ALLIANCE ALL-ASIA INVESTMENT FUND
SEMI-ANNUAL REPORT
APRIL 30, 1997
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
May 23, 1997
Dear Shareholder:
We are pleased to provide the semi-annual report to shareholders of the
Alliance All-Asia Investment Fund for the six months ended April 30, 1997.
Since the beginning of the fiscal year in November 1996 through the end of
April 1997, the Asian-Pacific markets, as measured by the Morgan Stanley
Pacific Index, have fallen about 21.5%.
In the table below, the Fund's performance is shown. For comparison, the
performance of the overall stock markets of the Far East, represented by the
unmanaged Morgan Stanley Pacific Index, is shown, along with performance for
the Lipper Pacific Region Funds Average. As you can see in the chart below,
your Fund outperformed the Morgan Stanley Pacific Index for the six- and
twelve-month periods ended April 30, but underperformed the Lipper peer group.
INVESTMENT RESULTS*
TOTAL RETURNS FOR THE
PERIODS ENDED APRIL 30, 1997
6 MONTHS 12 MONTHS
----------- -----------
ALLIANCE ALL-ASIA
INVESTMENT FUND
Class A -5.99% -14.86%
Class B -6.26 -15.41
Class C -6.25 -15.40
MORGAN STANLEY
PACIFIC INDEX -10.38 -21.49
LIPPER PACIFIC REGION
FUNDS AVERAGE -0.29 -7.58
* TOTAL RETURNS FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT EXPENSES
ASSOCIATED WITH THAT CLASS.
THE MORGAN STANLEY PACIFIC INDEX MEASURES THE PERFORMANCE OF LARGE-CAP
STOCKS IN SIX OF THE LARGEST ASIAN MARKETS. THE LIPPER PEER GROUP AVERAGE
REFLECTS PERFORMANCE OF 45 FUNDS WITH INVESTMENT OBJECTIVES SIMILAR TO THAT OF
THE ALL-ASIA INVESTMENT FUND, THOUGH INVESTMENT POLICIES MAY DIFFER.
During the period under review, Fund performance benefited from stock selection
in markets such as Malaysia, Japan, India, and Hong Kong as well as an
underweight position in Japan. Poor performance of some of the largest
positions in the fund such as SK Telecom detracted from performance.
JAPAN LIKELY TO REBOUND
Japan continues to muddle along with a slight recovery in the economy while
stocks provided poor returns, particularly for U.S. dollar-based investors. The
Tokyo Stock Exchange first section index was down 7% in local currency terms in
the November 1996 to April 1997 period, while the currency fell by over 11%
versus the U.S. dollar during the same period. While the significant
depreciation in the yen is helping external demand, domestic strength is
restrained by the overhang of debt in the economy. Total debt in Japan is over
300% of gross domestic product (GDP). Japanese institutions are dealing with
the bad debt overhang, albeit at a slow pace.
The Japanese economy should continue to recover in the next few months.
Consumers rushed to buy not only high priced durables prior to the consumption
tax rise in April, but consumer non-durables. As these stockpiles are run down,
retail sales and industrial production should recover. Capital spending is
already on a solid upswing.
Restructuring of the banking system is accelerating. The top 20 banks are
likely to have sold about $43 billion in loans in the year ending March 31,
1997, twice as much as they sold the previous year, and the fledgling
securitization market for bad loans is taking off. We expect banks with
stronger balance sheets, such as Bank of Tokyo-Mitsubishi and Sumitomo Bank, to
benefit as the industry consolidates.
We have reduced technology stock exposure. While we see Japanese technology
companies as having superior growth prospects, their stock prices appear to
have run ahead of fundamentals in the near term. Despite cutting back on our
holdings in this area, we maintain sizable positions in select technology and
automobile stocks in Japan such as TDK, Rohm, and Honda because we continue to
see strong earnings momentum and attractive valuations in these stocks.
OUTSIDE JAPAN: REVIEW AND OUTLOOK
The past six months have been dismal for most of the Asian markets. China,
India, and Taiwan have been notable exceptions. Our stock selection, as well as
our
1
ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
overweight position in India, provided some offset to the lackluster
performance of holdings in SK Telecom, PT Indosat, PT Telekomunikasi Indonesia,
and Korea Electric Power.
