ALLIANCE ALL-MARKET ADVANTAGE FUND
SEMI-ANNUAL REPORT
MARCH 31, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
May 28,1999
Dear Shareholder:
This report discusses investment results and market activity for Alliance
All-Market Advantage Fund (the "Fund"), a closed-end fund which trades under
the New York Stock Exchange symbol "AMO," for the semi-annual reporting period
ended March 31, 1999. Your Fund's investment objective is to seek long-term
growth of capital through all market conditions. The Fund 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, 1999. For comparison, we have shown returns for the
overall U.S. stock market, represented by the unmanaged Standard & Poor's (S&P)
500 Stock Index, and the Russell 1000 Growth Stock Index.
The Fund and its benchmarks all experienced positive performance over the six-
and 12-month periods ended March 31, 1999, with the Fund outperforming both the
S&P 500 Stock Index and the Russell 1000 Growth Stock Index over both periods.
The Fund's strong performance during the year resulted from good stock
selection in general, and strong stock selection within the technology and
consumer sectors in particular.
INVESTMENT RESULTS*
Periods Ended March 31, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
---------- -----------
ALLIANCE ALL-MARKET ADVANTAGE FUND 50.77% 43.00%
S&P 500 STOCK INDEX 28.74% 19.81%
RUSSELL 1000 GROWTH STOCK INDEX 34.79% 28.11%
* THE FUND'S INVESTMENT RESULTS ARE TOTAL RETURNS FOR THE PERIOD, AND ARE
BASED ON THE NET ASSET VALUE AS OF MARCH 31, 1999. 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 AND IS
A COMMON MEASURE OF THE PERFORMANCE OF THE OVERALL U.S. STOCK MARKET. 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 12-month period ended March 31, 1999, the Fund paid four
distributions totaling $3.77 per share. The Fund's net asset value (NAV) ended
the period at $47.09 per share.
SIX MONTHS IN REVIEW
The market experienced a decent recovery during the period under review after
enduring a 20% correction during the three months prior to the review period.
Investors focused on the strong underlying fundamentals of the U.S. market
despite uncertainty in several emerging markets. The focus on the U.S. market's
strong underlying fundamentals gave us conviction to take advantage of the
weakness in several of our favorite names during the correction last fall. By
adding to our favorite names, we were able to benefit when the market recovered
during the review period. In essence, we used our "V-Factor" methodology to
take advantage of the volatility in the market. The "V-Factor" is a portfolio
management strategy whereby we add to the Fund's core holdings when we feel
they are an exceptional value, and sell some of the Fund's positions when we
feel that they have become
1
ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
overvalued in the market. Thus, over the past six months we have added to our
favorite names as they have traded down the left hand side of the "V," and sold
some of the Fund's holdings as they traded up the right hand side of the "V."
Besides trading around the "V," the Fund's strong outperformance over the
previous six months can also be attributed to solid stock selection. Several of
the Fund's technology holdings have rebounded nicely since September 1998,
including its largest holding, Nokia Corp., as well as Cisco Systems, Inc., EMC
Corp., and Microsoft Corp. The Fund's large weighting in retail (Wal-Mart
Stores, Inc., Home Depot, Inc., and Dayton Hudson Corp.) helped performance as
the U.S. consumer continued to spend given the strong job market and stock
market. The Fund's large holding in AirTouch Communications, Inc. benefited
when that company was acquired (at a nice premium) by Vodafone. Despite the
rise in interest rates, financial stocks performed well (specifically, Merrill
Lynch & Co., Inc., Morgan Stanley, Dean Witter & Co., and Citigroup, Inc.) as
global financial markets and economies stabilized.
As of the end of March 1999, the short positions in the Fund consisted of
written calls against individual stocks and written calls and purchased puts
against market indices. Due to the higher valuation of the market and the fact
that time premiums have come down, we have added some puts to the Fund to
provide increased protection in case of a correction.
