ALLIANCE ALL-MARKET ADVANTAGE FUND
SEMI-ANNUAL REPORT
MARCH 31, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
May 27, 1998
Dear Shareholder:
We are pleased to provide the semi-annual report to shareholders for Alliance
All-Market Advantage Fund, a closed-end fund which trades 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 assets in a core portfolio of stocks of large, intensely
researched, high quality companies that we believe are likely to achieve
superior earnings growth. The core portfolio typically consists 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 U.S. and
non-U.S. companies that we believe have exceptional growth potential.
INVESTMENT RESULTS
The following table shows how the Fund performed during the six and 12-month
periods ended March 31, 1998. For comparison, we have shown returns for the
overall U.S. stock market, represented by the unmanaged S&P 500 Stock Index and
the Russell 1000 Growth Stock Index. As you can see, your Fund substantially
outperformed both benchmarks, posting a 19.01% return at NAV for the six-month
period, and a 71.06% return at NAV for the 12-month period ending March 31,
1998. AMO benefited from overweightings in technology, health care and
financials, as well as good stock selections within those sectors.
INVESTMENT RESULTS*
Periods Ended March 31, 1998
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE ALL-MARKET ADVANTAGE FUND 19.01% 71.06%
S&P 500 STOCK INDEX 17.21% 47.96%
RUSSELL 1000 GROWTH STOCK INDEX 16.90% 49.46%
* THE FUND'S INVESTMENT RESULTS ARE CUMULATIVE TOTAL RETURNS FOR THE PERIOD,
AND ARE BASED ON THE NET ASSET VALUE AS OF MARCH 31, 1998. ALL FEES AND
EXPENSES RELATED TO THE OPERATION OF THE FUND HAVE BEEN DEDUCTED. RETURNS FOR
THE FUND INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE PERIOD.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE S&P 500 STOCK INDEX IS AN UNMANAGED INDEX OF 500 U.S. COMPANIES. THE
RUSSELL 1000 GROWTH STOCK INDEX CONSISTS OF 1000 OF THE LARGEST STOCKS
REPRESENTING APPROXIMATELY 87% OF THE U.S. EQUITY MARKET. THE INDICES REFLECT
NO FEES OR EXPENSES. AN INVESTOR CANNOT INVEST DIRECTLY IN THE INDICES.
During the six-month period ended March 31, 1998, AMO paid two distributions
totaling $3.27 per share. The Fund's net asset value (NAV) ended the period at
$36.21 per share, up from $33.72 per share on September 30, 1997, due to strong
Fund performance.
THE SIX MONTHS IN REVIEW
The six months ending March 31, 1998 were a continuation of the strong
performance of the last three years. During the market volatility of the
December quarter, largely caused by the Asian economic and currency events, we
added to our favorite technology stocks, namely Dell Computer Corp., Nokia
Corp., and Ericsson Telephone Co., as well as financial stocks, including call
positions in Chase Manhattan Corp. and Citicorp. We determined that the
individual company fundamentals of these firms had not been measurably
impacted, and their lower valuations provided a strong buying opportunity. This
late 1997 portfolio activity is primarily responsible for the strong Fund
performance during the first quarter of 1998.
During the March quarter, we reduced our technology exposure, mainly by
reducing our Compaq Computer
1
ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
Corp. and Intel Corp. holdings, due to the inventory buildup that was occurring
within the personal computer (PC) industry. We may again increase our
technology exposure if the PC oversupply situation corrects itself, and if
demand remains strong. Within the technology sector, we continue to have our
largest holdings in the telecommunication sector, represented by stocks such as
Cisco Systems, Inc., Nokia Corp., Ericsson Telephone Co. and Lucent
Technologies, Inc. The telecommunication sector continues to benefit from the
growth in wireless demand and the need for more capacity on the wireline.
In the health care sector, our performance was enhanced by large call positions
in four pharmaceutical companies: Merck & Co., Inc., Pfizer, Inc.,
Schering-Plough Corp. and Bristol-Myers Squibb Co. These stocks benefited from
strong earnings growth (over 15% annually), strong new pipelines of drugs and a
flight to large capitalization, liquid names.
