UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-08702
Alliance All-Market Advantage Fund, Inc.
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Mark R. Manley
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 221-5672
Date of fiscal year end: September 30, 2006
Date of reporting period: September 30, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
Alliance All-Market Advantage Fund
September 30, 2006
Annual Report
[LOGO]
ALLIANCEBERNSTEIN
INVESTMENTS
- ---------------------------
Investment Products Offered
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
- ---------------------------
You may obtain a description of the Fund's proxy voting policies and
procedures, and information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30,
without charge. Simply visit AllianceBernstein's web site at
www.alliancebernstein.com, or go to the Securities and Exchange Commission's
(the "Commission") web site at www.sec.gov, or call AllianceBernstein(R) at
(800) 227-4618.
The Fund files its complete schedule of portfolio holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the Commission's Public Reference
Room in Washington, DC; information on the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330.
AllianceBernstein Investments, Inc. is an affiliate of AllianceBernstein L.P.,
the manager of the AllianceBernstein funds, and is a member of the NASD.
AllianceBernstein(R) and the AB Logo are registered trademarks and service
marks used by permission of the owner, AllianceBernstein L.P.
November 13, 2006
Annual Report
This report provides management's discussion of fund performance for Alliance
All-Market Advantage Fund (the "Fund") for the annual reporting period ended
September 30, 2006. The Fund is a closed-end fund that trades under the New
York Stock Exchange symbol "AMO".
Investment Objectives and Policies
This closed-end fund seeks long-term growth of capital through all market
conditions. Consistent with the investment style of AllianceBernstein's Large
Cap Growth Team (the "team"), the Fund will invest in a core portfolio of
equity securities (common stocks, securities convertible into common stocks and
rights and warrants to subscribe for or purchase common stocks) of large,
intensively researched, high-quality companies that, in the manager's judgment,
are likely to achieve superior earnings growth. The Fund may invest up to 35%
of its total assets in equity securities of non-U.S. companies. The Fund may
invest up to 5% of its total assets in securities for which there is no ready
market. The core portfolio typically consists of the 25 companies that are the
most highly regarded by the team at any point in time. The balance of the
Fund's portfolio may be invested in equity securities of other U.S. and
non-U.S. companies that the team believes have exceptional growth potential.
The Fund may make substantial use of specialized trading techniques, such as
short selling, options, futures and leverage in an effort to enhance returns.
The use of these techniques entails special risks. For more information
regarding the Fund's risks, please see "A Word About Risk" on page 3 and "Note
E-Risks Involved in Investing in the Fund" of the Notes to Financial Statements
on page 17.
Investment Results
The table on page 4 shows the Fund's performance compared to its benchmark, the
Russell 1000 Growth Index, as well as the overall large capitalization stock
market, as represented by the Standard & Poor's (S&P) 500 Stock Index, for the
six- and 12-month periods ended September 30, 2006.
For the 12-month period ended September 30, 2006, the Fund underperformed its
benchmark, the Russell 1000 Growth Index. The Fund lost the most ground
relative to the Index in the energy sector due to both inferior stock selection
and overweighting this underperforming sector. In the consumer discretionary
and health care sectors, the Fund lagged the Index due to weaker stock
selection. The Fund posted its largest gains relative to the Index in the
financial services and technology sectors primarily due to better stock
selection.
For the six-month period ended September 30, 2006, the Fund underperformed its
benchmark, the Russell 1000 Growth Index, largely due to adverse stock
selection in the technology sector. Subpar stock selection in the energy,
consumer discretionary and health care sectors also detracted from the Fund's
performance relative to the Index. An overweighted position in the
outperforming financial services sector contributed the most to the Fund's
ALLIANCE ALL-MARKET ADVANTAGE FUND o 1
return. Better stock selection in the materials and processing sector was also
additive.
Market Review and Investment Strategy
The inflation fears that emerged late in the first quarter and that dominated
investor sentiment through July dissipated suddenly following the August 8,
2006 Federal Reserve's (the "Fed") decision not to raise interest rates. The
fear that inflation would drive higher interest rates helped make investors
wary of growth stocks whose future cash flows are worth less in real terms if
interest rates increase. After the Fed paused, growth stocks rallied. This
rally was reflected in the returns of the Russell 1000 Growth Index, which
outperformed the Russell 1000 Value Index in both August and September.
A significant factor in the Fund's underperformance during the six months ended
September 30, 2006, is that the Fund is more skewed toward the fastest-growing
companies than the benchmark and the Fund's growth profile remains highly
aggressive. As has been the case for some time now, future year earnings growth
forecasts for the Russell 1000 Growth Index are at or above historical
averages, yet the premiums (relative to the broad market) that investors must
pay for this superior growth have remained near the lowest on record.
Consequently, the Fund is invested in some of the fastest-growing companies at
a minimal price premium. In the view of the Fund's manager, the widespread
misalignment between growth prospects and valuations is too anomalous to last.
2 o ALLIANCE ALL-MARKET ADVANTAGE FUND
HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance on the following page represents past performance and does not
guarantee future results. Current performance may be lower or higher than the
performance information shown. All fees and expenses related to the operation
of the Fund have been deducted. Performance assumes reinvestment of
distributions and does not account for taxes.
Alliance All-Market Advantage Fund Shareholder Information
The daily net asset value of the Fund's shares is available from the Fund's
Transfer Agent by calling 800.219.4218. The Fund also distributes its daily net
asset value to various financial publications or independent organizations such
as Lipper Inc., Morningstar, Inc. and Bloomberg. The Fund's NYSE trading symbol
is "AMO". Weekly comparative net asset value (NAV) and market price information
about the Fund is published each Monday in The Wall Street Journal, each Sunday
in The New York Times and each Saturday in Barron's and in other newspapers in
a table called "Closed-End Funds". For additional shareholder information
regarding this Fund, please see page 40.
Benchmark Disclosure
Neither the unmanaged Russell 1000 Growth Index nor the unmanaged Standard &
Poor's (S&P) 500 Stock Index reflects fees and expenses associated with the
active management of a mutual fund portfolio. The Russell 1000 Growth Index
contains those securities in the Russell 1000 Index with a greater-than-average
growth orientation. The unmanaged Russell 1000 Index is composed of 1,000 of
the largest capitalized companies that are traded in the United States. The S&P
500 Stock Index is composed of 500 U.S. companies and is a common measure of
the performance of the overall U.S. stock market. An investor cannot invest
directly in an index, and its results are not indicative of the performance for
any particular investment, including the Fund.
A Word About Risk
The Fund invests in a limited number of securities and is subject to focused
portfolio risk. Fluctuations in the value of a single security or several
security holdings could have a more significant effect, either positive or
negative, on the Fund's net asset value. The Fund's assets can be invested in
foreign securities. This may magnify asset value fluctuations due to changes in
foreign exchange rates and the possibility of substantial volatility and less
liquidity due to political and economic uncertainties in foreign countries. The
Fund can engage in short selling, which is a type of investment strategy that
can incur additional fees. If appropriate, the Fund can utilize a variety of
leveraged investment strategies. Such borrowings involve additional risk to the
Fund, since interest expense may be greater than the income from or
appreciation of the securities carried by the borrowings and since the value of
the securities carried may decline below the amount borrowed. While the Fund
invests principally in common stocks and other equity securities, in order to
achieve its investment objectives, the Fund may at times use certain types of
investment derivatives, such as options, futures, forwards and swaps. These
instruments involve risks different from, and in certain cases, greater than,
the risks presented by more traditional investments.
(Historical Performance continued on next page)
ALLIANCE ALL-MARKET ADVANTAGE FUND o 3
HISTORICAL PERFORMANCE
(continued from previous page)
Returns
THE FUND VS. ITS BENCHMARK ---------------------------------
PERIODS ENDED SEPTEMBER 30, 2006 6 Months 12 Months
- -------------------------------------------------------------------------------
Alliance All-Market
Advantage Fund (NAV) -6.23% 0.58%
Russell 1000 Growth Index -0.12% 6.04%
S&P 500 Stock Index 4.14% 10.78%
The Fund's Market Price per share on September 30, 2006 was $14.36. The
Fund's Net Asset Value Price per share on September 30, 2006 was $12.83. For
additional Financial Highlights, please see page 23.
GROWTH OF A $10,000 INVESTMENT IN THE FUND
9/30/96 TO 9/30/06
[THE FOLLOWING DATA WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Alliance All-Market Advantage Fund (NAV): $19,969
Russell 1000 Growth Index: $17,011
S&P 500 Stock Index: $22,791
Alliance All-Market Russell 1000 S&P 500
Advantage Fund (NAV) Growth Index Stock Index
- -------------------------------------------------------------------------------
9/30/96 $ 10,000 $ 10,000 $ 10,000
9/30/97 $ 16,572 $ 13,630 $ 14,043
9/30/98 $ 18,706 $ 15,144 $ 15,318
9/30/99 $ 26,642 $ 20,422 $ 19,575
9/30/00 $ 32,066 $ 25,207 $ 22,173
9/30/01 $ 18,656 $ 13,703 $ 16,272
9/30/02 $ 14,440 $ 10,618 $ 12,942
9/30/03 $ 15,926 $ 13,370 $ 16,095
9/30/04 $ 16,494 $ 14,374 $ 18,326
9/30/05 $ 19,857 $ 16,042 $ 20,571
9/30/06 $ 19,969 $ 17,011 $ 22,791
This chart illustrates the total value of an assumed $10,000 investment in
Alliance All-Market Advantage Fund at net asset value (NAV) (from 9/30/96 to
9/30/06) as compared to the performance of the Fund's benchmark, the Russell
1000 Growth Index, and the overall market, as represented by the S&P 500 Stock
Index. The chart assumes the reinvestment of dividends and capital gains
distributions at prices obtained pursuant to the Fund's dividend reinvestment
plan.
See Historical Performance and Benchmark disclosures on previous page.
4 o ALLIANCE ALL-MARKET ADVANTAGE FUND
PORTFOLIO SUMMARY
September 30, 2006
PORTFOLIO STATISTICS
Net Assets ($mil): $47.4
SECTOR BREAKDOWN*
o 29.6% Technology
o 20.8% Health Care
o 20.6% Finance
o 9.3% Consumer Services
o 5.4% Energy [Pie Chart Omitted]
o 4.4% Consumer Staples
o 4.1% Aerospace & Defense
o 2.3% Basic Industry
o 1.0% Capital Goods
o 2.5% Short-Term
TEN LARGEST HOLDINGS
September 30, 2006
Percent of
Company U.S. $ Value Net Assets
- -------------------------------------------------------------------------------
Apple Computer, Inc. $ 3,027,278 6.4%
WellPoint, Inc.
(common stock & option) 2,722,370 5.7
Google, Inc. Class A 2,445,562 5.2
Procter & Gamble Co. 2,150,706 4.5
The Boeing Co. 2,042,215 4.3
Genentech, Inc. 1,662,270 3.5
Yahoo!, Inc. 1,520,592 3.2
Alcon, Inc. 1,442,700 3.0
Halliburton Co. 1,394,050 3.0
QUALCOMM, Inc. 1,374,030 3.0
$ 19,781,773 41.8%
* All data are as of September 30, 2006. The Fund's sector breakdown is
expressed as a percentage of total investments and may vary over time.
Please Note: The sector classifications presented herein are based on the
sector categorization methodology of the Adviser. These sector classifications
are broadly defined. The "Portfolio of Investments" section of this report
reflects more specific industry information and is consistent with the
investment restrictions discussed in the Fund's prospectus.
