ALLIANCE
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ALL-ASIA
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INVESTMENT
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FUND
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Annual Report
October 31, 1998
Alliance Capital [LOGO](R)
<PAGE>
LETTER TO SHAREHOLDERS Alliance All-Asia Investment Fund
================================================================================
December 31, 1998
Dear Shareholder:
This annual shareholder report reviews investment results and market activity
for Alliance All-Asia Investment Fund (the "Fund") for the six- and 12-month
periods ended October 31, 1998.
INVESTMENT RESULTS
Over the 12 months ended October 31, 1998, equity markets around the region
posted weak performance. During this period, Japan was down 14.4%, Hong Kong
declined 4.6%, Singapore fell 22.4%, and South Korea tumbled 40.9%, all on a
U.S.-dollar basis. During the period, most regional currencies depreciated
against the U.S. dollar, except for the Thai baht and the Japanese yen, which
both appreciated, and the Chinese renminbi and the Hong Kong dollar, which both
stayed flat due to the currency peg system. Reflecting these weak numbers,
the Morgan Stanley Capital International All Country ("MSCI AC") Asia Pacific
Index, the performance benchmark of the Fund, was down 15.60% for the 12-month
period ended October 31, 1998.
The Fund's Class A shares posted a total return of -22.28% at net asset value
("NAV") for the 12-month period ended October 31, 1998, underperforming the
benchmark. Similarly, the Lipper Pacific Region Funds Average (the "Lipper
Average") declined 21.64% for the same period. The Japanese equity market
performed relatively well for the first six months of the period, but we were
relatively underweighted in Japan. In addition, we partially hedged our exposure
to Japan against possible Japanese yen weakness, but the sudden appreciation of
the Japanese yen against the U.S. dollar added to our underperformance during
the period.
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INVESTMENT RESULTS*
Periods Ended October 31, 1998
Total Returns
6 Months 12 Months
-------- ---------
Alliance All-Asia Investment Fund
Class A -18.72% -22.28%
Class B -19.01% -22.73%
Class C -18.98% -22.70%
Total Returns
6 Months 12 Months
-------- ---------
MSCI AC Asia Pacific Index -7.66% -15.60%
Lipper Pacific Region Funds Average -12.61% -21.64%
* 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. The Lipper Pacific Region Funds 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 50 funds for the six-month period and 48 funds for the
12-month period. An investor cannot invest directly in an index or an
average.
+ Excludes shares which are not readily purchased by non-local investors.
Additional investment results appear on page 3.
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ECONOMIC OUTLOOK
Seventeen months have passed since Thailand floated the baht, which started a
global emerging markets crisis. We believe we will see more bankruptcies and
bank recapitalizations going forward. On the other hand, it is hard to think of
additional negative scenarios that have not been widely discussed and discounted
by the equity markets. In Japan, the debt crisis of the financial system is
being addressed by the government, which finally decided to inject public money
into the banking sector.
We are optimistic about long-term Asian economic growth. We believe that the
long-term economic growth rates in the region generally are not dramatically
lower now than pre-crisis estimates. For example, we believe that annual
economic growth rates of 8%, 6%, and 4% are realistic and attainable for China,
Taiwan, and Hong Kong, respectively, as five- to 10-year targets. The spread of
sovereign bonds over U.S. Treasuries decreased in
1
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Alliance All-Asia Investment Fund
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September and October of 1998, which confirms that the crisis of investor
confidence in Asia is being resolved.
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
to 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 October,
we are nearly fully invested in over fifty companies located in nine countries
within the region.
As of October 31, 1998, your Fund was relatively overweighed in India, South
Korea, and the Philippines and underweighed in Australia, Hong Kong, and Japan.
The Fund had no exposure to Malaysia, Singapore, Taiwan or Thailand. The country
weighting is an outcome of our stock selection based on our in-house analysts'
company research.
At the end of the period, the Fund's largest holding was NTT Mobile
Communications Network Inc. We participated the initial public offering for this
company in September of 1998. This company has the largest number of cellular
phone subscribers in the world and is dominating the Japanese mobile
communications market. The Fund also invested 4% of its total portfolio in TDK
Corporation of Japan. TDK manufactures MR heads, which are an important
component of hard disk drives. We believe that the Year 2000 ("Y2K") computer
conversion will fuel strong PC demand through 1999, which will also benefit TDK.
