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, 2007
Date of reporting period: March 31, 2007
ITEM 1. REPORTS TO STOCKHOLDERS.
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SEMI-ANNUAL REPORT
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Alliance All-Market Advantage Fund
Semi-Annual Report
March 31, 2007
[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.
May 22, 2007
Semi-Annual Report
This report provides management's discussion of fund performance for Alliance
All-Market Advantage Fund (the "Fund") for the semi-annual reporting period
ended March 31, 2007. 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 Team'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 Adviser 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 makes 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 March 31, 2007.
For the six-month period ended March 31, 2007, the Fund underperformed the
benchmark. Adverse stock selection in the technology sector accounted for much
of the Fund's underperformance relative to the benchmark, although negative
stock selection in the health care and consumer staples sectors also detracted
from the Fund's relative performance. Sector allocation contributed negatively
to the Fund's return relative to its benchmark, as the Fund was underweighted
in the outperforming materials and processing sector and the energy sector.
More positive stock selection in the financial services, consumer discretionary
and producer durables sectors was most beneficial.
For the 12-month period ended March 31, 2007, the Fund substantially
underperformed the benchmark. The Fund lost significant ground relative to the
benchmark due to negative stock selection in the technology sector. Adverse
stock selection in the energy, health care and consumer discretionary
ALLIANCE ALL-MARKET ADVANTAGE FUND o 1
sectors also detracted from the Fund's performance. Relative to the benchmark,
a moderately overweighted position in the underperforming energy sector was
unfavorable; however, considerably overweighting the outperforming financial
services sector proved beneficial. Better stock selection in the financial
services and producer durables sectors contributed positively to the Fund's
performance.
Market Review and Investment Strategy
A significant detrator from the Fund's relative performance during the 12-month
period ended March 31, 2007, was that the Fund has been more skewed toward the
fastest-growing companies than the Russell 1000 Growth Index during a time when
growth was especially out of favor. Value stocks significantly outperformed
growth stocks for the 12-month period with the Russell 1000 Value Index gaining
16.83% while the Russell 1000 Growth Index was up 7.06%.
The Fund remains aggressively positioned because the Fund's manager (the
"Manager") continues to believe that the current opportunity for growth stocks
is as attractive as the Manager has experienced in the last 20 years. Given the
mismatches between earnings growth potential and valuation that pervade today's
market, the Manager believes it has a unique opportunity to capitalize on
investor aversion to the highest quality U.S. growth companies. 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.
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 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 27.
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 comprised of 1,000 of
the largest capitalized companies that are traded in the United States. The S&P
500 Stock Index is comprised 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 securitiescarried 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)
THE FUND VS. ITS BENCHMARK
PERIODS ENDED MARCH 31, 2007
Returns
------------------------------
6 Months 12 Months
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Alliance All-Market Advantage Fund (NAV) 4.90% -1.64%
Russell 1000 Growth Index 7.19% 7.06%
S&P 500 Stock Index 7.38% 11.82%
The Fund's Market Price per share on March 31, 2007 was $14.20. The Fund's
Net Asset Value Price per share on March 31, 2007 was $12.84. For additional
Financial Highlights, please see page 22.
See Historical Performance and Benchmark disclosure on previous page.
