ALLIANCE ALL-ASIA INVESTMENT FUND
ANNUAL REPORT
OCTOBER 31, 1995
ALLIANCE
MUTUAL FUNDS WITHOUT THE MYSTERY.
LETTER TO SHAREHOLDERS ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
December 8, 1995
Dear Shareholder:
We are pleased to provide the first annual report to shareholders of Alliance
All-Asia Investment Fund. The Fund seeks to provide long-term capital
appreciation from a portfolio investing primarily in the equity securities of
Asian-Pacific companies. The following pages include information that covers
the period from November 28, 1994, when operations for the Fund began, through
October 31, 1995, its fiscal year end.
In the table below, your Fund's performance during the fiscal year is compared
with that of the overall stock markets of the Far East, represented by the
unmanaged Morgan Stanley Pacific Index (MSCI PI), and with the Lipper Pacific
Region Funds Average, which reflects performance of 38 funds (these funds have
generally similar investment objectives to your Fund though some may have
somewhat different investment policies):
Life of Fund Through October 31, 1995
Total Return Ending NAV
------------ ----------
ALLIANCE ALL-ASIA INVESTMENT FUND
Class A +4.50% $10.45
Class B +4.10% $10.41
Class C +4.10% $10.41
MSCI PI -5.79%
LIPPER PACIFIC REGION FUNDS AVERAGE -2.10%
The Fund's total returns are based on the net asset values of each class of
shares as of October 31; additional investment results appear on page 3.
Over much of 1995 Fund performance has benefited from stock selection in Japan,
Hong Kong, Thailand, and New Zealand and the overweighted position in Hong
Kong. Performance was negatively affected by the Fund's underweighted positions
in Australia and New Zealand at the beginning of the year.
VOLATILITY EXPECTED TO BE TEMPORARY
Asian stocks hit some turbulence in the past couple of months in what has been
a rather lackluster year. It has seemed that anything that could go wrong in
Asia has done so this fall. Japan has barely managed to remain in positive
territory, while most other Asian markets are down 5-15%. While this is
painful, all of the factors that caused the corrections should be temporary.
Given the strong underlying fundamentals and attractive valuations, the
corrections should prove to be rewarding buying opportunities.
One example of what went wrong in Asia was the slush fund scandal in Korea,
when news broke that former president Roh Tae Woo had amassed a massive amount
of secret funds while in office. As a result of the investigation, Korean
stocks have been sold off. In particular, Korean global depository receipts
(GDRs) have taken a big hit. Korea Mobile Telecom (KMT), one of the positions
in the Fund, was at $40 a few weeks ago. At the time of writing it was trading
at about $30 even though subscriber growth in the first ten months of 1995 was
53% and valuations make it the cheapest telecom stock in Asia. We see this
panic selling as temporary. When investors realize that individual company
fundamentals are not affected by the scandal, the stocks should stage a strong
recovery.
In Thailand, a trust fund issue has caused some turbulence in its stock market.
Financial market officials in Thailand proposed last month to set up trust
funds for individual stocks in which foreigners can invest. As a result, Thai
stocks-in particular bank stocks, which tend to have the highest foreign
premiums-were marked down significantly. Your Fund has holdings in several Thai
banking stocks given their attractive valuations. Since the proposal was made,
a number of Thai firms have stated that they would not allow their shares to be
included in these trust funds. This has given some stability to the share
prices of Thai bank stocks. We see little impact in the future from the
so-called trust funds given that so many firms are opposed to their creation.
We expect prices to recover as it becomes clear that there is little risk of
the foreign premiums on these bank stocks disappearing.
The budget war in the U.S. is resulting in some short-term casualties in Asia.
Investors in Asia are very concerned about the possibility of a default on U.S.
Government debt. Given their limited understanding of U.S. politics and the
nature of the government shutdown, Asian investors appear to be reducing their
exposure to equities and dealers seem to be marking down securities prices.
1
ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
TAKING ADVANTAGE OF BUYING OPPORTUNITY
It is a rare coincidence that so many negative events have taken place at the
same time, thereby negatively affecting virtually every market in Asia. It also
presents an outstanding investment opportunity given that a number of our
favorite stocks are down to incredibly low levels. We have been putting the
Fund's cash to work taking advantage of these opportunities.