The financial sector continued to perform well, whether it was banks, brokerage
companies or consumer finance companies. Our largest holding, MBNA Corp.,
benefited from taking market share in the fast growing credit card industry.
Several of our holdings benefited from consolidation within the financial
sectors, including Citicorp, Travelers Group, Inc., Merrill Lynch & Co., Inc.,
Morgan Stanley, Dean Witter, Discover & Co. Consolidation in this sector is
occurring in an effort to grow revenue through cross-selling more products
(traditional banking, insurance and brokerage products) and eliminating
duplicate expenses. We believe more mergers and acquisitions will occur in this
sector as financial companies try to become "one stop shopping" conglomerates.
The short positions in the Fund constrained performance during the quarter.
Specifically, our largest individual short position was up 40% for the quarter
despite our view that its major competitor, Intel, with its large cost
advantage, is now using price as a major competitive weapon in the sub-$1,000
PC category. In addition, performance was negatively impacted by our continued
primary short strategy of writing at-the-money or in-the-money calls on the
Indices. We continue to use instruments on the S&P 500 and NASDAQ indices for
over 90% of our short positions, with a keen attention to preserving the Fund's
capital in the event of sharp market decline.
MARKET ENVIRONMENT AND OUTLOOK
As we look forward, it is important to emphasize the tremendous strengths of
the U.S. market, both in absolute and relative terms. In fact, during the March
quarter, the announced macro-economic data, particularly with regard to
inflation and the related productivity reports, reinforced our long-term
bullishness for financial assets. Therefore, even though historic models
comparing equity valuations to long-term bond yields calculate the market as
15% overvalued, we believe the key factor for equity valuations is expected
inflation, not bond yields. Inflation, as measured by the Consumer Price Index,
(CPI), averaged less than 1% for the March quarter, and we are projecting a
1.5%-2.0% increase in the CPI for all of calendar year 1998. This strong
combination of moderate growth, modest inflation, technological superiority,
and centrist fiscal, monetary and political policies continues to provide the
healthy fundamental backdrop to sustain and move this U.S. market higher. Add
to this mix the powerful flow of money into equities, and we would conclude
that the arguments are persuasive for staying the equity course.
However, it is important to recognize that there are potential fundamental
negatives on the horizon which, in order of importance, are the still unstable
Asian situation, the Year 2000 problem and the European currency conversion to
eurodollars.
The Asian situation is actually a compilation of several independent, yet
intertwined events. The Japanese growth engine needs a dramatic jump-start in
the form of fiscal stimulus. Bogged down by ineffective leadership, banking and
real estate problems, and cultural impediments, it will take time to get Japan
back on its feet to spur regional growth. China's economy continues to work
through its Communist past. However, a weak banking and
industrial/transportation network will likely slow growth from the
state-targeted 8% levels. This could secondarily delay other regional economic
recoveries. South Korea's private and public sectors need to focus more on
corporate profits rather than on market share and jobs. Malaysia and Indonesia
probably face the greatest difficulties due to their long histories of bureau
2
ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
cratic corruption. In aggregate, we believe that the Asian situation will serve
as an economic drag of unknown magnitude, but probably does not represent a
systematic disruption to the world's financial markets. It is worthwhile to
remember that, with regard to the U.S., Asia is primarily a source of
production, rather than a source of potential demand, for end products: only
8%-10% of U.S. corporate profits are derived from Asian sales.
As we approach the millennium, Year 2000 computer and 1999 Euro conversion
issues could increase uncertainty regarding our computer readiness and
security. This is particularly true for governments and the financial sector,
with Europe and Asia a step behind the U.S. in terms of preparedness.
On the positive side of fundamentals, there is increased likelihood that, as
the European Monetary Union comes together in Europe next year, there will be a
convergence between U.S. real bond yields and those in Germany and France,
which are 50 basis points lower. In addition, there is an ongoing positive
reaction by U.S. individual investors to the more favorable 18-month 20%
long-term capital gains tax rate, which should, at the very least, establish
longer time horizons.