MARKET ENVIRONMENT AND OUTLOOK
With the U.S. market at an all-time high and with the price-to-earnings (P/E)
multiples of our favorite companies going ever higher, where are we today,
given that our investment philosophy is that success stems from the correct
marriage of fundamentals and price? The fundamentals could hardly be better.
Low inflationary expectations continue to provide a healthy backdrop for equity
investments. The 1998 U.S. economic deflator was only 0.7%. The Consumer Price
Index (CPI) was up a modest 1.7% in 1998 despite the fact that labor costs,
which are about two-thirds of the CPI, rose about 4.1%. Remember as well that
energy is only a 6% weight in the CPI. Labor's productivity gains,
under-measured in our view at 2.8%, continue to keep inflation in check despite
healthy wage increases amidst a robust domestic economy with low unemployment.
In fact, in the fourth quarter of 1998, labor productivity was 4.6%, which
actually produced a deflationary contribution to the CPI.
The United States continues to demonstrate tremendous strength, both in
absolute and relative terms. The strength comes from our democratic-capitalist
base, our sound legal and accounting systems, excellent corporate balance
sheets, technological leadership, and name brand recognition to our centrist
fiscal, monetary, and political policies. With Japan just beginning to tackle
its fundamental problems, many European countries facing the need for major
structural reforms, and the early Euro euphoria waning, the U.S. equity market
has become the preferred fundamental investment arena. In addition, if the U.S.
economy should falter, the Federal Reserve has considerable room for
stimulation with the federal funds rate at 4.75%, versus short-term rates of
2.75% in the European Union.
Yet, in our view, there are concerns on the horizon. Through March, the market
advance has been very narrow; large cap growth stocks have accounted for most
of the gains in the S&P 500. The S&P 500 corporate profits are projected to
grow a modest 6% in 1999, while the market is trading at a P/E multiple of
about 27x. We recognize that the absolute P/E multiple to earnings growth rate
is very high by any historical measure, especially for earnings that are not
robust over 1998 levels. In addition, consumer spending has been carrying the
U.S. economy, but we believe that the consumer, whose wages are increasing at
4% on average, cannot indefinitely sustain the 6% gross domestic product (GDP)
level witnessed in the fourth quarter of 1998. Early indications are that the
GDP has cooled off from the fourth quarter of 1998 with a continued, expected
slowdown for the remainder of 1999. In Europe, our largest export market,
evidence of economic slowdowns in France and Germany has already become the
primary issue for the recently appointed European Central Banker.
PORTFOLIO STRATEGY
Our 1999 expectation for U.S. equity market returns is a modest 5% to 12% with
continued high volatility. We believe that we have structured the Fund to
perform well in this environment. On the long side of the portfolio, we believe
that we have mitigated the risk somewhat by trimming our positions in very high
P/E technology
2
ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
stocks. These include stocks such as Nokia Corp. and Cisco Systems, Inc. In
addition, we trimmed our positions in Microsoft Corp. and EMC Corp., and
subsequently bought back shares in these companies during a period of price
weakness.
We believe that we have also mitigated the risk by adding to our positions in
more moderate P/E sectors such as financial stocks and consumer stocks. These
include stocks and options such as Associates First Capital Corp., and Lowe's
Cos., Inc. As of the end of the quarter, the gross long position of the
portfolio had a weighted average P/E multiple of 35x for 26% projected 1999
earnings growth versus 27x for 6% earnings growth for the S&P 500.
Despite absolute valuation concerns, we anticipate that the best relative
investment opportunity is to stay with the companies that provide the strongest
earnings growth (four times the market's growth rate) for only a 25% premium to
the market's valuation. Our rigorous, bottom-up, company specific research
process is especially important in today's environment where companies with
disappointing fundamentals are treated harshly by the market.
