ALLIANCE MULTI-MARKET STRATEGY TRUST
ANNUAL REPORT
OCTOBER 31, 1995
ALLIANCE
MUTUAL FUNDS WITHOUT THE MYSTERY.
LETTER TO SHAREHOLDERS ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
December 4, 1995
Dear Shareholder:
The U.S. bond market continued its broad-based rally over the past six months.
The rally strengthened despite strong third quarter gross domestic product
growth, as restrained inflationary pressures and expectations for a more
accommodative monetary policy buoyed investor confidence. Outside the U.S.,
emerging market and other foreign debt prices also rose during the six-month
reporting period.
MARKET REVIEW
As expected a year ago, the Federal Reserve's monetary tightening that began
early in 1994 came to an end as economic growth moderated to more sustainable
levels. Short-term interest rates stabilized following the late December 1994
Mexican peso crisis and the increase in the federal funds rate in February of
1995. Longer-term interest rates declined sharply in April as evidence of a
slowing, but still healthy, economy mounted and inflationary fears receded.
Lower interest rates combined with significant corporate earnings growth has
supported a strong rally in stocks and across nearly all sectors of the fixed
income markets for most of 1995. Inflation remains at very low levels and
progress is underway in Washington to balance the U.S. fiscal budget.
The rally in the U.S. bond market has been fueled largely by favorable economic
developments. Investment grade and high yield corporate securities offered the
highest total return, but across all major sectors of the U.S. fixed income
market longer-duration securities outperformed shorter-duration securities as
rates on all maturities declined.
Emerging market and other foreign debt prices have rebounded sharply since
March due in part to the favorable U.S. interest rate environment and some
improvement in the Mexican and Argentine economic outlook.
INVESTMENT RESULTS
Alliance Multi-Market Strategy Trust benefited from 1995's bond market price
gains, though twelve-month performance was restrained by the difficult market
conditions that existed in late 1994 and early 1995. Most of the Fund's gain
has been achieved over the past six months as emerging market and other foreign
debt prices recovered. In the table below, your Fund's performance over the
fiscal reporting period ended October 31, 1995, is compared with the short
maturity U.S. government bond market, represented by the Merrill Lynch (ML) 1-3
Year Government Bond Index, and the Lipper Short World Multi-Market Income
Funds Average, which reflects performance of 44 funds (complete descriptions of
these unmanaged benchmarks appear on page 4):
Total Return as of October 31, 1995
12 Months 6 Months
--------- --------
ALLIANCE MULTI-MARKET STRATEGY TRUST
Class A -6.47% +6.08%
Class B -7.31% +5.44%
Class C -7.29% +5.61%
ML 1-3 Year Index +2.17% +1.39%
Lipper Short World MM
Income Funds Avg. +3.18% +4.58%
The Fund's total returns are based on the net asset values of each class of
shares as of October 31; additional investment results appear on page 4. As of
October 31, the Fund's net assets were distributed as follows:
PORTFOLIO DISTRIBUTION BY COUNTRY
U.S. - 28.2%
Denmark - 11.1%
Ireland - 9.8%
Germany - 9.3%
Finland - 8.2%
Canada - 7.7%
Australia - 7.0%
Mexico - 6.6%
Spain - 4.5%
New Zealand - 4.0%
Portugal - 3.6%
INVESTMENT OUTLOOK
In the following pages is a discussion with Douglas Peebles, your Fund's
portfolio manager. Mr. Peebles pro-
1
ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
vides an update on the current political and economic situation in Mexico, on
new areas of investment for the Fund since we last reported and on the areas
that he expects will provide future opportunities. We appreciate your
investment in the Fund and look forward to updating you on its progress in the
coming period.
Sincerely,
John D. Carifa
Chairman and President
2
INTERVIEW WITH PORTFOLIO MANAGER
DOUGLAS J. PEEBLES, VICE PRESIDENT ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
Q: THE FUND'S NET ASSET VALUE REMAINED FAIRLY STABLEOVER THE LAST SIX MONTHS.