4 o ALLIANCE ALL-MARKET ADVANTAGE FUND
PORTFOLIO SUMMARY
March 31, 2007 (unaudited)
PORTFOLIO STATISTICS
Net Assets ($mil): $47.5
SECTOR BREAKDOWN*
[ ] 29.4% Technology
[ ] 21.5% Finance
[ ] 16.6% Consumer Services
[ ] 15.5% Health Care
[ ] 5.5% Aerospace & Defense
[ ] 4.6% Consumer Staples
[ ] 3.8% Energy
[ ] 2.0% Basic Industry
[ ] 1.1% Capital Goods
TEN LARGEST HOLDINGS
March 31, 2007 (unaudited)
Percent of
Company U.S. $ Value Net Assets
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Google, Inc. - Class A $ 2,753,542 5.8%
Apple, Inc. 2,722,263 5.7
WellPoint, Inc. 2,570,870 5.4
Boeing Co. 1,876,001 4.0
Gilead Sciences, Inc. 1,728,900 3.7
Cisco Systems, Inc. 1,723,275 3.6
Procter & Gamble Co. 1,717,952 3.6
Franklin Resources, Inc. 1,582,873 3.3
Alcon, Inc. 1,548,885 3.3
Hewlett-Packard Co. 1,497,222 3.2
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$ 19,721,783 41.6%
* All data are as of March 31, 2007. 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
March 31, 2007 (unaudited)
Company Shares U.S. $ Value
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COMMON STOCKS-102.8%
Technology-30.2%
Communication Equipment-4.3%
Cisco Systems, Inc.(a) 67,500 $ 1,723,275
QUALCOMM, Inc. 7,200 307,152
------------
2,030,427
Communication Services-0.8%
Monster Worldwide, Inc.(a) 8,000 378,960
Computer Hardware/Storage-10.0%
Apple, Inc.(a) 29,300 2,722,263
Hewlett-Packard Co. 37,300 1,497,222
Sun Microsystems, Inc.(a) 87,700 527,077
------------
4,746,562
Computer Peripherals-1.5%
Network Appliance, Inc.(a) 20,300 741,356
Internet Infrastructure-1.2%
Akamai Technologies, Inc.(a) 11,300 564,096
Internet Media-5.8%
Google, Inc.--Class A(a) 6,010 2,753,542
Semiconductor Components-3.5%
Broadcom Corp.--Class A(a) 34,400 1,103,208
NVIDIA Corp.(a) 19,100 549,698
------------
1,652,906
Software-3.1%
Adobe Systems, Inc.(a) 13,200 550,440
Microsoft Corp. 33,400 930,858
------------
1,481,298
------------
14,349,147
Finance-22.1%
Banking - Money Center-4.5%
Credit Suisse Group (New York Exchange)
(ADR) 20,000 1,436,600
JP Morgan Chase & Co. 14,600 706,348
------------
2,142,948
Brokerage & Money Management-10.5%
The Charles Schwab Corp. 12,500 228,625
Franklin Resources, Inc. 13,100 1,582,873
Goldman Sachs Group, Inc. 3,100 640,553
Janus Capital Group, Inc. 2,600 54,366
Lazard Ltd.--Class A 4,700 235,846
Legg Mason, Inc. 11,000 1,036,310
Merrill Lynch & Co., Inc. 14,800 1,208,716
------------
4,987,289
6 o ALLIANCE ALL-MARKET ADVANTAGE FUND
Company Shares U.S. $ Value
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Insurance-2.0%
American International Group, Inc. 13,800 $ 927,636
Miscellaneous-5.1%
Chicago Mercantile Exchange Holdings, Inc.--
Class A 2,730 1,453,616
Moody's Corp. 1,900 117,914
NYSE Group, Inc.(a) 9,000 843,750
------------
2,415,280
------------
10,473,153
Consumer Services-17.1%
Apparel-0.7%
Nike, Inc.--Class B 3,100 329,406
Broadcasting & Cable-3.4%
Comcast Corp.--Special--Class A(a) 53,850 1,371,559
Time Warner, Inc. 12,200 240,584
------------
1,612,143
Cellular Communications-1.2%
America Movil SAB de CV Series L (ADR) 6,600 315,414
NII Holdings, Inc.(a) 3,350 248,503
------------
563,917
Entertainment & Leisure-0.4%
Wynn Resorts Ltd. 2,200 208,692
Restaurants & Lodging-5.8%
Hilton Hotels Corp. 18,100 650,876
Las Vegas Sands Corp.(a) 4,200 363,762