PORTFOLIO STRATEGY
Weighing both sides, we are still inclined to believe that equities, under the
weight of money, will work higher, particularly on a medium term basis. We do
not intend to deviate, however, from our current strategy of continuing to tone
down portfolio aggressiveness into periods of market euphoria. We are keeping
portfolios balanced between sectors and carrying a more diversified list of
stocks than we have on many previous occasions. We have reduced our technology
holdings and built up positions in domestic consumer and financial stocks. We
have also taken down our net long exposure to the market. In short, we hope to
continue participating fully in any further absolute equity rise, but we are
prepared to sacrifice the possibility of some relative performance in a
continued strong bull market because of these actions. It seems sensible to
take out such "insurance."
QUARTERLY DISTRIBUTION
The Fund will distribute to its shareholders an amount equal to 2.5% of the
Fund's total net assets as of the beginning of each of the first three quarters
of the calendar year. With respect to the fourth quarter, an amount equal to at
least 2.5% of the total net assets will be distributed to shareholders. If the
distribution exceeds the Fund's aggregate net investment income and net
realized capital gains with respect to a given year, the difference will
generally constitute a tax-free return of capital to shareholders.
Thank you for your continued interest in Alliance All-Market Advantage Fund. We
look forward to reporting to you again on market activity and the Fund's
investment results in the coming periods.
Sincerely,
John D. Carifa
Chairman and President
Alfred Harrison
Senior Vice President
Michael J. Reilly
Senior Vice President
3
TEN LARGEST HOLDINGS
MARCH 31, 1998 (UNAUDITED) ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
MBNA Corp. (a) $ 5,339,748 5.9%
Dell Computer Corp. 4,715,400 5.2
Cisco Systems, Inc. 4,697,362 5.2
Tyco International, Ltd. (a) 4,236,375 4.7
Nokia Corp. ADR 4,209,562 4.6
Microsoft Corp. 3,186,200 3.5
Merrill Lynch & Co., Inc. 3,071,000 3.4
Merck & Co., Inc. (a) 2,898,031 3.2
Northwest Airlines, Inc. Cl. A 2,849,962 3.2
Compaq Computer Corp. 2,846,250 3.1
$ 38,049,890 42.0%
(a) Adjusted for market value of call options purchased.
4
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998 (UNAUDITED) ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-67.4%
TECHNOLOGY-27.4%
COMMUNICATION EQUIPMENT-8.6%
Ericsson (L.M.) Telephone Co. ADR(a) 42,000 $ 1,997,625
Lucent Technologies, Inc. 12,300 1,572,862
Nokia Corp. ADR(b) 39,000 4,209,562
------------
7,780,049
COMPUTER HARDWARE-8.3%
Compaq Computer Corp.(c) 110,000 2,846,250
Dell Computer Corp.(c)(d) 69,600 4,715,400
------------
7,561,650
COMPUTER SOFTWARE-3.5%
Microsoft Corp.(c)(d) 35,600 3,186,200
NETWORKING SOFTWARE-5.2%
Cisco Systems, Inc.(c) 68,700 4,697,362
SEMICONDUCTOR COMPONENTS-1.8%
Intel Corp. 20,500 1,600,281
------------
24,825,542
FINANCE-18.3%
BANKING-REGIONAL-1.9%
Banc One Corp. 10,000 632,500
Norwest Corp. 27,000 1,122,188
------------
1,754,688
BROKERAGE & MONEY MANAGEMENT-3.4%
Merrill Lynch & Co., Inc. 37,000 3,071,000
INSURANCE-2.9%
Progressive Corp. 11,000 1,481,563
Travelers Group, Inc.