ALLIANCE ALL-MARKET ADVANTAGE FUND o 5
PORTFOLIO OF INVESTMENTS
September 30, 2006
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
COMMON STOCKS-99.3%
Technology-30.8%
Communication Equipment-6.7%
Cisco Systems, Inc.(a) 31,000 $ 713,000
Corning, Inc.(a) 45,100 1,100,891
QUALCOMM, Inc. 37,800 1,374,030
------------
3,187,921
Computer Hardware/Storage-7.4%
Apple Computer, Inc.(a) 39,300 3,027,278
Hewlett-Packard Co. 13,000 476,970
------------
3,504,248
Computer Peripherals-1.5%
Network Appliance, Inc.(a) 19,300 714,293
Internet Media-8.4%
Google, Inc. Class A(a) 6,085 2,445,562
Yahoo!, Inc.(a) 60,150 1,520,592
------------
3,966,154
Semiconductor Components-5.3%
Advanced Micro Devices, Inc.(a) 41,200 1,023,820
Broadcom Corp. Class A(a) 32,700 992,118
NVIDIA Corp.(a) 17,200 508,948
------------
2,524,886
Software-1.5%
Electronic Arts, Inc.(a) 4,300 239,424
Oracle Corp.(a) 26,700 473,658
------------
713,082
------------
14,610,584
Finance-21.4%
Banking - Money Center-5.0%
JPMorgan Chase & Co. 22,100 1,037,816
UBS AG 22,600 1,340,406
------------
2,378,222
Banking - Regional-0.8%
Northern Trust Corp. 6,100 356,423
Brokerage & Money Management-11.3%
Franklin Resources, Inc. 12,500 1,321,875
Legg Mason, Inc. 13,400 1,351,524
Merrill Lynch & Co., Inc. 15,100 1,181,122
Morgan Stanley 3,300 240,603
The Goldman Sachs Group, Inc. 7,400 1,251,858
------------
5,346,982
Insurance-2.3%
American International Group, Inc. 16,600 1,099,916
6 o ALLIANCE ALL-MARKET ADVANTAGE FUND
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
Miscellaneous-2.0%
Chicago Mercantile Exchange Holdings, Inc. 650 $ 3 10,863
NYSE Group, Inc.(a) 8,600 642,850
------------
953,713
------------
10,135,256
Health Care-19.5%
Biotechnology-4.3%
Genentech, Inc.(a) 20,100 1,662,270
Gilead Sciences, Inc.(a) 5,600 384,720
------------
2,046,990
Drugs-2.3%
Teva Pharmaceutical
Industries Ltd. (ADR) 32,300 1,101,107
Medical Products-3.1%
Alcon, Inc. 12,600 1,442,700
Medical Services-9.8%
Caremark Rx, Inc. 24,000 1,360,080
Medco Health Solutions, Inc.(a) 17,000 1,021,870
WellPoint, Inc.(a) 29,400 2,265,270
------------
4,647,220
------------
9,238,017
Consumer Services-9.7%
Cellular Communications-1.6%
America Movil SA de CV
Series L (ADR) 19,500 767,715
Restaurant & Lodging-4.8%
Hilton Hotels Corp. 9,000 250,650
Las Vegas Sands Corp.(a) 4,200 287,070
Marriott International, Inc.
Class A 6,300 243,432
McDonald's Corp. 25,700 1,005,384
Starwood Hotels & Resorts
Worldwide, Inc. 8,200 468,958
------------
2,255,494
Retail - General Merchandise-3.3%
Kohl's Corp.(a) 12,200 792,024
Target Corp. 14,000 773,500
------------
1,565,524
------------
4,588,733
Energy-5.6%
Oil Service-5.6%
GlobalSantaFe Corp. 9,600 479,904
Halliburton Co. 49,000 1,394,050
Schlumberger Ltd. 12,300 762,969
------------
2,636,923
ALLIANCE ALL-MARKET ADVANTAGE FUND o 7
Shares,
Contracts(b)
or Principal
Amount
Company (000) U.S. $ Value
- -------------------------------------------------------------------------------
Consumer Staples-4.5%
Household Products-4.5%
Procter & Gamble Co. 34,700 $ 2,150,706
Aerospace & Defense-4.3%
Aerospace-4.3%
The Boeing Co. 25,900 2,042,215
Basic Industry-2.4%
Chemicals-2.4%
Monsanto Co. 23,800 1,118,838
Capital Goods-1.1%
Electrical Equipment-1.1%
Emerson Electric Co. 5,900 494,774
Total Common Stocks
(cost $38,891,526) 47,016,046
CALL OPTIONS PURCHASED(a)-2.2%
Gilead Sciences, Inc.
expiring Jan '07 @ $35 165 565,950
Nabors Industries Ltd.
expiring Oct '06 @ $32.50 240 3,600
WellPoint, Inc.
expiring Jan '07 @ $45 140 457,100
Total Call Options Purchased
(cost $939,565) 1,026,650
SHORT-TERM INVESTMENT-2.6%
Time Deposit-2.6%
The Bank of New York
4.25%, 10/02/06
(cost $1,250,000) $ 1,250 1,250,000
Total Investments-104.1%
(cost $41,081,091) 49,292,696
Other assets less liabilities-(4.1%) (1,923,333)
Net Assets-100% $47,369,363
(a) Non-income producing security.
(b) One contract relates to 100 shares unless otherwise indicated.
Glossary:
ADR-American Depositary Receipt
See notes to financial statements.
8 o ALLIANCE ALL-MARKET ADVANTAGE FUND
STATEMENT OF ASSETS & LIABILITIES
September 30, 2006
Assets
Investments in securities, at value (cost $41,081,091) $ 49,292,696
Cash 9,030
Receivable for investment securities sold 734,637
Dividends and interest receivable 17,956
Total assets 50,054,319
Liabilities
Payable for investment securities purchased 1,384,453
Dividends payable 1,188,619
Administrative fee payable 23,069
Advisory fee payable 14,488
Accrued expenses 74,327
Total liabilities 2,684,956
Net Assets $ 47,369,363
Composition of Net Assets
Capital stock, at par $ 36,914
Additional paid-in capital 52,799,374
Accumulated net realized loss on
investment transactions (13,678,530)
Net unrealized appreciation of investments 8,211,605
$ 47,369,363
Net Asset Value Per Share--300 million
shares of capital stock authorized,
$.01 per value
(based on 3,691,364 shares outstanding) $ 12.83
See notes to financial statements.
ALLIANCE ALL-MARKET ADVANTAGE FUND o 9
STATEMENT OF OPERATIONS
Year Ended September 30, 2006
Investment Income
Dividends (net of foreign taxes
withheld of $7,634) $ 288,904
Interest 95,048 $ 383,952
Expenses
Advisory fee 750,757
Custodian 118,106
Administrative 94,120
Legal 84,115
Audit 55,486
Directors' fees 40,317
Printing 38,047
Registration 23,957
Transfer agency 9,618
Miscellaneous 11,852
Total expenses 1,226,375
Less: expenses waived by the Adviser
(see Note B) (51,602)
Net expenses 1,174,773
Net investment loss (790,821)
Realized and Unrealized Gain (Loss)
on Investment Transactions
Net realized gain (loss) on:
Investment transactions 4,886,958
Futures contracts (138,665)
Written options 61,462
Net change in unrealized
appreciation/depreciation of
investments (3,396,585)
Net gain on investment transactions 1,413,170
Net Increase in Net Assets from
Operations $ 622,349
See notes to financial statements.
10 o ALLIANCE ALL-MARKET ADVANTAGE FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
September 30, September 30,
2006 2005
- -------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
from Operations
Net investment loss $ (790,821) $ (381,663)
Net realized gain on investment
transactions 4,809,755 2,902,445
Net change in unrealized
appreciation/depreciation of
investments (3,396,585) 6,734,680
Net increase in net assets from
operations 622,349 9,255,462
Distributions to Shareholders from
Net realized gain on investment
transactions (5,085,941) (1,614,458)
Tax return of capital (67,042) (3,192,492)
Common Stock Transactions
Reinvestment of dividends resulting
in the issuance of common stock 173,020 260,117
Total increase (decrease) (4,357,614) 4,708,629
Net Assets
Beginning of period 51,726,977 47,018,348
End of period (including net
investment loss of $0 and $0,
respectively) $ 47,369,363 $ 51,726,977
See notes to financial statements.
ALLIANCE ALL-MARKET ADVANTAGE FUND o 11
NOTES TO FINANCIAL STATEMENTS
September 30, 2006
NOTE A
Significant Accounting Policies
Alliance All-Market Advantage Fund, Inc. (the "Fund") was incorporated under
the laws of the state of Maryland on August 16, 1994 and is registered under
the Investment Company Act of 1940 as a diversified, closed-end management
investment company. The financial statements have been prepared in conformity
with U.S. 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 are valued at their current market value determined on the
basis of market quotations or, if market quotations are not readily available
or are deemed unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors.
In general, the market value of securities which are readily available and
deemed reliable are determined as follows. Securities listed on a national
securities exchange (other than securities listed on The NASDAQ Stock Market,
Inc. ("NASDAQ")) or on a foreign securities exchange are valued at the last
sale price at the close of the exchange or foreign securities exchange. If
there has been no sale on such day, the securities are valued at the mean of
the closing bid and asked prices on such day. Securities listed on more than
one exchange are valued by reference to the principal exchange on which the
securities are traded; securities listed only on NASDAQ are valued in
accordance with the NASDAQ Official Closing Price; listed put or call options
are valued at the last sale price. If there has been no sale on that day, such
securities will be valued at the closing bid prices on that day; open futures
contracts and options thereon are valued using the closing settlement price or,
in the absence of such a price, the most recent quoted bid price. If there are
no quotations available for the day of valuation, the last available closing
settlement price is used; securities traded in the over-the-counter market,
("OTC") are valued at the mean of the current bid and asked prices as reported
by the National Quotation Bureau or other comparable sources; U.S. Government
securities and other debt instruments having 60 days or less remaining until
maturity are valued at amortized cost if their original maturity was 60 days or
less; or by amortizing their fair value as of the 61st day prior to maturity if
their original term to maturity exceeded 60 days; fixed-income securities,
including mortgage backed and asset backed securities, may be valued on the
basis of prices provided by a pricing service or at a price obtained from one
or more of the major broker/dealers. In cases where broker/dealer quotes are
obtained, AllianceBernstein L.P. (prior to February 24, 2006 known
12 o ALLIANCE ALL-MARKET ADVANTAGE FUND
as Alliance Capital Management L.P.) (the "Adviser") may establish procedures
whereby changes in market yields or spreads are used to adjust, on a daily
basis, a recently obtained quoted price on a security; and OTC and other
derivatives are valued on the basis of a quoted bid price or spread from a
major broker/dealer in such security.
Securities for which market quotations are not readily available (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not
limited to, information obtained by contacting the issuer, analysts, analysis
of the issuer's financial statements or other available documents. In addition,
the Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because, most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities. To account for this, the Fund may frequently value
many of its foreign equity securities using fair value prices based on third
party vendor modeling tools to the extent available.
2. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required. The Fund may be subject to taxes imposed by countries in which it
invests. Such taxes are generally based on income and/or capital gains earned
or repatriated. Taxes are accrued and applied to net investment income, net
realized gains and net unrealized appreciation/depreciation as such income
and/or gains are earned.
3. Investment Income and Investment Transactions
Dividend income (or expense on securities sold short) is recorded on the
ex-dividend date or as soon as the Fund is informed of the dividend. Investment
transactions are accounted for on the date securities are purchased or sold.
Investment gains and losses are determined on the identified cost basis.
4. Dividends and Distributions
Dividends and distributions to shareholders, if any, 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 U.S. 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.
ALLIANCE ALL-MARKET ADVANTAGE FUND o 13
The Fund distributes to its shareholders an amount equal to 2.5% of the Fund's
total net assets at the beginning of each of the first three quarters of the
calendar year. With respect to the fourth quarter, an amount equal to at least
2.5% of the total net assets is distributed to shareholders. If these
distributions exceed the Fund's aggregate net investment income and net
realized capital gains with respect to a given year, the difference will
generally constitute a return of capital to shareholders.
NOTE B
Advisory Fee and Other Transactions with Affiliates
Under the terms of an Investment Advisory Agreement, the Fund pays the Adviser
a fee comprised of a basic fee (the "Basic Fee") and an adjustment to the Basic
Fee based on the investment performance of the Fund in relation to the
investment record of the Russell 1000R Growth Index ( the "Index"). The Basic
Fee is 1.25% of the average of the net assets of the Fund, and may be adjusted
upward or downward by up to .55%. During the year ended September 30, 2006, the
Adviser voluntarily waived .10% of the Basic Fee; such waiver amounted to
$51,602. Under the terms of the Investment Advisory Agreement, the performance
period for calculation of adjustments to the Basic Fee is a rolling 36-month
period ending with the most recent calendar month. During the year ended
September 30, 2006, the fee as adjusted, amounted to 1.35% of the Fund's
average net assets.
Pursuant to an Administration Agreement, the Fund reimburses the Administrator
AllianceBernstein L.P. (prior to February 24, 2006 known as Alliance Capital
Management L.P.) (the "Administrator") for its costs incurred for providing
administrative services, provided however that such reimbursement shall not
exceed an annualized rate of .25% of the average weekly net assets of the Fund.
Under the terms of a Shareholder Inquiry Agency Agreement with
AllianceBernstein Investor Services, Inc. (prior to February 24, 2006 known as
Alliance Global Investor Services, Inc.) ("ABIS"), a wholly-owned subsidiary of
the Adviser, the Fund reimburses ABIS for costs relating to servicing phone
inquiries on behalf of the Fund. During the year ended September 30, 2006, the
Fund reimbursed ABIS $190 for such cost.
Under the terms of a Shareholder Servicing Agreement, the Fund paid its
Shareholder Servicing Agent, UBS PaineWebber, Inc. a quarterly fee equal to the
annualized rate of .10% of the Fund's average weekly net assets. The
Shareholder Servicing Agreement was terminated effective October 1, 2005.
Brokerage commissions paid on investment transactions for the year ended
September 30, 2006 amounted to $117,443, of which $508 and $0, respectively,
was paid to Sanford C. Bernstein Co., LLC and Sanford C.Bernstein Limited,
affiliates of the Adviser.
