300
CONTRACTS VALUE
- -------------------------------------------------------------------------
Total Common Stocks
(cost $40,264,878) $45,081,633
CALL OPTIONS PURCHASED-23.3% (A)
Amgen, Inc.
expiring Jan '97 @ $27.50 290 1,058,500
Chase Manhattan Corp.
expiring Jan '98 @ $40 110 479,875
Citicorp
expiring Jan '97 @ $40 65 328,656
Federal National Mortgage Association
expiring Jan '98 @ $20 100 157,500
First Chicago NBD Corp.
expiring Jan '98 @ $25 100 207,500
Ford Motor Co.
expiring Jan '97 @ $35 200 10,000
General Electric Co.
expiring Jan '97 @ $40 130 671,125
expiring Jan '98 @ $50 100 431,250
General Motors Corp.
expiring Jan '97 @ $55 150 10,313
Gillette Co.
expiring Jan '97 @ $35 90 335,813
Hewlett-Packard Co.
expiring Jan '97 @$22.50 125 326,562
expiring Jan '98 @ $30 260 565,500
Intel Corp.
expiring Jan '97 @ $32.50 248 1,571,700
expiring Jan '98 @ $40 50 297,500
Marriott International, Inc.
expiring Jan '97 @ $20 120 424,500
McDonald's Corp.
expiring Jan '97 @ $30 185 329,531
expiring Jan '98 @ $30 140 277,375
Merck & Co., Inc.
expiring Jan '97 @ $40 160 492,000
Merrill Lynch & Co., Inc.
expiring Jan '98 @ $30 100 366,250
Monsanto Co.
expiring Jan '97 @ $20 300 502,500
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
_______________________________________________________________________________
CONTRACTS VALUE
- -------------------------------------------------------------------------
NationsBank Corp.
expiring Jan '97 @ $45 75 $ 316,875
Norwest Corp.
expiring Jan '97 @ $30 210 238,875
PepsiCo., Inc.
expiring Jan '97 @ $17.50 150 165,000
expiring Jan '98 @ $17.50 510 612,000
Pharmacia & Upjohn, Inc.
expiring Jan '98 @ $30 100 125,000
Pfizer, Inc.
expiring Jan '97 @ $35 75 332,812
Philip Morris Cos., Inc.
expiring Jan '97 @ $50 184 742,900
expiring Jan '97 @ $60 115 350,750
expiring Jan '98 @ $60 80 256,000
expiring Jan '98 @ $70 40 89,500
Sears, Roebuck and Co.
expiring Jan '97 @ $25 100 198,750
UAL Corp.
expiring Jan '97 @ $28.75 100 188,750
Walt Disney Co.
expiring Jan '97 @ $40 200 475,000
Total Call Options Purchased
(cost $10,543,746) 12,936,162
TOTAL INVESTMENTS-104.4%
(cost $50,808,624) 58,017,795
CALL OPTIONS WRITTEN-(0.4%) (A)
Altera Corp.
expiring Oct '96 @ $50 40 (13,500)
expiring Oct '96 @ $55 60 (8,250)
Chicago Board Options Exchange NASDAQ 100 Index
expiring Oct '96 @ $750 30 (29,250)
CONTRACTS
OR
SHARES VALUE
- --------------------------------------------------------------------------
Intel Corp.
expiring Oct '96 @ $100 15 $ (2,438)
Novellus Systems, Inc.
expiring Oct '96 @ $45 70 (9,625)
Standard & Poor's 500 Index
expiring Oct '96 @ $670 30 (62,625)
expiring Oct '96 @ $685 75 (78,750)
Total Call Options Written
(premiums received $207,873) (204,438)
SECURITIES SOLD SHORT-(2.5%) (A)
Advanced Micro Devices, Inc. 20,000 (295,000)
Apple Computer, Inc. 5,000 (110,937)
Genzyme Corp. - General Division 6,000 (153,000)
Grand Casinos, Inc. 8,000 (118,000)
Motorola, Inc. 10,000 (516,250)
Nordstrom, Inc. 5,000 (190,000)
Total Securities Sold Short
(proceeds $1,436,265) (1,383,187)
TOTAL INVESTMENTS, NET OF OUTSTANDING
CALL OPTIONS WRITTEN AND
SECURITIES SOLD SHORT-101.5%
(cost $49,164,486) 56,430,170
Other assets less liabilities-(1.5%) (847,682)
NET ASSETS-100% $55,582,488
(a) Non-income producing.