Warrants, expiring 7/31/98(c) 8,000 1,132,000
------------
2,613,563
MORTGAGE BANKING-3.3%
Fannie Mae Corp. 27,000 1,707,750
H. F. Ahmanson & Co. 17,400 1,348,500
------------
3,056,250
MISCELLANEOUS-6.8%
Associates First Capital Corp. Cl. A 12,000 948,000
Household International, Inc. 11,200 1,542,800
MBNA Corp.(d) 102,150 3,658,247
------------
6,149,047
------------
16,644,548
CONSUMER SERVICES-11.7%
AIRLINES-6.0%
Northwest Airlines, Inc. Cl. A(c) 46,200 2,849,962
UAL Corp.(c) 28,300 2,630,131
------------
5,480,093
BROADCASTING & CABLE-1.8%
AirTouch Communications, Inc.(c) 20,000 978,750
Tele-Communications, Inc.-
Liberty Media Group Cl. A(c) 19,500 670,313
------------
1,649,063
ENTERTAINMENT & LEISURE-2.4%
Carnival Corp. 7,000 488,250
Premier Parks, Inc. (c) 28,400 1,647,200
------------
2,135,450
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
SHARES OR
CONTRACTS VALUE
- -------------------------------------------------------------------------------
RETAIL-GENERAL MERCHANDISE-1.5%
Home Depot, Inc. 7,500 $ 505,781
Kohl's Corp.(c) 10,200 833,850
------------
1,339,631
------------
10,604,237
MULTI-INDUSTRY-3.3%
CAPITAL GOODS-3.3%
Tyco International, Ltd. 55,000 3,004,375
CONSUMER STAPLES-2.8%
BEVERAGES-1.1%
Coca-Cola Co. 12,500 967,969
HOUSEHOLD PRODUCTS-1.2%
Colgate-Palmolive Co. 13,000 1,126,125
TOBACCO-0.5%
Philip Morris Cos., Inc. 10,500 437,719
------------
2,531,813
HEALTHCARE-2.3%
DRUGS-1.3%
Pfizer, Inc. 12,000 1,196,250
MEDICAL PRODUCTS-1.0%
Medtronic, Inc. 17,400 902,625
------------
2,098,875
ENERGY-1.6%
OIL SERVICE-1.6%
Halliburton Co. 29,000 1,455,438
Total Common Stocks & Other Investments
(cost $35,048,766) 61,164,828
CALL OPTIONS PURCHASED-36.3%(C)
AirTouch Communications, Inc.
expiring Jan '99 @ $20 550 1,646,562
expiring Jan '00 @ $20 150 464,063
Banc One Corp.
expiring Jan '00 @ $45 70 154,875
Bristol-Myers Squibb Co.
expiring Jan '99 @ $60 280 1,282,750
expiring Jan '00 @ $60 100 486,250
Cendant Corp.
expiring Jan '00 @ $20 250 546,875
Chase Manhattan Corp.
expiring Jan '99 @ $60 185 1,392,125
Citicorp
expiring Jan '99 @ $60 95 795,625
Coca-Cola Co.
expiring Jan '99 @ $35 50 220,000
Dayton Hudson Corp.
expiring Jan '99 @ $45 140 623,000
Ford Motor Co.
expiring Jan '99 @ $30 400 1,390,000
General Electric Co.
expiring Jan '99 @ $30 100 568,750
expiring Jan '00 @ $50 100 403,750
Gillette Co.
expiring Jan '99 @ $55 110 719,125
Home Depot, Inc.
expiring Jan '99 @ $30 290 1,680,187
Intel Corp.
expiring Jan '99 @ $25 106 572,400
MBNA Corp.
expiring Jan '99 @ $15 180 389,250
expiring Jan '99 @ $16.625 225 666,563
expiring Jan '99 @ $20 100 165,000
expiring Jan '99 @ $25 135 460,688
MCI Communications Corp.
expiring Apr '98 @ $30 850 1,652,187
Merck & Co., Inc.
expiring Jan '99 @ $55 250 1,859,375
expiring Jan '99 @ $60 90 626,625
expiring Jan '00 @ $80 75 412,031
Morgan Stanley, Dean Witter, Discover & Co.
expiring Jan. '99 @ $30 400 1,745,000
NationsBank Corp.