We have raised the portfolio's weighting in Japan with most of the purchases
taking place in bank stocks. We expect better disclosure by Japanese banks in
the next few weeks regarding their bad loan problems, which, coupled with
improving industry fundamentals should be positive for stock prices.
We are also adding to positions in Indonesia, Thailand, and Korea since these
equity markets have seen corrections in the past few weeks.
VERY POSITIVE OUTLOOK
By historical standards, 1994 and 1995 have yielded extremely poor returns for
investors in Asia; at no time since 1980-81 has there been two consecutive
years of such disappointing performance. We are optimistic, however, that 1996
will be an excellent year for Asian equities and consequently for Alliance
All-Asia Investment Fund. The growth potential in these markets continues to be
strong, and valuations are even lower today than they were following the 1987
market crash, and are among their lowest levels ever relative to that of the
U.S. stock market.
Growth rates for Asian gross domestic product in the next year should be at
least five percentage points higher than comparable growth rates for the U.S.
and European economies. Given that Asia has had little correlation with the
U.S. stock market in 1994-95, we expect there would not be much impact on Asian
equity markets if the U.S. market experiences a correction.
Thank you for your interest and investment in Alliance All-Asia Investment
Fund. We believe that despite market setbacks in the recent period, investors
with a long-term outlook will benefit from investing in the equity markets of
Asian-Pacific countries.
Sincerely,
John D. Carifa
Chairman and President
A. Rama Krishna
Senior Vice President and Portfolio Manager
2
INVESTMENT RESULTS ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
TOTAL RETURN AS OF OCTOBER 31, 1995
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
---------------------------
. Since Inception* +4.50% +0.10%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
---------------------------
. Since Inception* +4.10% +0.10%
CLASS C SHARES
. Since Inception* +4.10%
The total returns reflect investment of dividends and/or capital gains
distributions in additional shares-with and without the effect of the 4.25%
maximum front-end sales charge for Class A or applicable contingent deferred
sales charge for Class B (4% year 1, 3% year 2, 2% year 3, 1% year 4); Class C
shares are not subject to front-end or contingent deferred sales charges. Past
performance does not guarantee future results. Investment return and principal
value will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
* Inception: 11/28/94.
3
TEN LARGEST HOLDINGS*
OCTOBER 31, 1995 ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
PERCENT OF
COMPANY U.S.$VALUE NET ASSETS
- -------------------------------------------------------------------------------
PT HM Sampoerna-Multi-Industry Indonesian company $ 369,881 4.3%
Korea Mobile Telecom Corp. (GDR)-Provides mobile
telecommunications and radio paging services 257,250 3.0
Siam Commercial Bank Co., Ltd.-Provides commercial
banking services in Thailand and overseas 233,658 2.7
Woolworths Ltd.-Operates grocery and discount
stores throughout Australia 231,275 2.7
Manila Electric Co. Series B-Distributes electricity 223,760 2.6
Bajaj Auto, Ltd. (GDR)-Indian auto & related
manufacturing company 212,000 2.5
Telekom Malaysia Berhad-Provides telecommunication
services, manages properties, holds investments
and provides printing and consulting services 193,388 2.2
Consolidated Electric Power Asia, Ltd.-Develops and
operates power station projects and provides
civil construction and engineering services 168,003 1.9
The Thai Farmers Bank Ltd.-Provides commercial
banking services nationwide 148,778 1.7
Resorts World Berhad-Operates a tourist resort
at Genting Highlands 146,399 1.7
$2,184,392 25.3%
INDUSTRY DIVERSIFICATION
OCTOBER 31, 1995
_______________________________________________________________________________
PERCENT OF
U.S.$VALUE NET ASSETS
- -------------------------------------------------------------------------------
Basic Industries $ 312,351 3.6%
Capital Goods 279,123 3.2
Consumer Manufacturing 842,895 9.8
Consumer Services 1,091,410 12.6
Consumer Staples 549,415 6.4
Energy 15,883 0.2
Finance 1,873,474 21.7
Healthcare 50,467 0.6
Multi-Industry 559,098 6.5
Technology 369,299 4.3
Transportation 133,514 1.5
Utilities 1,718,954 19.9
Total Investments* 7,795,883 90.3
Cash and receivables, net of liabilities 841,611 9.7
Net Assets $8,637,494 100.0%
* Excludes short-term obligations.