14 o ALLIANCE ALL-MARKET ADVANTAGE FUND
NOTE C
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the year ended September 30, 2006, were as follows:
Purchases Sales
- -------------------------------------------------------------------------------
Investment securities (excluding
U.S. government securities) $ 62,797,416 $ 67,826,232
U.S. government securities -0- -0-
The cost of investments for federal income tax purposes, gross unrealized
appreciation and unrealized depreciation are as follows:
Cost $ 41,676,495
Gross unrealized appreciation $ 7,693,645
Gross unrealized depreciation (77,444)
Net unrealized appreciation $ 7,616,201
1. Financial Futures Contracts
The Fund may buy or sell financial futures contracts for the purpose of hedging
its portfolio against adverse affects of anticipated movements in the market.
The Fund bears the market risk that arises from changes in the value of these
financial instruments and the imperfect correlation between movements in the
price of the futures contracts and movements in the price of the securities
hedged or used for cover.
At the time the Fund enters into a futures contract, the Fund deposits and
maintains as collateral an initial margin with the broker, as required by the
exchange on which the transaction is affected. Pursuant to the contract, the
Fund agrees to receive from or pay to the broker an amount of cash equal to the
daily fluctuation in the value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized gains or
losses. Risks may arise from the potential inability of a counterparty to meet
the terms of a contract. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the time it was closed.
2. Option Transactions
For hedging and investment purposes, the Fund may purchase and write (sell) put
and call options on U.S. securities that are traded on U.S. securities
exchanges and over-the-counter markets.
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk
of loss of premium and change in market value should the counterparty not per-
ALLIANCE ALL-MARKET ADVANTAGE FUND o 15
form under the contract. Put and call options purchased are accounted for in
the same manner as portfolio securities. The cost of securities acquired
through the exercise of call options is increased by premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from written options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from options
written. The difference between the premium received and the amount paid on
effecting a closing purchase transaction, including brokerage commissions, is
also treated as a realized gain, or if the premium received is less than the
amount paid for the closing purchase transaction, as a realized loss. If a
written call option is exercised, the premium received is added to the proceeds
from the sale of the underlying security in determining whether the Fund has
realized a gain or loss. If a written put option is exercised, the premium
received reduces the cost basis of the security purchased by the Fund. In
writing an option, the Fund bears the market risk of an unfavorable change in
the price of the security underlying the written option. Exercise of an option
written by the Fund could result in the Fund's selling or buying a security at
a price different from the current market value.
Transactions in written options for the year ended September 30, 2006 were as
follows:
Number of Premiums
Contracts Received
- -------------------------------------------------------------------------------
Options outstanding at
September 30, 2005 -0- $ -0-
Options written 26 73,500
Options terminated in closing
purchase transactions (26) (73,500)
Options outstanding at
September 30, 2006 -0- $ -0-
3. Securities Sold Short
The Fund may sell securities short. A short sale is a transaction in which the
Fund sells securities it does not own, but has borrowed, in anticipation of a
decline in the market price of the securities. The Fund is obligated to replace
the borrowed securities at their market price at the time of replacement. The
Fund's obligation to replace the securities borrowed in connection with a short
sale will be fully secured by collateral deposited with the broker. In
addition, the Fund will consider the short sale to be a borrowing by the Fund
that is subject to the asset coverage requirements of the 1940 Act. Short sales
by the Fund involve certain risks and special considerations. Possible losses
from short sales differ from
16 o ALLIANCE ALL-MARKET ADVANTAGE FUND
losses that could be incurred from a purchase of a security because losses from
short sales may be unlimited, whereas losses from purchases can not exceed the
total amount invested.
NOTE D
Capital Stock
During the years ended September 30, 2006 and September 30, 2005, the Fund
issued 12,474 shares and 19,193 shares, respectively, in connection with the
Fund's dividend reinvestment plan.
NOTE E
Risks Involved in Investing in the Fund
Foreign Securities Risk--Investing in securities of foreign companies or
foreign governments involves special risks which include changes in foreign
exchange rates and the possibility of the future political and economic
developments which could adversely affect the value of such securities.
Moreover, securities of many foreign companies or foreign governments and their
markets may be less liquid and their prices more volatile than those of
comparable U.S. companies or of the U.S. Government.
Indemnification Risk--In the ordinary course of business, the Fund enters into
contracts that contain a variety of indemnifications. The Fund's maximum
exposure under these arrangements is unknown. However, the Fund has not had
prior claims or losses pursuant to these contracts and expects the risk of loss
thereunder to be remote.
NOTE F
Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended September
30, 2006 and September 30, 2005 were as follows:
2006 2005
- -------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 5,085,941 $ 1,614,458
Total taxable distributions 5,085,941 1,614,458
Tax return of capital 67,042 3,192,492
Total distributions paid $ 5,152,983 $ 4,806,950
ALLIANCE ALL-MARKET ADVANTAGE FUND o 17
As of September 30, 2006, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Accumulated capital and other losses $ (11,894,508)(a)
Unrealized appreciation/(depreciation) 7,616,201(b)
Total accumulated earnings/(deficit) $ (4,278,307)(c)
(a) On September 30, 2006, the Fund had a net capital loss carryforward of
$11,842,062 of which $371,706 expires in the year 2010 and $11,470,356 expires
in 2011. Future realized gains offset by the loss carryforwards are not
required to be distributed to shareholders. However, under the Fund's
distribution policy, such gains may be distributed to shareholders in the year
the gains are realized. Any such gains distributed may be taxable to
shareholders. During the year ended September 30, 2006, the Fund utilized
$5,103,998 in carryforward losses. As of September 30, 2006, the Fund deferred
tax straddle losses of $52,446.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral of
losses on wash sales.
(c) The difference between book-basis and tax-basis components of accumulated
earnings/(deficit) is attributable primarily to dividends payable.
During the current fiscal year permanent differences primarily due to the
disallowance of the net operating loss, taxable over distributions, and a tax
return of capital, resulted in a decrease to net investment loss, a decrease in
the accumulated net realized loss on investment transactions and corresponding
decrease in additional paid-in capital. This reclassification had no effect on
net assets.
Please see Note A for additional information regarding the Fund's
distributions.
NOTE G
Legal Proceedings
As has been previously reported, the staff of the U.S. Securities and Exchange
Commission ("SEC") and the Office of the New York Attorney General ("NYAG")
have been investigating practices in the mutual fund industry identified as
"market timing" and "late trading" of mutual fund shares. Certain other
regulatory authorities have also been conducting investigations into these
practices within the industry and have requested that the Adviser provide
information to them. The Adviser has been cooperating and will continue to
cooperate with all of these authorities. The shares of the Fund are not
redeemable by the Fund, but are traded on an exchange at prices established by
the market. Accordingly, the Fund and its shareholders are not subject to the
market timing and late trading practices that are the subject of the
investigations mentioned above or the lawsuits described below. Please see
below for a description of the agreements reached by the Adviser and the SEC
and NYAG in connection with the investigations mentioned above.
Numerous lawsuits have been filed against the Adviser and certain other
defendants in which plaintiffs make claims purportedly based on or related to
the same practices that are the subject of the SEC and NYAG investigations
referred to
18 o ALLIANCE ALL-MARKET ADVANTAGE FUND
above. Some of these lawsuits name the Fund as a party. The lawsuits are now
pending in the United States District Court for the District of Maryland
pursuant to a ruling by the Judicial Panel on Multidistrict Litigation
transferring and centralizing all of the mutual funds involving market and late
trading in the District of Maryland (the "Mutual Fund MDL"). Management of the
Adviser believes that these private lawsuits are not likely to have a material
adverse effect on the results of operations or financial condition of the Fund.
On December 18, 2003, the Adviser confirmed that it had reached terms with the
SEC and the NYAG for the resolution of regulatory claims relating to the
practice of "market timing" mutual fund shares in some of the AllianceBernstein
Mutual Funds. The agreement with the SEC is reflected in an Order of the
Commission ("SEC Order"). The agreement with the NYAG is memorialized in an
Assurance of Discontinuation dated September 1, 2004 ("NYAGOrder"). Among the
key provisions of these agreements are the following:
(i) The Adviser agreed to establish a $250 million fund (the
"Reimbursement Fund") to compensate mutual fund shareholders for the adverse
effects of market timing attributable to market timing relationships described
in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be
paid, in order of priority, to fund investors based on (i) their aliquot share
of losses suffered by the fund due to market timing, and (ii) a proportionate
share of advisory fees paid by such fund during the period of such market
timing;
(ii) The Adviser agreed to reduce the advisory fees it receives from some
of the AllianceBernstein long-term, open-end retail funds, commencing January
1, 2004, for a period of at least five years; and
(iii) The Adviser agreed to implement changes to its governance and
compliance procedures. Additionally, the SEC Order contemplates that the
Adviser's registered investment company clients, including the Fund, will
introduce governance and compliance changes.
The shares of the Fund are not redeemable by the Fund, but are traded on an
exchange at prices established by the market. Accordingly, the Fund and its
shareholders are not subject to the market timing practices described in the
SEC Order and are not expected to participate in the Reimbursement Fund. Since
the Fund is a closed-end fund, it will not have its advisory fee reduced
pursuant to the terms of the agreements mentioned above.
On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the
Office of the Attorney General of the State of West Virginia and (ii) a request
for information from West Virginia's Office of the State Auditor, Securities
Commission (the "West Virginia Securities Commissioner") (together, the
ALLIANCE ALL-MARKET ADVANTAGE FUND o 19
"Information Requests"). Both Information Requests require the Adviser to
produce documents concerning, among other things, any market timing or late
trading in the Adviser's sponsored mutual funds. The Adviser responded to the
Information Requests and has been cooperating fully with the investigation.
On April 11, 2005, a complaint entitled The Attorney General of the State of
West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed
against the Adviser, Alliance Capital Management Holding L.P. ("Alliance
Holding"), and various other defendants not affiliated with the Adviser. The
WVAG Complaint was filed in the Circuit Court of Marshall County, West Virginia
by the Attorney General of the State of West Virginia. The WVAG Complaint makes
factual allegations generally similar to those in certain of the complaints
related to the lawsuits discussed above. On October 19, 2005, the WVAG
Complaint was transferred to the Mutual Fund MDL.
On August 30, 2005, the West Virginia Securities Commissioner signed a Summary
Order to Cease and Desist, and Notice of Right to Hearing addressed to the
Adviser and Alliance Holding. The Summary Order claims that the Adviser and
Alliance Holding violated the West Virginia Uniform Securities Act, and makes
factual allegations generally similar to those in the SEC Order and the NYAG
Order. On January 26, 2006, the Adviser, Alliance Holding, and various
unaffiliated defendants filed a Petition for Writ of Prohibition and Order
Suspending Proceedings in West Virginia state court seeking to vacate the
Summary Order and for other relief. The court denied the writ and in September
2006 the Supreme Court of Appeals declined the defendants' petition for appeal.
On September 22, 2006, Alliance and Alliance Holding filed an answer and motion
to dismiss the Summary Order with the Securities Commissioner.
On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v.
Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against
the Adviser, Alliance Capital Management Holding L.P., Alliance Capital
Management Corporation, AXA Financial, Inc., AllianceBernstein Investment
Research & Management, Inc., certain current and former directors of the
AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin
Complaint names certain of the AllianceBernstein mutual funds as nominal
defendants. The Fund was not named as a defendant in the Aucoin Complaint. The
Aucoin Complaint was filed in the United States District Court for the Southern
District of New York by alleged shareholders of an AllianceBernstein mutual
fund. The Aucoin Complaint alleges, among other things, (i) that certain of the
defendants improperly authorized the payment of excessive commissions and other
fees from fund assets to broker-dealers in exchange for preferential marketing
services, (ii) that certain of the defendants misrepresented and omitted from
registration statements and other reports material facts concerning such
payments, and (iii) that certain defendants caused such conduct as control
persons of other defendants. The Aucoin Complaint asserts claims for violation
20 o ALLIANCE ALL-MARKET ADVANTAGE FUND
of Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections 206
and 215 of the Advisers Act, breach of common law fiduciary duties, and aiding
and abetting breaches of common law fiduciary duties. Plaintiffs seek an
unspecified amount of compensatory damages and punitive damages, rescission of
their contracts with the Adviser, including recovery of all fees paid to the
Adviser pursuant to such contracts, an accounting of all fund-related fees,
commissions and soft dollar payments, and restitution of all unlawfully or
discriminatorily obtained fees and expenses.
Since June 22, 2004, nine additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants. All nine of the lawsuits (i) were brought
as class actions filed in the United States District Court for the Southern
District of New York, (ii) assert claims substantially identical to the Aucoin
Complaint, and (iii) are brought on behalf of shareholders of the Funds.
On February 2, 2005, plaintiffs filed a consolidated amended class action
complaint ("Aucoin Consolidated Amended Complaint") that asserts claims
substantially similar to the Aucoin Complaint and the nine additional lawsuits
referenced above. On October 19, 2005, the District Court dismissed each of the
claims set forth in the Aucoin Consolidated Amended Complaint, except for
plaintiffs' claim under Section 36(b) of the Investment Company Act. On January
11, 2006, the District Court granted defendants' motion for reconsideration and
dismissed the remaining Section 36(b) claim. On May 31, 2006 the District Court
denied plaintiffs' motion for leave to file an amended complaint. On July 5,
2006, plaintiffs filed a notice of appeal. On October 4, 2006 the appeal was
withdrawn by stipulation, with plaintiffs reserving the right to reinstate it
at a later date.