The software and systems integration business in Asia has also seen strong
growth rates, particularly in India. Infosys Technologies, Ltd., NIIT, Ltd., and
BFL Software, Ltd. serve premier overseas clients with possible solutions to
systems integration issues, as well as Y2K issues, based on a competitive and
talented pool of software engineers. We continue to overweight India because of
these companies.
We also believe that the mobile telecommunication service providers benefit from
the relatively low penetration of telecommunication services in the region. We
selectively invest in the mobile telecom service operators whose growth
potential more than justifies their stock price valuations.
We feel that favorable external economic factors, such as a weaker U.S. dollar
and lower U.S. interest rates, will continue to help the Asian recovery. We also
see the evidence that investor confidence has returned to the Asian markets in
the form of lower risk premiums. We seek to distinguish those companies with
sound fundamentals, strong management, and clear shareholder orientation through
our internal research team.
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,
/s/ John D. Carifa
John D. Carifa
Chairman and President
/s/ Hiroshi Motoki
Hiroshi Motoki
Vice President
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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.
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2
<PAGE>
INVESTMENT OBJECTIVES 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 issued
by companies based in Asia and the Pacific region.
INVESTMENT RESULTS
================================================================================
NAV and SEC Average Annual Total Returns as of October 31, 1998
------------------
CLASS A SHARES
------------------
Without With
Sales Charge Sales Charge
================================
One Year -22.28% -25.54%
Since Inception* -11.87% -12.83%
------------------
CLASS B SHARES
------------------
Without With
Sales Charge Sales Charge
================================
One Year -22.73% -25.82%
Since Inception* -12.44% -12.66%
------------------
CLASS C SHARES
------------------
Without With
Sales Charge Sales Charge
================================
One Year -22.70% -23.48%
Since Inception* -12.41% -12.41%
SEC Average Annual Total Returns as of the most recent quarter-end (September
30, 1998)
Class A Class B Class C
------- ------- -------
1 Year -40.02% -40.33% -38.35%
Since Inception* -14.30% -14.11% -13.85%
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.
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* Inception date for Classes A, B & C is 11/28/94.
3
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Alliance All-Asia Investment Fund
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ALLIANCE ALL-ASIA INVESTMENT FUND
GROWTH OF A $10,000 INVESTMENT
11/30/94* TO 10/31/98
[The following table was represented as a mountain chart
in the printed material.]
<<< NEED PLOT POINTS TO INSERT HERE FOR MISSING VALUES IN TABLE BELOW. >>>
11/30/94 10/31/95 10/31/96 10/31/97 10/31/98
-------- -------- -------- -------- --------
Lipper Pacific
Region Funds
Average: $6,630
MSCI AC Asia
Pacific Index: $6,423
All-Asia
Investment
Fund
Class A: $5,828
This chart illustrates the total value of an assumed $10,000 investment in
Alliance All-Asia Investment Fund Class A shares (from 11/30/94 to 10/31/98) as
compared to the performance of appropriate broad-based indices. The chart
reflects the deduction of the maximum 4.25% sales charge from the initial
$10,000 investment in the Fund and assumes the reinvestment of dividends and
capital gains. Performance for Class B, Class C and Advisor Class shares will
vary from the results shown above due to differences in expenses charged to
those classes. Past performance is not indicative of future results, and is not
representative of future gain or loss in capital value or dividend income.
The Morgan Stanley Capital International AC Asia Pacific Index is
unmanaged and is a common measure of overall stock market activity in 15 Pacific
region countries.
The Lipper Pacific Region Funds Average reflects performance of 34 funds.
These funds have generally similar investment objectives to Alliance All-Asia
Investment Fund, although the investment policies of some funds included in the
average may vary.
When comparing Alliance All-Asia Investment Fund to the index and average
shown above, you should note that no charges or expenses are reflected in the
performance of the index. Lipper results include fees and expenses.