Economic recovery in the Asian-Pacific region has been uneven. While many of
the Asian economies are recovering, we see some as having their growth
constrained. Thailand and South Korea are going through acute financial
crisises and should see slower growth rates than in recent history. Meanwhile,
Australia and New Zealand are on a recovery path similar to that of Western
Europe. The hand over of Hong Kong to China appears to be on track and should
proceed smoothly.
We continue to be positive about the outlook for holdings in Asia. Earnings
numbers for the stocks we favor are coming in at or above expectations and the
valuations are compelling. Korea Mobile Telecom, one of our large holdings,
added 120,000 net subscribers in the month of March. This is on top of the
95,000 subscribers added in January, and the 115,000 subscribers added in
February. The company achieved 38% of our analysts' forecast for the full year
in the first quarter and we are adding to our holdings at current price levels.
THAILAND
In Thailand, the operating environment in the banking industry has deteriorated
significantly with loan growth slowing down and asset quality worsening.
Earnings in 1997 will be diminished at Thai Farmers Bank and Bangkok Bank
because of greater than expected provisioning. Valuations, however, continue to
look attractive for Thai Farmers Bank. We have significantly cut our position
in Bangkok Bank while slightly reducing our position in Thai Farmers Bank.
INDIA
We participated in the global depository receipt offering of Videsh Sanchar
Nigam, the Indian international telephony monopoly. Earnings should be robust
as they are a function of volumes under the revenue sharing agreement, and
volumes should be strong at about 20% a year.
HONG KONG
We continue to be negative on property holdings in Hong Kong as we expect the
speculator-driven property bubble to taper off in the next few months. However,
we have been adding to positions in banks. They are trading at attractive
valuations with strong earnings momentum.
AUSTRALIA
Within Australia, we initiated a position in Normandy Mining where we see the
upside coming from a re-rating towards higher valuations in line with major
North American gold producers. While Coca-Cola Amatil's earnings for the past
year were poor, the stock was sold down heavily, with the company losing over
A$1 billion in market capitalization over three days. As a result, we added to
our position in the stock.
In general, valuations for Asian stocks are at some of their most attractive
levels versus those for the U.S. stock market. We see the current period of
market weakness as an opportunity to add to your holdings in the Alliance
All-Asia Investment Fund.
FEE WAIVER
In order to enable the Fund to maintain a reasonable expense ratio,
notwithstanding its currently small size, Alliance has unilaterally determined
to temporarily waive its 0.15% administrative fee and 0.35% of the Fund's
advisory fee. These fee reductions are effective as of June 1, 1997. The Board
of Director's and Alliance are continuing to look for ways to further reduce
Fund expenses.
Thank you for your continued interest and investment in the Alliance All-Asia
Investment Fund. We look forward to reporting its progress to you in the near
future.
Sincerely,
John D. Carifa
Chairman and President
A. Rama Krishna
Senior Vice President
2
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
Alliance All-Asia Investment Fund seeks long-term capital appreciation. The
Fund invests principally in a non-diversified portfolio of equity securities of
Asia/Pacific countries.
INVESTMENT RESULTS
TOTAL RETURN AS OF APRIL 30, 1997
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -14.86% -18.47%
Since Inception* 1.86% 0.06%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -15.41% -18.69%
Since Inception* 1.21% 0.40%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year -15.40% -16.22%
Since Inception* 1.25% 1.25%
The average annual total returns reflect reinvestment 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);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000. Total return for Advisor Class shares will differ due to
different expenses associated with that class.