The Adviser believes that these matters are not likely to have a material
adverse effect on the Fund or the Adviser's ability to perform advisory
services relating to the Fund.
NOTE H
Change of Independent Registered Public Accounting Firm
On June 14, 2006, KPMG LLP ("KPMG") was selected as the Fund's independent
registered public accounting firm for the 2006 fiscal year. A majority of the
Fund's Board of Directors, including a majority of the Independent Directors,
approved the appointment of KPMG. The predecessor independent registered public
accounting firm's reports on the Fund's financial statements for the year ended
September 30, 2005, and the year ended September 30, 2004 contained no adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles. During such fiscal periods
there were no disagreements between the Fund and the predecessor independent
registered public accounting firm on any matter of accounting principles or
prac-
ALLIANCE ALL-MARKET ADVANTAGE FUND o 21
tices, financial statement disclosure, or auditing scope or procedures, which
such disagreements, if not resolved to the satisfaction of the predecessor
independent registered public accounting firm, would have caused them to make
reference to the subject matter of the disagreement in connection with their
reports on the financial statements for such periods.
NOTE I
Recent Accounting Pronouncements
On July 13, 2006, the Financial Accounting Standards Board ("FASB") released
FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in
the course of preparing the Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not threshold
would be recorded in the current period. Adoption of FIN 48 is required for
fiscal years beginning after December 15, 2006 and is to be applied to all open
tax years as of the effective date. At this time, management is evaluating the
implications of FIN 48 and its impact on the financial statements has not yet
been determined.
On September 20, 2006, the FASB released Statement of Financial Accounting
Standards No. 157 "Fair Value Measurements" ("FAS 157"). FAS 157 establishes an
authoritative definition of fair value, sets out a framework for measuring fair
value, and requires additional disclosures about fair-value measurements. The
application of FAS 157 is required for fiscal years beginning after November
15, 2007 and interim periods within those fiscal years. At this time,
management is evaluating the implications of FAS 157 and its impact on the
financial statements has not yet been determined.
22 o ALLIANCE ALL-MARKET ADVANTAGE FUND
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
Year Ended September 30,
---------------------------------------------------------------
2006 2005 2004 2003 2002
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period $14.06 $12.85 $13.69 $13.65 $19.68
Income From Investment
Operations
Net investment loss(a) (.21)(b) (.10)(b) (.18) (.22) (.26)
Net realized and unrealized
gain (loss) on investment
transactions .38 2.62 .76 1.58 (3.82)
Net increase (decrease)
in net asset value
from operations .17 2.52 .58 1.36 (4.08)
Less: Distributions
Distributions from
net realized
gain on investments (1.38) (.44) (1.21) -0- -0-
Tax return of capital (.02) (.87) (.21) (1.32) (1.95)
Total distributions (1.40) (1.31) (1.42) (1.32) (1.95)
Net asset value,
end of period $12.83 $14.06 $12.85 $13.69 $13.65
Market value, end of period $14.36 $14.15 $14.19 $14.30 $13.45
Premium/(Discount) 11.93% .64% 10.43% 4.46% (1.47)%
Total Return
Total investment return
based on:(c)
Market value 11.86% 9.72% 9.39% 16.93% (24.59)%
Net asset value .58% 20.39% 3.74% 10.42% (22.64)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $47,369 $51,727 $47,018 $49,797 $49,534
Ratio to average net assets of:
Expenses, before waivers 2.38% 1.79% 1.74% 2.28% 2.06%
Expenses, net of waivers 2.28% 1.73% 1.73% 2.28% 2.06%
Net investment loss (1.53)%(b) (.78)%(b) (1.30)% (1.58)% (1.38)%
Portfolio turnover rate 134% 189% 336% 294% 215%
See footnote summary on page 24.
ALLIANCE ALL-MARKET ADVANTAGE FUND o 23
(a) Based on average shares outstanding.
(b) Net of waivers/reimbursement by the Adviser.
(c) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
purposes of this calculation, to be reinvested at prices obtained under the
Fund's dividend reinvestment plan. Generally, total investment return based on
net asset value will be higher than total investment return based on market
value in periods where there is an increase in the discount or a decrease in
the premium of the market value to the net asset value from the beginning to
the end of such periods. Conversely, total investment return based on the net
asset value will be lower than total investment return based on market value in
periods where there is a decrease in the discount or an increase in the premium
of the market value to the net asset value from the beginning to the end of
such periods. Total investment return calculated for a period of less than one
year is not annualized.
24 o ALLIANCE ALL-MARKET ADVANTAGE FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
Alliance All-Market Advantage Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Alliance All-Market Advantage Fund, Inc. as of
September 30, 2006, and the related statement of operations, statement of
changes in net assets, and the financial highlights for the year then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The statement
of changes in net assets for the year ended September 30, 2005 and the
financial highlights for each of the years in the four-year period ended
September 30, 2005 were audited by other independent registered public
accountants whose report thereon, dated November 22, 2005, expressed an
unqualified opinion on that financial statement and those financial highlights.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 September 30, 2006, by
correspondence with the custodian and brokers or by other appropriate auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance All-Market Advantage Fund, Inc. as of September 30, 2006, and the
results of its operations, changes in its net assets, and its financial
highlights for the year then ended, in conformity with U.S. generally accepted
accounting principles.
/s/ KPMG LLP
New York, New York
November 22, 2006
ALLIANCE ALL-MARKET ADVANTAGE FUND o 25
ADDITIONAL INFORMATION
(unaudited)
Shareholders whose shares are registered in their own names will automatically
be participants in the Dividend Reinvestment Plan (the "Plan"), pursuant to
which distributions to shareholders will be paid in or reinvested in additional
shares of the Fund. Computershare Trust Company, N.A. (the "Agent") will act as
agent for participants under the Plan. Shareholders whose shares are held in
the name of a broker or nominee should contact such broker or nominee to
determine whether or how they may participate in the Plan.
If the Board declares a distribution payable either in shares or in cash, as
holders of the Common Stock may have elected, non-participants in the Plan will
receive cash and participants in the Plan will receive the equivalent in shares
of Common Stock of the Fund valued as follows:
(i) If the shares of Common Stock are trading at net asset value or at a
premium above net asset value at the time of valuation, the Fund will issue new
shares at the greater of net asset value or 95% of the then current market
price.
(ii) If the shares of Common Stock are trading at a discount from net
asset value at the time of valuation, the Plan Agent will receive the
distribution in cash and apply it to the purchase of the Fund's shares of
Common Stock in the open market on the New York Stock Exchange or elsewhere,
for the participants' accounts. Such purchases will be made on or shortly after
the payment date for such distribution and in no event more than 30 days after
such date except where temporary curtailment or suspension of purchase is
necessary to comply with Federal securities laws. If, before the Agent has
completed its purchases, the market price exceeds the net asset value of a
share of Common Stock, the average purchase price per share paid by the Agent
may exceed the net asset value of the Fund's shares of Common Stock, resulting
in the acquisition of fewer shares than if the distribution had been paid in
shares issued by the Fund.
The Agent will maintain all shareholders' accounts in the Plan and furnish
written confirmation of all transactions in the account, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Agent in non-certificate form in the name of
the participant, and each shareholder's proxy will include those shares
purchased or received pursuant to the Plan.
There will be no charges with respect to shares issued directly by the Fund to
satisfy the reinvestment requirements. However, each participant will pay a pro
rata share of brokerage commissions incurred with respect to the Agent's open
market purchases of shares. In each case, the cost per share of shares
purchased for each shareholder's accounts will be the average cost, including
brokerage commissions, of any shares purchased in the open market plus the cost
of any shares issued by the Fund.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income taxes that
26 o ALLIANCE ALL-MARKET ADVANTAGE FUND
may be payable (or required to be withheld) on distributions.
Experience under the Plan may indicate that changes are desirable. Accordingly,
the Fund reserves the right to suspend or terminate the Plan as applied to any
distribution paid subsequent to written notice of the change sent to
participants in the Plan at least 90 days before the record date for such
distribution. The Plan may also be amended or terminated by the Agent on at
least 90 days' written notice to participants in the Plan. All correspondence
concerning the Plan should be directed to the Agent at Computershare Trust
Company, N.A., P.O. Box 43010, Providence, RI 02940-3010.
ALLIANCE ALL-MARKET ADVANTAGE FUND o 27
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President
David H. Dievler(1)
John H. Dobkin(1)
Michael J. Downey(1)
D. James Guzy(1)
Nancy P. Jacklin(1)
Marshall C. Turner, Jr.(1)
OFFICERS
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
Thomas J. Bardong, Vice President
John A. Koltes, Vice President
Daniel Nordby, Vice President
Michael J. Reilly(2), Vice President
Emilie D. Wrapp, Secretary
Joseph J. Mantineo, Treasurer and Chief Financial Officer
Vincent S. Noto, Controller
Administrator
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, NY 10105
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
Dividend Paying Agent, Transfer Agent and Registrar
Computershare Trust Company, N.A.
P.O. Box 43010
Providence, RI
02940-3010
Independent Registered Public Accounting Firm
KPMG LLP
345 Park Avenue
New York, NY 10154
(1) Member of the Audit Committee, the Governance and Nominating Committee
and the Independent Directors Committee.
(2) Mr. Reilly is the investment professional primarily responsible for the
day-to-day management of the Fund's investment portfolio.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its Common Stock in the open market.
This report, including the financial statements herein, is transmitted to
the shareholders of Alliance All-Market Advantage Fund for their information.
The financial information included herein is taken from the records of the
Fund. This is not a prospectus, circular or representation intended for use in
the purchase of shares of the Fund or any securities mentioned in this report.
Annual Certifications - As required, on April 21, 2006, the Fund
submitted to the New York Stock Exchange ("NYSE") the annual certification of
the Fund's Chief Executive Officer certifying that he is not aware of any
violation of the NYSE's Corporate Governance listing standards. The Fund also
has included the certifications of the Fund's Chief Executive Officer and Chief
Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002 as
exhibits to the Fund's Form N-CSR filed with the Securities and Exchange
Commission for the period.
28 o ALLIANCE ALL-MARKET ADVANTAGE FUND
MANAGEMENT OF THE FUND
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the
Board of Directors. Certain information concerning the Fund's Directors is set
forth below.
PORTFOLIOS
IN FUND OTHER
NAME, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS, AGE OCCUPATION(S) OVERSEEN BY HELD BY
(FIRST YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ------------------------------------------------------------------------------------------------------------------------------
INTERESTED DIRECTOR
Marc O.Mayer, ** Executive Vice President of the Adviser 111 SCB Partners, Inc.
1345 Avenue of the since 2001, and Executive Managing and SCB Inc.
Americas, Director of AllianceBernstein Investments,
New York, NY 10105 Inc. ("ABI") since 2003; prior thereto, he
49 was head of AllianceBernstein Institutional
(2003) Investments, a unit of the Adviser
from 2001-2003. Prior thereto, Chief
Executive Officer of Sanford C.
Bernstein & Co., LLC (institutional
research and brokerage arm of
Bernstein & Co., LLC) ("SCB & Co.")
and its predecessor since prior to 2001.
DISINTERESTED DIRECTORS
Chairman of the Board Investment Adviser and an Independent 113 None
William H. Foulk, Jr., #, + Consultant. He was formerly Senior
P.O. Box 5060 Manager of Barrett Associates, Inc.,
Greenwich, CT a registered investment adviser, with
06831-0505 which he had been associated since
74 prior to 2001. He was formerly Deputy
(1994) Comptroller and Chief Investment
Officer of the State of New York and,
prior thereto, Chief Investment Officer
of the New York Bank for Savings.
David H. Dievler, # Independent Consultant. Until 112 None
P.O. Box 167 December 1994, he was Senior Vice
Spring Lake, NJ 07762 President of AllianceBernstein
77 Corporation ("AB Corp") (formerly,
(1994) Alliance Capital Management
Corporation) responsible for mutual
fund administration. Prior to joining
AB Corp. in 1984, he was Chief
Financial Officer of Eberstadt Asset
Management since 1968. Prior to
that, he was a Senior Manager at
Price Waterhouse & Co. Member
of American Institute of Certified
Public Accountants since 1953.
ALLIANCE ALL-MARKET ADVANTAGE FUND o 29
PORTFOLIOS
IN FUND OTHER
NAME, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS, AGE OCCUPATION(S) OVERSEEN BY HELD BY
(FIRST YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
John H. Dobkin, # Consultant. Formerly, President 111 None
P.O. Box 12 of Save Venice, Inc. (preservation
Annandale, NY 12504 organization) from 2001-2002,
64 Senior Advisor from June 1999-
(1994) June 2000 and President of Historic
Hudson Valley (historic preservation)
from December 1989-May 1999.
Previously, Director of the National
Academy of Design and during
1988-1992, Director and Chairman
of the Audit Committee of AB
Corp. (formerly, Alliance Capital
Management Corporation).