(b) Security, or portion thereof, has been segregated to collateralize short
sales and options. This collateral has a total market value of approximately
$4,718,671.
See notes to financial statements.
6
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1996 ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $50,808,624) $58,017,795
Receivable for investment securities sold 1,185,473
Dividends receivable 45,239
Deferred organization expenses and other assets 138,309
Total assets 59,386,816
LIABILITIES
Due to custodian 380,221
Securities sold short, at value (proceeds $1,436,265) 1,383,187
Outstanding call options written, at value
(premiums received $207,873) 204,438
Dividend payable 1,130,757
Payable for investment securities purchased 485,901
Advisory fee payable 54,664
Administration fee payable 11,394
Accrued expenses and other liabilities 153,766
Total liabilities 3,804,328
NET ASSETS $55,582,488
COMPOSITION OF NET ASSETS
Capital stock, at par $ 25,050
Additional paid-in capital 49,343,315
Distributions in excess of net realized gain (1,051,561)
Net unrealized appreciation of investments, short sales and
options written 7,265,684
$55,582,488
NET ASSET VALUE PER SHARE (based on 2,505,000 shares outstanding) $22.19
See notes to financial statements.
7
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1996 ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
_______________________________________________________________________________
INVESTMENT INCOME
Dividends $381,923
Interest 47,652 $ 429,575
EXPENSES
Advisory fee 879,811
Custodian 142,915
Administration fee 141,825
Audit and legal 124,965
Shareholder servicing 56,729
Dividends on securities sold short 33,638
Directors' fees and expenses 28,999
Transfer agency 24,688
Printing 18,404
Registration 16,210
Amortization of organization expenses 4,011
Miscellaneous 13,253
Total expenses before interest 1,485,448
Interest expense on short sales 144,124
Total expenses 1,629,572
Net investment loss (1,199,997)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on long transactions 7,122,169
Net realized loss on short sale transactions (2,983,271)
Net realized loss on written option transactions (119,440)
Net change in unrealized appreciation of
investments, short sales and options written 643,212
Net gain on investments 4,662,670
NET INCREASE IN NET ASSETS FROM OPERATIONS $3,462,673
See notes to financial statements.
8
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
_______________________________________________________________________________
YEAR ENDED NOV. 4,1994*
SEP. 30, TO
1996 SEP. 30,1995
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $(1,199,997) $ (229,164)
Net realized gain on investment, short sale and
option transactions 4,019,458 7,496,386
Net change in unrealized appreciation of
investments, short sales and options written 643,212 6,622,472
Net increase in net assets from operations 3,462,673 13,889,694
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gain on
investments (7,440,855) (3,697,389)
COMMON STOCK TRANSACTIONS
Net proceeds from sale of shares of common stock -0- 50,000,000
Offering costs charged to additional paid-in
capital -0- (731,635)
Total increase (decrease) (3,978,182) 59,460,670
NET ASSETS
Beginning of period 59,560,670 100,000
End of period $55,582,488 $59,560,670
* Commencement of operations.
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance All-Market Advantage Fund, Inc. (the "Fund") was incorporated under
the laws of the state of Maryland on August 16, 1994 and is registered under
the Investment Company Act of 1940 as a non-diversified, closed-end management
investment company. The following is a summary of significant accounting
policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities including securities sold short traded on a national
securities exchange are valued at the closing price on such exchange on the day
of valuation or, if no such closing price is available, at the mean of the bid
and asked price quoted on such day. Listed securities not traded and securities
traded in the over-the-counter market are valued at the mean between the most
recently quoted bid and asked price provided by the principal market makers.