4
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
COMPANY SHARES U.S.$VALUE
- -----------------------------------------------------------------------
COMMON STOCKS-90.3%
AUSTRALIA-4.2%
Goldfields Ltd. 4,176 $ 10,338
National Australia Bank Ltd. 11,000 94,183
Qantas Airways Ltd.* 15,573 27,522
Woolworths Ltd. 97,000 231,275
363,318
CHINA-1.9%
Ek Chor China Motorcycle Co 6,000 84,000
Yizheng Chemical Fibre Co., Ltd. 270,000 78,573
162,573
HONG KONG-13.4%
C.P. Pokphand Co. 242,000 97,029
Cheung Kong Holdings, Ltd. 12,000 67,825
Consolidated Electric Power Asia, Ltd. 83,000 168,003
Dao Heng Bank Group, Ltd. 20,000 73,334
Guangdong Investments 176,000 103,574
Guoco Group, Ltd. 31,000 142,737
Hong Kong & China Gas Co., Ltd. 33,000 53,565
Hopewell Holdings, Ltd. 99,000 62,421
Hysan Development Co., Ltd. 27,000 68,795
New World Development Co., Ltd. 8,000 31,145
New World Infrastructure* 16 28
Orient Telecom & Technology Holdings, Ltd.* 121,000 37,168
Shun Tak Holdings, Ltd. 80,000 63,117
Sun Hung Kai Properties, Ltd. 8,000 63,893
Swire Pacific, Ltd. Cl. A 6,000 45,010
Television Broadcasting, Ltd. 20,000 80,189
1,157,833
INDIA-2.4%
Bajaj Auto, Ltd. (GDR)* 8,000 $212,000
INDONESIA-6.4%
PT HM Sampoerna 40,000 369,881
PT Indosat 40,000 135,623
PT Semen Cibinong 15,000 39,300
PT Semen Gresik 2,000 5,196
550,000
JAPAN-26.3%
Amano Corp. 2,000 24,255
Asahi Bank, Ltd. 6,000 59,856
Bank of Tokyo, Ltd. 1,000 14,573
Chiba Bank, Ltd. 1,000 8,294
Dai Nippon Printing Co., Ltd. 1,000 15,942
Daifuku Co., Ltd. 1,000 11,932
Daito Trust Construction Co., Ltd. 300 2,641
Daiwa Securities Co., Ltd. 1,000 11,736
DDI Corp. 6 48,648
East Japan Railway Co. 7 33,068
Fuji Photo Film 4,000 98,978
Furakawa Co., Ltd. 2,000 9,057
Heiwa 2,000 53,206
Hirose Electric 1,000 63,866
Hitachi, Ltd. 3,000 30,808
Honda Motor Co. 1,000 17,409
House Foods Industry 1,000 18,192
Ito-Yokado Co., Ltd. 1,000 54,673
Japan Securities Finance 8,000 100,152
Kamigumi Co., Ltd. 2,000 18,094
Kandenko Co., Ltd. 2,000 24,647
Kao Corp. 3,000 36,383
Kirin Brewery Co., Ltd. 2,000 20,148
Kokusai Electric 1,000 22,788
Kokuyo* 1,000 21,517
Kuraray Co., Ltd. 5,000 49,391
Kurita Water Industries 1,000 27,874
Kyocera Corp. 1,000 81,960
Long-Term Credit Bank of Japan 1,000 7,805
Maeda Road Construction 1,000 17,898
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
COMPANY SHARES U.S.$VALUE
- -----------------------------------------------------------------------
Matsushita Electric Industrial Co. 3,000 $ 42,545
Matsushita Electric Works 2,000 19,756
Mazda Motor* 4,000 12,558
Mitsubishi Heavy Industries, Ltd. 2,000 15,433
Mitsubishi Materials Corp. 3,000 13,556
Mitsubishi Oil Co. 2,000 15,883
Mitsui Marine & Fire Insurance Co. 7,000 42,105
Mitsui Trust & Banking 7,000 56,003
Mori Seiki 1,000 19,756
National House Industrial 1,000 17,018
NGK Insulators 1,000 9,213
Nikko Securities Co. 2,000 18,661
Nikon Corp. 1,000 14,279
Nintendo Corp., Ltd. 1,100 80,904
Nippon Express Co., Ltd. 2,000 16,236
Nippon Light Metal Co. 3,000 16,255