McDonald's Corp. 17,700 797,385
Starwood Hotels & Resorts Worldwide, Inc. 14,300 927,355
------------
2,739,378
Retail-General Merchandise-5.6%
eBay, Inc.(a) 15,000 497,250
Kohl's Corp.(a) 14,500 1,110,845
Target Corp. 17,900 1,060,754
------------
2,668,849
------------
8,122,385
Health Care-16.0%
Biotechnology-5.3%
Genentech, Inc.(a) 9,500 780,140
Gilead Sciences, Inc.(a) 22,600 1,728,900
------------
2,509,040
Medical Products-5.3%
Abbott Laboratories 17,000 948,600
Alcon, Inc. 11,750 1,548,885
------------
2,497,485
ALLIANCE ALL-MARKET ADVANTAGE FUND o 7
Company Shares U.S. $ Value
Medical Services-5.4%
WellPoint, Inc.(a) 31,700 $ 2,570,870
------------
7,577,395
Aerospace & Defense-5.6%
Aerospace-5.6%
Boeing Co. 21,100 1,876,001
Rockwell Collins, Inc. 7,200 481,896
Spirit Aerosystems Holdings, Inc.--
Class A(a) 10,000 318,500
------------
2,676,397
Consumer Staples-4.7%
Food-1.1%
WM Wrigley Jr Co. 9,900 504,207
Household Products-3.6%
Procter & Gamble Co. 27,200 1,717,952
------------
2,222,159
Energy-3.9%
Oil Service-3.9%
Halliburton Co. 33,300 1,056,942
Schlumberger Ltd. 11,400 787,740
------------
1,844,682
Basic Industry-2.1%
Chemicals-2.1%
Monsanto Co. 17,800 978,288
Capital Goods-1.1%
Engineering & Construction-1.1%
Fluor Corp. 5,900 529,348
Total Investments-102.8%
(cost $39,682,172) 48,772,954
Other assets less liabilities-(2.8%) (1,311,383)
Net Assets-100.0% $47,461,571
(a) Non-income producing security.
Glossary:
ADR - American Depositary Receipt
See notes to financial statements.
8 o ALLIANCE ALL-MARKET ADVANTAGE FUND
STATEMENT OF ASSETS & LIABILITIES
March 31, 2007 (unaudited)
Assets
Investments in securities, at value (cost $39,682,172) $48,772,954
Cash 43,956
Receivable for investment securities sold 347,266
Dividends receivable 11,365
Total assets 49,175,541
Liabilities
Dividends payable 1,212,841
Payable for investment securities purchased 360,095
Advisory fee payable 38,837
Administrative fee payable 24,238
Accrued expenses 77,959
Total liabilities 1,713,970
Net Assets $47,461,571
Composition of Net Assets
Capital stock, at par $ 36,977
Additional paid-in capital 52,885,676
Net investment loss (335,040)
Accumulated net realized loss on investment transactions (14,216,824)
Net unrealized appreciation of investments 9,090,782
------------
$47,461,571
Net Asset Value Per Share--300 million shares of capital stock authorized,
$.01 per value
(based on 3,697,685 shares outstanding) $12.84
See notes to financial statements.
ALLIANCE ALL-MARKET ADVANTAGE FUND o 9
STATEMENT OF OPERATIONS
Six Months Ended March 31, 2007 (unaudited)
Investment Income
Dividends (net of foreign taxes
withheld of $179) $ 175,028
Interest 9,762 $184,790
Expenses
Advisory fee 289,847
Custodian 60,592
Legal 54,471
Administrative 51,769
Audit 26,412
Printing 19,551
Directors' fees 18,575
Registration 11,893
Transfer agency 657
Miscellaneous 4,673
Total expenses 538,440
Less: expenses waived by the Adviser
(see Note B) (18,610)
Net expenses 519,830
Net investment loss (335,040)
Realized and Unrealized Gain
on Investment Transactions
Net realized gain on investment
transactions 1,856,862
Net change in unrealized
appreciation/depreciation
of investments 879,177
Net gain on investment transactions 2,736,039
Net Increase in Net Assets from
Operations $2,400,999
See notes to financial statements.