Michael J. Downey, # Consultant since January 2004. 111 Asia Pacific Fund,
c/o AllianceBernstein L.P. Formerly, managing partner of Inc., and
Attn:Philip Kirstein Lexington Capital, LLC (investment The Merger Fund
1345 Avenue of the advisory firm) from December 1997
Americas until December 2003. Prior thereto,
New York, NY 10105 Chairman and CEO of Prudential
62 Mutual Fund Management from
(2005) 1987 to 1993.
D. James Guzy, # Chairman of the Board of PLX 111 Intel
P.O. Box 128 Technology (semi-conductors) and of Corporation
Glenbrook, NV 89413 SRC Computers Inc., with which he (semi-
70 has been associated since prior to conductors);
(2005) 2001. He is also President of the Arbor Cirrus Logic
Company (private family investments). Corporation
(semi-
conductors);
and the
Davis Selected
Advisors Group
of Mutual Funds
Nancy P. Jacklin, # Formerly, U.S. Executive Director 111 None
4046 Chancery Court, NW of the International Monetary Fund
Washington, DC 20007 (December 2002-May 2006); Partner,
58 Clifford Chance (1992-2002); Senior
(2006) Counsel, International Banking and
Finance, and Associate General
Counsel, Citicorp (1985-1992);
Assistant General Counsel (Inter-
national), Federal Reserve Board of
Governors (1982-1985); and Attorney
Advisor, U.S. Department of the
Treasury (1973-1982). Member of the
Bar of the District of Columbia and of
New York; and member of the Council
on Foreign Relations.
30 o ALLIANCE ALL-MARKET ADVANTAGE FUND
PORTFOLIOS
IN FUND OTHER
NAME, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS, AGE OCCUPATION(S) OVERSEEN BY HELD BY
(FIRST YEAR ELECTED*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
Marshall C. Turner, Jr., # Principal of Turner Venture Associates 111 The George
220 Montgomery Street (venture capital and consulting) since Lucas
Penthouse 10, prior to 2001. From 2003 until May 31, Educational
San Francisco, CA 2006, he was CEO of Toppan Foundation;
94104-3402 Photomasks, Inc., Austin, Texas and National
65 (semi-conductor manufacturing Datacast, Inc.
(2005) services).
* There is no stated term of office for the Fund's Directors.
** Mr. Mayer is an "interested person", as defined in the 1940 Act, due to
his position as an Executive Vice President of the Adviser.
# Member of the Audit Committee, the Governance and Nominating Committee
and the Independent Directors Committee.
+ Member of the Fair Value Pricing Committee.
ALLIANCE ALL-MARKET ADVANTAGE FUND o 31
Officers of the Fund
Certain information concerning the Fund's Officers is set forth below.
NAME, ADDRESS* POSITION(S) PRINCIPAL OCCUPATION
AND AGE HELD WITH FUND DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------
Marc O. Mayer President and Chief See biography above.
49 Executive Officer
Philip L. Kirstein Senior Vice President Senior Vice President and Independent
61 and Independent Compliance Officer of the Alliance-
Compliance Officer Bernstein Funds, with which he has
been associated since October 2004.
Prior thereto, he was Of Counsel to
Kirkpatrick & Lockhart, LLP from
October 2003 to October 2004, and
General Counsel of Merrill Lynch
Investment Managers, L.P. since prior
to 2001 until March 2003.
Thomas J. Bardong Vice President Senior Vice President of the Adviser**,
61 with which he has been associated
since prior to 2001.
John A. Koltes Vice President Senior Vice President of the Adviser**,
64 with which he has been associated with
since prior to 2001.
Daniel Nordby Vice President Senior Vice President of the Adviser**,
62 with which he has been associated
since 2001.
Michael J. Reilly Vice President Senior Vice President of the Adviser**,
42 with which he has been associated
since prior to 2001.
Emilie D. Wrapp Secretary Senior Vice President, Assistant General
51 Counsel and Assistant Secretary of
ABI**, with which she has been
associated since prior to 2001.
Joseph J. Mantineo Treasurer and Chief Senior Vice President of ABIS**, with
47 Financial Officer which he has been associated since
prior to 2001.
Vincent S. Noto Controller Vice President of ABIS**, with which
41 he has been associated since prior to
2001.
* The address for each of the Fund's Officers is 1345 Avenue of the
Americas, New York, NY 10105.
** ABI, ABIS, the Adviser, and SCB & Co. are affiliates of the Fund.
32 o ALLIANCE ALL-MARKET ADVANTAGE FUND
Information Regarding the Review and Approval of the Fund's Advisory and
Administration Agreements
The Fund's disinterested directors (the "directors") unanimously approved the
continuance of the Advisory Agreement between the Fund and the Adviser and the
continuance of the Administration Agreement between the Adviser (in such
capacity, the "Administrator") and the Fund at a meeting held on September 13,
2006.
In preparation for the meeting, the directors had requested from the Adviser
and received and evaluated extensive materials, including performance and
expense information for other investment companies with similar investment
objectives derived from data compiled by Lipper Inc. ("Lipper"), which is not
affiliated with the Adviser. Prior to voting, the directors reviewed the
proposed continuance of the Advisory Agreement and Administration Agreement
with management and with experienced counsel who are independent of the Adviser
and received a memorandum from such counsel discussing the legal standards for
their consideration of the proposed continuance. The directors also discussed
the proposed continuance in a private session at which only the directors,
their independent counsel and the Fund's Independent Compliance Officer were
present. In reaching their determinations relating to continuance of the
Advisory Agreement and the Administration Agreement, the directors considered
all factors they believed relevant, including the following:
1. information comparing the performance of the Fund to other investment
companies with similar investment objectives and to an index;
2. the nature, extent and quality of investment, compliance,
administrative and other services rendered by the Adviser;
3. payments received by the Adviser from all sources in respect of the
Fund and all investment companies in the AllianceBernstein Funds complex;
4. the costs borne by, and profitability of, the Adviser and its
affiliates in providing services to the Fund and to all investment companies in
the AllianceBernstein Funds complex;
5. comparative fee and expense data for the Fund and other investment
companies with similar investment objectives;
6. the extent to which economies of scale would be realized to the
extent the Fund grows and whether fee levels reflect any economies of scale for
the benefit of investors;
7. the Adviser's policies and practices regarding allocation of
portfolio transactions of the Fund, including the extent to which the Adviser
benefits from soft dollar arrangements;
ALLIANCE ALL-MARKET ADVANTAGE FUND o 33
8. portfolio turnover rates for the Fund compared to other investment
companies with similar investment objectives;
9. fall-out benefits which the Adviser and its affiliates receive from
their relationships with the Fund;
10. the Adviser's representation that there are no institutional products
managed by the Adviser which have a substantially similar investment style as
the Fund;
11. the professional experience and qualifications of the Fund's
portfolio management team and other senior personnel of the Adviser;
12. the terms of the Advisory Agreement; and
13. the terms of the Administration Agreement.
The directors also considered their knowledge of the nature and quality of the
services provided by the Adviser to the Fund gained from their experience as
directors or trustees of most of the registered investment companies advised by
the Adviser, their overall confidence in the Adviser's integrity and competence
they have gained from that experience and the Adviser's responsiveness to
concerns raised by them in the past, including the Adviser's willingness to
consider and implement organizational and operational changes designed to
improve investment results and the services provided to the AllianceBernstein
Funds.
In their deliberations, the directors did not identify any particular
information that was all-important or controlling, and different directors may
have attributed different weights to the various factors.
The directors determined that the overall arrangements (i) between the Fund and
the Adviser, as provided in the Advisory Agreement, and (ii) between the Fund
and the Administrator, as provided in the Administration Agreement, were fair
and reasonable in light of the services performed, expenses incurred and such
other matters as the directors considered relevant in the exercise of their
business judgment.
The material factors and conclusions that formed the basis for the directors
reaching their determinations to approve the continuance of the Advisory
Agreement and Administration Agreement (including their determinations that the
Adviser should continue to be the investment adviser for the Fund, that the
Administrator should continue to be the administrator for the Fund, and that
the fees payable to the Adviser pursuant to the Advisory Agreement and to the
Administrator pursuant to the Administration Agreement are appropriate) were
separately discussed by the directors.
34 o ALLIANCE ALL-MARKET ADVANTAGE FUND
Nature, Extent and Quality of Services Provided by the Adviser
The directors noted that, under the Advisory Agreement, the Adviser, subject to
the oversight of the directors, administers the Fund's business and other
affairs. The Adviser manages the investment of the assets of the Fund,
including making purchases and sales of portfolio securities consistent with
the Fund's investment objective and policies. The Adviser also provides the
Fund with such office space, administrative and other services (exclusive of,
and in addition to, any such services provided by any others retained by the
Fund) and executive and other personnel as are necessary for the Fund's
operations. The Adviser pays all of the compensation of directors of the Fund
who are affiliated persons of the Adviser and of the officers of the Fund.
The directors noted that the Advisory Agreement for the Fund does not contain a
reimbursement provision for the cost of certain administrative and other
services provided by the Adviser. The directors noted that under the
Administration Agreement, the Administrator, subject to the supervision of the
directors, renders certain administrative services to the Fund, including
specified duties with respect to, among other things, the preparation of
reports required to be sent to the Fund's shareholders, the preparation of
reports required to be filed with the Securities and Exchange Commission on
Form N-SAR, arranging for the dissemination to shareholders of proxy materials,
negotiating the terms and conditions under which custodian and dividend
disbursing services will be provided and the related fees, arranging for the
calculation of the net asset value of the Fund, the calculation of the basic
fee payable to the Adviser and the adjustment to the basic fee based on the
investment performance of the Fund in relation to the investment record of the
Russell 1000 Growth Index, determining the amounts available for distribution
as dividends and distributions to shareholders, assisting the Fund's
independent accountants with the filing of tax returns, monitoring compliance
of the Fund's operations with the Act and with the Fund's investment policies
and limitations, monitoring compliance of the Fund's operations with respect to
short sales with the Investment Company Act of 1940 and with the Internal
Revenue Code, and providing accounting and bookkeeping services.
The directors considered the scope and quality of services provided by the
Adviser under the Advisory Agreement and by the Administrator under the
Administration Agreement and noted that the scope of services provided by
advisers and administrators of funds had expanded over time as a result of
regulatory and other developments. The directors noted that, for example, the
Adviser (including in its capacity as Administrator of the Fund) is responsible
for maintaining and monitoring its own and, to varying degrees, the Fund's
compliance programs, and these compliance programs have recently been refined
and enhanced in light of new regulatory requirements. The directors considered
the quality of the in-house investment research capabilities of the Adviser and
the other resources it has dedicated to performing services for the Fund. The
quality of administrative and other services, including the Adviser's role in
coordinating the activities of the Fund's other service providers, also were
considered. The
ALLIANCE ALL-MARKET ADVANTAGE FUND o 35
directors also considered the Adviser's response to recent regulatory
compliance issues affecting a number of the investment companies in the
AllianceBernstein Funds complex. The directors concluded that, overall, they
were satisfied with the nature, extent and quality of services provided to the
Fund under the Advisory Agreement and the Administration Agreement.
Costs of Services Provided and Profitability to the Adviser
The directors reviewed a schedule of the revenues, expenses and related notes
indicating the profitability of the Fund to the Adviser (including in its
capacity as Administrator) for calendar years 2004 and 2005 that had been
prepared with an updated expense allocation methodology. The directors noted
that the updated methodology differed in various respects from the methodology
used in prior years. The directors reviewed the assumptions and methods of
allocation used by the Adviser in preparing fund-specific profitability data,
and noted the Adviser's representation to them that it believed that the
methods of allocation used in preparing the profitability information were
reasonable and appropriate and that the Adviser had previously discussed with
the directors that there is no generally accepted allocation methodology for
information of this type.
The directors recognized that it is difficult to make comparisons of
profitability from fund advisory contracts because comparative information is
not generally publicly available and is affected by numerous factors, including
the structure of the particular adviser, the types of funds it manages, its
business mix, numerous assumptions regarding allocations and the adviser's
capital structure and cost of capital. In considering profitability
information, the directors considered the effect of fall-out benefits on the
Adviser's expenses. The directors focused on the profitability of the Adviser's
relationship with the Fund before taxes. The directors recognized that the
Adviser should generally be entitled to earn a reasonable level of profits for
the services it provides to the Fund and, based on their review, concluded that
they were satisfied that the Adviser's level of profitability from its
relationship with the Fund was not excessive.
Fall-Out Benefits
The directors considered that the Adviser benefits from soft dollar
arrangements whereby it receives brokerage and research services from many of
the brokers and dealers that execute purchases and sales of securities on
behalf of its clients on an agency basis. They noted that the Adviser makes
presentations to the directors regarding its trading practices and brokerage
allocation policies, including its policies with respect to soft dollar
arrangements, annually and had made a special presentation to the directors in
May 2006 on this subject. The directors noted that the Adviser has represented
to them that all of its soft dollar arrangements are consistent with applicable
legal requirements including the achievement of best execution.