Nippon Paper Industries Co. 1,000 6,876
Nippon Steel Co. 6,000 19,893
Nisshin Steel Co., Ltd. 3,000 11,120
NKK Corp.* 7,000 16,910
Nomura Securities Co., Ltd. 3,000 54,868
Osaka Gas Co. 6,000 20,128
Rohm Co. 2,000 121,473
Secom 1,000 65,138
Shimano, Inc. 1,000 18,583
Shimizu Corp. 2,000 18,642
Shin-Etsu Chemical Co. 1,000 20,441
Sumitomo Bank 4,000 70,810
Sumitomo Electric Industries 2,000 23,082
Sumitomo Marine & Fire Insurance Co. 2,000 14,279
Sumitomo Realty and Development 3,000 19,717
Sumitomo Rubber Industries 1,000 7,971
Takara Shuzo 1,000 8,763
Takeda Chemical Industries 2,000 28,168
Toagosei Co., Ltd. 1,000 4,939
Tokai Bank 2,000 $20,930
Tokyo Electric Power Co. 1,010 26,474
Tokyo Gas Co., Ltd. 11,000 38,731
Tokyo Steel Mfg. Co. 3,000 55,748
Tostem Corp. 1,000 30,711
Toyo Kanetsu 3,000 12,059
Toyota Motor Corp. 4,000 74,331
UBE Industries, Ltd.* 2,000 6,612
Yakult Honsha 1,000 12,715
Yamanouchi Pharmaceutical 1,000 22,299
2,268,363
MALAYSIA-10.3%
AMMB Holdings Berhad* 7,000 86,777
Lion Land Berhad 77,000 83,333
Malakoff Berhad 39,000 115,880
Malaysia International Shipping Berhad 8,000 21,094
New Straits Times Press Berhad 3,000 9,445
Petronas Gas Berhad* 12,000 40,614
Rashid Hussain Berhad 37,000 91,736
Resorts World Berhad 30,000 146,399
Telekom Malaysia Berhad 27,000 193,388
YTL Corp. Berhad 18,000 97,757
886,423
NEW ZEALAND-2.1%
Air New Zealand, Ltd. Cl. B 2,000 6,891
Fletcher Challenge, Ltd. 32,000 44,147
Telecom Corp. of New Zealand 32,000 132,865
183,903
PHILIPPINES-2.9%
International Container Terminal Svcs., Inc. 26,250 11,101
Manila Electric Co. Series B 30,000 223,760
Philippine Commercial International Bank 1,400 11,465
246,326
6
ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
COMPANY SHARES U.S.$VALUE
- -----------------------------------------------------------------------
SINGAPORE-4.9%
First Capital Corp., Ltd. 11,000 $ 29,738
Overseas Union Bank Corp., Ltd. 18,000 112,102
Overseas-Chinese Banking Corp., Ltd. 5,000 58,740
Singapore Airlines, Ltd. 11,000 101,982
Singapore Press Holdings, Ltd. 7,600 118,868
421,430
SOUTH KOREA-5.4%
Korea Electric Power (ADR)* 4,400 108,900
Korea Mobile Telecom Corp. (GDR)* 7,000 257,250
Pohang Iron & Steel Co. (ADR) 4,000 103,000
469,150
TAIWAN-1.6%
Advanced Semi-Conductor Engineering (GDR)* 8,000 102,000
China Steel Corp. (GDR)* 2,000 37,000
139,000
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S.$VALUE
- -----------------------------------------------------------------------
THAILAND-8.5%
Bangkok Bank Co., Ltd. 10,000 $ 103,318
Phatra Thanakit Co., Ltd. 18,000 140,910
Siam Commercial Bank Co., Ltd. 20,000 233,658
The Thai Farmers Bank, Ltd. 18,000 148,778
Total Access Communication Plc.* 18,000 108,900
735,564
Total Common Stocks (cost $7,776,764) 7,795,883
TIME DEPOSIT-9.2%
Societe Generale
5.88%, 11/01/95
(amortized cost $800,000) US$ 800 800,000
TOTAL INVESTMENTS-99.5%
(cost $8,576,764) 8,595,883
Other assets less liabilities-0.5% 41,611
NET ASSETS-100% $8,637,494
* Non-income producing security.