WHAT WERE THE MAIN FACTORS BEHIND THE FAVORABLE TOTAL RETURNS?
MR. PEEBLES: Two main factors influenced the Fund's performance during the last
six months. First was the strong price appreciation in global fixed income
markets. Your Fund's five-year maturity restriction limited the benefit of
these gains to a degree, but the rally was strong even at the short- to
medium-term ends of global yield curves. The second factor involved the decline
in the value of the Japanese yen of approximately 20% from its peak in June.
Since we have been using the yen as a hedge currency, this worked quite nicely
in the Fund's favor.
Q: WHAT ARE YOU EXPECTING FOR MAJOR CURRENCIES OVER THE NEAR TERM?
MR. PEEBLES: Our currency outlook is really more of an outlook on the U.S.
dollar. We are expecting the dollar to appreciate versus both the Japanese yen
and the German deutschemark.
The long-standing U.S. trade deficit appears to have peaked, which should
benefit the dollar, but, more importantly, the outlook for our budget deficit
compared to the Japanese and German budget deficits is very favorable. The poor
fiscal situations in Europe and Japan will impede economic growth in these
regions which should contribute to weaker currencies. Also, in the U.S.,
structural reform in both the labor market and in the corporate sector have far
outweighed any reforms undertaken in Europe or Japan. In Europe the social
welfare system remains far too large in the current competitive global
environment, and Japanese markets for goods and services remain closed to
global competition, thus hindering its economy. For these reasons we look for
the dollar to appreciate.
Q: SUBSEQUENT TO THE OCTOBER 31 REPORTING PERIOD, YOU INITIATED EXPOSURE TO THE
THAI BAHT. WHY HAVE YOU ESTABLISHED A POSITION IN THIS CURRENCY?
MR. PEEBLES: The East Asian region has had the strongest overall economic
growth of any region in the world in the last 10 years or so. In our view, this
strong growth pattern should continue over the next decade and specifically, we
believe exposure to the Thai Baht will benefit the Fund's performance.
There are a couple of major events that have already helped spur growth in
countries such as Thailand. First, The People's Republic of China is beginning
to open up its market to outsiders and Thailand will benefit because of its
broadly educated population, relatively cheap labor force and established
manufacturing base.
Also, many Japanese companies have started to outsource their manufacturing
into Thailand as the cost structures there are a fraction of those in Japan.
Consequently, foreign direct investment in Thailand by the Japanese can be
expected to remain at high levels.
Q: THE PORTFOLIO'S EXPOSURE TO MEXICO IS A BIT LOWER THAN IT WAS IN APRIL. ARE
THERE STILL OPPORTUNITIES IN MEXICO?
MR. PEEBLES: In our view the Mexican peso remains very cheap and real interest
rates remain attractive-that is why the Fund is still invested in Mexico.
However, the political situation, the banking sector, and the monetary policies
of the Mexican officials all remain quite nebulous. We must have a clearer
picture of how some of the outstanding issues will be worked out before we
commit more of the Fund's assets to Mexico.
Q: OVERALL, WHAT IS YOUR OUTLOOK FOR GLOBAL FIXED INCOME INVESTING GOING
FORWARD?
MR. PEEBLES: Our outlook continues to be relatively favorable. The last move in
official interest rates by all three of the world's major central banks, the
U.S. Federal Reserve, the German Bundesbank and the Bank of Japan, was to lower
rates, which we believe could be repeated when monetary policy is next
reviewed. Although the U.S. and Japanese markets are already fairly priced for
any potential central bank easing, the European yield curves remain quite steep
and therefore further capital appreciation potential still exists in the short
ends of European fixed income markets.