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* Month-end nearest to Fund's inception date of 11/28/94.
4
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TEN LARGEST HOLDINGS
October 31, 1998 Alliance All-Asia Investment Fund
================================================================================
<TABLE>
<CAPTION>
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COMPANY U.S. $ VALUE PERCENT OF NET ASSETS
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<S> <C> <C>
NTT Mobile Comm Network Inc.--Provides various
telecommunication services $ 758,559 4.7%
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TDK Corp.--Manufactures magnetic tapes and
floppy discs 658,945 4.0
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Takeda Chemical Industries--Produces and sells
health-care related products 585,328 3.6
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Sony Corp.--Develops and manufactures consumer and
industrial electronic equipment 577,778 3.5
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Honda Motor Co., Ltd.--A company who develops,
manufactures, distributes, and finances motorcycles,
automobiles and power products 570,571 3.5
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Yamanouchi Pharmaceutical--Manufactures and markets
a variety of pharmaceutical products 544,487 3.3
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Nintendo Co., Ltd.--Manufactures and markets video
games and related products 541,433 3.3
- -----------------------------------------------------------------------------------------------
Rohm Co.--Makes custom linear ICs and semiconductor
devices mainly for consumer electronics 530,245 3.3
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Canon, Inc.--Manufactures office equipment, cameras
and video equipment 529,730 3.2
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Fuji Photo Film Co.--Manufactures film for general,
medical, printing, office, and movie use 512,913 3.1
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$5,809,989 35.5%
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</TABLE>
5
<PAGE>
INDUSTRY DIVERSIFICATION
October 31, 1998 Alliance All-Asia Investment Fund
================================================================================
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U.S. $ VALUE PERCENT OF NET ASSETS
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Basic Industries $ 1,068,383 6.5%
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Capital Goods 602,132 3.7
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Consumer Manufacturing 1,962,109 12.0
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Consumer Services 2,662,467 16.3
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Consumer Staples 961,038 5.9
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Finance 1,124,727 6.9
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Healthcare 1,541,450 9.4
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Multi-Industry 547,166 3.3
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Technology 3,693,844 22.6
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Utilities 2,030,559 12.4
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Total Investments* 16,193,875 99.0
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Cash and receivables,
net of liabilities 157,540 1.0
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Net Assets $16,351,415 100.0%
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* Excludes short-term obligations
6
<PAGE>
PORTFOLIO OF INVESTMENTS
October 31, 1998 Alliance All-Asia Investment Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
COMMON STOCKS-99.0%
AUSTRALIA-7.0%
Hoyts Cinemas Group ............................. 250,000 $ 223,527
Normandy Mining, Ltd. ........................... 306,979 274,472
Tabcorp Holdings, Ltd. .......................... 43,750 291,163
Woolworths, Ltd. ................................ 103,680 364,970
-----------
1,154,132
-----------
CHINA-1.6%
Yanzhou Coal Mining Co., Ltd. Cl. H ............. 912,000 178,985
Zhejiang Southeast Electric Power Co., Ltd.