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
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
3
TEN LARGEST HOLDINGS
APRIL 30, 1997 (UNAUDITED) ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
PT Indosat--Provides international
telecommunication services $ 1,772,881 5.2%
Korea Electric Power (ADR)-Generates and
supplies electric power to industrial
and residential customers 1,717,000 5.1
South Korea Telecom, Ltd. (ADR)-Provides
local telecommunication services 1,668,390 4.9
Magnum Corp. Berhad--Provides finance, printing
and resort management services 1,173,153 3.5
Berjaya Sports Toto-Provides management
services and has operations in investment
holdings, property development and
computer services 1,147,182 3.4
Resorts World Berhad--Operates a tourist
resort at Genting Highlands 1,061,143 3.1
Total Access Communication, Plc.-Provides
cellular mobile telecommunications services 942,450 2.8
Bajaj Auto, Ltd. (GDR)-Manufactures and
distributes motorcycles and mopeds 916,515 2.7
Dickson Concepts, Ltd.--A holding company
whose subsidiaries are involved in
wholesaling and retailing 875,002 2.6
Videsh Sanchar Nigam, Ltd.-Provides
international telecommunication services 822,263 2.4
$12,095,979 35.7%
INDUSTRY DIVERSIFICATION
APRIL 30, 1997 (UNAUDITED)
_______________________________________________________________________________
PERCENT OF
U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Banking $ 5,203,815 15.3%
Basic Industries 1,486,049 4.4
Capital Goods 394,533 1.1
Consumer Manufacturing 2,626,823 7.8
Consumer Services 6,600,974 19.5
Consumer Staples 1,197,882 3.5
Energy 365,480 1.1
Finance 1,596,728 4.7
Healthcare 266,556 0.8
Multi-Industry 1,752,026 5.2
Technology 1,970,229 5.8
Transportation 719,403 2.1
Utilities 8,679,392 25.6
Total Investments* 32,859,890 96.9
Cash and receivables, net of liabilities 1,053,159 3.1
Net Assets $33,913,049 100.0%
* Excludes short-term obligations.
4
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997 (UNAUDITED) ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-96.4%
AUSTRALIA-6.6%
Coca-Cola Amatil, Ltd. 45,739 $ 522,880
Goldfields, Ltd. 4,176 6,644
Normandy Mining, Ltd. 285,000 348,944
Qantas Airways, Ltd. 124,161 258,044
Tab Corp Holdings, Ltd. 59,750 295,186
WMC, Ltd. 62,963 373,173
Woolworths, Ltd. 143,224 422,200
------------
2,227,071
HONG KONG-12.0%
Asia Satellite Telecom(a) 179,000 454,057
Beijing Datang Power Co.(a) 178,300 92,643
Dao Heng Bank Group, Ltd. 37,000 175,770
Dickson Concepts, Ltd. 237,000 875,002
First Pacific Co. 450,355 537,763
Guangshen Railway (ADR)(a) 26,000 617,500
Hang Seng Bank 12,000 134,770
HSBC Holdings, Plc. 20,400 514,839
Smartone Telecom
Holdings, Ltd.(a) 12,000 22,926
Swire Pacific, Ltd. Cl. A 28,000 215,968
Television Broadcasting, Ltd. 107,000 440,625
------------
4,081,863
INDIA-8.7%
Bajaj Auto, Ltd. (GDR)(a)(b) 27,900 916,515
Hindustan Petroleum 31,300 365,480
Industrial Credit & Inv. (GDR)(a)(b) 30,600 309,825
State Bank Of India (GDR)(a)(b) 11,500 279,738
Steel Authority Of India (GDR) 22,000 195,250
Videsh Sanchar Nigam,
Ltd. 24,000 $ 822,263
(GDR) (a) (b) 3,700 73,057
