ALLIANCE ALL-ASIA INVESTMENT FUND
SEMI-ANNUAL REPORT
APRIL 30, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
June 28, 1999
Dear Shareholder:
This report provides an update of performance and investment activity of
Alliance All-Asia Investment Fund (the "Fund") for the semi-annual reporting
period ended April 30, 1999.
INVESTMENT RESULTS
The following table shows how your Fund performed during the six- and
twelve-month periods ended April 30, 1999. For comparison, the table also
provides performance data for the Fund's benchmark, as represented by the MSCI
AC Asia Pacific Index, and the Fund's peer group average, as represented by the
Lipper Pacific Region Funds Average.
For the six-month period ended April 30, 1999, the Fund's Class A shares posted
a total return of 30.89% at net asset value, marginally outperforming the MSCI
AC Asia Pacific Index gain of 29.86%, however, slightly underperforming its
peer group of funds, as represented by the Lipper Pacific Region Funds Average,
which increased 31.39%.
Over the six months ended April 30, 1999, equity markets around the region
generally performed strongly. During this period, Japan was up 27.1%, Australia
climbed 25.6%, Hong Kong gained 27.9%, Singapore appreciated 50.8%, and South
Korea was up 122.8%, all on a U.S.-dollar basis. The strength of the currencies
in Asia amplified this strong stock market performance when the U.S. dollar
return is calculated. During the period, almost all of the regional currencies
appreciated against the U.S. dollar with the exception of the Chinese renminbi
and Hong Kong dollar, which remained flat due to the currency peg system.
In terms of the Fund's country allocation, during the six month period ended
April 30, 1999 we were generally in line with the benchmark index, but with
exceptions in our underweighting of Japan and our overweightings in Korea,
Taiwan and India. The Fund's relative overweighting in India hindered
performance as the returns of the Indian market lagged those of the other
countries within the region. Going forward, however, we believe that our
holdings in India will benefit the Fund's performance.
INVESTMENT RESULTS*
Periods Ended April 30, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE ALL-ASIA
INVESTMENT FUND
Class A 30.89% 6.38%
Class B 30.30% 5.53%
Class C 30.42% 5.67%
MSCI AC ASIA
PACIFIC INDEX 29.86% 19.91%
LIPPER PACIFIC REGION
FUNDS AVERAGE 31.39% 15.14%
* THE FUND'S INVESTMENT RESULTS ARE TOTAL RETURNS FOR THE PERIODS AND ARE
BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES. ALL FEES AND EXPENSES
RELATED TO THE OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT NO ADJUSTMENT HAS
BEEN MADE FOR SALES CHARGES THAT MAY APPLY WHEN SHARES ARE PURCHASED OR
REDEEMED. TOTAL RETURN FOR ADVISOR CLASS SHARES WILL DIFFER DUE TO DIFFERENT
EXPENSES ASSOCIATED WITH THAT CLASS. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE
RESULTS.
THE MSCI AC ASIA PACIFIC INDEX IS A TOTAL RETURN, CAPITALIZATION-WEIGHTED
INDEX THAT MEASURES THE PERFORMANCE OF STOCK MARKETS IN 15 PACIFIC REGION
COUNTRIES INCLUDING AUSTRALIA, CHINA (FREE)#, HONG KONG, INDIA, INDONESIA,
JAPAN, KOREA, MALAYSIA, NEW ZEALAND, PAKISTAN, PHILIPPINES, SINGAPORE, SRI
LANKA, TAIWAN AND THAILAND. AN INVESTOR CANNOT INVEST DIRECTLY IN AN INDEX. THE
LIPPER PACIFIC REGION FUNDS AVERAGE (THE "LIPPER AVERAGE") CONSISTS OF FUNDS
THAT CONCENTRATE THEIR INVESTMENTS IN EQUITY SECURITIES WITH PRIMARY TRADING
MARKETS OR OPERATIONS CONCENTRATED IN THE WESTERN PACIFIC BASIN REGION OR A
SINGLE COUNTRY WITHIN THIS REGION. THE LIPPER AVERAGE INCLUDES 51 FUNDS FOR THE
SIX-MONTH PERIOD AND 48 FUNDS FOR THE TWELVE-MONTH PERIOD.