(GDR) (a)(b) .................................. 8,000 84,000
-----------
262,985
-----------
HONG KONG-4.6%
Cheung Kong Holdings, Ltd. ...................... 24,000 164,235
Dao Heng Bank Group, Ltd. ....................... 20,000 41,575
Dickson Concepts, Ltd. .......................... 140,000 135,571
HSBC Holdings, Plc .............................. 3,300 75,629
Hutchison Whampoa, Ltd. ......................... 12,000 85,991
NG Fung Hong, Ltd. .............................. 100,000 88,444
Smartone Telecom Holdings, Ltd. ................. 42,000 119,303
Sun Hung Kai Properties, Ltd. ................... 7,000 48,580
-----------
759,328
-----------
INDIA-13.8%
BFL Software, Ltd. (a) .......................... 18,000 223,115
Hindustan Petroleum Corp. ....................... 55,300 347,395
Indian Hotels Co., Ltd. (GDR) ................... 30,000 275,250
Industrial Credit & Inv. Corp. (GDR) (b) ........ 15,600 87,360
(GDR) ......................................... 15,000 84,000
Infosys Technologies, Ltd. ...................... 6,000 345,480
Leading Edge Systems, Ltd. ...................... 20,000 205,310
Mahanagar Telephone Nigam, Ltd. (GDR) ........... 4,500 49,388
NIIT, Ltd. ...................................... 10,000 300,885
Videsh Sanchar Nigam, Ltd. (GDR) (b) ............ 1,700 17,808
Zee Telefilms, Ltd. ............................. 20,000 317,640
-----------
2,253,631
-----------
INDONESIA-0.7%
PT Tambang Timah ................................ 200,000 109,868
-----------
JAPAN-61.7%
Acom Co., Ltd. .................................. 5,000 279,279
Advantest Corp. (c) ............................. 3,000 189,189
Alps Electric Co., Ltd. ......................... 14,000 192,673
Bank Of Tokyo-Mitsubishi ........................ 200 1,855
Bridgestone Corp. (c) ........................... 21,000 462,162
Canon, Inc. ..................................... 28,000 529,730
Daito Trust Construction Co., Ltd. .............. 29,300 250,137
Familymart Co., Ltd. ............................ 3,000 152,124
Fuji Photo Film Co. (c) ......................... 14,000 512,913
Honda Motor Co., Ltd. (c) ....................... 19,000 570,571
Hoya Corp. (c) .................................. 6,000 256,885
Japan Tobacco, Inc. ............................. 45 377,220
Kao Corp. ....................................... 10,000 202,488
Kokuyo .......................................... 11,000 146,289
Mabuchi Motor Co., Ltd. ......................... 3,000 195,624
Nintendo Co., Ltd. (c) .......................... 6,400 541,433
Nippon Electric Glass Co., Ltd. ................. 15,000 156,371
NTT Mobile Comm Network Inc. .................... 21 758,559
Promise Co., Ltd. ............................... 5,000 226,083
Rohm Co. (c) .................................... 6,000 530,245
Santen Pharmaceutical Co. (c) ................... 24,000 411,634
Shin-Etsu Chemical Co., Ltd. .................... 10,000 199,056
Shohkoh Fund & Co., Ltd. ........................ 1,300 395,410
Sony Corp. (c) .................................. 9,100 577,778
Takeda Chemical Industries ...................... 18,000 585,328
7
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) Alliance All-Asia Investment Fund
================================================================================
Company Shares U.S. $ Value
- --------------------------------------------------------------------------------
TDK Corp. ....................................... 10,000 $ 658,945
Uni-Charm Corp. ................................. 4,000 181,896
Yamanouchi Pharmaceutical........................ 19,000 544,487
-----------
10,086,364
-----------
NEW ZEALAND-0.9%
Lion Nathan, Ltd. ............................... 53,700 140,762
-----------
PHILIPPINES-4.4%
Manila Electric Co. Series B..................... 121,400 358,032
Philippine Long Distance Telephone .............. 15,000 358,736
-----------
716,768
-----------
SOUTH KOREA-4.3%
Pohang Iron & Steel Co., Ltd. (ADR) ............. 17,000 306,000
S.K. Telecom Co., Ltd. .......................... 570 404,037
-----------
710,037
-----------
Total Common Stocks (cost $17,399,648) .......... 16,193,875
-----------
Principal
Amount
Company (000) U.S. $ Value
- --------------------------------------------------------------------------------
TIME DEPOSIT-5.5%
UNITED STATES-5.5%
Dresdner 5.56%, 11/02/98 (cost $900,000) ........ $900 $ 900,000
-----------
TOTAL INVESTMENTS-104.5% (cost $18,299,648) ..... 17,093,875
Other assets less liabilities-(4.5%) ............ (742,460)
-----------
NET ASSETS-100% ................................. $16,351,415
===========
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(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 October 31,
1998, these securities amounted to $189,168 or 1.16% of net assets.
(c) Securities, or a portion thereof, with an aggregate market value of
$3,248,581 have been segregated to collateralize forward exchange currency
contracts.
Glossary of Terms:
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
See notes to financial statements.