------------
2,962,128
INDONESIA-9.2%
PT Indosat 643,000 1,772,881
PT Sampoerna 3,500 14,079
PT Semen Cibinong 15,000 40,895
PT Semen Gresik 302,000 736,358
PT Telekomunikasi
Indonesia (ADR) 187,000 271,265
Series B 10,000 285,000
------------
3,120,478
JAPAN-20.1%
Advantest Corp. 2,400 133,286
Amano Corp. 7,000 65,619
Asahi Glass Co., Ltd. 11,000 99,649
Bank Of Tokyo-Mitsubishi 20,200 319,839
Bridgestone Corp. 6,000 127,614
Canon, Inc. 6,000 142,266
Dai Nippon Printing Co., Ltd. 4,000 72,157
Daifuku Co., Ltd. 6,000 69,006
Daito Trust Construction Co., Ltd. 9,100 91,756
Daiwa Securities Co., Ltd. 33,000 219,662
DDI Corp. 47 312,112
East Japan Railway Co. 14 60,546
Eisai Co., Ltd. 200 3,466
Fuji Bank 26,000 292,883
Fuji Heavy Industries 29,000 144,606
Fuji Photo Film 1,000 38,206
Hirose Electric 1,100 60,136
Honda Motor Co. 9,000 279,334
Hoya Corp. 1,000 45,847
Japan Securities Finance 12,000 86,778
Japan Tobacco, Inc. 31 197,558
Kokuyo 3,000 65,225
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Mitsubishi Heavy Industries, Ltd. 7,000 $ 46,209
Mitsui Marine & Fire Insurance Co. 30,000 170,625
Mitsui Trust & Banking 49,000 279,460
National House Industrial 6,000 70,897
Nintendo Co. 1,100 80,413
Nippon Express Co., Ltd. 6,000 41,356
Nippon Steel Co. 13,000 37,071
Nisshin Steel Co., Ltd. 25,000 62,035
NKK Corp. 18,000 38,851
Nomura Securities Co., Ltd. 30,000 335,578
Rohm Co. 4,000 310,056
Santen Pharmaceutical Co. 1,100 19,757
Sanwa Bank, Ltd. 19,000 203,553
Seven-Eleven Japan 4,200 266,336
Shimano, Inc. 3,000 50,573
Shiseido Co., Ltd. 5,000 71,685
Sony Corp. 3,000 218,362
Sumitomo Bank 45,000 514,002
Sumitomo Electric Industries 9,000 121,943
Sumitomo Marine & Fire Insurance Co. 6,000 36,914
Sumitomo Realty and Development 20,000 141,951
Taisho Pharmaceutical 2,000 49,470
Takeda Chemical Industries 1,000 23,081
TDK Corp. 5,000 360,392
Tokai Bank 5,000 37,221
UBE Industries, Ltd. 4,000 10,461
Yakult Honsha 3,000 28,831
Yamanouchi Pharmaceutical 8,000 170,783
Yamatake Honeywell 4,000 59,553
Yamazaki Baking Co., Ltd. 2,000 30,880
------------
6,815,850
MALAYSIA-14.8%
AMMB Holdings Berhad 90,000 $ 598,686
Berjaya Sports Toto 240,000 1,147,182
Magnum Corp. Berhad 740,000 1,173,153
Malakoff Berhad 90,000 358,494
Malayan Banking Berhad 20,000 199,164
Resorts World Berhad 288,000 1,061,143
Tanjong 128,000 463,971
------------
5,001,793
NEW ZEALAND-1.9%
Air New Zealand, Ltd. Cl. B 2,545 7,357
Fletcher Challenge, Ltd. 30,072 41,486
Lion Nathan, Ltd. 138,000 331,970
Telecom Corp. of New Zealand 59,000 264,634
------------
645,447
PHILIPPINES-6.0%
Alson's Cement Corp. 244,500 44,505
International Container
Terminal Svcs., Inc. (a) 13,125 7,715
Manila Electric Co. Series B 78,000 485,097
Metropolitan Bank & Trust Co. 769 15,747
Philipino Telephone Corp. (a) 901,000 427,095
Philippine Commercial International Bank 39,000 480,660
Philippine Long Distance Telephone 10,000 570,724
------------
2,031,543
SINGAPORE-0.8%
Development Bank of Singapore (a) 22,000 261,416
Overseas-Chinese Banking Corp., Ltd. 500 5,838
------------
267,254
6
ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