# EXCLUDES SHARES WHICH ARE NOT READILY PURCHASED BY NON-LOCAL INVESTORS.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 3.
ECONOMIC OUTLOOK
The Asian economy has started to show evidence of bottoming out. For example,
the Asian Development Bank released its 1999 gross domestic product ("GDP")
growth forecast for Asia ex-Japan, at 4.4% in real terms, up from 2.6% in 1998.
The Bank of Korea has estimated that the Korean economy expanded 3.0% in the
first three months of 1999, and will grow 3.8% in 1999, faster than its
previous forecast of 3.2%.
1
ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
Annualized Japanese GDP growth for the first quarter of 1999 was recently
released at 7.9%, quarter-on-quarter and, consequently, the IMF is reportedly
studying an upward revision of its 1999 GDP forecast for Japan (from -1.4%). We
believe that a Japanese recovery will have widespread positive effects on the
Asian economy and that we will observe more positive news about the region
going forward.
PORTFOLIO STRATEGY AND OUTLOOK
We take full advantage of Alliance's global research team. We have our in-house
Asian research teams in Tokyo, Hong Kong, Singapore and Mumbai. These teams
keep in close contact with our U.S. and European research teams to exchange
views and identify industry trends in advance. On the basis of our in-depth
fundamental research and frequent contact with corporate managements across the
region, we hope to identify undervalued companies in the sector. As of the end
of April, we are almost fully invested in over fifty companies located in nine
countries within the region.
Regarding stock selection, we seek to distinguish those companies with sound
fundamentals, strong management, and clear shareholder orientation through our
research team on the ground. At the end of the period, your Fund's ten largest
holdings accounted for 30.8% of total net assets.
As of April 30, 1999, your Fund had invested 3.8% of its total net assets in
India Information Technology Fund, through which we invested in Indian software
companies. The Indian information technology industry has been a very strong
stock market performer in the 1998 calendar year, with the market
capitalization of the forty-six companies in the sector rising by 162%. We
believe that this trend will continue, thanks to the cost-competitive talented
labor pool in India, as well as the Indian Government's support of this
industry.
In Japan, Takeda Chemical Industries and Tokyo Electron, Ltd. were also among
your Fund's core investments. Takeda is the largest pharmaceutical company in
Japan with a strong product pipeline. Through its successful joint venture with
Abbott Laboratories, Takeda also takes advantage of strong growth in health
care spending in the U.S.
Tokyo Electron, Ltd. is the world's second largest semiconductor production
equipment maker. We expect that Tokyo Electron's order receipt will show strong
growth for two important reasons. First, the cyclical semiconductor market
appears to have bottomed out and manufacturers have started to increase
semiconductor capital spending. Second, in order to improve production
efficiency, the silicon wafer size of the most advanced production line will be
increased from 200 mm to 300 mm in diameter. This important technological leap
is anticipated to begin in the year 2000, and will require substantial
investment because semiconductor producers will invest in new lines. We expect
that Tokyo Electron will benefit from this increased investment because it can
supply 300 mm-based equipment.
The software and systems integration business in Asia has also seen strong
growth rates, particularly in India. Infosys Technologies, Ltd. (your Fund's
largest holding at April 30, 1999), as well as NIIT, Ltd., and BFL Software,
Ltd. serve premier overseas clients with possible solutions to systems
integration issues. We continue to overweight India because of these companies.
We appreciate your continued interest and investment in Alliance All-Asia
Investment Fund and look forward to reporting to you again on the Fund's
investment results.
Sincerely,
John D. Carifa
Chairman and President
Hiroshi Motoki
Vice President
Samir Arora
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 portfolio of equity securities issued by
companies based in Asia and the pacific region.