We have reduced the net long position from about 100% at the end of the fourth
quarter of 1998 to 95% at the end of the first quarter of 1999, with a bias
toward going lower if the market rises further. We will continue to capture the
rich premiums by selling at-the-money calls on the S&P 500 and NASDAQ, while
purchasing cheap S&P 500 puts for absolute protection. It is important,
however, to remember that we can curb--but not avoid--losses if the market
should have a sustained decline.
QUARTERLY DISTRIBUTION
The Fund distributes 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 is distributed to shareholders. If these
distributions exceed 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, 1999 (UNAUDITED) ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
Nokia Corp. ADR (a) $ 11,052,250 9.3%
Dell Computer Corp. 7,766,250 6.6
Home Depot, Inc. (a) 7,664,375 6.5
Cisco Systems, Inc. (a) 6,863,291 5.8
AirTouch Communications, Inc. (a) 6,426,875 5.4
Pfizer, Inc. (a) 5,364,375 4.5
Tyco International, Ltd. (a) 5,284,100 4.5
Microsoft Corp. (a) 4,865,050 4.1
EMC Corp. 4,816,175 4.1
Mckesson HBOC, Inc. 4,786,452 4.0
$ 64,889,193 54.8%
(a) Adjusted for market value of call options purchased and written.
4
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999 (UNAUDITED) ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS-77.4%
TECHNOLOGY-35.7%
COMMUNICATION EQUIPMENT-13.4%
EMC Corp.(a) 37,700 $ 4,816,175
Lucent Technologies, Inc. 13,000 1,400,750
Nokia Corp. ADR (Finland) 62,000 9,656,500
------------
15,873,425
COMPUTER HARDWARE-7.6%
Dell Computer Corp.(b) 190,000 7,766,250
Sun Microsystems, Inc. (a)(b) 10,300 1,286,856
------------
9,053,106
COMPUTER SOFTWARE-4.2%
Microsoft Corp.(a)(b) 55,200 4,947,300
INTERNET CONTENT-0.1%
Ziff-Davis, Inc. (b) 2,500 90,000
NETWORKING SOFTWARE-6.4%
Ascend Communications, Inc. (b) 8,000 669,500
Cisco Systems, Inc.(a)(b) 63,050 6,907,916
------------
7,577,416
SEMICONDUCTOR COMPONENTS-4.0%
Intel Corp. (a) 39,500 4,695,562
------------
42,236,809
HEALTHCARE-15.5%
DRUGS-9.8%
Bristol-Myers Squibb Co. (a) 36,000 2,315,250
Schering-Plough Corp. (a) 85,000 4,701,563
Pfizer, Inc. (a) 33,500 4,648,125
------------
11,664,938
MEDICAL PRODUCTS-5.7%
IMS Health, Inc. 30,000 993,750
Mckesson HBOC, Inc. 72,522 4,786,452
Medtronic, Inc. (a) 13,400 961,450
------------
6,741,652
------------
18,406,590
CONSUMER SERVICES-15.4%
BROADCASTING & CABLE-6.9%
AirTouch Communications, Inc.(a)(b) 30,000 2,898,750
AT&T Corp - Liberty Media Group Cl. A 61,500 3,236,437
Chancellor Media Corp. Cl. A (a)(b) 43,200 2,035,800
------------
8,170,987
RETAIL - GENERAL MERCHANDISE-8.5%
Dayton Hudson Corp. (a) 20,000 1,332,500
Home Depot, Inc. (a) 105,000 6,536,250
Kohl's Corp. (a) 30,400 2,154,600
------------
10,023,350
------------
18,194,337
FINANCE-7.1%
BANKING - REGIONAL-0.6%
Wells Fargo Co. 19,500 683,719
BROKERAGE & MONEY MANAGEMENT-1.2%
Morgan Stanley, Dean Witter & Co. (a) 14,000 1,399,125
INSURANCE-0.8%
Citigroup, Inc. 16,000 1,022,000
MORTGAGE BANKING-1.6%
Fannie Mae Corp. 27,000 1,869,750
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
SHARES OR
CONTRACTS (C) VALUE
- -------------------------------------------------------------------------
MISCELLANEOUS-2.9%
MBNA Corp. (a) 143,225 $ 3,419,497
------------
8,394,091
MULTI-INDUSTRY-1.5%
CAPITAL GOODS-1.5%
Tyco International, Ltd. (a) 25,200 1,808,100
CONSUMER GOODS-1.1%
ELECTRICAL EQUIPMENT-0.4%
General Electric Co. 5,000 553,125
MISCELLANEOUS-0.7%
United Technologies Corp. (a) 6,000 812,625
------------
1,365,750
UTILITIES-1.1%
TELEPHONE UTILITY-1.1%
MCI WorldCom, Inc. (b) 14,300 1,266,444
Total Common Stocks
(cost $43,169,880) 1,311,997 91,672,121
CALL OPTIONS PURCHASED-25.1%(B)
AirTouch Communications, Inc.