SOUTH KOREA-10.6%
Korea Electric Power (ADR) 101,000 $ 1,717,000
Pohang Iron & Steel Co. (ADR) 8,000 193,000
S.K. Telecom Co., Ltd. (ADR) 175,620 1,668,390
------------
3,578,390
THAILAND-5.7%
Bangkok Bank Co., Ltd. 25,000 231,601
Thai Farmers Bank, Ltd. 128,000 774,198
Total Access Communication Plc. 183,000 942,450
------------
1,948,249
Total Common Stocks
(cost $35,394,268) 32,680,066
CONVERTIBLE DEBT OBLIGATION-0.3%
JAPAN-0.3%
Sumitomo Bank International
.75%, 5/31/01 (c)
(cost $109,886) $12,000 101,028
CORPORATE DEBT OBLIGATIONS-0.2%
MALAYSIA-0.2%
AMMB Holdings Berhad
5.00%, 12/31/02 $90,000 $ 35,849
7.50%, 5/08/02 90,000 35,849
(cost $72,778) 71,698
WARRANTS-0.0%
HONG KONG-0.0%
Hysan Development
Wts. 4/30/98 (a) 550 188
MALAYSIA-0.0%
AMMB Holdings Berhad
Wts. 12/31/02 (a) 9,000 -0-
THAILAND-0.0%
The Thai Farmers Bank,
Wts. 9/15/02 (a) 9,500 6,910
Total Warrants
(cost $9,408) 7,098
TIME DEPOSIT-2.3%
UNITED STATES-2.3%
Bank Of Tokyo-Mitsubishi
5.69%, 05/01/97
(cost $800,000) $ 800 800,000
TOTAL INVESTMENTS-99.2%
(cost $36,386,340) 33,659,890
Other assets less liabilities-0.8% 253,159
NET ASSETS-100% $33,913,049
(a) Non-income producing security.
(b) Securities are exempt from registration under rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30, 1997,
these securities amounted to $1,579,135 or 4.7% of net assets.
(c) Japanese holding.
Glossary of Terms:
ADR - American depository receipt.
GDR - Global depository receipt.
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED) ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $36,386,340) $ 33,659,890
Cash, at value (cost $674,168) 673,532
Receivable for investment securities sold 765,187
Receivable for capital stock sold 364,271
Deferred organization expenses 103,721
Dividends and interest receivable 49,948
Total assets 35,616,549
LIABILITIES
Payable for investment securities purchased 1,353,341
Payable for capital stock redeemed 76,467
Advisory fee payable 28,516
Distribution fee payable 21,209
Accrued expenses 223,967
Total liabilities 1,703,500
NET ASSETS $ 33,913,049
COMPOSITION OF NET ASSETS
Capital stock, at par $ 3,402
Additional paid-in capital 37,881,978
Accumulated net investment loss (535,523)
Accumulated net realized loss on investments and foreign
currency transactions (711,328)
Net unrealized depreciation of investments and foreign
currency denominated assets and liabilities (2,725,480)
$ 33,913,049
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($8,840,070/
877,510 shares of capital stock issued and outstanding) $10.07
Sales Charge--4.25% of public offering price .45
Maximum offering price $10.52
CLASS B SHARES
Net asset value and offering price per share ($19,695,946/
1,986,493 shares of capital stock issued and outstanding) $ 9.91
CLASS C SHARES
Net asset value and offering price per share ($2,897,701/
292,115 shares of capital stock issued and outstanding) $ 9.92
ADVISOR CLASS SHARES
Net asset value, redemption, and offering price per share
($2,479,332 / 245,847 shares of capital stock issued and
outstanding) $10.08
See notes to financial statements.