INVESTMENT RESULTS
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF APRIL 30, 1999
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 6.38% 1.86%
Since Inception* -5.02% -5.94%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 5.53% 1.53%
Since Inception* -5.66% -5.66%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 5.67% 4.67%
Since Inception* -5.60% -5.60%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END
(MARCH 31, 1999)
CLASS A CLASS B CLASS C
------- ------- -------
1 Year -6.27% -6.75% -3.84%
Since Inception* -7.05% -6.74% -6.71%
The Fund's investment results represent average annual total returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) 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 date for Classes A, B & C IS 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, 1999 (UNAUDITED) ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Infosys Technologies, Ltd.--
Develops software and provides
services for the distribution,
banking, telecommunication and
manufacturing sectors. $ 1,277,809 5.0%
India Information Technology
Fund--Open-end investment
company that invests its
assets in equity securities
of companies in India. 972,720 3.8
Takeda Chemical Industries--
Produces and sells health-
care related products. 912,623 3.6
Tokyo Electron, Ltd.--Produces,
imports and sells electronic
products. 797,153 3.1
Taiwan Semiconductor
Manufacturing Co.--
Manufactures and sells
integrated circuits and
other semiconductor devices. 743,425 2.9
Housing & Commercial Bank,
Korea--Provides a full range
of commercial and mortgage
banking services. 706,773 2.8
TDK Corp.--Manufactures magnetic
tapes and floppy discs. 680,511 2.7
Qantas Airways, Ltd.--International
airline with routes mainly in
the Asia-Pacific region. 604,178 2.4
Alps Electric Co., Ltd.--
Manufactures and markets
electronic parts for cars,
computer peripherals and
communications and broadcasting
related equipment. 576,512 2.3
Santen Pharmaceutical Co., Ltd.--
Produces and sells
pharmaceuticals for human
and veterinary use. 545,112 2.2
$ 7,816,816 30.8%
4
INDUSTRY DIVERSIFICATION
APRIL 30, 1999 (UNAUDITED) ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
PERCENT OF
U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Capital Goods $ 753,524 3.0%
Consumer Manufacturing 533,700 2.1
Consumer Services 3,475,050 13.7
Consumer Staples 2,088,620 8.2
Finance 5,828,300 23.0
Healthcare 2,239,983 8.8
Multi-Industry 218,301 0.9
Technology 7,545,052 29.7
Utilities 742,528 2.9
Total Investments* 23,425,058 92.3
Cash and receivables, net of liabilities 1,957,131 7.7
Net Assets $ 25,382,189 100.0%
* Excludes short-term obligations.
5
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED) ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-92.3%
AUSTRALIA-10.4%
Lend Lease Corp., Ltd. 33,000 $ 444,900
National Australia Bank, Ltd. 22,000 428,311
Publishing & Broadcasting, Ltd. 70,000 470,498
Qantas Airways, Ltd. 220,000 604,178
Tabcorp Holdings, Ltd. 43,750 355,815
Telstra Corp., Ltd. 63,000 341,860
------------
2,645,562
HONG KONG-7.9%
Cheung Kong Holdings, Ltd. 24,000 218,301
China Telecom (Hong Kong), Ltd.
Cl. H (a) 160,000 365,384
Johnson Electric Holdings, Ltd. 80,000 238,945
Li & Fung, Ltd. 100,000 245,138
NG Fung Hong, Ltd. 220,000 212,883
Sun Hung Kai Properties, Ltd. 32,000 279,715
Television Broadcast, Ltd. 60,000 243,847
VTech Holdings, Ltd. 60,000 205,141
------------
2,009,354
INDIA-13.6%
BFL Software, Ltd. (a) 28,000 517,434
Digital Equipment India, Ltd. 21,000 201,951
India Information Technology Fund (a) 46,320 972,720
Infosys Technologies, Ltd. (ADR) (a) 18,200 751,888
New Shares (a) 8,500 525,921
Leading Edge Systems, Ltd. 200 1,483
NIIT, Ltd. Bonus Shares (a) 5,000 194,467
Zee Telefilms, Ltd. (a) 10,900 287,402
------------
3,453,266