3
INVESTMENT RESULTS ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF OCTOBER 31, 1995
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year -6.47% -10.48%
. Since Inception* +0.01% -0.96%
. SEC Yield 6.95%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year -7.31% -9.85%
. Since Inception* -0.75% -0.75%
. SEC Yield 6.54%
CLASS C SHARES
. One Year -7.29%
. Since Inception* -2.20%
. SEC Yield 6.54%
The average annual total returns reflect investment of dividends and/or capital
gains distributions in additional shares-with and without the effect of the
4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (3% year 1, 2% year 2, 1% year 3, 0% year 4);
Class C shares are not subject to front-end or contingent deferred sales
charges. Past performance does not guarantee future results. Investment return
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Yields are for the 30 days
ended October 31, 1995.
* Inception: 5/29/91 Class A and Class B; 5/3/93 Class C.
$10,000 INVESTMENT OVER LIFE OF FUND: 5/31/91 TO 10/31/95
$14,000
ML 1-3 Year
Gov't Index
$13,000
$12,000
Multi-Market Lipper Short World
Strategy Trust Multi-Market Income
Class A: $9,583 Funds Average
$11,000
$10,000
$ 9,000
5/31/91 10/31/95
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Multi-Market Strategy Trust Class A shares (from inception) after
deducting the maximum 4.25% sales charge, and with dividends and capital gains
reinvested. Performance for Class B and Class C shares will vary from the
results shown above due to differences in expenses charged to those classes.
Results should not be considered representative of future gain or loss in
capital value or dividend income.
The Merrill Lynch 1-3 Year Government Index is composed of U.S. Government
agency and Treasury securities with maturities of one to three years. The
Lipper Short World Multi-Market Income Funds Average reflects performance of 44
funds that invest in non-U.S. dollar and U.S. dollar debt instruments. The
funds tracked by Lipper Analytical Services have generally similar investment
objectives to Alliance Multi-Market Strategy Trust, though some of the funds
may have somewhat different investment policies.
When comparing Alliance Multi-Market Strategy Trust to the Index above, you
should note that the fund's performance reflects the maximum sales charge of
4.25%, while no such charges are reflected in the performance of the benchmarks.
4
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $VALUE
- ----------------------------------------------------------------------
AUSTRALIA-6.9%
GOVERNMENT OBLIGATION-6.9%
Republic of Australia
13.00%, 7/15/00(a)
(cost $13,621,647) AU$ 15,000 $13,484,114
CANADA-7.7%
GOVERNMENT OBLIGATION-5.0%
Government of Canada
8.50%, 3/01/00(a) CA$ 12,500 9,791,512
DEBT OBLIGATION-2.7%
Abbey National Plc.
7.50%, 7/16/98(a) 7,000 5,248,175
Total Canadian Securities
(cost $15,034,680) 15,039,687
DENMARK-11.1%
GOVERNMENT OBLIGATION-11.1%
Kingdom of Denmark
6.00%, 12/10/99(a)
(cost $20,445,553) DKK 120,000 21,558,916
FINLAND-8.2%
GOVERNMENT OBLIGATION-8.2%
Republic of Finland
11.00%, 1/15/99(a)
(cost $15,241,429) FIM 60,000 15,941,320
GERMANY-9.4%
DEBT OBLIGATIONS-5.3%
Dresdner Finance
6.50%, 5/22/00(a) DEM 10,000 7,356,339
SMM Trust Co., Ltd. FRN
4.66%, 11/22/96(a)(c) 4,000 2,842,176
10,198,515
GOVERNMENT OBLIGATION-4.1%
Federal Republic of Germany
8.50%, 8/21/00(a) 10,000 7,966,879
Total German Securities
(cost $17,692,851) 18,165,394
IRELAND-9.9%
GOVERNMENT OBLIGATION-9.9%
Republic of Ireland
6.25%, 4/01/99(a)
(cost $18,579,332) IEP 12,200 $19,130,259