10 o ALLIANCE ALL-MARKET ADVANTAGE FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months
Ended
March 31, Year Ended
2007 September 30,
(unaudited) 2006
------------- -------------
Increase (Decrease) in Net Assets
from Operations
Net investment loss $ (335,040) $ (790,821)
Net realized gain on investment
transactions 1,856,862 4,809,755
Net change in unrealized
appreciation/depreciation
of investments 879,177 (3,396,585)
Net increase in net assets from
operations 2,400,999 622,349
Distributions to Shareholders from
Net realized gain on investment
transactions (2,395,156) (5,085,941)
Tax return of capital -0- (67,042)
Common Stock Transactions
Reinvestment of dividends
resulting in the issuance of
common stock 86,365 173,020
Total increase (decrease) 92,208 (4,357,614)
Net Assets
Beginning of period 47,369,363 51,726,977
End of period (including net
investment loss of ($335,040)
and $0, respectively) $47,461,571 $47,369,363
See notes to financial statements.
ALLIANCE ALL-MARKET ADVANTAGE FUND o 11
NOTES TO FINANCIAL STATEMENTS
March 31, 2007 (unaudited)
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. (the "Adviser") may establish proce-
12 o ALLIANCE ALL-MARKET ADVANTAGE FUND
dures 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 .80% of the average of the net assets of the Fund, and may be adjusted
upward or downward by up to .55%. Prior to February 17, 2006, the Basic Fee was
1.25% of the average of the net assets of the Fund. During the six months ended
March 31, 2007, the Adviser voluntarily waived .10% of the Basic Fee; such
waiver amounted to $18,610. 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 six months ended March 31, 2007, the fee as adjusted, amounted to
1.08% 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. ("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 six months ended March 31, 2007,
the Fund reimbursed ABIS $140 for such cost.
Brokerage commissions paid on investment transactions for the six months ended
March 31, 2007 amounted to $45,131, of which $255 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 six months ended March 31, 2007, were as follows:
Purchases Sales
------------- -------------
Investment securities (excluding
U.S. government securities) $29,959,561 $31,965,253
U.S. government securities -0- -0-
The cost of investments for federal income tax purposes was substantially the
same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation and unrealized depreciation are as follows:
Gross unrealized appreciation $9,366,356
Gross unrealized depreciation (275,574)
Net unrealized appreciation $9,090,782
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
perform under the contract. Put and call options purchased are accounted for in
the
ALLIANCE ALL-MARKET ADVANTAGE FUND o 15
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.
For the six months ended March 31, 2007, the Fund had no transactions in
written options.
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 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 six months ended March 31, 2007 and the year ended September 30,
2006, the Fund issued 6,321 shares and 12,474 shares, respectively, in
connection with the Fund's dividend reinvestment plan.
16 o ALLIANCE ALL-MARKET ADVANTAGE FUND
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
currency 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 to be paid for the year ending September 30,
2007, will be determined at the end of the current fiscal year. 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
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.
ALLIANCE ALL-MARKET ADVANTAGE FUND o 17
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 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 ("NYAG Order"). 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;
18 o ALLIANCE ALL-MARKET ADVANTAGE FUND
(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
"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
ALLIANCE ALL-MARKET ADVANTAGE FUND o 19
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
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
20 o ALLIANCE ALL-MARKET ADVANTAGE FUND
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
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 a 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. On December 22, 2006, the Securities and
Exchange Commission notified the industry that the implementation of FIN 48 by
registered investment companies could be delayed until the last business day of
the first required financial statement reporting period for fiscal years
beginning after December 15, 2006. 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.