8
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1998 Alliance All-Asia Investment Fund
================================================================================
ASSETS
Investments in securities, at value (cost $18,299,648) ....... $ 17,093,875
Cash, at value (cost $62,650) ................................ 62,680
Receivable for capital stock sold ............................ 761,880
Dividends and interest receivable ............................ 52,980
Deferred organization expenses ............................... 42,790
Receivable from Adviser ...................................... 32,412
------------
Total assets ................................................. 18,046,617
------------
LIABILITIES
Payable for investment securities purchased .................. 1,088,940
Unrealized depreciation of forward exchange currency contracts 388,774
Payable for capital stock redeemed ........................... 13,599
Distribution fee payable ..................................... 9,217
Accrued expenses ............................................. 194,672
------------
Total liabilities ............................................ 1,695,202
------------
NET ASSETS ..................................................... $ 16,351,415
============
COMPOSITION OF NET ASSETS
Captial stock, at par ........................................ $ 2,834
Additional paid-in capital ................................... 30,333,902
Undistributed net investment income .......................... 59,962
Accumulated net realized loss on investments and foreign
currency transactions ...................................... (12,456,242)
Net unrealized depreciation of investments and foreign
currency denominated assets and liabilities ................ (1,589,041)
------------
$ 16,351,415
============
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share
($3,777,878 / 644,281 shares of capital stock issued and
outstanding) ............................................... $5.86
Sales charge--4.25% of public offering price ................. .25
-----
Maximum offering price ....................................... $6.11
=====
Class B Shares
Net asset value and offering price per share
($8,844,303 / 1,548,768 shares of capital stock issued
and outstanding) ........................................... $5.71
=====
Class C Shares
Net asset value and offering price per share
($1,717,049 / 300,050 shares of capital stock issued
and outstanding) ........................................... $5.72
=====
Advisor Class Shares
Net asset value, redemption, and offering per share
($2,012,185 / 340,919 shares of capital stock issued
and outstanding) ........................................... $5.90
=====
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See notes to financial statements.
9
<PAGE>
STATEMENT OF OPERATIONS
October 31, 1998 Alliance All-Asia Investment Fund
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $21,375) .... $ 337,684
Interest ................................................ 57,155 $ 394,839
-----------
EXPENSES
Advisory fee ............................................ 178,047
Distribution fee - Class A .............................. 13,958
Distribution fee - Class B .............................. 100,279
Distribution fee - Class C .............................. 18,084
Custodian ............................................... 150,535
Transfer agency ...................................... 125,660
Audit and legal ......................................... 82,145
Registration ............................................ 55,496
Amortization of organization expenses ................... 40,057
Taxes ................................................... 39,043
Printing ................................................ 36,637
Administrative .......................................... 26,707
Directors' fees ......................................... 24,000
Miscellaneous ........................................... 21,527
-----------
Total expenses .......................................... 912,175
Less expenses waived and reimbursed by the Adviser ...... (169,410) 742,765
----------- -----------
Net investment loss ..................................... (347,926)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment transactions ............ (7,442,593)
Net realized gain on foreign currency transactions ...... 398,837
Net change in unrealized depreciation of:
Investments ........................................... 3,685,890
Foreign currency denominated assets and liabilities ... (375,837)
-----------
Net loss on investments and foreign currency transactions (3,733,703)
-----------
NET DECREASE IN NET ASSETS FROM OPERATIONS ................ $(4,081,629)
===========
</TABLE>
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See notes to financial statements.
10
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS Alliance All-Asia Investment Fund
================================================================================
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, October 31,
1998 1997
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss ..................................................... $ (347,926) $ (830,892)
Net realized loss on investments and foreign currency transactions ...... 7,043,756) (5,174,455)
Net change in unrealized depreciation of investments and foreign currency
denominated assets and liabilities .................................... 3,310,053 (3,031,796)
------------ ------------
Net decrease in net assets from operations ... (4,081,629) (9,037,143)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A ............................................................... -0- (362,976)
Class B ............................................................... -0- (710,027)
Class C ............................................................... -0- (103,481)
Advisor Class ......................................................... -0- (5,766)
CAPITAL STOCK TRANSACTIONS
Net decrease ............................................................ (119,649) (9,550,773)
------------ ------------
Total decrease .......................................................... (4,201,278) (19,770,166)
NET ASSETS
Beginning of year ....................................................... 20,552,693 40,322,859
------------ ------------
End of year (including undistributed net investment income of $9,051
at October 31, 1997) .................................................. $ 16,351,415 $ 20,552,693
============ ============
</TABLE>
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See notes to financial statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1998 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 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 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 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.