expiring Jul '99 @ $10 500 2,365,625
expiring Jan '00 @ $20 150 1,162,500
Associates First Capital Corp. Cl. A
expiring Jan '00 @ $20 300 768,750
expiring Jan '00 @ $22.50 300 710,625
BankAmerica Corp.
expiring Jan '00 @ $40 305 972,188
Bristol-Myers Squibb Co.
expiring Jan '00 @ $30 200 707,500
expiring Jan '00 @ $40 100 260,000
expiring Jan '01 @ $35 100 321,250
Citigroup, Inc.
expiring Jan '00 @ $35 150 451,875
Colgate-Palmolive Co.
expiring Jan '00 @ $60 75 258,750
Dayton Hudson Corp.
expiring Jan '00 @ $27.50 200 800,000
Fannie Mae Corp.
expiring Jan '00 @ $35 300 705,000
General Electric Co.
expiring Jan '00 @ $50 100 620,000
Home Depot, Inc.
expiring Jan '00 @ $17.50 250 1,128,125
IBM Corp.
expiring Jan '00 @ $90 80 730,000
Kroger Co.
expiring Jan '00 @ $30 150 468,750
Lowe's Cos., Inc.
expiring Jan '00 @ $30 300 967,500
expiring Jan '00 @ $37.50 100 256,250
MBNA Corp.
expiring Jan '00 @ $15 1,230 1,199,250
MCI WorldCom, Inc.
expiring Jan '00 @ $25 190 1,230,250
expiring Jan '00 @ $40 90 473,625
expiring Jan '00 @ $50 75 311,250
Merck & Co., Inc.
expiring Jan '00 @ $40 150 618,750
Merrill Lynch & Co., Inc.
expiring Jan '00 @ $50 135 555,187
Morgan Stanley, Dean Witter & Co.
expiring Jan. '00 @ $50 100 518,750
Nokia Corp. (ADR)
expiring Jan '00 @ $60 70 687,750
expiring Jan '00 @ $70 80 708,000
Pfizer, Inc.
expiring Jan '00 @ $70 100 716,250
Philip Morris Cos., Inc.
expiring Jan '00 @ $30 300 232,500
expiring Jan '00 @ $35 200 87,500
Time Warner, Inc.
expiring Jan '00 @ $32.50 150 598,125
expiring Jan '00 @ $35 75 280,312
Tyco International, Ltd.
expiring Jan '00 @ $30 640 2,776,000
expiring Jan '00 @ $40 200 700,000
6
ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
CONTRACTS (C) OR
PRINCIPAL
AMOUNT
(000) VALUE
- -------------------------------------------------------------------------
United Technologies Corp.
expiring Jan '00 @ $70 210 $ 1,425,375
Wal-Mart Stores, Inc.