JAPAN-42.7%
Acom Co., Ltd. 3,000 224,827
Aeon Credit Service, Ltd. 4,400 379,485
Ajinomoto Co., Inc. 30,000 346,912
Alps Electric Co., Ltd. 34,000 576,512
Bank of Tokyo-Mitsubishi, Ltd. 34,200 504,588
Banyu Pharmaceutical Co., Ltd. 27,000 497,383
Bridgestone Corp. 10,000 267,951
Canon, Inc. 11,000 268,955
Fuji Bank, Ltd. 60,000 468,244
Fuji Photo Film Co. 9,000 339,879
Honda Motor Co., Ltd. 6,000 264,266
Hoya Corp. 5,000 261,671
Ibiden Co., Ltd. 30,000 523,760
Japan Tobacco, Inc. 35 351,685
Kao Corp. 18,000 456,688
Kita Kyushu Coca-Cola Bottling Co.,
Ltd. 8,000 389,868
NTT Mobile Communications
Network, Inc. 4 234,457
Rohm Co., Ltd. 2,000 241,156
Santen Pharmaceutical Co., Ltd. 30,000 545,112
Shinko Electric Industries Co., Ltd. 7,000 269,625
Shiseido Co., Ltd. 21,000 330,584
Shohkoh Fund & Co., Ltd. 700 410,299
Takeda Chemical Industries 21,000 912,623
TDK Corp. 9,000 680,511
Tokyo Electron, Ltd. 14,000 797,153
Yamanouchi Pharmaceutical Co., Ltd. 9,000 284,865
------------
10,829,059
PHILIPPINES-1.7%
Bank of the Philippine Islands 135,000 426,036
6
ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
SINGAPORE-3.8%
Natsteel Electronics, Ltd. 74,000 $ 248,659
Pacific Internet, Ltd. (a) 4,400 349,250
Singapore Press Holdings, Ltd. 25,000 368,449
------------
966,358
SOUTH KOREA-7.3%
Housing & Commercial Bank, Korea (a) 30,000 706,773
Samsung Electronics 6,000 461,422
Samsung Fire & Marine Insurance 600 277,661
S.K. Telecom Co., Ltd. 227 249,430
ADR 10,900 151,238
------------
1,846,524
TAIWAN-4.7%
Hon Hai Precision Industry (a) 45,000 244,954
Sunplus Technology Co., Ltd. (a) 60,000 200,917
Taiwan Semiconductor Manufacturing
Co. (a) 220,000 743,425
------------
1,189,296
THAILAND-0.2%
Siam Common Bank CV pfd. (a) 85,000 59,603
Total Common Stocks & Other Investments
(cost $19,232,279) 23,425,058
TIME DEPOSIT-2.0%
UNITED STATES-2.0%
West Deutsche Landesbank Girozentrale
4.88%, 5/03/99 (cost $500,000) $500 500,000
TOTAL INVESTMENTS-94.3%
(cost $19,732,279) 23,925,058
Other assets less liabilities-5.7% 1,457,131
NET ASSETS-100% $ 25,382,189
(a) Non-income producing security.
Glossary:
ADR - American Depositary Receipt
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED) ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $19,732,279) $ 23,925,058
Cash, at value (cost $2,339,144) 2,347,396
Receivable for investment securities sold 999,780
Receivable for capital stock sold 472,357
Dividends and interest receivable 23,141
Deferred organization expense 21,000
Receivable from Adviser 16,268
Total assets 27,805,000
LIABILITIES
Payable for investment securities purchased 2,214,249
Payable for capital stock redeemed 26,980
Distribution fee payable 14,795
Organizational expense payable 311
Accrued expenses 166,476
Total liabilities 2,422,811
NET ASSETS $ 25,382,189
COMPOSITION OF NET ASSETS
Capital stock, at par $ 3,371
Additional paid-in capital 34,230,370
Distributions in excess of net investment income (185,823)
Accumulated net realized loss on investments and
foreign currency transactions (12,846,407)
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 4,180,678
$ 25,382,189
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($6,878,306 / 896,721 shares of capital stock
issued and outstanding) $7.67
Sales Charge--4.25% of public offering price 0.34
Maximum offering price $8.01
CLASS B SHARES
Net asset value and offering price per share
($13,041,779 / 1,751,893 shares of capital stock
issued and outstanding) $7.44
CLASS C SHARES
Net asset value and offering price per share
($3,262,493 / 437,449 shares of capital stock
issued and outstanding) $7.46
ADVISOR CLASS SHARES
Net asset value, redemption and offering price
per share ($2,199,611 / 284,454 shares of
capital stock issued and outstanding) $7.73
See notes to financial statements.