expiring Jan '99 @ $35 230 882,625
6
ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
SHARES OR
CONTRACTS VALUE
- -------------------------------------------------------------------------------
Pfizer, Inc.
expiring Jan '99 @ $30 150 $ 1,057,500
expiring Jan '99 @ $50 100 516,250
Philip Morris Cos., Inc.
expiring Jan '99 @ $23.375 745 1,387,563
expiring Jan '99 @ $30 400 510,000
Schlumberger, Ltd.
expiring Jan '00 @ $40 30 117,750
Schering-Plough Corp.
expiring Jan '99 @ $25 460 2,610,500
Tyco International, Ltd.
expiring Jan '00 @ $30 440 1,232,000
United Healthcare Corp.
expiring Jan '99 @ $25 235 962,031
United Technologies Corp.
expiring Jan '99 @ $50 260 1,127,750
Walt Disney Co.
expiring Jan '99 @ $50 275 1,605,313
Total Call Options Purchased
(cost $21,147,566) 32,932,338
TOTAL INVESTMENTS-103.7%
(cost $56,196,332) 94,097,166
CALL OPTIONS WRITTEN-(0.8%)(C)
Chicago Board Options Exchange
NASDAQ 100 Index
expiring Apr '98 @ $1,180 50 (281,250)
expiring Apr '98 @ $1,220 10 (26,750)
Standard & Poor's 500 Index
expiring Apr '98 @ $1,070 30 (149,250)
expiring Apr '98 @ $1,080 40 (132,000)
expiring Apr '98 @ $1,090 30 (82,500)
expiring Apr '98 @ $1,095 20 (47,000)
expiring Apr '98 @ $1,100 10 (21,000)
expiring Apr '98 @ $1,110 15 (22,875)
Total Call Options Written
(premiums received $494,743) (762,625)
SECURITIES SOLD SHORT-(1.1%)(C)
Advanced Micro Devices,Inc. 29,000 (842,813)
Polaris Industries, Inc. 5,000 (185,000)
Total Securities Sold Short
(proceeds $866,668) (1,027,813)
TOTAL INVESTMENTS, NET OF OUTSTANDING
CALL OPTIONS WRITTEN AND SECURITIES
SOLD SHORT - 101.8%
(cost $54,834,921) 92,306,728
Other assets less liabilities-(1.8%) (1,609,761)
NET ASSETS-100% $ 90,696,967
(a) Country of origin-Sweden.
(b) Country of origin-Finland.
(c) Non-income producing.
(d) Security, or portion thereof, has been segregated to collateralize short
sales and options. This collateral has a total market value of approximately
$4,570,688.
Glossary:
ADR - American Depositary Receipt.
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998 (UNAUDITED) ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $56,196,332) $ 94,097,166
Receivable for investment securities sold 3,248,802
Dividends receivable 105,231
Deferred organization expenses and other assets 30,167
Total assets 97,481,366
LIABILITIES
Due to custodian 742,643
Securities sold short, at value (proceeds $866,668) 1,027,813
Outstanding call options written, at value
(premiums received $494,743) 762,625
Payable for investment securities purchased 2,008,076
Dividend payable 1,903,800
Advisory fee payable 128,705
Administration fee payable 18,735
Accrued expenses and other liabilities 192,002
Total liabilities 6,784,399
NET ASSETS $ 90,696,967
COMPOSITION OF NET ASSETS
Capital stock, at par $ 25,050
Additional paid-in capital 49,343,315
Accumulated net investment loss (845,501)
Accumulated net realized gain on investment transactions 4,702,296
Net unrealized appreciation of investments, short sales
and options written 37,471,807
$ 90,696,967
NET ASSET VALUE PER SHARE (based on 2,505,000 shares outstanding) $36.21
See notes to financial statements.