expiring Jan '00 @ $30 50 316,250
expiring Jan '00 @ $35 350 2,058,438
expiring Jan '00 @ $40 50 269,375
Waste Management
expiring Jan '00 @ $30 195 318,094
Total Call Options Purchased
(cost $22,665,670) 29,735,719
PUT OPTIONS PURCHASED-0.5%(B)
Standard & Poor's 500 Index
expiring Apr '99 @ $1,350 10 61,000
expiring Apr '99 @ $1,390 10 76,000
expiring Apr '99 @ $1,400 30 344,250
expiring Jun '99 @ $1,450 5 80,062
Total Put Options Purchased
(cost $527,486) 561,312
SHORT TERM INVESTMENT-0.3%
COMMERCIAL PAPER-0.3%
General Electric Capital Corp.
5.03%, 4/01/99
(amortized cost $401,000) $401 401,000
TOTAL INVESTMENTS-103.3%
(cost $66,764,036) 122,370,152
CALL OPTIONS WRITTEN-(0.8%)(B)
Chicago Board Options Exchange
NASDAQ 100 Index
expiring Apr '99 @ $1,980 10 (183,000)
expiring Apr '99 @ $2,020 10 (127,875)
expiring Apr '99 @ $2,040 20 (197,000)
expiring Apr '99 @ $2,060 20 (184,250)
Cisco Systems, Inc.
expiring Apr '99 @ $105 70 (44,625)
Microsoft Corp.
expiring Apr '99 @ $82.50 70 (54,250)
expiring Apr '99 @ $87.50 70 (28,000)
Standard & Poor's 500 Index
expiring Apr '99 @ $1,275 10 (37,500)
expiring Apr '99 @ $1,300 35 (51,625)
Total Call Options Written
(premiums received $762,814) (908,125)
TOTAL INVESTMENTS, NET OF OUTSTANDING
CALL OPTIONS WRITTEN-102.5%
(cost $66,001,222) 121,462,027
Other assets less liabilities-(2.5%) (2,990,855)
NET ASSETS-100% $ 118,471,172
(a) Security, or a portion thereof, has been segregated to collateralize open
options written. This collateral has a total market value of approximately
$23,824,041.
(b) Non-income producing.
(c) One contract relates to 100 shares unless otherwise indicated.
Glossary:
ADR - American Depositary Receipt.
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999 (UNAUDITED) ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $66,764,036) $ 122,370,152
Cash 183,952
Receivable for investment securities sold 268,691
Dividends receivable 91,099
Deferred organization expenses and other assets 12,397
Total assets 122,926,291
LIABILITIES
Outstanding call options written, at value (premiums
received $762,814) 908,125
Dividend payable 2,688,838
Payable for investment securities purchased 489,244
Advisory fee payable 167,698
Administration fee payable 24,657
Accrued expenses and other liabilities 176,557
Total liabilities 4,455,119
NET ASSETS $ 118,471,172
COMPOSITION OF NET ASSETS
Capital stock, at par $ 25,157
Additional paid-in capital 49,741,734
Undistributed net investment loss (5,740,917)
Accumulated net realized gain on investment transactions 18,984,393
Net unrealized appreciation of investments and options
written 55,460,805
$ 118,471,172
NET ASSET VALUE PER SHARE (based on 2,515,686 shares
outstanding) $47.09
See notes to financial statements.