Glossary of Terms:
ADR - American Depository Receipt.
GDR - Global Depository Receipt.
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
ASSETS
Investments in securities, at value(cost $8,576,764) $8,595,883
Cash, at value (cost $144,013) 144,293
Deferred organization expenses 165,412
Receivable for capital stock sold 117,851
Receivable for investment securities sold 74,162
Receivable from investment adviser 28,033
Dividends and interest receivable 17,319
Unrealized appreciation of forward exchange currency contracts 3,273
Total assets 9,146,226
LIABILITIES
Payable for investment securities purchased 328,473
Advisory fee payable 7,230
Distribution fee payable 5,513
Payable for capital stock redeemed 1,112
Accrued expenses 166,404
Total liabilities 508,732
NET ASSETS $8,637,494
COMPOSITION OF NET ASSETS
Capital stock, at par $ 829
Additional paid-in capital 8,553,113
Undistributed net investment income 68,726
Accumulated net realized loss on investments and foreign
currency transactions (7,793)
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 22,619
$8,637,494
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($2,870,491/
274,591 shares of capital stock issued and outstanding) $10.45
Sales charge-4.25% of public offering price .46
Maximum offering price $10.91
CLASS B SHARES
Net asset value and offering price per share ($5,170,282/
496,886 shares of capital stock issued and outstanding) $10.41
CLASS C SHARES
Net asset value, redemption and offering price per share($596,721/
57,306 shares of capital stock issued and outstanding) $10.41
See notes to financial statements.
8
STATEMENT OF OPERATIONS
NOVEMBER 28, 1994* TO OCTOBER 31, 1995 ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $6,799) $81,462
Interest 50,319 $131,781
EXPENSES
Advisory fee 51,714
Distribution fee - Class A 5,824
Distribution fee - Class B 30,068
Distribution fee - Class C 2,233
Custodian 178,318
Audit and legal 87,933
Registration 58,280
Amortization of organization expenses 36,075
Directors' fees 35,130
Printing 33,319
Transfer agency 25,380
Administrative 7,757
Miscellaneous 19,084
Total expenses 571,115
Less expenses waived and assumed by Adviser
(see Note B) (315,866)
Net expenses 255,249
Net investment loss (123,468)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 194,457
Net realized loss on futures and foreign currency transactions (10,056)
Net change in unrealized appreciation of:
Investments 19,119
Foreign currency denominated assets and liabilities 3,500
Net gain on investments and foreign currency transactions 207,020
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 83,552
* Commencement of operations.
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS
NOVEMBER 28, 1994* TO OCTOBER 31, 1995 ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (123,468)
Net realized gain on investments and foreign currency transactions 184,401
Net change in unrealized appreciation of investments and foreign
currency denominated assets and liabilities 22,619
Net increase in net assets from operations 83,552
CAPITAL STOCK TRANSACTIONS
Net increase 8,451,942
Total increase 8,535,494
NET ASSETS
Beginning of period 102,000
End of period(including undistributed net investment income of
$68,726) $8,637,494
* Commencement of operations.
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance All-Asia Investment Fund, Inc. (the 'Fund'), was organized as a
Maryland corporation on September 21, 1994 and is registered under the
Investment Company Act of 1940 as a non-diversified, open-end management
investment company. The Fund had no operations other than the sale to Alliance
Capital Management L.P. (the 'Adviser') of 10,000 shares of Class A common
stock and 100 shares each of Class B and Class C shares of common stock for the
aggregate amount of $102,000 on October 18, 1994. Class A, Class B and Class C
shares, commenced operations on November 28, 1994. The Fund offers three
classes of shares. Class A shares are sold with an initial sales charge of up
to 4.25%. Class B shares are sold with a contingent deferred sales charge which
declines from 4.00% to zero depending on the period of time the shares are
held. Class B shares will automatically convert to Class A shares eight years
after the end of the calendar month of purchase. Class C shares are sold
without an initial or contingent deferred sales charge. All three classes of
shares have identical voting, dividend, liquidation and other rights, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The following is a summary of
significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange for which market
quotations are readily available are valued at the last quoted sales price on
that exchange prior to the time when assets are valued. Securities listed or
traded on certain foreign exchanges whose operations are similar to the U.S.
over-the-counter market are valued at the price within the limits of the latest
available current bid and asked price deemed best to reflect fair value.