8
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes
withheld of $5,860) $ 59,255
Interest 15,165 $ 74,420
EXPENSES
Advisory fee 93,396
Distribution fee - Class A 6,998
Distribution fee - Class B 50,340
Distribution fee - Class C 10,698
Custodian 97,497
Transfer agency 60,351
Audit and legal 49,833
Registration 25,737
Amortization of organization expenses 21,790
Printing 19,758
Directors' fees 17,053
Administrative 14,009
Miscellaneous 12,241
Total expenses 479,701
Less: expenses waived and reimbursed
by the Adviser (see Note B) (156,232)
Less: expense offset arrangement
(see Note B) (3,264)
Net expenses 320,205
Net investment loss (245,785)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 28,041
Net realized loss on foreign currency
transactions (418,206)
Net change in unrealized appreciation of:
Investments 5,398,552
Foreign currency denominated assets and
liabilities 371,167
Net gain on investments and foreign
currency transactions 5,379,554
NET INCREASE IN NET ASSETS FROM OPERATIONS $5,133,769
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31,
(UNAUDITED) 1998
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (245,785) $ (347,926)
Net realized loss on investments
and foreign currency transactions (390,165) (7,043,756)
Net change in unrealized
appreciation of investments
and foreign currency denominated
assets and liabilities 5,769,719 3,310,053
Net increase (decrease) in net
assets from operations 5,133,769 (4,081,629)
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) 3,897,005 (119,649)
Total increase (decrease) 9,030,774 (4,201,278)
NET ASSETS
Beginning of year 16,351,415 20,552,693
End of period $25,382,189 $16,351,415
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 (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 an open-end management investment company.
The Fund offers Class A, Class B, Class C and Advisor Class shares. 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 may 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 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 to investors participating in fee-based
programs and to certain retirement plan accounts. 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 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 sale price or if no sale occurred, at the
mean of the closing bid and asked price 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. 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 or loss on foreign currency transactions represents foreign
exchange gains and losses from sales of investments and forward exchange
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 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.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
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 any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
5. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the shares of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees
than Class A shares and the Advisor Class shares have no distribution fees.
6. 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.
7. 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 FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under an investment advisory agreement, the Fund pays Alliance Capital
Management L.P. ("the Adviser") an advisory fee at an annual rate of 1% of the
Fund's average daily net assets. Such fee is accrued daily and paid monthly.
Effective July 1, 1998 the Adviser has agreed to waive its fees and bear
certain expenses to the extent necessary to limit total operating expenses on
an annual basis to 3.00%, 3.70%, 3.70% and 2.70% of the daily average net
assets for the Class A, Class B, Class C and Advisor Class shares,
respectively. For the six months ended April 30, 1999, such waivers and
reimbursement amounted to $142,223. The Adviser may terminate the waiver at any
time.
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. For the six months
ended April 30, 1999, the Adviser agreed to waive its fees. Such waiver
amounted to $14,009.
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 $42,731 for the six months ended April 30, 1999.
For the six months ended April 30, 1999, the Fund's expenses were reduced by
$3,264 under an expense offset arrangement with Alliance Fund Services.
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 $3,117 from the sales of Class A shares, $14,249 and
$2,746 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, 1999.
Brokerage commissions paid on investment transactions for the six months ended
April 30, 1999 amounted to $141,509, none of which was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp. ("DLJ"), an affiliate of the Adviser, nor to DLJ directly.
12
ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
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
$2,150,638 and $320,747 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.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term and U.S.
government obligations) aggregated $20,680,869 and $18,953,483, respectively,
for the six months ended April 30, 1999. There were no purchases or sales of
U.S. government or government agency obligations for the six months ended April
30, 1999.
At April 30, 1999, the cost of investments for federal income tax purposes was
substantially the same as the cost for finanical reporting purposes.
Accordingly, gross unrealized appreciation of investments was $4,248,355 and
gross unrealized depreciation of investments was $55,576 resulting in net
unrealized appreciation of $4,192,779, (excluding foreign currency
transactions).
The Fund had a net capital loss carryover of $12,456,151, of which $5,008,025
expires October 31, 2005, and $7,448,126, expires October 31, 2006. To the
extent that any net capital loss carryover or post-October loss is used to
offset future capital gains, it is probable that these gains will not be
distributed to shareholders.
FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund enters into forward exchange currency contracts to hedge its exposure
to changes in foreign currency exchange rates on its foreign portfolio
holdings, to hedge certain firm purchase and sale commitments denominated in
foreign currencies and for investment purposes. 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 currency contracts
outstanding at April 30, 1999.