Options are valued at market value or fair value, if no market exists, using
methods determined by the Board of Directors. Securities for which market
quotations are not readily available and illiquid securities which are subject
to limitations as to their resale are valued in good faith, at fair value,
using methods determined by the Board of Directors. Securities which mature in
60 days or less are valued at amortized cost, which approximates market value,
unless this method does not represent fair value.
2. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provision for federal income or excise taxes is
required.
To reflect reclassifications arising from permanent book/tax differences for
the year ended September 30, 1996, (1,199,997) was reclassified from net
investment income to distribution in excess of net realized gain.
3. ORGANIZATION EXPENSES
Organization expenses of approximately $20,000 have been deferred and are being
amortized on a straight-line basis through November, 1999.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income (or expense on securities sold short) is recorded on the
ex-dividend date. Investment transactions are accounted for on the date
securities are purchased or sold. Investment gains and losses are determined on
the identified cost basis.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gains distributions are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles.
NOTE B: ADVISORY, ADMINISTRATIVE FEES AND OTHER AFFILIATED TRANSACTIONS
Under the terms of the Investment Advisory Agreement, the Fund pays Alliance
Capital Management L.P. (the "Investment Adviser"), a monthly fee at an
annualized rate of 1.50% of the Fund's average weekly net assets (the "Basic
Fee") and an adjustment to the Basic Fee based upon the investment performance
of the Fund in relation to the investment record of the Russell 1000 Growth
Index for certain prescribed periods. The Basic Fee, as adjusted, will range
between 1.20% and 1.80% annualized of the Fund's average net assets. The Basic
Fee as adjusted amounted to 1.61% of the Fund's average net assets including
the performance fee of .30% of the Fund's average net assets for the initial
period ending October 31, 1995.
Under the terms of the Administrative Agreement, the Fund pays its
Administrator, Alliance Capital Management L.P., a monthly fee equal to the
annualized rate of .25 of 1% of the Fund's average weekly net assets. The
Administrator provides administrative functions to the Fund as well as other
clerical services. The Administrator also prepares financial and regulatory
reports for the Fund.
10
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
_______________________________________________________________________________
During the year ended September 30, 1996, the Fund entered into a Shareholder
Inquiry Agreement with Alliance Fund Services, Inc. ("AFS"), an affiliate of
the Investment Adviser, whereby the Fund reimburses AFS for costs relating to
servicing phone inquiries for the Fund. The Fund reimbursed AFS$1,254 during
the year ended September 30, 1996 relating to shareholder servicing costs.
Under terms of a Shareholder Servicing Agreement, the Fund pays its Shareholder
Servicing Agent, Paine Webber Inc. a quarterly fee equal to the annualized rate
of .10 of 1% of the Fund's average weekly net assets.
Brokerage commissions paid for the year ended September 30, 1996 on investment
transactions amounted to $195,295, none of which was paid to affiliated brokers.
NOTE C: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments,
short-term options, and U.S. Government securities) aggregated $100,760,138 and
$105,624,691, respectively, for the year ended September 30, 1996.
At September 30, 1996, the cost of investments for federal income tax purposes
was $50,919,267. Accordingly, gross unrealized appreciation of investments was
$8,356,293 and gross unrealized depreciation of investments was $1,257,765
resulting in net unrealized appreciation of $7,098,528.
1. OPTIONS TRANSACTIONS
For hedging purposes, the Fund purchases and writes (sells) options on market
indices and covered put and call options on U.S. securities that are traded on
U.S. 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 of call options is increased by premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written.