Securities which mature in 60 days or less are valued at amortized cost which
approximates market value. Restricted securities are valued at fair value as
determined by the Board of Directors. In determining fair value, consideration
is given to cost, operating and other financial data.
2. ORGANIZATION EXPENSES
Organization expenses of approximately $201,500 have been deferred and are
being amortized on a straight-line basis through October, 1999.
3. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar.
Purchases and sales of portfolio securities are translated at the rates of
exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at rates of exchange prevailing when accrued.
Net realized loss on futures and foreign currency transactions of $10,056
represents foreign exchange gains and losses from the holding of foreign
currencies, gains and losses on futures contracts, exchange gains or losses
realized between the trade and settlement dates on security transactions, and
the difference between the amounts of dividends, interest and foreign taxes
receivable recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received or paid. Net currency gains and losses from valuing
foreign currency denominated assets and liabilities at period end exchange
rates are reflected as a component of net change in unrealized appreciation of
investments and foreign currency denominated assets and liabilities.
4. 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.
5. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Security transactions are accounted for on the date securities are
purchased or sold. Security gains and losses are determined on the identified
cost basis. The Fund accretes discounts on short-term securities as adjustments
to interest income.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
7. RECLASSIFICATION OF NET ASSETS
As of October 31, 1995 differences totalling $192,194 were reclassified from
accumulated net realized loss on investments to undistributed net investment
income. This reclassification was the result of permanent book to tax
differences resulting from short term capital gains and realized gains from
foreign currency transactions which are treated as ordinary income for tax
purposes. This reclassification had no effect on net assets.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under an investment advisory agreement, the Fund pays its Adviser a fee at an
annual rate of 1% of the Fund's average daily net assets. Such fee is accrued
daily and paid monthly. The Adviser has agreed, under the terms of the advisory
agreement, to reimburse the Fund to the extent that its aggregate expenses
(exclusive of interest, taxes, brokerage, distribution fees, foreign custody
fees, extraordinary expenses and certain other expenses) exceed the limits
prescribed by any state in which the Fund's shares are qualified for sale. The
Fund believes that the most restrictive expense ratio limitation currently
imposed by any state is 2.5% of the first $30 million of its average daily net
assets, 2% of the next $70 million of its average daily net assets and 1.5% of
its average daily net assets in excess of $100 million. In compliance with this
limitation, the Adviser has borne certain expenses incurred in the operation of
the Fund to the extent necessary to limit the aggregate expenses. For the
period ended October 31, 1995 the Adviser has reimbursed the Fund for $315,866
of its expenses incurred.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Adviser) under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $14,675 for the period ended October 31, 1995.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $3,544 from the sale of Class A shares and $4,979 in
contingent deferred sales charges imposed upon redemptions by shareholders of
Class B shares for the period ended October 31, 1995.
Brokerage commissions paid on securities transactions for the period ended
October 31, 1995 amounted to $26,311, none of which was paid to affiliated
brokers.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the 'Agreement')
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30 of 1% of the Fund's average daily net assets attributable to
Class A shares and 1% of the average daily net assets attributable to both
Class B and Class C shares. The fees are accrued daily and paid monthly. The
Agreement provides that the Distributor will use such payments in their
entirety for distribution assistance and promotional activities. The
Distributor has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $552,379 and $25,680 for Class B and
Class C shares respectively; such costs may be recovered from the Fund in
future periods so long as the Agreement is in effect. In accordance with the
Agreement, there is no provision for recovery of unreimbursed distribution
costs, incurred by the Distributor, beyond the current fiscal year for Class A
shares. The Agreement also provides that the Adviser may use its own resources
to finance the distribution of the Fund's shares.
12
ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
aggregated $11,703,845 and $4,121,539, respectively, for the period ended
October 31, 1995. At October 31, 1995, the cost of securities for federal
income tax purposes was $8,584,529. Accordingly, gross unrealized appreciation
of investments was $420,544 and gross unrealized depreciation of investments
was $409,190 resulting in net unrealized appreciation of $11,354.