12
<PAGE>
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. During the current fiscal year, permanent differences,
primarily due to foreign currency losses, resulted in a net decrease in
accumulated net realized loss on investments and foreign currency transactions
and a corresponding increase in undistributed net investment income. 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 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 voluntarily waive its fees and
bear certain expenses so that total expenses do not exceed an annual basis of
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 year ended
October 31, 1998, such waivers and reimbursement amounted to $134,448. The
Adviser may terminate the voluntary 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 year ended October
31, 1998, the Adviser agreed to waive its fees. Such waiver amounted to $26,707.
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 $80,098 for the year ended October 31, 1998.
In addition, for the year ended October 31, 1998, the Fund's expenses were
reduced by $8,255 under an expense offset arrangement with Alliance Fund
Services. Transfer Agency fees reported in the statement of operations exclude
these credits.
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 $9,560 from the sales of Class A shares and $437,
$69,438 and $1,601 in contingent deferred sales charges imposed upon redemptions
by shareholders of Class A, Class B, and Class C shares, respectively, for the
year ended October 31, 1998.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) Alliance All-Asia Investment Fund
================================================================================
Brokerage commissions paid on investment transactions for the year ended October
31, 1998 amounted to $121,751, 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.
- --------------------------------------------------------------------------------
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 $2,011,503 and
$240,465 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 $18,324,364 and $15,414,943, respectively,
for the year ended October 31, 1998. There were no purchases or sales of U.S.
government or government agency obligations for the year ended October 31, 1998.
At October 31, 1998, the cost of investments for federal income tax purposes was
substantially the same. Accordingly, gross unrealized appreciation of
investments was $1,201,054 and gross unrealized depreciation of investments was
$2,406,827 resulting in net unrealized depreciation of $1,205,773 (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. 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.
14
<PAGE>
Alliance All-Asia Investment Fund
================================================================================
At October 31, 1998, the Fund had outstanding forward exchange currency
contracts, as follows:
<TABLE>
<CAPTION>
U.S. $
Contract U.S. $ Value on
Amount Current Origination Unrealized
(000) Value Date Depreciation
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Forward Exchange
Currency Sale Contracts
Japanese Yen,
settling 12/17/98............. 339,681 $2,933,774 $ 2,545,000 $ (388,774)
</TABLE>
- --------------------------------------------------------------------------------
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:
<TABLE>
<CAPTION>
------------------------------ ----------------------------------
SHARES AMOUNT
------------------------------ ----------------------------------
Year Ended Year Ended Year Ended Year Ended
October 31, October 31, October 31, October 31,
1998 1997 1998 1997
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Class A
Shares sold .................... 2,992,159 774,765 $ 18,903,363 $ 7,493,418
Shares issued in reinvestment of
distributions ................ -0- 29,448 -0- 321,278
Shares converted from Class B .. 11,757 12,185 78,666 128,940
Shares redeemed ................ (3,144,145) (1,145,077) (20,297,907) (11,393,804)
---------- ---------- ------------ ------------
Net decrease ................... (140,229) (328,679) $ (1,315,878) $ (3,450,168)
========== ========== ============ ============
Class B
Shares sold .................... 1,784,537 1,070,451 $ 11,105,833 $ 10,641,169
Shares issued in reinvestment of
distributions ................ -0- 42,591 -0- 458,704
Shares converted to Class A .... (12,033) (12,388) (78,666) (128,940)
Shares redeemed ................ (1,770,993) (1,735,240) (11,089,438) (17,475,408)
---------- ---------- ------------ ------------
Net increase (decrease) ........ 1,511 (634,586) $ (62,271) $ (6,504,475)
========== ========== ============ ============