8
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes
withheld of $10,345) $ 176,353
Interest 42,962 $ 219,315
EXPENSES
Advisory fee 716,987
Administrative 104,031
Custodian 75,786
Shareholder servicing 41,530
Audit and legal 35,706
Printing 18,519
Directors' fees and expenses 15,500
Transfer agency 8,861
Registration 6,908
Dividends on securities sold short 3,426
Amortization of organization expenses 2,000
Miscellaneous 3,843
Total expenses before interest 1,033,097
Interest expense on short sales 31,719
Total expenses 1,064,816
Net investment loss (845,501)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
SHORT SALES AND OPTIONS WRITTEN
Net realized gain on long transactions 9,801,241
Net realized gain on short sale transactions 114,851
Net realized loss on written option
transactions (1,099,256)
Net change in unrealized appreciation of
investments, short sales and options written 6,439,529
Net gain on investments 15,256,365
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 14,410,864
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1998 SEPTEMBER 30,
(UNAUDITED) 1997
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (845,501) $ (1,439,672)
Net realized gain on investment, short sale
and written option transactions 8,816,836 12,310,009
Net change in unrealized appreciation of
investments, short sales and options written 6,439,529 23,766,594
Net increase in net assets from operations 14,410,864 34,636,931
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments (8,191,351) (5,741,965)
Total increase 6,219,513 28,894,966
NET ASSETS
Beginning of year 84,477,454 55,582,488
End of period $ 90,696,967 $ 84,477,454
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998 (UNAUDITED) ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
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 financial statements have been prepared in conformity
with generally accepted accounting policies which require management to make
certain estimates and assumptions that affect the reported amounts of assets
and liabilities in the financial statements and amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are
generally valued at the last reported sales price or if no sale occurred, at
the mean of the closing bid and asked prices on that day. Readily marketable
securities traded in the over-the-counter market, securities listed on a
foreign securities exchange whose operations are similar to the U.S.
over-the-counter market, and securities listed on a national securities
exchange whose primary market is believed to be over-the-counter, are valued at
the mean of the current bid and asked prices. U.S. government and fixed income
securities which mature in 60 days or less are valued at amortized cost, unless
this method does not represent fair value. Securities for which current market
quotations are not readily available are valued at their fair value as
determined in good faith by, or in accordance with procedures adopted by, the
Fund's Board of Directors. Fixed income securities may be valued on the basis
of prices obtained from a pricing service when such prices are believed to
reflect the fair value of such securities.
2. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provision for federal income or excise taxes is
required.
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 and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment; temporary differences do not require such
reclassification.
NOTE B: ADVISORY, ADMINISTRATIVE FEES AND OTHER AFFILIATED TRANSACTIONS
Under the terms of an 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. During the six months ended March 31,
1998, the fee as adjusted, amounted to 1.74% of the Fund's average net assets.
Under the terms of an 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
11
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
Administrator provides administrative functions to the Fund as well as other
clerical services. The Administrator also prepares financial and regulatory
reports for the Fund.
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Fund
Services, Inc. ("AFS"), an affiliate of the Investment Adviser, the Fund
reimburses AFS for costs relating to servicing phone inquiries for the Fund.
The Fund reimbursed AFS$1,215 during the six months ended March 31, 1998.
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 on investment transactions for the six months ended
March 31, 1998 amounted to $149,669, none of which was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp., an affiliate of the Adviser.
NOTE C: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments,
short-term options, and U.S. government securities) aggregated $53,084,466 and
$56,486,404, respectively, for the six months ended March 31, 1998. There were
no purchases or sales of U.S. government or government agency obligations for
the six months ended March 31, 1998.
At March 31, 1998, the cost of investments for federal income tax purposes was
$54,887,743. Accordingly, gross unrealized appreciation of investments was
$38,097,857 and gross unrealized depreciation of investments was $678,872
resulting in net unrealized appreciation of $37,418,985.
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 the premium and any 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. Losses from written market index options may be unlimited.