MEXICO-12.2%
GOVERNMENT OBLIGATIONS-12.2%
Mexican Treasury Bills
46.50%, 11/01/95(a)(b) MXP 77,400 10,964,451
38.00%, 1/04/96(a)(b) 14,000 1,831,121
40.00%, 1/25/96(b) 20,000 2,564,411
44.70%, 2/01/96(b) 30,000 3,819,056
45.00%, 2/08/96(b) 36,406 4,595,257
Total Mexican Securities
(cost $25,768,921) 23,774,296
NEW ZEALAND-4.0%
GOVERNMENT OBLIGATIONS-4.0%
Government of New Zealand
9.00%, 11/15/96(a) NZ$ 10,000 6,680,872
10.00%, 7/15/97(a) 1,600 1,098,195
Total New Zealand Securities
(cost $7,706,279) 7,779,067
PORTUGAL-3.6%
GOVERNMENT OBLIGATIONS-3.6%
Government of Portugal
11.88%, 2/23/00
(cost $7,021,385) PTE 1,000,000 6,980,562
SPAIN-4.5%
GOVERNMENT OBLIGATION-4.5%
Government of Spain
12.25%, 3/25/00(a)
(cost $8,717,976) ESP 1,000,000 8,677,012
5
PORTFOLIO OF INVESTMENTS (CONTINUED)
ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $VALUE
- ----------------------------------------------------------------------
UNITED STATES-30.6%
DEBT OBLIGATIONS-3.7%
ISIS, Ltd. VRN
6.00%, 12/15/95(c) US$ 5,200 $ 5,198,440
SMM Trust Co., Ltd. FRN
6.25%, 11/22/96(c) 2,000 1,999,400
7,197,840
COMMERCIAL PAPER-2.6%
Merrill Lynch
5.89%, 11/13/95(a)(b) 5,000 4,989,365
TIME DEPOSITS-24.3%
Toronto Dominion Bank
5.97%, 11/13/95 10,000 10,000,000
Wachovia Bank
5.90%, 11/01/95 US$ 35,400 $35,400,000
WestDeutsche Landesbank
5.56%, 1/09/96 1,800 1,800,000
47,200,000
Total United States Securities
(cost $59,392,277) 59,387,205
TOTAL INVESTMENTS-108.1%
(cost $209,222,330) 209,917,832
Other assets less liabilities-(8.1)% (15,744,644)
NET ASSETS-100% $194,173,188
(a) Security, or portion thereof, has been segregated to collateralize forward
exchange currency contracts. This collateral has a total market value of
approximately $137,560,706.
(b) Annualized yield to maturity at purchase date.
(c) Stated interest rate in effect at October 31, 1995.
Glossary:
FRN - Floating Rate Note.
VRN - Variable Rate Note.
See notes to financial statements.
6
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $209,222,330) $209,917,832
Cash 29,651
Receivable for investment securities sold 16,795,397
Interest receivable 6,431,028
Deferred organization expenses and other assets 118,977
Total assets 233,292,885
LIABILITIES
Payable for investment securities purchased 35,357,251
Unrealized depreciation of forward exchange currency contracts 1,532,247
Payable for capital stock redeemed 947,697
Dividend payable 532,800
Unrealized depreciation of swap contracts 215,542
Distribution fee payable 121,660
Advisory fee payable 101,062
Loan fee payable 8,073
Accrued expenses and other liabilities 303,365
Total liabilities 39,119,697
NET ASSETS $194,173,188
COMPOSITION OF NET ASSETS
Capital stock, at par $ 28,445
Additional paid-in capital 215,483,859
Distributions in excess of net investment income 21,359
Accumulated net realized loss on investments, options,
swaps, and foreign currency transactions (20,333,497)
Net unrealized depreciation of investments, swaps, and
foreign currency denominated assets and liabilities (1,026,978)
$194,173,188
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($76,837,089/
11,255,641 shares of capital stock issued and outstanding) $6.83
Sales charge-4.25% of public offering price .30
Maximum offering price $7.13
CLASS B SHARES
Net asset value and offering price per share ($116,550,528/
17,074,930 shares of capital stock issued and outstanding) $6.83
CLASS C SHARES
Net asset value, redemption and offering price per share($785,571/
115,052 shares of capital stock issued and outstanding) $6.83
See notes to financial statements.