ALLIANCE ALL-MARKET ADVANTAGE FUND o 21
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Common Stock Outstanding Throughout Each Period
Six Months
Ended
March 31, Year Ended September 30,
2007 ---------------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning
of period $12.83 $14.06 $12.85 $13.69 $13.65 $19.68
Income From Investment
Operations
Net investment loss(a) (.09)(b) (.21)(b) (.10)(b) (.18) (.22) (.26)
Net realized and unrealized
gain (loss) on investment
transactions .75 .38 2.62 .76 1.58 (3.82)
Net increase (decrease) in net
asset value from operations .66 .17 2.52 .58 1.36 (4.08)
Less: Distributions
Distributions from net realized
gain on investments (.65) (1.38) (.44) (1.21) -0- -0-
Tax return of capital -0- (.02) (.87) (.21) (1.32) (1.95)
Total distributions (.65) (1.40) (1.31) (1.42) (1.32) (1.95)
Net asset value, end of period $12.84 $12.83 $14.06 $12.85 $13.69 $13.65
Market value, end of period $14.20 $14.36 $14.15 $14.19 $14.30 $13.45
Premium/(Discount) 10.59% 11.93% .64% 10.43% 4.46% (1.47)%
Total Return
Total investment return based on:(c)
Market value 3.65% 11.86% 9.72% 9.39% 16.93% (24.59)%
Net asset value 4.90% .58% 20.39% 3.74% 10.42% (22.64)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $47,462 $47,369 $51,727 $47,018 $49,797 $49,534
Ratio to average net assets of:
Expenses, before waivers 2.20%(d) 2.38% 1.79% 1.74% 2.28% 2.06%
Expenses, net of waivers 2.12%(d) 2.28% 1.73% 1.73% 2.28% 2.06%
Net investment loss (1.37)%(b)(d) (1.53)%(b) (.78)%(b) (1.30)% (1.58)% (1.38)%
Portfolio turnover rate 62% 134% 189% 336% 294% 215%
(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.
(d) Annualized.
22 o ALLIANCE ALL-MARKET ADVANTAGE FUND
ADDITIONAL INFORMATION
(unaudited)
Supplemental Proxy Information
The Annual Meeting of Stockholders of the Alliance All-Market Advantage Fund,
Inc. was held on March 28, 2007 and adjourned to May 4, 2007.
A description of the proposal and number of shares voted at the Meeting are as
follows:
Abstain/
Authority
Voted for Withheld
- -------------------------------------------------------------------------------
1. To elect Class One Directors: David H. Dievler 3,457,811 77,883
(terms expire in 2010) Michael J. Downey 3,451,190 84,504
Nancy P. Jacklin 3,451,435 84,259
To elect a Class Three Director: Earl D. Weiner 3,455,969 79,725
(term expires in 2009)
ALLIANCE ALL-MARKET ADVANTAGE FUND o 23
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O.Mayer, President and Chief Executive Officer
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)
Earl D. Weiner(1)
OFFICERS
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
John A. Koltes, 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 26, 2007, 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.
24 o ALLIANCE ALL-MARKET ADVANTAGE FUND
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 registered 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.
ALLIANCE ALL-MARKET ADVANTAGE FUND o 25
Information Regarding the Review and Approval of the Fund's Advisory and
Administration Agreements
The disinterested directors (the "directors") of Alliance All-Market Advantage
Fund, Inc. (the "Fund") unanimously approved the continuance of the Advisory
Agreement with the Adviser and the continuance of the Administration Agreement
with the Adviser (in such capacity, the "Administrator") at meetings held on
October 31-November 2, 2006 (for a "stub" period ending February 28, 2007) and
February 7-8, 2007 (for an annual period).
Prior to approval of the continuance of the Advisory Agreement and
Administration Agreement, the directors requested and received and evaluated
extensive materials from the Adviser. They reviewed the proposed continuance of
the Advisory Agreement and Administration Agreement with the Adviser and with
experienced counsel who are independent of the Adviser who advised on the
relevant legal standards. The directors also discussed the proposed
continuances in five private sessions with counsel and the Fund's Independent
Compliance Officer.
The directors 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, the Adviser's initiative in identifying
and raising potential issues with the directors and its responsiveness,
frankness and attention to concerns raised by the directors 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. The directors noted that they have
four regular meetings each year, at each of which they receive presentations
from the Adviser on the investment results of the Fund and review extensive
materials and information presented by the Adviser.