8
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends $ 214,044
Interest 17,641 $ 231,685
EXPENSES
Advisory fee 884,555
Administrative 128,673
Custodian 74,141
Audit and legal 52,151
Shareholder servicing 51,470
Printing 33,525
Directors' fees and expenses 24,000
Registration 4,720
Transfer agency 2,824
Amortization of organization expenses 1,995
Miscellaneous 3,310
Total expenses before interest 1,261,364
Interest expense on short sales 2,223
Total expenses 1,263,587
Net investment loss (1,031,902)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
SHORT SALES AND OPTIONS WRITTEN
Net realized gain on long transactions 21,532,569
Net realized gain on short sale transactions 33,773
Net realized loss on written option transactions (668,578)
Net change in unrealized appreciation of
investments and options written 21,491,287
Net gain on investments 42,389,051
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 41,357,149
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1999 SEPTEMBER 30,
(UNAUDITED) 1998
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (1,031,902) $ (1,932,651)
Net realized gain on investment, short
sale and written option transactions 20,897,764 8,866,477
Net change in unrealized appreciation of
investments and options written 21,491,287 2,937,240
Net increase in net assets from
operations 41,357,149 9,871,066
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments (4,709,015) (12,924,008)
COMMON STOCK TRANSACTIONS
Reinvestment of dividends resulting in
issuance of common stock 271,019 127,507
Total increase (decrease) 36,919,153 (2,925,435)
NET ASSETS
Beginning of year 81,552,019 84,477,454
End of period $ 118,471,172 $ 81,552,019
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999 (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 principles which require management to make
certain estimates and assumptions that affect the reported amounts of assets
and liabilities in the financial statements and amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are
generally valued at the last reported sales price or if no sale occurred, at
the mean of the closing bid and asked prices on that day. Readily marketable
securities traded in the over-the-counter market, securities listed on a
foreign securities exchange whose operations are similar to the U.S.
over-the-counter market, and securities listed on a national securities
exchange whose primary market is believed to be over-the-counter, are valued at
the mean of the current bid and asked prices. U.S. government and fixed income
securities which mature in 60 days or less are valued at amortized cost, unless
this method does not represent fair value. Securities for which current market
quotations are not readily available are valued at their fair value as
determined in good faith by, or in accordance with procedures adopted by, the
Board of Directors. Fixed income securities may be valued on the basis of
prices obtained from a pricing service when such prices are believed to reflect
the fair market value of such securities.
2. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if 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,
1999, the fee as adjusted, amounted to 1.73% 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
Administrator provides administrative functions to the Fund as well as other
clerical services. The Administrator also prepares financial and regulatory
reports for the Fund.
11
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE ALL-MARKET ADVANTAGE 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.
During the six months ended March 31, 1999, there was no reimbursement paid to
AFS.
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, 1999 amounted to $121,209, 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 $58,573,860 and
$71,963,350, respectively, for the six months ended March 31, 1999. There were
no purchases or sales of U.S. government or government agency obligations for
the six months ended March 31, 1999.
At March 31, 1999, the cost of investments for federal income tax purposes was
substantially the same as the cost for financial reporting purposes.
Accordingly, gross unrealized appreciation of investments was $57,453,728 and
gross unrealized depreciation of investments was $1,847,612 resulting in net
unrealized appreciation of $55,606,116.
1. OPTIONS TRANSACTIONS
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.
Transactions in options written for the six months ended March 31, 1999 were as
follows:
NUMBER PREMIUMS
OF CONTRACTS RECEIVED
------------ ------------
Options outstanding at beginning of year 885 $ 1,306,240
Options written 3,460 6,301,198
Options terminated in closing purchase
transactions (4,030) (6,844,624)
Options outstanding at March 31, 1999 315 $ 762,814
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
12
ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
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 5.59% 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
2,515,686 shares outstanding at March 31, 1999, the Investment Adviser owned
5,000 shares. During the six months ended March 31, 1999, the Fund issued 7,669
shares in connection with the Fund's dividend reinvestment plan.
NOTE E: YEAR 2000
Many computer systems and applications in use today process transactions using
two-digit date fields for the year of the transaction, rather than the full
four digits. If these systems are not modified or replaced, transactions
occurring after 1999 could be processed as year "1900," which could result in
processing inaccuracies and computer system failures. This is commonly known as
the year 2000 problem. Should any of the computer systems employed by the
Fund's major service providers fail to process Year 2000 related information
properly, that could have a significant negative impact on the Fund's
operations and the services that are provided to the Fund's shareholders. In
addition, to the extent that the operations of issuers of securities held by
the Fund are impaired by the Year 2000 problem, or prices of securities held by
the Fund decline as a result of real or perceived problems relating to the Year
2000, the value of the Fund's shares may be materially affected.