The directors also noted that a subsidiary of the Adviser provides certain
shareholder services to the Fund and receives compensation from the Fund for
such
36 o ALLIANCE ALL-MARKET ADVANTAGE FUND
services and that brokers who are affiliated with the Adviser are permitted to
execute brokerage transactions for the Fund subject to satisfaction of certain
requirements and receive brokerage commissions from the Fund and liquidity
rebates from electronic communication networks in connection with certain of
such transactions.
The directors recognized that the Adviser's profitability would be somewhat
lower if it did not receive research for soft dollars or if the Adviser's
subsidiary did not receive the benefits described above. The directors
understood that the Adviser also might derive reputational and other benefits
from its association with the Fund.
Investment Results
In addition to the information reviewed by the directors in connection with the
meeting, the directors receive detailed comparative performance information for
the Fund at each regular Board meeting during the year. At the meeting, the
directors reviewed information prepared by the Adviser based on information
obtained from Lipper showing performance of the Fund compared to other funds in
the Lipper Growth Funds Average (the "Lipper Average") for periods ended June
30, 2006 over the year to date ("YTD"), 1-, 3-, 5- and 10-year and since
inception periods (inception November 1994) and for each of the last ten
calendar years, and as compared to the Standard & Poor's 500 Index (the
"Index") for periods ended June 30, 2006 over the YTD, 1-, 3-, 5- and 10-year
and since inception periods. The directors noted that in the Lipper Average
comparison (eight funds in the YTD period, including the Fund), the Fund's
performance was materially above the Lipper median in the 1- and 10-year and
since inception periods, significantly below the Lipper median in the YTD
period and materially below the Lipper median in the 3- and 5-year periods, and
that the Fund's calendar year performance was at the Lipper median in 2001,
significantly above the Lipper median in 1999 and 2005, materially above the
Lipper median in 1996, 1997 and 1998 and significantly below the Lipper median
in 2000, 2002, 2003 and 2004. The directors further noted that the Fund
underperformed the Index in all periods reviewed. Based on their review and
their discussion of the reasons for the Fund's recent underperformance with the
Adviser, the directors retained confidence in the Adviser's ability to continue
to advise the Fund and concluded that the Fund's investment performance was
understandable. The directors informed the Adviser that they planned to closely
monitor the Fund's performance.
Advisory Fees and Other Expenses
The directors considered the latest fiscal period actual management fees paid
by the Fund (advisory fees paid to the Adviser and administration fees paid to
the Adviser (in its capacity as Administrator of the Fund)) and information
prepared by Lipper concerning fee rates paid by other funds in the same Lipper
category as the Fund. They compared the combined advisory and administration
fees paid by the Fund to the advisory fees of other funds where there is no
separate administrator. The directors recognized that it is difficult to make
comparisons of advi-
ALLIANCE ALL-MARKET ADVANTAGE FUND o 37
sory fees because there are variations in the services that are included in the
fees paid by other funds. In addition, the Fund's advisory fee incorporates a
performance adjustment whereas most other funds do not pay fees with
performance adjustments, making comparisons particularly difficult.
The directors noted that in connection with the settlement of the market timing
matter with the New York Attorney General, the Adviser agreed to material
reductions (averaging 20%) in the fee schedules of most of the open-end funds
sponsored by the Adviser (other than money market funds), and that the open-end
funds had benefited from such fee reductions since 2004. The directors had
previously requested a reduction in the advisory fees of the Fund to the levels
charged to comparable open-end funds managed by the Adviser and had considered
the Adviser's position that no fee adjustments were warranted in the Fund's
particular circumstances, including the performance adjustment in its fee and
the base fee waiver referred to below. After discussion with the directors at
the September 2005 meeting, the Adviser had agreed to continue the current 10
basis point base fee waiver (5 basis points from June 30, 2004 to June 30, 2005
and an additional 5 basis points beginning June 30, 2005) until such time as
the Board agreed that it could be discontinued. The Lipper information reviewed
by the directors included pro forma advisory and administration fees assuming
the additional 5 basis point advisory fee waiver had been in effect throughout
the Fund's fiscal year ended 2005.
The Adviser informed the directors that there are no institutional products
managed by the Adviser which have a substantially similar investment style as
the Fund. The directors reviewed information in the Adviser's Form ADV and
noted that it charged institutional clients lower fees for advising comparably
sized accounts using strategies that differ from those of the Fund but which
involve investments in securities of the same type that the Fund invests in
(i.e., domestic growth equity securities). They had previously received an oral
presentation from the Adviser that supplemented such information. The directors
noted that the Adviser advises another AllianceBernstein fund with a similar
although somewhat different investment style as the Fund for a fee rate
schedule with breakpoints and no performance component.
The Adviser reviewed with the directors the significant differences in the
scope of services it provides to institutional clients and to the Fund. For
example, the Advisory Agreement requires the Adviser to provide, in addition to
investment advice, office facilities and officers (including officers to
provide required certifications). The Adviser also coordinates the provision of
services to the Fund by non-affiliated service providers and is responsible for
the compensation of the Fund's Independent Compliance Officer and certain
related expenses. The provision of these non-advisory services involves costs
and exposure to liability. The Adviser explained that many of these services
normally are not provided to non-investment company clients, and that fees
charged to the Fund reflect the costs
38 o ALLIANCE ALL-MARKET ADVANTAGE FUND
and risks of the additional obligations. In light of these facts, the directors
did not place significant weight on these fee comparisons.
The directors also considered the total expense ratio of the Fund in comparison
to the fees and expenses of funds within a comparison group created by Lipper
(an Expense Group, which Lipper described as a representative sample of
comparable funds). Comparison information for an Expense Universe (described by
Lipper as a broader group, consisting of all funds in the Fund's
classification/objective with a similar load type as the Fund) was not provided
by Lipper in light of the relatively small number of funds in the Fund's Lipper
category. The expense ratio of the Fund was based on the Fund's latest fiscal
year expense ratio. The Lipper information reviewed by the directors included
the pro forma expense ratio provided by the Adviser assuming the current
advisory fee waiver and the termination effective October 1, 2005 of the Fund's
Shareholder Servicing Agreement with a third party broker dealer (pursuant to
which the Fund paid a 10 basis point fee) had been in effect throughout fiscal
2005 . All references to expense ratios are to the pro forma expense ratio. The
directors recognized that the expense ratio information for the Fund
potentially reflected on the Adviser's provision of services, as the Adviser is
responsible for coordinating services provided to the Fund by others. The
directors noted that the expense ratios of some funds in the Fund's Lipper
category also were lowered by waivers or reimbursements by those funds'
investment advisers, which in some cases were voluntary and perhaps temporary.
The information reviewed by the directors showed that the Fund's latest fiscal
period pro forma management fees of 81 basis points (pro forma combined
advisory and administration fees paid under the Advisory and Administration
Agreements) were slightly lower than the Expense Group median and the same as
the Expense Universe median. The directors noted that the Fund currently
benefits from a 10 basis point base advisory fee waiver and that the Adviser
had previously agreed to continue the 10 basis point waiver until such time as
the Board agreed that the waiver may be terminated. The directors also noted
that the Fund's pro forma total expense ratio was materially higher than the
Expense Group and Expense Universe medians. The directors further noted that
the Adviser had recently reviewed with them steps being taken that are intended
to reduce expenses of the AllianceBernstein Funds. The directors concluded that
the Fund's expense ratio was acceptable in the Fund's particular circumstances.
Economies of Scale
The directors considered that the Fund is a closed-end Fund and that it was not
expected to have meaningful asset growth as a result. In such circumstances,
the directors did not view the potential for realization of economies of scale
as the Fund's assets grow to be a material factor in their deliberations. The
directors noted that if the Fund's net assets were to increase materially as a
result of, e.g., an acquisition or rights offering, they would review whether
potential economies of scale would be realized.
ALLIANCE ALL-MARKET ADVANTAGE FUND o 39
SUMMARY OF GENERAL INFORMATION
Shareholder Information
The daily net asset value of the Fund's shares is available from the Fund's
Transfer Agent by calling (800) 219-4218. The Fund distributes its daily net
asset value to various financial publications or independent organizations such
as Lipper, Inc., Morningstar, Inc. and Bloomberg. The Fund's NYSE trading
symbol is "AMO". Weekly comparative net asset value (NAV) and market price
information about the Fund is published each Monday in The Wall Street Journal,
each Sunday in The New York Times and each Saturday in Barron's, as well as
other newspapers ina table called "Closed-End Funds."
Information Regarding New or Amended Investment Policies
The Fund's Board of Directors recently approved an investment policy that
permits the Fund to invest in other investment companies to the full extent
permitted by the Investment Company Act of 1940 (the "1940 Act") and the rules
thereunder. The Board of Directors also approved the Fund's investments of
uninvested cash balances in an affiliated money market fund as permitted by
Rule 12d1-1 under the 1940 Act.
Dividend Reinvestment Plan
All shareholders whose shares are regis-tered in their own names will have all
distributions reinvested automatically in additional shares, unless a
shareholder elects to receive cash.
Shareholders whose shares are held in the name of a broker or nominee will
automatically have distributions reinvested by the broker or nominee in
additional shares under the Plan, unless the automatic reinvestment service is
not provided by the particular broker or nominee or the Shareholder elects to
receive distributions in cash.
The Plan provides you with a convenient way to reinvest your dividends and
capital gains in additional shares of the Fund, thereby enabling you to
compound your returns from the Fund.
For questions concerning shareholder account information, or if you would like
a brochure describing the Dividend Reinvestment Plan, please call ComputerShare
Trust Company, N.A. at (800) 219-4218.
40 o ALLIANCE ALL-MARKET ADVANTAGE FUND
THIS PAGE IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS
ALLIANCEBERNSTEIN FAMILY OF FUNDS
- -------------------------------------------
Wealth Strategies Funds
- -------------------------------------------
Balanced Wealth Strategy
Wealth Appreciation Strategy
Wealth Preservation Strategy
Tax-Managed Balanced Wealth Strategy
Tax-Managed Wealth Appreciation Strategy
Tax-Managed Wealth Preservation Strategy
- -------------------------------------------
Blended Style Funds
- -------------------------------------------
U.S. Large Cap Portfolio
International Portfolio
Tax-Managed International Portfolio
- -------------------------------------------
Growth Funds
- -------------------------------------------
Domestic
Growth Fund
Mid-Cap Growth Fund
Large Cap Growth Fund
Small Cap Growth Portfolio
Global & International
Global Health Care Fund
Global Research Growth Fund
Global Technology Fund
Greater China '97 Fund
International Growth Fund
International Research Growth Fund
- -------------------------------------------
Value Funds
- -------------------------------------------
Domestic
Balanced Shares
Focused Growth & Income Fund
Growth & Income Fund
Real Estate Investment Fund
Small/Mid-Cap Value Fund
Utility Income Fund
Value Fund
Global & International
Global Value Fund
International Value Fund
- -------------------------------------------
Taxable Bond Funds
- -------------------------------------------
Global Government Income Trust*
Corporate Bond Portfolio
Emerging Market Debt Fund
Global Strategic Income Trust
High Yield Fund
Intermediate Bond Portfolio*
Short Duration Portfolio
U.S. Government Portfolio
- -------------------------------------------
Municipal Bond Funds
- -------------------------------------------
National Michigan
Insured National Minnesota
Arizona New Jersey
California New York
Insured California Ohio
Florida Pennsylvania
Massachusetts Virginia
- -------------------------------------------
Intermediate Municipal Bond Funds
- -------------------------------------------
Intermediate California
Intermediate Diversified
Intermediate New York
- -------------------------------------------
Closed-End Funds
- -------------------------------------------
All-Market Advantage Fund
ACM Income Fund
ACM Government Opportunity Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
California Municipal Income Fund
National Municipal Income Fund
New York Municipal Income Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II
- -------------------------------------------
Retirement Strategies Funds
- -------------------------------------------
2000 Retirement Strategy
2005 Retirement Strategy
2010 Retirement Strategy
2015 Retirement Strategy
2020 Retirement Strategy
2025 Retirement Strategy
2030 Retirement Strategy
2035 Retirement Strategy
2040 Retirement Strategy
2045 Retirement Strategy
We also offer Exchange Reserves,** which serves as the money market fund
exchange vehicle for the AllianceBernstein mutual funds.
For more complete information on any AllianceBernstein mutual fund, including
investment objectives and policies, sales charges, expenses, risks and other
matters of importance to prospective investors, visit our website at
www.alliancebernstein.com or call us at 800.227.4618 for a current prospectus.
You should read the prospectus carefully before you invest.
* Prior to February 1, 2006, Global Government Income Trust was named
Americas Government Income Trust and Intermediate Bond Portfolio was named
Quality Bond Portfolio.
** An investment in the Fund is not a deposit in a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
Fund.
ALLIANCE ALL-MARKET ADVANTAGE FUND o 41
ALLIANCE ALL-MARKET ADVANTAGE FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO]
ALLIANCEBERNSTEIN
INVESTMENTS
AMA-0151-0906
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to its principal
executive officer, principal financial officer and principal accounting
officer. A copy of the registrant's code of ethics is filed herewith as
Exhibit 12(a)(1).