8
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED) ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes
withheld of $27,200) $ 215,749
Interest 7,940 $ 223,689
EXPENSES
Advisory fee 192,171
Distribution fee - Class A 17,442
Distribution fee - Class B 113,701
Distribution fee - Class C 17,033
Custodian 154,533
Registration 55,459
Transfer agency 52,934
Audit and legal 51,506
Administrative 28,826
Amortization of organization expenses 20,535
Directors' fees 19,000
Printing 14,866
Miscellaneous 17,104
Total expenses 755,110
Net investment loss (531,421)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment transactions (584,708)
Net realized loss on foreign currency transactions (59,276)
Net change in unrealized appreciation
(depreciation) of:
Investments (860,011)
Foreign currency denominated assets and liabilities 1,829
Net loss on investments and foreign
currency transactions (1,502,166)
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (2,033,587)
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
SIX MONTHS ENDED EAR ENDED
APRIL 30, 1997 OCTOBER 31,
(UNAUDITED) 1996
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (531,421) $ (646,380)
Net realized gain (loss) on investments
and foreign currency transactions (643,984) 1,777,108
Net change in unrealized depreciation
of investments and foreign currency
denominated assets and liabilities (858,182) (1,889,917)
Net decrease in net assets from operations (2,033,587) (759,189)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (362,976) (21,900)
Class B (710,027) (46,814)
Class C (103,481) (5,445)
Advisor Class (5,766) -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) (3,193,973) 32,518,713
Total increase (decrease) (6,409,810) 31,685,365
NET ASSETS
Beginning of year 40,322,859 8,637,494
End of period $33,913,049 $40,322,859
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 (UNAUDITED) ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
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 offers Class A, Class B, Class C and Advisor Class
shares. Class A, Class B and Class C shares commenced operations on November
28, 1994. Advisor Class shares commenced operation on October 2, 1996. Class A
shares are sold with an initial sales charge of up to 4.25%. With respect to
purchases of $1,000,000 or more, Class A shares redeemed within one year of
purchase will be subject to a contingent deferred sales charge of 1%. 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 purchased on or after July 1,
1996 are subject to a contingent deferred sales charge of 1.00% on redemptions
made within the first year after purchase. Advisor Class shares are sold
without an initial or contingent deferred sales charge and are not subject to
ongoing distribution expenses. Advisor Class shares are offered solely to
investors participating in fee-based programs. All four 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, unless this method does not represent fair value.
Securities for which market quotations are not readily available and restricted
securities are valued in good faith at fair value using methods 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 gain on foreign currency transactions represents foreign exchange
gains and losses from sales and maturities of investments and foreign currency
contracts, the holding of foreign currencies, currency gains or losses realized
between the trade and settlement dates on foreign 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 unrealized currency gains and losses
from valuing foreign currency denominated assets and liabilities at period end
exchange rates are reflected as a component of net change in unrealized
appreciation (depreciation) 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 provisions for federal income or excise taxes are
required.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
5. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. Investment gains and losses are determined on the identified
cost basis. The Fund accretes discounts on short-term securities as adjustments
to interest income.
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.
For federal income tax purposes, the Fund's distributions of income and capital
gains are subject to recharacterization, which may include a tax return of
capital, at the end of the year to reflect the final investment results for
that year.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under an investment advisory agreement, the Fund pays Alliance Capital
Management, L.P. ("the 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.
Under the terms of an Administrative Agreement, the Fund pays Alliance Capital
Management, L.P. (the "Administrator"), a monthly fee equal to the annualized
rate of .15 of 1% of the Fund's average daily net assets. Such compensation
amounted to $28,826 for the six months ended April 30, 1997.
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.
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 $39,084 for the six months ended April 30, 1997.
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 $1,876 from the sale of Class A shares and $34,285
and 808 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B, and Class C shares, respectively, for the six months
ended April 30, 1997.
Brokerage commissions paid on securities transactions for the six months ended
April 30, 1997 amounted to $173,355, of which $6,799 was paid to a broker
utilizing the services of an affiliate of the Adviser.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays 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. There is no distribution fee on the Advisor Class
shares. The fees are accrued daily and paid monthly. The Agreement provides
that the Distributor will use such payments in their entirety for distribution
assistance and promotional activities. The Distributor has incurred expenses in
excess of the distribution costs reimbursed by the Fund in the amounts of
$1,528,108 and $127,339 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
_______________________________________________________________________________
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term and U.S.
government obligations) aggregated $12,161,192 and $17,940,548, respectively,
for the six months ended April 30, 1997. There were no purchases or sales of
U.S. government or government agency obligations for the six months ended April
30, 1997.
At April 30, 1997, the cost of securities for federal income tax purposes was
$36,420,673. Accordingly, gross unrealized appreciation of investments was
$2,046,723 and gross unrealized depreciation of investments was $4,807,506
resulting in net unrealized depreciation of $2,760,783.
FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund enters into forward exchange currency contracts for investment
purposes and 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 difference
between the original contracts and the closing of such contracts is included in
net realized gains or losses 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 other liquid assets 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. There were no forward exchange currency
contracts outstanding at April 30, 1997.
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 12,000,000,000 shares of $0.001 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, APRIL 30, 1997 OCTOBER 31,
(UNAUDITED) 1996 (UNAUDITED) 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 253,866 1,333,932 $ 2,810,727 $ 15,265,574
Shares issued in
reinvestment of
distributions 29,448 1,703 321,278 18,287
Shares converted
from Class B 5,877 19,434 62,615 233,351
Shares redeemed (524,870) (516,471) (5,704,423) (5,861,457)
Net increase
(decrease) (235,679) 838,598 $ (2,509,803) $ 9,655,755
CLASS B
Shares sold 409,150 2,645,348 $ 4,471,063 $ 30,130,477
Shares issued in
reinvestment of
distributions 42,591 3,362 458,704 35,910
Shares converted
to Class A (5,968) (19,621) (62,615) (233,415)
Shares redeemed (641,123) (944,132) (7,024,050) (10,813,924)
Net increase
(decrease) (195,350) 1,684,957 $ (2,156,898) $ 19,119,048
CLASS C
Shares sold 79,217 679,693 $ 860,404 $ 7,727,714
Shares issued in
reinvestment of
distributions 8,253 481 88,889 5,146
Shares redeemed (183,000) (349,835) (2,039,865) (4,016,334)
Net increase
(decrease) (95,530) 330,339 $ (1,090,572) $ 3,716,526
OCT. 2, 1996* OCT. 2, 1996*
TO TO
OCT. 31, 1996 OCT. 31, 1996
------------ --------------
ADVISOR CLASS
Shares sold 246,583 2,474 $ 2,597,496 $ 27,384
Shares issued in
reinvestment of
distributions 528 -0- 5,766 -0-
Shares redeemed (3,738) -0- (39,962) -0-
Net increase 243,373 2,474 $ 2,563,300 $ 27,384
* Commencement of distribution
14
FINANCIAL HIGHLIGHTS ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------
SIX MONTHS ENDED YEAR ENDED NOV. 28, 1994(A)
APRIL 30, 1997 OCTOBER 31, TO
(UNAUDITED) 1996 OCT. 31, 1995
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period $11.04 $10.45 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(b) (.13) (.21)(c) (.19)(c)
Net realized and unrealized gain (loss)
on investments (.50) .88 .64
Net increase (decrease) in net asset
value from operations (.63) .67 .45
LESS: DISTRIBUTIONS
Distributions from net realized gains on
investments and foreign currency
transactions (.34) (.08) -0-
Net asset value, end of period $10.07 $11.04 $10.45
TOTAL RETURN
Total investment return based on net
asset value(d) (5.99)% 6.43% 4.50%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $8,840 $12,284 $2,870
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 3.45%(e) 3.37% 4.42%(e)
Expenses, before waivers/reimbursements 3.45%(e) 3.61% 10.57%(e)
Net investment loss, net of
waivers/reimbursements (2.29)%(e) (1.75)% (1.87)%(e)
Portfolio turnover rate 56% 66% 90%
Average commission rate paid (f) $.0269 $.0280 --
</TABLE>
See footnote summary on page 18.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------
SIX MONTHS ENDED YEAR ENDED NOV. 28, 1994(A)
APRIL 30, 1997 OCTOBER 31, TO
(UNAUDITED) 1996 OCT. 31, 1995
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period $10.90 $10.41 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(b) (.16) (.28)(c) (.25)(c)
Net realized and unrealized gain (loss)
on investments (.49) .85 .66
Net increase (decrease) in net asset
value from operations (.65) .57 .41
LESS: DISTRIBUTIONS
Distributions from net realized gains on
investments and foreign currency
transactions (.34) (.08) -0-
Net asset value, end of period $9.91 $10.90 $10.41
TOTAL RETURN
Total investment return based on net
asset value(d) (6.26)% 5.49% 4.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $19,696 $23,784 $5,170
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 4.16%(e) 4.07% 5.20%(e)
Expenses, before waivers/reimbursements 4.16%(e) 4.33% 11.32%(e)
Net investment loss, net of
waivers/reimbursements (2.99)%(e) (2.44)% (2.64)%(e)
Portfolio turnover rate 56% 66% 90%
Average commission rate paid (f) $.0269 $.0280 --
</TABLE>
See footnote summary on page 18.