Premiums received from writing options which expire unexercised are recorded by
the Fund on the expiration date as realized gains from option transactions. The
difference between the premium and the amount paid on effecting a closing
purchase transaction, including brokerage commissions, is also treated as a
realized gain, or if the premium is less than the amount paid for the closing
purchase transaction, as a realized loss. If a written call option is
exercised, the premium is added to the proceeds from the sale of the underlying
security in determining whether the Fund has realized a gain or loss. If a
written put option is exercised, the premium reduces the cost basis of the
security purchased by the Fund. In writing covered options, the Fund bears the
market risk of an unfavorable change in the price of the security underlying
the written option. Exercise of an option written by the Fund could result in
the Fund selling or buying a security at a price different from the current
market value.
Transactions in options written for the year ended September 30, 1996 were as
follows:
NUMBER PREMIUMS
OF CONTRACTS RECEIVED
------------ -----------
Options outstanding at beginning of period 370 $ 73,205
Options written 10,741 6,363,771
Options terminated in closing purchase transactions (9,551) (5,967,882)
Options expired (1,240) (261,221)
Options outstanding at September 30, 1996 320 $ 207,873
2. SECURITIES SOLD SHORT
The Fund may sell securities short. A short sale is a transaction in which the
Fund sells securities it does not own, but has borrowed, in anticipation of a
decline in the market price of the securities. The Fund is obligated to replace
the borrowed securities at their market price at
11
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
_______________________________________________________________________________
the time of replacement. The Fund's obligation to replace the securities
borrowed in connection with a short sale will be partially secured by
collateral deposited with the broker. In addition, the Fund will consider the
short sale to be a borrowing by the Fund that is subject to the asset
requirements of the 1940 Act. Short sales by the Fund involve certain risks and
special considerations. Possible losses from short sales differ from losses
that could be incurred from a purchase of a security because losses from short
sales may be unlimited, whereas losses from purchases can not exceed the total
amount invested. The Fund is currently paying an interest expense of 8.25% to
the prospective brokers on the market value of the short sales.
NOTE D: CAPITAL STOCK
There are 300,000,000 shares of $.01 par value common stock authorized. Of the
2,505,000 shares outstanding at September 30, 1996, the Investment Adviser
owned 5,000 shares. In addition to the shares issued to the Investment Adviser,
an initial public offering of the Fund's shares during the fiscal period ended
September 30, 1995 resulted in the issuance of 2,500,000 shares of the Fund's
common stock for net proceeds of $50,000,000.
12
FINANCIAL HIGHLIGHTS ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT THE PERIOD
YEAR ENDED NOV. 4, 1994*
SEP. 30, TO SEP. 30,
1996 1995
---------- -------------
Net asset value, beginning of period $23.78 $19.70#
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.48) (.09)
Net realized and unrealized gain on investments 1.86 5.65
Net increase in net asset value from operations 1.38 5.56
LESS: DISTRIBUTIONS
Distributions from net realized gains (2.97) (1.48)
Total distributions (2.97) (1.48)
Net asset value, end of period $22.19 $23.78
Market value, end of period $19.00 $19.50
TOTAL RETURN
Total investment return based on: (a)
Market value 13.26% 5.46%
Net asset value 8.10% 28.60%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $55,582 $59,561
Ratio of expenses to average net assets 2.87% 2.00%(b)
Ratio of expenses to average net assets excluding
interest expense 2.62% 2.00%(b)
Ratio of net investment loss to average net assets (2.11)% (.48)%(b)
Portfolio turnover rate 199% 140%
Average commission rate paid (c) $.0616 -
* Commencement of operations.
# Net of offering costs of $.30.
(a) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
purposes of this calculation, to be reinvested at prices obtained under the
Fund's dividend reinvestment plan. Generally, total investment return based on
net asset value will be higher than total investment return based on market
value in periods where there is an increase in the discount or a decrease in
the premium of the market value to the net asset value from the beginning to
the end of such periods. Conversely, total investment return based on the net
asset value will be lower than total investment return based on market value in
periods where there is a decrease in the discount or an increase in the premium
of the market value to the net asset value from the beginning to the end of
such periods. Total return for a period of less than one year is not annualized.