(b) During the period covered by this report, no material amendments were made
to the provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, no implicit or explicit waivers
to the provisions of the code of ethics adopted in 2(a) above were granted.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors has determined that independent directors
David H. Dievler and William H. Foulk, Jr. qualify as audit committee
financial experts.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) - (c) The following table sets forth the aggregate fees billed by the
independent registered public accounting firm Pricewaterhouse Coopers for the
Fund's 2005 fiscal years and by KPMG LLP for the Fund's 2006 fiscal year for
professional services rendered for: (i) the audit of the Fund's annual
financial statements included in the Fund's annual report to stockholders;
(ii) assurance and related services that are reasonably related to the
performance of the audit of the Fund's financial statements and are not
reported under (i), which include advice and education related to accounting
and auditing issues and quarterly press release review (for those Funds that
issue quarterly press releases), and preferred stock maintenance testing (for
those Funds that issue preferred stock); and (iii) tax compliance, tax advice
and tax return preparation.
Audit-Related
Audit Fees Fees Tax Fees
- -------------------------------------------------------------------------------
2005 $47,000 $1,880 $25,150
2006 $37,500 $ 0 $ 9,250
(d) Not applicable.
(e) (1) Beginning with audit and non-audit service contracts entered into on
or after May 6, 2003, the Fund's Audit Committee policies and procedures
require the pre-approval of all audit and non-audit services provided to the
Fund by the Fund's independent registered public accounting firm. The Fund's
Audit Committee policies and procedures also require pre-approval of all audit
and non-audit services provided to the Adviser and Service Affiliates to the
extent that these services are directly related to the operations or financial
reporting of the Fund.
(e) (2) All of the amounts for Audit Fees, Audit-Related Fees and Tax Fees in
the table under Item 4 (a) - (c) are for services pre-approved by the Fund's
Audit Committee.
(f) Not applicable.
(g) The following table sets forth the aggregate non-audit services provided
to the Fund, the Fund's Adviser and entities that control, are controlled by
or under common control with the Adviser that provide ongoing services to the
Fund, which include conducting an annual internal control report pursuant to
Statement on Auditing Standards No. 70 ("Service Affiliates"):
Total Amount of
Foregoing Column Pre-
approved by the Audit
All Fees for Committee
Non-Audit Services (Portion Comprised of
Provided to the Audit Related Fees)
Portfolio, the Adviser (Portion Comprised of
and Service Affiliates Tax Fees)
- -------------------------------------------------------------------------------
2005 $1,005,924 [ $27,030 ]
( $ 1,880 )
( $25,150 )
*2006 $4,884,346 ( $ 9,250 )
$ 0
( $ 9,250 )
* On June 14, 2006, the Fund engaged KPMG LLP as independent accountants for
fiscal year 2006.
(h) The Audit Committee of the Fund has considered whether the provision of
any non-audit services not pre-approved by the Audit Committee provided by the
Fund's independent auditor to the Adviser and Service Affiliates is compatible
with maintaining the auditor's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934.
The audit committee members are as follows:
David H. Dievler William H. Foulk, Jr
John H. Dobkin D. James Guzy
Michael J. Downey Nancy P. Jacklin
Marshall C. Turner, Jr.
ITEM 6. SCHEDULE OF INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Statement of Policies and Procedures for
Proxy Voting
October 2006
1. Introduction
As a registered investment adviser, AllianceBernstein L.P.
("AllianceBernstein", "we" or "us") has a fiduciary duty to act solely in the
best interests of our clients. We recognize that this duty requires us to vote
client securities in a timely manner and make voting decisions that are in the
best interests of our clients. Consistent with these obligations, we will
disclose our clients' voting records only to them and as required by mutual
fund vote disclosure regulations. In addition, the proxy committees may, after
careful consideration, choose to respond to surveys regarding past votes.
This statement is intended to comply with Rule 206(4)-6 of the Investment
Advisers Act of 1940. It sets forth our policies and procedures for voting
proxies for our discretionary investment advisory clients, including
investment companies registered under the Investment Company Act of 1940. This
statement applies to AllianceBernstein's growth, value and blend investment
groups investing on behalf of clients in both US and non-US securities.
2. Proxy Policies
This statement is designed to be responsive to the wide range of proxy voting
subjects that can have a significant effect on the investment value of the
securities held in our clients' accounts. These policies are not exhaustive
due to the variety of proxy voting issues that we may be required to consider.
AllianceBernstein reserves the right to depart from these guidelines in order
to avoid voting decisions that we believe may be contrary to our clients' best
interests. In reviewing proxy issues, we will apply the following general
policies:
2.1 Corporate Governance
AllianceBernstein's proxy voting policies recognize the importance of good
corporate governance in ensuring that management and the board of directors
fulfill their obligations to the shareholders. We favor proposals promoting
transparency and accountability within a company. We will vote for proposals
providing for equal access to the proxy materials so that shareholders can
express their views on various proxy issues. We also support the appointment
of a majority of independent directors on key committees and separating the
positions of chairman and chief executive officer. Finally, because we believe
that good corporate governance requires shareholders to have a meaningful
voice in the affairs of the company, we will support shareholder proposals
that request that companies amend their by-laws to provide that director
nominees be elected by an affirmative vote of a majority of the votes cast.
2.2 Elections of Directors
Unless there is a proxy fight for seats on the Board or we determine that there
are other compelling reasons for withholding votes for directors, we will vote
in favor of the management proposed slate of directors. That said, we believe
that directors have a duty to respond to shareholder actions that have
received significant shareholder support. We may withhold votes for directors
(or vote against in non-US markets) that fail to act on key issues such as
failure to implement proposals to declassify boards, failure to implement a
majority vote requirement, failure to submit a rights plan to a shareholder
vote or failure to act on tender offers where a majority of shareholders have
tendered their shares. In addition, we will withhold votes for directors who
fail to attend at least seventy-five percent of board meetings within a given
year without a reasonable excuse. Finally, we may abstain or vote against
directors of non-U.S. issuers where there is insufficient information about
the nominees disclosed in the proxy statement.
2.3 Appointment of Auditors
AllianceBernstein believes that the company remains in the best position to
choose the auditors and will generally support management's recommendation.
However, we recognize that there may be inherent conflicts when a company's
independent auditor performs substantial non-audit related services for the
company. The Sarbanes-Oxley Act of 2002 prohibited certain categories of
services by auditors to US issuers, making this issue less prevalent in the
US. Nevertheless, in reviewing a proposed auditor, we will consider the fees
paid for non-audit services relative to total fees as well as if there are
other reasons to question the independence of the auditors.
2.4 Changes in Legal and Capital Structure
Changes in a company's charter, articles of incorporation or by-laws are often
technical and administrative in nature. Absent a compelling reason to the
contrary, AllianceBernstein will cast its votes in accordance with the
company's management on such proposals. However, we will review and analyze on
a case-by-case basis any non-routine proposals that are likely to affect the
structure and operation of the company or have a material economic effect on
the company. For example, we will generally support proposals to increase
authorized common stock when it is necessary to implement a stock split, aid
in a restructuring or acquisition or provide a sufficient number of shares for
an employee savings plan, stock option or executive compensation plan.
However, a satisfactory explanation of a company's intentions must be
disclosed in the proxy statement for proposals requesting an increase of
greater than one hundred percent of the shares outstanding. We will oppose
increases in authorized common stock where there is evidence that the shares
will be used to implement a poison pill or another form of anti-takeover
device. We will support shareholder proposals that seek to eliminate dual
class voting structures.
2.5 Corporate Restructurings, Mergers and Acquisitions
AllianceBernstein believes proxy votes dealing with corporate reorganizations
are an extension of the investment decision. Accordingly, we will analyze such
proposals on a case-by-case basis, weighing heavily the views of our research
analysts that cover the company and our investment professionals managing the
portfolios in which the stock is held.
2.6 Proposals Affecting Shareholder Rights
AllianceBernstein believes that certain fundamental rights of shareholders must
be protected. We will generally vote in favor of proposals that give
shareholders a greater voice in the affairs of the company and oppose any
measure that seeks to limit those rights. However, when analyzing such
proposals we will weigh the financial impact of the proposal against the
impairment of shareholder rights.
2.7 Anti-Takeover Measures
AllianceBernstein believes that measures that impede corporate transactions
such as takeovers or entrench management not only infringe on the rights of
shareholders but may also have a detrimental effect on the value of the
company. We will generally oppose proposals, regardless of whether they are
advanced by management or shareholders, the purpose or effect of which is to
entrench management or excessively or inappropriately dilute shareholder
ownership. Conversely, we support proposals that would restrict or otherwise
eliminate anti-takeover or anti-shareholder measures that have already been
adopted by corporate issuers. For example, we will support shareholder
proposals that seek to require the company to submit a shareholder rights plan
to a shareholder vote. We will evaluate, on a case-by-case basis, proposals to
completely redeem or eliminate such plans. Furthermore, we will generally
oppose proposals put forward by management (including the authorization of
blank check preferred stock, classified boards and supermajority vote
requirements) that appear to be anti-shareholder or intended as management
entrenchment mechanisms.
2.8 Executive Compensation
AllianceBernstein believes that company management and the compensation
committee of the board of directors should, within reason, be given latitude
to determine the types and mix of compensation and benefit awards offered to
company employees. Whether proposed by a shareholder or management, we will
review proposals relating to executive compensation plans on a case-by-case
basis to ensure that the long-term interests of management and shareholders
are properly aligned. In general, we will analyze the proposed plan to ensure
that shareholder equity will not be excessively diluted taking into account
shares available for grant under the proposed plan as well as other existing
plans. We generally will oppose plans that have below market value grant or
exercise prices on the date of issuance or permit repricing of underwater
stock options without shareholder approval. Other factors such as the
company's performance and industry practice will generally be factored into
our analysis. We generally will support shareholder proposals seeking
additional disclosure of executive and director compensation. This policy
includes proposals that seek to specify the measurement of performance based
compensation. In addition, we will support proposals requiring managements to
submit severance packages that exceed 2.99 times the sum of an executive
officer's base salary plus bonus that are triggered by a change in control to
a shareholder vote. Finally, we will support shareholder proposals requiring
companies to expense stock options because we view them as a large corporate
expense that should be appropriately accounted for.
2.9 Social and Corporate Responsibility
AllianceBernstein will review and analyze on a case-by-case basis proposals
relating to social, political and environmental issues to determine whether
they will have a financial impact on shareholder value. We will vote against
proposals that are unduly burdensome or result in unnecessary and excessive
costs to the company. We may abstain from voting on social proposals that do
not have a readily determinable financial impact on shareholder value.
3. Proxy Voting Procedures
3.1 Proxy Voting Committees
Our growth and value investment groups have formed separate proxy voting
committees to establish general proxy policies for AllianceBernstein and
consider specific proxy voting matters as necessary. These committees
periodically review these policies and new types of corporate governance
issues, and decide how we should vote on proposals not covered by these
policies. When a proxy vote cannot be clearly decided by an application of our
stated policy, the proxy committee will evaluate the proposal. In addition,
the committees, in conjunction with the analyst that covers the company, may
contact corporate management and interested shareholder groups and others as
necessary to discuss proxy issues. Members of the committee include senior
investment personnel and representatives of the Legal and Compliance
Department. The committees may also evaluate proxies where we face a potential
conflict of interest (as discussed below). Finally, the committees monitor
adherence to these policies.
3.2 Conflicts of Interest
AllianceBernstein recognizes that there may be a potential conflict of interest
when we vote a proxy solicited by an issuer whose retirement plan we manage,
or we administer, who distributes AllianceBernstein sponsored mutual funds, or
with whom we or an employee has another business or personal relationship that
may affect how we vote on the issuer's proxy. Similarly, AllianceBernstein may
have a potential material conflict of interest when deciding how to vote on a
proposal sponsored or supported by a shareholder group that is a client. We
believe that centralized management of proxy voting, oversight by the proxy
voting committees and adherence to these policies ensures that proxies are
voted with only our clients' best interests in mind. Additionally, we have
implemented procedures to ensure that our votes are not the product of a
material conflict of interests, including: (i) on an annual basis, the
proxy committees will take reasonable steps to evaluate the nature of
AllianceBernstein's and our employees' material business and personal
relationships (and those of our affiliates) with any company whose equity
securities are held in client accounts and any client that has sponsored or
has material interest in a proposal upon which we will be eligible to vote;
(ii) requiring anyone involved in the decision making process to disclose to
the chairman of the appropriate proxy committee any potential conflict that
they are aware of (including personal relationships) and any contact that they
have had with any interested party regarding a proxy vote; (iii) prohibiting
employees involved in the decision making process or vote administration from
revealing how we intend to vote on a proposal in order to reduce any attempted
influence from interested parties; and (iv) where a material conflict of
interests exists, reviewing our proposed vote by applying a series of
objective tests and, where necessary, considering the views of third party
research services to ensure that our voting decision is consistent with our
clients' best interests. Because under certain circumstances AllianceBernstein
considers the recommendation of third party research services, the proxy
committees will take reasonable steps to verify that any third party research
service is in fact independent based on all of the relevant facts and
circumstances. This includes reviewing the third party research service's
conflict management procedures and ascertaining, among other things, whether
the third party research service (i) has the capacity and competency to
adequately analyze proxy issues; and (ii) can make such recommendations in
an impartial manner and in the best interests of our clients.