12
ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
Transactions in options written for the six months ended March 31, 1998 were as
follows:
NUMBER PREMIUMS
OF CONTRACTS RECEIVED
------------ -------------
Options outstanding at beginning of year 350 $ 1,191,160
Options written 7,365 13,888,785
Options terminated in closing
purchase transactions (7,435) (14,305,811)
Options expired (75) (279,391)
Options outstanding at March 31, 1998 205 $ 494,743
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 the time of replacement. The
Fund's obligation to replace the securities borrowed in connection with a short
sale will be fully 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 coverage 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 6.25% 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 March 31, 1998, the Investment Adviser owned
5,000 shares. During the six months ended March 31, 1998 and the year ended
September 30, 1997, the Fund did not issue shares in connection with the
dividend reinvestment plan.
13
FINANCIAL HIGHLIGHTS ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30, NOV. 4, 1994(A)
MARCH 31, 1998 ------------------------ TO SEPT. 30,
(UNAUDITED) 1997 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $33.72 $22.19 $23.78 $19.70(b)
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.33) (.58) (.48) (.09)
Net realized and unrealized gain on
investment transactions 6.09 14.40 1.86 5.65
Net increase in net asset value
from operations 5.76 13.82 1.38 5.56
LESS: DISTRIBUTIONS
Distributions from net realized gains (3.27) (2.29) (2.97) (1.48)
Net asset value, end of period $36.21 $33.72 $22.19 $23.78
Market value, end of period $36.75 $31.188 $19.00 $19.50
TOTAL RETURN
Total investment return based on: (c)
Market value 30.55% 79.27% 13.26% 5.46%
Net asset value 19.01% 65.66% 8.10% 28.60%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $90,697 $84,477 $55,582 $59,561
Ratio of expenses to average net assets 2.58%(d) 2.48% 2.87% 2.00%(d)
Ratio of expenses to average net assets
excluding interest expense 2.50%(d)(e) 2.43%(e) 2.62%(e) 2.00%(d)
Ratio of net investment loss to average
net assets (2.05)%(d) (2.07)% (2.11)% (.48)%(d)
Portfolio turnover rate 66% 105% 199% 140%
Average commission rate paid (f) $.0447 $.0504 $.0616 --
</TABLE>
(a) Commencement of operations.
(b) Net of offering costs of $.30.
(c) 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.
(d) Annualized.
(e) Net of interest expense of .08%, .05% and .25%, respectively, on short
sales (see Note C).
(f) 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.
14
ADDITIONAL INFORMATION ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
SUPPLEMENTAL PROXY INFORMATION
The Annual Meeting of Shareholders of the Alliance All-Market Advantage Fund
was held on January 8, 1998. The description of each proposal and number of
shares are as follows:
<TABLE>
<CAPTION>
SHARES SHARES VOTED
VOTED FOR WITHOUT AUTHORITY
------------- -----------------
<S> <C> <C>
1. To elect directors: Class One Directors
(term expires 2001)
David H. Dievler 1,761,343 13,747
Clifford L. Michel 1,762,913 12,177
Donald J. Robinson 1,762,913 12,177
</TABLE>
<TABLE>
<CAPTION>
SHARES SHARES VOTED SHARES VOTED
VOTED FOR AGAINST ABSTAIN
------------- ------------- ---------------
<S> <C> <C> <C>
2. To ratify the selection of Price Waterhouse LLP
as the Fund's independent auditors for the Fund's
fiscal year ending September 30, 1998: 1,742,652 6,960 25,478
</TABLE>
15
ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
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)
DONALD J. ROBINSON (1)
ROBERT C. WHITE (1)
OFFICERS
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
ALFRED HARRISON, SENIOR VICE PRESIDENT
THOMAS J. BARDONG, VICE PRESIDENT
JOHN A. KOLTES, VICE PRESIDENT
DANIEL V. PANKER, VICE PRESIDENT
MICHAEL J. REILLY, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, 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 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
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".
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.
For questions concerning shareholder account information, or if you would like
a brochure describing the Dividend Reinvestment Plan, please call The Bank of
New York at 1-800-432-8224.
ALLIANCE ALL-MARKET ADVANTAGE FUND
1345 Avenue of the Americas
New York, New York 10105
ALLIANCE CAPITAL
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER, ALLIANCE
CAPITAL MANAGEMENT L.P.
AMASR