(b) Annualized.
(c) For fiscal years beginning on or after September 1, 1995, a Fund is
required to disclose its average commission rate per share for trades on which
commissions are charged.
13
REPORT OF INDEPENDENT ACCOUNTANTS ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
_______________________________________________________________________________
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF ALLIANCE ALL-MARKET ADVANTAGE
FUND, INC.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Alliance All-Market Advantage
Fund, Inc. (the "Fund") at September 30, 1996, the results of its operations
for the year then ended, and the changes in its net assets and the financial
highlights for the year then ended and for the period November 4, 1994
(commencement of operations) through September 30, 1995, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at September 30, 1996 by
correspondence with the custodian and brokers, and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
November 14, 1996
1996 FEDERAL TAX NOTICE (UNAUDITED)
_______________________________________________________________________________
For the year ended September 30, 1996, the Fund paid to shareholders $2.97 of
which $0.782 per share has been designated as long term capital gain dividends
for federal income tax purposes.
14
ADDITIONAL INFORMATION ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
_______________________________________________________________________________
Shareholders whose shares are registered in their own names will automatically
be participants in the Dividend Reinvestment and Cash Purchase Plan (the
"Plan"), pursuant to which dividends and capital gain distributions to
shareholders will be paid in or reinvested in additional shares of the Fund
(the Dividend Shares"). Bank of New York (the "Agent") will act as agent for
participants under the Plan. Shareholders whose shares are held in the name of
a broker or nominee should contact such broker or nominee to determine whether
or how they may participate in the Plan.
If the Board declares an income distribution or determines to make a capital
gain distribution payable either in shares or in cash, as holders of the Common
Stock may have elected, non-participants in the Plan will receive cash and
participants in the Plan will receive the equivalent in shares of Common Stock
of the Fund valued as follows:
(i) If the shares of Common Stock are trading at net asset value or at a
premium above net asset value at the time of valuation, the Fund will issue new
shares at the greater of net asset value or 95% of the then current market
price.
(ii) If the shares of Common Stock are trading at a discount from net asset
value at the time of valuation, the Plan Agent will receive the dividend or
distribution in cash and apply it to the purchase of the Fund's shares of
Common Stock in the open market on the New York Stock Exchange or elsewhere,
for the participants' accounts. Such purchases will be made on or shortly after
the payment date for such dividend or distribution and in no event more than 30
days after such date except where temporary enrollment or suspension of
purchase is necessary to comply with Federal securities laws. If, before the
Plan Agent has completed its purchases, the market price exceeds the net asset
value of a share of Common Stock, the average purchase price per share paid by
the Plan Agent may exceed the net asset value of the Fund's shares of Common
Stock, resulting in the acquisition of fewer shares than if the dividend or
distribution had been paid in shares issued by the Fund.
The Agent will maintain all shareholders' accounts in the Plan and furnish
written confirmation of all transactions in the account, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Agent in non-certificate form in the name of
the participant, and each shareholder's proxy will include those shares
purchased or received pursuant to the Plan.
There will be no charges with respect to shares issued directly by the Fund to
satisfy the dividend reinvestment requirements. However, each participant will
pay a pro rata share of brokerage commissions incurred with respect to the
Agent's open market purchases of shares. In each case, the cost per share of
shares purchased for each shareholder's accounts will be the average cost,
including brokerage commissions, of any shares purchased in the open market
plus the cost of any shares issued by the Fund.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income taxes that may be payable (or required to be
withheld) on dividends and distributions.