The directors also considered all other factors they believed relevant,
including the specific matters discussed below. 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 selection of the Adviser
to manage the Fund and the Administrator to provide administrative services to
the Fund, and the overall arrangements (i) between the Fund and the Adviser, as
provided in the Advisory Agreement, including the revised advisory fee approved
at the February 7-8, 2007 meeting and (ii) between the Fund and the
Administrator, as provided in the Administration Agreement, including the
administration fee, were fair and reasonable in light of the services
performed, expenses incurred and such other
26 o ALLIANCE ALL-MARKET ADVANTAGE FUND
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' determinations included the following:
Nature, Extent and Quality of Services Provided
The directors noted that the Advisory Agreement for the Fund does not contain a
provision requiring the Fund to reimburse the Adviser for the cost of certain
administrative and other services provided at the Fund's request by employees
of the Adviser or its affiliates. The directors noted that the Fund has a
separate administration agreement and pays separate administration fees to its
administrator.
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, including the quality of the investment research
capabilities of the Adviser and the other resources it has dedicated to
performing services for the Fund. They also noted the professional experience
and qualifications of the Fund's portfolio management team and other senior
personnel of the Adviser. 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 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
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 arrived at in
consultation with an independent consultant. 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. 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. 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
concluded that they were satisfied that the Adviser's level of profitability
from its relationship with the Fund was not excessive.
ALLIANCE ALL-MARKET ADVANTAGE FUND o 27
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
annual presentations to the directors regarding its trading practices and
brokerage allocation policies, including its policies with respect to soft
dollar arrangements. 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 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 without these benefits. 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.
28 o ALLIANCE ALL-MARKET ADVANTAGE FUND
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 advisory 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 in December 2003, the Adviser agreed
to material reductions (averaging 20%) in the fee schedules of most of the
open-end funds sponsored by the Adviser, and that such open-end funds had
benefited from such fee reductions since 2004. The directors noted that the
Fund was benefiting from a 10 basis point base advisory fee waiver and that at
the October 31-November 2, 2006 meetings in approving continuance of the Fund's
Advisory Agreement and Administration Agreement for a stub period ending
February 28, 2007, the Adviser had agreed to continue the 10 basis point waiver
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 current 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
involved investments in securities of the same type that the Fund invests in
(i.e., domestic growth equity securities). The Adviser reviewed with the
directors the significantly greater scope of the services it provides the Fund
relative to institutional clients. In light of this information, 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
cate-
ALLIANCE ALL-MARKET ADVANTAGE FUND o 29
gory. 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 pro forma
management fees of 81 basis points (pro forma combined advisory and
administration fees paid under the Advisory and Administration Agreements) for
the fiscal year ended September 30, 2005 were slightly lower than the Expense
Group median and the same as the Expense Universe median. However, the
directors further noted that the Fund's fee rate was much higher in its fiscal
year ended September 30, 2006, at 135 basis points. They noted that the
Advisory Agreement for the Fund has a basic fee ("Basic Fee") and a performance
adjustment and that the Fund is currently the only AllianceBernstein Fund
managed by the Adviser that has a performance component in its management fee.
The directors also 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. At their
October 31-November 2, 2006 meetings the directors requested that the Adviser
propose a fee reduction for their consideration by the end of the year.
The directors noted that at their December 20, 2006 meeting the Adviser had
proposed adjusting the fee schedule in the Advisory Agreement such that the
Basic Fee would be 1/12 of 0.80% of the average of the net assets of the Fund
at the end of each month included in the applicable performance periods (i.e.,
0.80% on an annualized basis). The Adviser also proposed to adjust the fulcrum
component of the fee such that the Basic Fee would increase each month at the
rate of 1/12 of 0.025% for each percentage point in excess of two up to and
including the eighth percentage point that the investment performance of the
Fund for the period exceeds that of the designated index (the "Index"). The
Basic Fee would decrease each month at the rate of 1/12 of 0.025% for each
percentage point in excess of two up to and including the eighth percentage
point that the investment performance of the Index for the period exceeds that
of the Fund. The maximum increase or decrease to the Basic Fee would be 1/12 of
30 o ALLIANCE ALL-MARKET ADVANTAGE FUND
0.15%. The maximum monthly fee would be 1/12 of 0.95% and the minimum monthly
fee would be 1/12 of 0.65%. In addition, the Adviser proposed to discontinue
the current waiver of 0.10% of the Basic Fee. The directors believed that the
Adviser's proposal was appropriately responsive to their request for an
adjustment to the Fund's advisory fee arrangements.