Class C
Shares sold .................... 419,389 182,241 $ 2,891,821 $ 1,850,152
Shares issued in reinvestment of
distributions ................ -0- 8,253 -0- 88,889
Shares redeemed ................ (370,637) (326,841) (2,560,420) (3,438,732)
---------- ---------- ------------ ------------
Net increase (decrease) ........ 48,752 (136,347) $ 331,401 $ (1,499,691)
========== ========== ============ ============
</TABLE>
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) Alliance All-Asia Investment Fund
================================================================================
<TABLE>
<CAPTION>
------------------------------ ----------------------------------
SHARES AMOUNT
------------------------------ ----------------------------------
Year Ended Year Ended Year Ended Year Ended
October 31, October 31, October 31, October 31,
1998 1997 1998 1997
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Advisor Class
Shares sold .................... 385,020 265,011 $ 2,330,830 $ 2,733,346
Shares issued in reinvestment of
distributions ................ -0- 529 -0- 5,766
Shares redeemed ................ (221,111) (91,004) (1,403,731) (835,551)
---------- ---------- ------------ ------------
Net increase ................... 163,909 174,536 $ 927,099 $ 1,903,561
========== ========== ============ ============
</TABLE>
- --------------------------------------------------------------------------------
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") 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 year ended October 31, 1998.
16
<PAGE>
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,
Year Ended October 31, 1994(a)
-------------------------------------- to
1998 1997 1996 October 31, 1995
------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..... $ 7.54 $ 11.04 $ 10.45 $10.00
------- ------- ------- ------
Income From Investment Operations
Net investment loss (b)(c) ............... (.10) (.21) (.21) (.19)
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ........................... (1.58) (2.95) .88 .64
------- ------- ------- ------
Net increase (decrease) in net asset value
from operations ........................ (1.68) (3.16) .67 .45
------- ------- ------- ------
Less: Distributions
Distributions from net realized gains on
investments and foreign currency
transactions ........................... -0- (.34) (.08) -0-
------- ------- ------- ------
Net asset value, end of period ........... $ 5.86 $ 7.54 $ 11.04 $10.45
======= ======= ======= ======
Total Return
Total investment return based on net asset
value (d) .............................. (22.28)% (29.61)% 6.43% 4.50%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $ 3,778 $ 5,916 $12,284 $2,870
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 3.74%(e) 3.45% 3.37% 4.42%(f)
Expenses, before waivers/reimbursements 4.63% 3.57% 3.61% 10.57%(f)
Net investment loss, net of waivers/
reimbursements ....................... (1.50)% (1.97)% (1.75)% (1.87)%(f)
Portfolio turnover rate .................. 93% 70% 66% 90%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 20.
17
<PAGE>
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,
Year Ended October 31, 1994(a)
-------------------------------------- to
1998 1997 1996 October 31, 1995
------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..... $ 7.39 $ 10.90 $ 10.41 $10.00
------- ------- ------- ------
Income From Investment Operations
Net investment loss (b)(c) ............... (.14) (.28) (.28) (.25)
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ........................... (1.54) (2.89) .85 .66
------- ------- ------- ------
Net increase (decrease) in net asset value
from operations ........................ (1.68) (3.17) .57 .41
------- ------- ------- ------
Less: Distributions
Distributions from net realized gains on
investments and foreign currency
transactions ........................... -0- (.34) (.08) -0-
------- ------- ------- ------
Net asset value, end of period ........... $ 5.71 $ 7.39 $ 10.90 $10.41
======= ======= ======= ======
Total Return
Total investment return based on net asset
value (d) .............................. (22.73)% (30.09)% 5.49% 4.10%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $ 8,844 $11,439 $23,784 $5,170
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 4.49%(e) 4.15% 4.07% 5.20%(f)
Expenses, before waivers/reimbursements 5.39% 4.27% 4.33% 11.32%(f)
Net investment loss, net of waivers/
reimbursements ....................... (2.22)% (2.67)% (2.44)% (2.64)%(f)
Portfolio turnover rate .................. 93% 70% 66% 90%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 20.