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, 1999 OCTOBER 31, APRIL 30, 1999 OCTOBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
------------ ------------ -------------- --------------
CLASS A
Shares sold 885,929 2,992,159 $ 6,118,957 $ 18,903,363
Shares converted
from Class B 10,217 11,757 65,689 78,666
Shares redeemed (643,706) (3,144,145) (4,391,489) (20,297,907)
Net increase
(decrease) 252,440 (140,229) $ 1,793,157 $ (1,315,878)
CLASS B
Shares sold 1,147,110 1,784,537 $ 7,532,643 $ 11,105,833
Shares converted
to Class A (10,502) (12,033) (65,689) (78,666)
Shares redeemed (933,483) (1,770,993) (6,000,887) (11,089,438)
Net increase
(decrease) 203,125 1,511 $ 1,466,067 $ (62,271)
CLASS C
Shares sold 400,519 419,389 $ 2,727,022 $ 2,891,821
Shares redeemed (263,120) (370,637) (1,765,233) (2,560,420)
Net increase 137,399 48,752 $ 961,789 $ 331,401
ADVISOR CLASS
Shares sold 195,704 385,020 $ 1,236,429 $ 2,330,830
Shares redeemed (252,169) (221,111) (1,560,437) (1,403,731)
Net increase
(decrease) (56,465) 163,909 $ (324,008) $ 927,099
NOTE F: CONCENTRATION OF RISK
Investing in securities of foreign companies involves special risks which
include the possibility of future political and economic developments which
could adversely affect the value of such securities. Moreover, securities of
many foreign companies and their markets may be less liquid and their prices
more volatile than those of United States companies. The securities markets of
many Asian countries are relatively small, with the majority of market
capitalization and trading volume concentrated in a limited number of companies
representing a small number of industries. Consequently, the Fund's investment
portfolio may experience greater price volatility and significantly lower
liquidity than a portfolio invested in equity securities of U.S. companies.
These markets may be subject to greater influence by adverse events generally
affecting the market, and by large investors trading significant blocks of
securities, than is usual in the United States.
NOTE G: BANK BORROWING
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility")
intended to provide for short-term financing if necessary, subject to certain
restrictions, in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the six months ended April 30, 1999.
14
FINANCIAL HIGHLIGHTS ALLIANCE ALL-ASIA INVESTMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
NOVEMBER 28,
SIX MONTHS 1994(A)
ENDED YEAR ENDED OCTOBER 31, TO
APRIL 30, 1999 ------------------------------------- OCTOBER 31,
(UNAUDITED) 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.86 $7.54 $11.04 $10.45 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b)(c) (.07) (.10) (.21) (.21) (.19)
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions 1.88 (1.58) (2.95) .88 .64
Net increase (decrease) in net asset
value from operations 1.81 (1.68) (3.16) .67 .45
LESS: DISTRIBUTIONS
Distributions from net realized
gains on investments and foreign
currency transactions -0- -0- (.34) (.08) -0-
Net asset value, end of period $7.67 $5.86 $7.54 $11.04 $10.45
TOTAL RETURN
Total investment return based on net
asset value (d) 30.89% (22.28)% (29.61)% 6.43% 4.50%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $6,878 $3,778 $5,916 $12,284 $2,870
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 3.03%(e)(f) 3.74%(f) 3.45% 3.37% 4.42%(e)
Expenses, before waivers/reimbursements 4.65%(e) 4.63% 3.57% 3.61% 10.57%(e)
Net investment loss, net of waivers/
reimbursements (2.24)%(e) (1.50)% (1.97)% (1.75)% (1.87)%(e)
Portfolio turnover rate 210% 93% 70% 66% 90%
</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
-----------------------------------------------------------------
NOVEMBER 28,
SIX MONTHS 1994(A)
ENDED YEAR ENDED OCTOBER 31, TO
APRIL 30, 1999 ------------------------------------ OCTOBER 31,
(UNAUDITED) 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.71 $7.39 $10.90 $10.41 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b)(c) (.09) (.14) (.28) (.28) (.25)
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions 1.82 (1.54) (2.89) .85 .66
Net increase (decrease) in net
asset value from operations 1.73 (1.68) (3.17) .57 .41