The directors also noted that the Fund's pro forma total expense ratio was
materially higher than the Expense Group and Expense Universe medians, and that
this was largely due to the Fund's very small size. 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 31
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
Small/Mid Cap Value Fund
Utility Income Fund
Value Fund
Global & International
Global Real Estate Investment Fund*
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
AllianceBernstein Global High Income Fund*
AllianceBernstein Income Fund*
ACM Managed Dollar Income Fund
ACM Managed Income Fund
California Municipal Income Fund
AllianceBernstein National Municipal Income Fund*
New York Municipal Income Fund
The Spain Fund
- -------------------------------------------------
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.
You should consider the investment objectives, risks, charges and expenses of
any AllianceBernstein fund/portfolio carefully before investing. For free
copies of our prospectuses, which contain this and other information, visit us
online at www.alliancebernstein.com or contact your financial advisor. Please
read the prospectus carefully before investing.
* Prior to January 26, 2007, AllianceBernstein Global High Income Fund was
named Alliance World Dollar Government Fund II and AllianceBernstein Income
Fund was named ACM Income Fund. Prior to March 1, 2007, Global Real Estate
Investment Fund was named Real Estate Investment Fund. Prior to May 18, 2007,
AllianceBernstein National Municipal Income Fund was named National Municipal
Income Fund.
** 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.
32 o ALLIANCE ALL-MARKET ADVANTAGE FUND
NOTES
ALLIANCE ALL-MARKET ADVANTAGE FUND o 33
NOTES
34 o ALLIANCE ALL-MARKET ADVANTAGE FUND
Privacy Notice
AllianceBernstein, the AllianceBernstein Family of Funds and AllianceBernstein
Investments, Inc. (collectively, "AllianceBernstein" or "we") understand the
importance of maintaining the confidentiality of our customers' nonpublic
personal information. In order to provide financial products and services to
our customers efficiently and accurately, we may collect nonpublic personal
information about our customers from the following sources: (1) information we
receive from account documentation, including applications or other forms
(which may include information such as a customer's name, address, social
security number, assets and income) and (2) information about our customers'
transactions with us, our affiliates and others (including information such as
a customer's account balances and account activity).
It is our policy not to disclose nonpublic personal information about our
customers (or former customers) except to our affiliates, or to others as
permitted or required by law. From time to time, AllianceBernstein may disclose
nonpublic personal information that we collect about our customers (or former
customers), as described above, to non-affiliated third party providers,
including those that perform processing or servicing functions and those that
provide marketing services for us or on our behalf pursuant to a joint
marketing agreement that requires the third party provider to adhere to
AllianceBernstein's privacy policy. We have policies and procedures to
safeguard nonpublic personal information about our customers (or former
customers) which include: (1) restricting access to such nonpublic personal
information and (2) maintaining physical, electronic and procedural safeguards
that comply with federal standards to safeguard such nonpublic personal
information.
ALLIANCE ALL-MARKET ADVANTAGE FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO]
ALLIANCEBERNSTEIN
INVESTMENTS
AMA-0152-0307
ITEM 2. CODE OF ETHICS.
Not applicable when filing a semi-annual report to shareholders.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable when filing a semi-annual report to shareholders.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable when filing a semi-annual report to shareholders.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable when filing a semi-annual report to shareholders.
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.
Not applicable when filing a semi-annual report to shareholders.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable when filing a semi-annual report to shareholders.
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-2(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 (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: May 30, 2007
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: May 30, 2007
By: /s/ Joseph J. Mantineo
----------------------
Joseph J. Mantineo
Treasurer and Chief Financial Officer
Date: May 30, 2007