3.3 Proxies of Certain Non-US Issuers
Proxy voting in certain countries requires "share blocking." Shareholders
wishing to vote their proxies must deposit their shares shortly before the
date of the meeting with a designated depositary. During this blocking period,
shares that will be voted at the meeting cannot be sold until the meeting has
taken place and the shares are returned to the clients' custodian banks.
Absent compelling reasons to the contrary, AllianceBernstein believes that the
benefit to the client of exercising the vote does not outweigh the cost of
voting (i.e. not being able to sell the shares during this period).
Accordingly, if share blocking is required we generally abstain from voting
those shares.
In addition, voting proxies of issuers in non-US markets may give rise to a
number of administrative issues that may prevent AllianceBernstein from voting
such proxies. For example, AllianceBernstein may receive meeting notices
without enough time to fully consider the proxy or after the cut-off date for
voting. Other markets require AllianceBernstein to provide local agents with
power of attorney prior to implementing AllianceBernstein's voting
instructions. Although it is AllianceBernstein's policy to seek to vote all
proxies for securities held in client accounts for which we have proxy voting
authority, in the case of non-US issuers, we vote proxies on a best efforts
basis.
3.4 Loanned Securities
Many clients of AllianceBernstein have entered into securities lending
arrangements with agent lenders to generate additional revenue.
AllianceBernstein will not be able to vote securities that are on loan under
these types of arrangements. However, under rare circumstances, for voting
issues that may have a significant impact on the investment, we may request
that clients recall securities that are on loan if we determine that the
benefit of voting outweighs the costs and lost revenue to the client or fund
and the administrative burden of retrieving the securities.
3.5 Proxy Voting Records
You may obtain information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30,
without charge. Simply visit AllianceBernstein's web site at
www.alliancebernstein.com, go to the Securities and Exchange Commission's web
site at www.sec.gov or call AllianceBernstein at (800) 227-4618.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(1) The management of and investment decisions for the Fund's portfolio are
made by Michael Reilly.
The following table sets forth when Michael Reilly became involved in the
management of the Fund, and Michael Reilly's principal occupation during the
past five years:
Employee; Year; Title Principal Occupation During the Past Five (5) Years
- -------------------------------------------------------------------------------------------------------------
Michael Reilly; since May 2006-Senior Vice President Senior Vice President of AB with which he has been
of AllianceBernstein L.P. ("AB") associated in a substantially similar capacity to
his current position since prior to 2001.
(a) (2) The following tables provide information regarding registered
investment companies other than the Fund, other pooled investment vehicles and
other accounts over which the Fund's portfolio manager also has day-to-day
management responsibilities. The tables provide the numbers of such accounts,
the total assets in such accounts and the number of accounts and total assets
whose fees are based on performance. The information is provided as of the
Fund's fiscal year ended September 30, 2006.
REGISTERED INVESTMENT COMPANIES
(excluding the Fund)
- ---------------------------------------------------------------------------------------
Total Assets
Number of Registered of Registered
Total Number Total Assets Investment Companies Investment
of Registered of Registered Managed with Companies Managed
Portfolio Investment Investment Performance-based with Performance-
Manager Companies Managed Companies Managed Fees based Fees
- -------------------------------------------------------------------------------------------------------------
Michael Reilly NONE NONE NONE NONE
POOLED INVESTMENT VEHICLES
- -------------------------------------------------------------------------------------
Number of Pooled Total Assets of
Total Number Total Assets Investment Vehicles Pooled Investment
of Pooled of Pooled Managed with Vehicles Managed
Portfolio Investment Investment Performance-based with Performance-
Manager Vehicles Managed Vehicles Managed Fees based Fees
- -----------------------------------------------------------------------------------------------------------
Michael Reilly NONE NONE NONE NONE
OTHER ACCOUNTS
- -------------------------------------------------------------------------------------
Number of Other Total Assets of
Total Number Total Assets Managed with Other Accounts
Portfolio of Other of Other Performance-based with Performance-
Manager Accounts Managed Accounts Managed Fees based Fees
- -----------------------------------------------------------------------------------------------------------
Michael Reilly 23 $2,935,000,000 1 $329,000,000
Investment Professional Conflict of Interest Disclosure
As an investment adviser and fiduciary, Alliance owes its clients and
shareholders an undivided duty of loyalty. We recognize that conflicts of
interest are inherent in our business and accordingly have developed policies
and procedures (including oversight monitoring) reasonably designed to detect,
manage and mitigate the effects of actual or potential conflicts of interest
in the area of employee personal trading, managing multiple accounts for
multiple clients, including AllianceBernstein Mutual Funds, and allocating
investment opportunities. Investment professionals, including portfolio
managers and research analysts, are subject to the above-mentioned policies
and oversight monitoring to ensure that all clients are treated equitably. We
place the interests of our clients first and expect all of our employees to
meet their fiduciary duties.
Employee Personal Trading. Alliance has adopted a Code of Business Conduct
and Ethics that is designed to detect and prevent conflicts of interest when
investment professionals and other personnel of Alliance own, buy or sell
securities which may be owned by, or bought or sold for, clients. Personal
securities transactions by an employee may raise a potential conflict of
interest when an employee owns or trades in a security that is owned or
considered for purchase or sale by a client, or recommended for purchase or
sale by an employee to a client. Subject to the reporting requirements and
other limitations of its Code of Business Conduct and Ethics, Alliance permits
its employees to engage in personal securities transactions, and also allows
them to acquire investments in the AllianceBernstein Mutual Funds through
direct purchase, 401K/profit sharing plan investment and/or notionally in
connection with deferred incentive compensation awards. Alliance's Code of
Ethics and Business Conduct requires disclosure of all personal accounts and
maintenance of brokerage accounts with designated broker-dealers approved by
Alliance. The Code also requires preclearance of all securities transactions
and imposes a one-year holding period for securities purchased by employees to
discourage short-term trading.
Managing Multiple Accounts for Multiple Clients. Alliance has compliance
policies and oversight monitoring in place to address conflicts of interest
relating to the management of multiple accounts for multiple clients.
Conflicts of interest may arise when an investment professional has
responsibilities for the investments of more than one account because the
investment professional may be unable to devote equal time and attention to
each account. The investment professional or investment professional teams for
each client may have responsibilities for managing all or a portion of the
investments of multiple accounts with a common investment strategy, including
other registered investment companies, unregistered investment vehicles, such
as hedge funds, pension plans, separate accounts, collective trusts and
charitable foundations. Among other things, Alliance's policies and procedures
provide for the prompt dissemination to investment professionals of initial or
changed investment recommendations by analysts so that investment
professionals are better able to develop investment strategies for all
accounts they manage. In addition, investment decisions by investment
professionals are reviewed for the purpose of maintaining uniformity among
similar accounts and ensuring that accounts are treated equitably. No
investment professional that manages client accounts carrying performance fees
is compensated directly or specifically for the performance of those accounts.
Investment professional compensation reflects a broad contribution in multiple
dimensions to long-term investment success for our clients and is not tied
specifically to the performance of any particular client's account, nor is it
directly tied to the level or change in level of assets under management.
Allocating Investment Opportunities. Alliance has policies and procedures
intended to address conflicts of interest relating to the allocation of
investment opportunities. These policies and procedures are designed to ensure
that information relevant to investment decisions is disseminated promptly
within its portfolio management teams and investment opportunities are
allocated equitably among different clients. The investment professionals at
Alliance routinely are required to select and allocate investment
opportunities among accounts. Portfolio holdings, position sizes, and
industry and sector exposures tend to be similar across similar accounts,
which minimizes the potential for conflicts of interest relating to the
allocation of investment opportunities. Nevertheless, investment opportunities
may be allocated differently among accounts due to the particular
characteristics of an account, such as size of the account, cash position, tax
status, risk tolerance and investment restrictions or for other reasons.
Alliance's procedures are also designed to prevent potential conflicts of
interest that may arise when Alliance has a particular financial incentive,
such as a performance-based management fee, relating to an account. An
investment professional may perceive that he or she has an incentive to devote
more time to developing and analyzing investment strategies and opportunities
or allocating securities preferentially to accounts for which Alliance could
share in investment gains.
To address these conflicts of interest, Alliance's policies and procedures
require, among other things, the prompt dissemination to investment
professionals of any initial or changed investment recommendations by
analysts; the aggregation of orders to facilitate best execution for all
accounts; price averaging for all aggregated orders; objective allocation for
limited investment opportunities (e.g., on a rotational basis) to ensure fair
and equitable allocation among accounts; and limitations on short sales of
securities. These procedures also require documentation and review of
justifications for any decisions to make investments only for select accounts
or in a manner disproportionate to the size of the account.
(a) (3) Portfolio Manager Compensation
Alliance's compensation program for investment professionals is designed to be
competitive and effective in order to attract and retain the highest caliber
employees. The compensation program for investment professionals is designed
to reflect their ability to generate long-term investment success for our
clients, including shareholders of the AllianceBernstein Mutual Funds.
Investment professionals do not receive any direct compensation based upon the
investment returns of any individual client account, nor is compensation tied
directly to the level or change in level of assets under management.
Investment professionals' annual compensation is comprised of the following:
(i) Fixed base salary: This is generally the smallest portion of compensation.
The base salary is a relatively low, fixed salary within a similar range for
all investment professionals. The base salary is determined at the outset of
employment based on level of experience, does not change significantly from
year-to-year and hence, is not particularly sensitive to performance.
(ii) Discretionary incentive compensation in the form of an annual cash bonus:
Alliance's overall profitability determines the total amount of incentive
compensation available to investment professionals. This portion of
compensation is determined subjectively based on qualitative and quantitative
factors. In evaluating this component of an investment professional's
compensation, Alliance considers the contribution to his/her team or
discipline as it relates to that team's overall contribution to the long-term
investment success, business results and strategy of Alliance. Quantitative
factors considered include, among other things, relative investment
performance (e.g., by comparison to competitor or peer group funds or similar
styles of investments, and appropriate, broad-based or specific market
indices), and consistency of performance. There are no specific formulas used
to determine this part of an investment professional's compensation and the
compensation is not tied to any pre-determined or specified level of
performance. Alliance also considers qualitative factors such as the
complexity and risk of investment strategies involved in the style or type of
assets managed by the investment professional; success of marketing/business
development efforts and client servicing; seniority/length of service with the
firm; management and supervisory responsibilities; and fulfillment of
Alliance's leadership criteria.
(iii) Discretionary incentive compensation in the form of awards under
Alliance's Partners Compensation Plan ("deferred awards"): Alliance's overall
profitability determines the total amount of deferred awards available to
investment professionals. The deferred awards are allocated among investment
professionals based on criteria similar to those used to determine the annual
cash bonus. There is no fixed formula for determining these amounts. Deferred
awards, for which there are various investment options, vest over a four-year
period and are generally forfeited if the employee resigns or Alliance
terminates his/her employment. Investment options under the deferred awards
plan include many of the same AllianceBernstein Mutual Funds offered to mutual
fund investors, thereby creating a close alignment between the financial
interests of the investment professionals and those of Alliance's clients and
mutual fund shareholders with respect to the performance of those mutual
funds. Alliance also permits deferred award recipients to allocate up to 50%
of their award to investments in Alliance's publicly traded equity
securities.(1)
(iv) Contributions under Alliance's Profit Sharing/401(k) Plan: The
contributions are based on Alliance's overall profitability. The amount and
allocation of the contributions are determined at the sole discretion of
Alliance.
(a) (4) The dollar range of the Fund's equity securities owned directly or
beneficially by the Fund's portfolio managers as of the Fund's fiscal year
ended September 30, 2006 is set forth below:
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
- --------------------------------------------------------------------------
Michael Reilly None
(1) Prior to 2002, investment professional compensation also included
discretionary long-term incentive in the form of restricted grants of Alliance
Capital's Master Limited Partnership Units.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
There have been no purchases of equity securities by the Fund or by affiliated
parties for the reporting period.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Fund's Board of Directors since the Fund last
provided disclosure in response to this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and procedures
(as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as
amended) are effective at the reasonable assurance level based on their
evaluation of these controls and procedures as of a date within 90 days of the
filing date of this document.
(b) There were no changes in the registrant's internal controls over financial
reporting that occurred during the second fiscal quarter of the period that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ---------------------------------------
12 (a) (1) Code of Ethics that is subject to the disclosure of Item 2
hereof
12 (b) (1) Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
12 (b) (2) Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
12 (c) Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): Alliance All-Market Advantage Fund, Inc.
By: /s/ Marc O. Mayer
-------------------
Marc O. Mayer
President
Date: November 28, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Marc O. Mayer
-------------------
Marc O. Mayer
President
Date: November 28, 2006
By: /s/ Joseph J. Mantineo
------------------------
Joseph J. Mantineo
Treasurer and Chief Financial Officer
Date: November 28, 2006