With respect to the Year 2000, the Fund has been advised that Alliance, the
Fund's Investment Manager, began to address the year 2000 issue several years
ago in connection with the replacement or upgrading of certain computer systems
and applications. During 1997, Alliance began a formal Year 2000 initiative,
which established a structured and coordinated process to deal with the Year
2000 issues. Alliance reports that it has completed its assessment of the Year
2000 issues on its domestic and international computer systems and applications.
Currently, management of Alliance expects that the required modifications for
the majority of its significant systems and applications that will be in use on
January 1, 2000, will be completed and tested in early 1999. Full integration
testing of these systems and testing of interfaces with third-party suppliers
will continue through 1999. At this time, management of Alliance believes that
the costs associated with resolving this issue will not have a material adverse
effect on its operations or on its ability to provide the level of services it
currently provides to the Fund.
The Fund and Alliance have been advised by the Fund's Transfer Agent and
Custodian that they are also in the process of reviewing their systems with the
same goals. As of the date of this report, the Fund and Alliance have no reason
to believe that the Transfer Agent and Custodian will be unable to achieve
these goals.
13
FINANCIAL HIGHLIGHTS ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SIX MONTHS NOVEMBER 4,
ENDED 1994(A)
MARCH 31, YEAR ENDED SEPTEMBER 30, TO
1999 ------------------------------------- SEPTEMBER 30,
(UNAUDITED) 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $32.52 $33.72 $22.19 $23.78 $19.70(b)
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.41) (.77) (.58) (.48) (.09)
Net realized and unrealized gain on
investment transactions 16.86 4.73 14.40 1.86 5.65
Net increase in net asset value from
operations 16.45 3.96 13.82 1.38 5.56
LESS: DISTRIBUTIONS
Distributions from net realized gains (1.88) (5.16) (2.29) (2.97) (1.48)
Net asset value, end of period $47.09 $32.52 $33.72 $22.19 $23.78
Market value, end of period $48.875 $36.875 $31.188 $19.00 $19.50
TOTAL RETURN
Total investment return based on: (c)
Market value 37.89% 37.40% 79.27% 13.26% 5.46%
Net asset value 50.77% 12.49% 65.66% 8.10% 28.60%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $118,471 $81,552 $84,477 $55,582 $59,561
Ratio of expenses to average net assets 2.47%(d) 2.57% 2.48% 2.87% 2.00%(d)
Ratio of expenses to average net assets
excluding interest expense 2.47%(d) 2.52%(e) 2.43%(e) 2.62%(e) 2.00%(d)
Ratio of net investment loss to average
net assets (2.02)%(d) (2.18)% (2.07)% (2.11)% (.48)%(d)
Portfolio turnover rate 59% 96% 105% 199% 140%
</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 .05%, .05% and .25%, respectively, on short
sales (see note c).
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 March 9, 1999. The description of each proposal and number of
shares are as follows:
<TABLE>
<CAPTION>
VOTED
WITHHELD/
VOTED FOR ABSTAIN
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect directors: Class Two Directors
(term expires 2002)
John H. Dobkin 1,979,497 22,815
William H. Foulk, Jr. 1,980,467 21,845
Dr. James M. Hester 1,979,312 23,000
<CAPTION>
VOTED
VOTED WITHHELD/
VOTED FOR AGAINST ABSTAIN
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of PricewaterhouseCoopers LLP
as the Fund's independent auditors for the Fund's
fiscal year ending September 30, 1999: 1,979,489 5,608 17,215
</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 NORDBY, 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
PRICEWATERHOUSECOOPERS LLP
1177 Avenue of the Americas
New York, NY 10036-2798
CUSTODIAN
THE BANK OF NEW YORK
One 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