16
ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------
SIX MONTHS ENDED YEAR ENDED NOV. 28,1994(A)
APRIL 30, 1997 OCTOBER 31, TO
(UNAUDITED) 1996 OCT. 31, 1995
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period $10.91 $10.41 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(b) (.16) (.28)(c) (.35)(c)
Net realized and unrealized gain (loss)
on investments (.49) .86 .76
Net increase (decrease) in net asset
value from operations (.65) .58 .41
LESS: DISTRIBUTIONS
Distributions from net realized gains
on investments and foreign currency
transactions (.34) (.08) -0-
Net asset value, end of period $9.92 $10.91 $10.41
TOTAL RETURN
Total investment return based on net
asset value(d) (6.25)% 5.59% 4.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $2,898 $4,228 $597
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 4.14%(e) 4.07% 5.84%(e)
Expenses, before waivers/reimbursements 4.14%(e) 4.30% 11.38%(e)
Net investment loss, net of
waivers/reimbursements (2.98)%(e) (2.42)% (3.41)%(e)
Portfolio turnover rate 56% 66% 90%
Average commission rate paid (f) $.0269 $.0280 --
</TABLE>
See footnote summary on page 18.
17
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
ADVISOR CLASS
-----------------------------------
SIX MONTHS ENDED OCTOBER 2, 1996(G)
APRIL 30, 1997 TO
(UNAUDITED) OCTOBER 31, 1996
------------- -------------
Net asset value, beginning of period $11.04 $11.65
INCOME FROM INVESTMENT OPERATIONS
Net investment loss(b) (.09) -0-(c)
Net realized and unrealized loss on
investments (.53) (.61)
Net decrease in net asset value from
operations (.62) (.61)
LESS: DISTRIBUTIONS
Distributions from net realized gains on
investments and foreign currency
transactions (.34) -0-
Net asset value, end of period $10.08 $11.04
TOTAL RETURN
Total investment return based on net
asset value(d) (5.89)% (5.24)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $2,479 $27
Ratio to average net assets of:
Expenses, net of waivers/reimbursements (e) 3.44% 4.97%
Expenses, before waivers/reimbursements (e) 3.44% 5.54%
Net investment income, net of
waivers/reimbursements (e) (2.30)% 1.63%
Portfolio turnover rate 56% 66%
Average commission rate paid $.0269 $.0280
(a) Commencement of operations.
(b) Based on average shares outstanding.
(c) Net of expenses waived by the Adviser.
(d) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(e) Annualized.
(f) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclosure its average commission rate per share for trades on
which commissions are charged. This amount includes commissions paid to foreign
brokers which may materially affect the rate shown. Amounts paid in foreign
currencies have been converted into US dollars using the prevailing exchange
rate on the date of the transaction.
(g) Commencement of distribution.
18
ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
W.H. HENDERSON (1)
STIG HOST (1)
RICHARD M. LILLY (1)
ALAN STOGA (1)
OFFICERS
A. RAMA KRISHNA, SENIOR VICE PRESIDENT
KARAN TREHAN, SENIOR VICE PRESIDENT
THOMAS J. BARDONG, VICE PRESIDENT
DANIEL V. PANKER, VICE PRESIDENT
FRANCIS P. REEVES, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
DOMENICK PUGLIESE, ASSISTANT SECRETARY
MARK D. GERSTEN, TREASURER AND CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, CONTROLLER
PHYLLIS CLARKE, ASSISTANT 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
(1) Members of the Audit Committee.
19
ALLIANCE ALL-ASIA INVESTMENT FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
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.
AAISR