18
<PAGE>
Alliance All-Asia Investment Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
---------------------------------------------------------
CLASS C
---------------------------------------------------------
November 28,
Year Ended October 31, 1994(a)
-------------------------------------- to
1998 1997 1996 October 31, 1995
------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..... $ 7.40 $ 10.91 $ 10.41 $10.00
------- ------- ------- ------
Income From Investment Operations
Net investment loss (b)(c) ............... (.14) (.27) (.28) (.35)
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ........................... (1.54) (2.90) .86 .76
------- ------- ------- ------
Net increase (decrease) in net asset value
from operations ........................ (1.68) (3.17) .58 .41
------- ------- ------- ------
Less: Distributions
Distributions from net realized gains on
investments and foreign currency
transactions ........................... -0- (.34) (.08) -0-
------- ------- ------- ------
Net asset value, end of period ........... $ 5.72 $ 7.40 $ 10.91 $10.41
======= ======= ======= ======
Total Return
Total investment return based on net asset
value (d) .............................. (22.70)% (30.06)% 5.59% 4.10%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $ 1,717 $ 1,859 $ 4,228 $ 597
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 4.48%(e) 4.15 % 4.07% 5.84%(f)
Expenses, before waivers/reimbursements 5.42% 4.27% 4.30% 11.38%(f)
Net investment loss, net of waivers/
reimbursements ....................... (2.20)% (2.66)% (2.42)% (3.41)%(f)
Portfolio turnover rate .................. 93% 70% 66% 90%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 20.
19
<PAGE>
FINANCIAL HIGHLIGHTS (continued) Alliance All-Asia Investment Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
--------------------------------------------
ADVISOR CLASS
--------------------------------------------
Year Ended October 31, October 2, 1996(g)
------------------------ to
1998 1997 October 31, 1996
------- ------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period ..... $ 7.56 $ 11.04 $ 11.65
------- ------- -------
Income From Investment Operations
Net investment loss (b)(c) ............... (.08) (.15) -0-
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ........................... (1.58) (2.99) (.61)
------- ------- -------
Net decrease in net asset value
from operations ........................ (1.66) (3.14 (.61)
------- ------- -------
Less: Distributions
Distributions from net realized gains on
investments and foreign currency
transactions ........................... -0- (.34) -0-
------- ------- -------
Net asset value, end of period ........... $ 5.90 $ 7.56 $ 11.04
======= ======= =======
Total Return
Total investment return based on net asset
value (d) .............................. (21.96)% (29.42)% (5.24)%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $ 2,012 $ 1,338 $ 27
Ratio to average net assets of:
Expenses, net of waivers/reimbursements 3.46%(e) 3.21% 4.97%(f)
Expenses, before waivers/reimbursements 4.39% 3.43% 5.54%(f)
Net investment loss, net of waivers/
reimbursements ....................... 1.22% (1.51)% 1.63%(f)
Portfolio turnover rate .................. 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
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) Ratios reflect expenses grossed up for expense offset arrangement with the
Transfer Agent. For the year ended October 31, 1998, the ratios of
expenses to average net assets were 3.70%, 4.44%, 4.44% and 3.41% for
Class A, B, C and Advisor Class shares, respectively.
(f) Annualized.
(g) Commencement of distribution.
20
<PAGE>
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS Alliance All-Asia Investment Fund
================================================================================
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, 1998, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods indicated therein. 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 audits.
We conducted our audits 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, 1998, 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 audits provide 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, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the indicated periods, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
New York, New York
December 2, 1998
21
<PAGE>
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 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
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.
22
<PAGE>
THE ALLIANCE FAMILY OF MUTUAL FUNDS
================================================================================
Fixed Income
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term U.S. Government Fund
Tax-Free Income
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
Money Market
AFD Exchange Reserves
Growth
The Alliance Fund
Alliance Global Environment Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
Select Investors Series - Premier Portfolio
Growth & Income
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
Aggressive Growth
Alliance Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
International
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
Institutional
Premier Growth
Quasar
Real Estate Investment
Closed-End Funds
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
Cash Management Services
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
23
<PAGE>
ALLIANCE ALL-ASIA INVESTMENT FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
Alliance Capital [LOGO](R)
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