The Fund enters into forward exchange currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings and to hedge certain firm purchase and sale commitments denominated in
foreign currencies. A forward exchange currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The gain or loss arising from the differences between the original
contract and the closing of such contract is included in net realized gain or
loss on foreign currency transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
The Fund's custodian will place and maintain cash not available for investment
or securities in a separate account of the Fund having a value equal to the
aggregate amount of the Fund's commitments under forward exchange currency
contracts entered into with respect to position hedges.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of foreign
currencies relative to the U.S. dollar. The face or contract amount, in U.S.
dollars, as reflected in the following table, reflects the total exposure the
Fund has in that particular currency contract.
At October 31, 1995, the Fund had the following outstanding forward exchange
currency contract:
CONTRACT VALUE ON U.S. $
AMOUNT ORIGINATION CURRENT UNREALIZED
(000) DATE VALUE APPRECIATION
-------- ----------- --------- ------------
FOREIGN CURRENCY SALE CONTRACT
Japanese Yen, expiring 1/31/96 18,000 $181,543 $178,270 $3,273
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 9,000,000,000 shares of $0.001 par value capital stock authorized,
divided into three classes, designated Class A, Class B and Class C. Each class
consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
SHARES AMOUNT
----------------- -----------------
NOVEMBER 28,1994* NOVEMBER 28,1994*
TO TO
OCTOBER 31,1995 OCTOBER 31,1995
----------------- -----------------
CLASS A
Shares sold 517,977 $ 5,445,327
Shares redeemed (253,386) (2,728,474)
Net increase 264,591 $ 2,716,853
CLASS B
Shares sold 594,882 $ 6,165,639
Shares redeemed (98,096) (1,034,923)
Net increase 496,786 $ 5,130,716
CLASS C
Shares sold 82,858 $ 865,593
Shares redeemed (25,652) (261,220)
Net increase 57,206 $ 604,373
* Commencement of operations.
14
FINANCIAL HIGHLIGHTS ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A CLASS B CLASS C
------------ ------------ -------------
NOV. 28, NOV. 28, NOV. 28,
1994* TO 1994* TO 1994* TO
OCT.31,1995 OCT.31,1995 OCT.31,1995
------------ ------------ -------------
Net asset value, beginning of period $10.00 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(c) (.19)** (.25)** (.35)**
Net realized and unrealized gain on
investments .64 .66 .76
Net increase in net asset value from
operations .45 .41 .41
Net asset value, end of period $10.45 $10.41 $10.41
TOTAL RETURN
Total investment return based on net
asset value(b) 4.50% 4.10% 4.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $2,870 $5,170 $597
Ratio of expenses to average net
assets of:
Expenses, net of reimbursements 4.42%(a) 5.20%(a) 5.84%(a)
Net investment loss, net of waivers/
reimbursements (1.87)%(a) (2.64)%(a) (3.41)%(a)
Portfolio turnover rate 90% 90% 90%
* Commencement of operations.
** Net of expenses reimbursed by the Adviser.
(a) Annualized.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(c) Based on average shares outstanding.
15
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Alliance All-Asia Investment Fund, Inc. (the 'Fund'), including the portfolio
of investments, as of October 31, 1995, and the related statements of
operations and changes in net assets and the financial highlights for the
period from November 28, 1994 (commencement of operations) to October 31, 1995.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance All-Asia Investment Fund, Inc. at October 31, 1995 and the results of
its operations, the changes in its net assets and the financial highlights for
the period from November 28, 1994 to October 31, 1995, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
New York, New York,
December 8, 1995
16
ALLIANCE ALL-ASIA INVESTMENT FUND, INC.
_______________________________________________________________________________
DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
DAVID H. DIEVLER
JOHN H. DOBKIN
W.H. HENDERSON
STIG HOST
RICHARD M. LILLY
ALAN STOGA
JOHN C. WEST
ROBERT C. WHITE
OFFICERS
A. RAMA KRISHNA, SENIOR VICE PRESIDENT
KARAN TREHAN, SENIOR VICE PRESIDENT
THOMAS J. BARDONG, VICE PRESIDENT
NICHOLAS E. CROSSLAND, VICE PRESIDENT
KELLY A. MORGAN, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER AND CHIEF FINANCIAL OFFICER
PATRICK J. FARRELL, CONTROLLER
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY10004
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY10019
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-free 1-(800)-221-5672
17
ALLIANCE ALL-ASIA INVESTMENT FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCECAPITAL
MUTUAL FUNDS WITHOUT THE MYSTERY.
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
AAIAR