Experience under the Plan may indicate that changes are desirable. Accordingly,
the Fund reserves the right to suspend or terminate the Plan as applied to any
voluntary cash payments made and any dividend or distribution paid subsequent
to written notice of the change sent to participants in the Plan at least 90
days before the record date for such dividend or distribution. The Plan may
also be amended or terminated by the Agent on at least 90 days' written notice
to participants in the Plan. All correspondence concerning the Plan should be
directed to the Agent at the Bank of New York, 101 Barclay Street, New York, NY
10286.
Since the filing of the most recent amendments to the Fund's registration
statement with the Securities and Exchange Commission, there have been (i) no
material changes in the Fund's investment objectives or policies, (ii) no
changes to the Fund's charter or by-laws that would delay or prevent a change
of control of the Fund, (iii) no material changes in the principal risk factors
associated with investment in the Fund, and (iv) no change in the person
primarily responsible for the day-to-day management of the Fund's portfolio,
who is Alfred Harrison, the Senior Vice President of the Fund.
15
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
ROBERT C. WHITE (1)
OFFICERS
ALFRED HARRISON, SENIOR VICE PRESIDENT
PETER W. ADAMS, VICE PRESIDENT
THOMAS BARDONG, VICE PRESIDENT
JACK KOLTES, VICE PRESIDENT
DANIEL V. PANKER, VICE PRESIDENT
ERIC PERKINS, VICE PRESIDENT
MICHAEL J. REILLY, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
JOSEPH J. MANTINEO, CONTROLLER
ADMINISTRATOR
ALLIANCE CAPITAL MANAGEMENT L.P.
1345 Avenue of the Americas
New York, NY 10105
DIVIDEND PAYING AGENT, TRANSFER
AGENT AND REGISTRAR
THE BANK OF NEW YORK
101 Barclay Street
New York, NY 10286
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036-2798
CUSTODIAN
THE BANK OF NEW YORK
48 Wall Street
New York, NY 10286
(1) Member of the Audit Committee.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its Common Stock in the open market.
This report, including the financial statements herein, is transmitted to
the shareholders of Alliance All-Market Advantage Fund, Inc. for their
information. The financial information included herein is taken from the
records of the Fund. This is not a prospectus, circular or representation
intended for use in the purchase of shares of the Fund or any securities
mentioned in this report.
16
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
Summary of General Information
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objective is to seek long-term growth of capital through
all market conditions. Consistent with the investment style of the Adviser's
Large-Cap Growth Group, the Fund will invest in a core portfolio of equity
securities (common stocks, securities convertible into common stocks and rights
and warrants to subscribe for or purchase common stocks) of large,
intensely-researched, high-quality companies that, in the judgement of the
Adviser, are likely to achieve superior earnings growth.
SHAREHOLDER INFORMATION
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transaction section of newspapers under the designation
"AllncAll". The Fund's NYSE trading symbol is "AMO". Weekly comparative net
asset value (NAV) and market price information about the Fund is published each
Monday in THE WALL STREET JOURNAL, each Sunday in THE NEW YORK TIMES and each
Saturday in BARRON'S, as well as other newspapers ina table called "Closed-End
Funds". Additional information about the Fund is available by calling
1-800-221-5672.
DIVIDEND REINVESTMENT PLAN
All shareholders whose shares are registered in their own names will have all
distributions reinvested automatically in additional shares, unless a
shareholder elects to receive cash.
Shareholders whose shares are held in the name of a broker or nominee will
automatically have distributions reinvested by the broker or nominee in
additional shares under the Plan, unless the automatic reinvestment service is
not provided by the particular broker or nominee or the Shareholder elects to
receive distributions in cash.
The Plan provides you with a convenient way to reinvest your dividends and
capital gains in additional shares of the Fund, thereby enabling you to
compound your returns from the Fund.
A brochure describing the Plan is available from the Plan Agent, The Bank of
New York, by calling 1-800-432-8224.
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
ALLIANCE CAPITAL
INVESTING WITHOUT THE MYSTERY
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER, ALLIANCE
CAPITAL MANAGEMENT L.P.
AMAAR