LESS: DISTRIBUTIONS
Distributions from net realized gains
on investments and foreign currency
transactions -0- -0- (.34) (.08) -0-
Net asset value, end of period $7.44 $5.71 $7.39 $10.90 $10.41
TOTAL RETURN
Total investment return based on net
asset value (d) 30.30% (22.73)% (30.09)% 5.49% 4.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $13,042 $8,844 $11,439 $23,784 $5,170
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 3.73%(e)(f) 4.49%(f) 4.15% 4.07% 5.20%(e)
Expenses, before waivers/reimbursements 5.44%(e) 5.39% 4.27% 4.33% 11.32%(e)
Net investment loss, net of waivers/
reimbursements (2.94)%(e) (2.22)% (2.67)% (2.44)% (2.64)%(e)
Portfolio turnover rate 210% 93% 70% 66% 90%
</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
-----------------------------------------------------------------
NOVEMBER 28,
SIX MONTHS 1994(A)
ENDED YEAR ENDED OCTOBER 31, TO
APRIL 30, 1999 ------------------------------------ OCTOBER 31,
(UNAUDITED) 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.72 $7.40 $10.91 $10.41 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b)(c) (.09) (.14) (.27) (.28) (.35)
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions 1.83 (1.54) (2.90) .86 .76
Net increase (decrease) in net
asset value from operations 1.74 (1.68) (3.17) .58 .41
LESS: DISTRIBUTIONS
Distributions from net realized
gains on investments and
foreign currency transactions -0- -0- (.34) (.08) -0-
Net asset value, end of period $7.46 $5.72 $7.40 $10.91 $10.41
TOTAL RETURN
Total investment return based on
net asset value (d) 30.42% (22.70)% (30.06)% 5.59% 4.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $3,262 $1,717 $1,859 $4,228 $597
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 3.73%(e)(f) 4.48%(f) 4.15% 4.07% 5.84%(e)
Expenses, before waivers/reimbursements 5.49%(e) 5.42% 4.27% 4.30% 11.38%(e)
Net investment loss, net of waivers/
reimbursements (2.95)%(e) (2.20)% (2.66)% (2.42)% (3.41)%(e)
Portfolio turnover rate 210% 93% 70% 66% 90%
</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
<TABLE>
<CAPTION>
ADVISOR CLASS
----------------------------------------------------
OCTOBER 2,
SIX MONTHS 1996(G)
ENDED YEAR ENDED OCTOBER 31, TO
APRIL 30, 1999 ----------------------- OCTOBER 31,
(UNAUDITED) 1998 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $5.90 $7.56 $11.04 $11.65
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b)(c) (.06) (.08) (.15) -0-
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions 1.89 (1.58) (2.99) (.61)
Net increase (decrease) in net asset
value from operations 1.83 (1.66) (3.14) (.61)
LESS: DISTRIBUTIONS
Distributions from net realized gains
on investments and foreign
currency transactions -0- -0- (.34) -0-
Net asset value, end of period $7.73 $5.90 $7.56 $11.04
TOTAL RETURN
Total investment return based on net
asset value (d) 31.02% (21.96)% (29.42)% (5.24)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $2,200 $2,012 $1,338 $27
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 2.74%(e)(f) 3.46%(f) 3.21% 4.97%(e)
Expenses, before waivers/reimbursements 4.31%(e) 4.39% 3.43% 5.54%(e)
Net investment loss, net of waivers/
reimbursements (1.93)%(e) 1.22% (1.51)% 1.63%(e)
Portfolio turnover rate 210% 93% 70% 66%
</TABLE>
(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 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) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For the six months ended April 30, 1999 and the year ended
October 31, 1998, the ratios of expenses to average net assets were 3.00% and
3.70% for Class A, 3.70% and 4.44% for Class B, 3.70% and 4.44% for Class C and
2.70% and 3.41% for Advisor Class shares, respectively.
(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)
ALAN STOGA (1)
OFFICERS
BRUCE W. CALVERT, SENIOR VICE PRESIDENT
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
KARAN TREHAN, SENIOR VICE PRESIDENT
THOMAS J. BARDONG, VICE PRESIDENT
RUSSELL BRODY, VICE PRESIDENT
HIROSHI MOTOKI, VICE PRESIDENT
SAMIR ARORA, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER AND CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, 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 LLP
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