7
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1995 ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
INVESTMENT INCOME
Interest (net of foreign taxes withheld of $53,163) $21,481,803
EXPENSES
Advisory fee $1,299,765
Distribution fee - Class A 187,381
Distribution fee - Class B 1,532,518
Distribution fee - Class C 8,959
Transfer agency 476,068
Custodian 299,705
Administrative 166,607
Loan commitment fees (see Note E) 142,868
Audit and legal 135,211
Printing 78,115
Amortization of organization expenses 48,545
Registration 30,703
Directors' fees 24,327
Miscellaneous 98,480
Total expenses 4,529,252
Net investment income 16,952,551
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment and swap transactions (6,055,909)
Net realized loss on purchased options and foreign currency
transactions (34,547,507)
Net realized loss on written options (3,527,762)
Net change in unrealized appreciation (depreciation) of:
Investment and swap transactions 3,931,903
Foreign currency denominated assets and liabilities 2,392,683
Net loss on investments (37,806,592)
NET DECREASE IN NET ASSETS FROM OPERATIONS $(20,854,041)
See notes to financial statements.
8
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1995 1994
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 16,952,551 $ 26,363,866
Net realized loss on investments, swaps,
options and foreign currency transactions (44,131,178) (32,781,216)
Net change in unrealized appreciation
(depreciation) of investments, swaps, options,
and foreign currency denominated assets and
liabilities 6,324,586 (8,617,153)
Net decrease in net assets from operations (20,854,041) (15,034,503)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A -0- (745,254)
Class B -0- (3,347,613)
Class C -0- (21,444)
Tax return of capital
Class A (6,001,336) (4,555,064)
Class B (13,227,764) (20,460,937)
Class C (77,659) (131,070)
CAPITAL STOCK TRANSACTIONS
Net decrease (53,199,891) (183,051,132)
Total decrease (93,360,691) (227,347,017)
NET ASSETS
Beginning of year 287,533,879 514,880,896
End of year (including undistributed net
investment income of $21,359 at
October 31, 1995) $194,173,188 $287,533,879
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Multi-Market Strategy Trust, Inc. (the 'Fund'), was incorporated in
the State of Maryland on March 7, 1991 as a non-diversified, open-end
investment company.
The Fund offers Class A, Class B and Class C shares. Class A shares are sold
with a front-end sales charge of up to 4.25%. Class B shares are sold with a
contingent deferred sales charge which declines from 3.0% to zero depending on
the period of time the shares are held. Class B shares will automatically
convert to Class A shares six years after the end of the calendar month of
purchase. Class C shares are sold without an initial or contingent deferred
sales charge. All three classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except that
each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The following is a summary of
significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Investments are stated at value. Investments for which market quotations are
readily available are valued at the closing price on the day of valuation or,
if no such closing price is available, at the mean of the last bid and ask
price quoted on such day. Options are valued at market value or fair value
using methods determined by the Board of Directors. Securities for which market
quotations are not readily available are valued in good faith at fair value
using methods determined by the Board of Directors. Securities which mature in
60 days or less are valued at amortized cost, which approximates market value,
unless this method does not represent fair value. Restricted securities are
valued at fair value as determined by the Board of Directors. In determining
fair value, consideration is given to cost, operating and other financial data.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward foreign exchange currency contracts are translated into U.S. dollars at
the mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated at the rates
of exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at rates of exchange prevailing when accrued.
Net realized losses on options and foreign currency transactions of $34,547,507
represent foreign exchange gains and losses from sales and maturities of
securities, holdings of foreign currencies, options on foreign currencies,
exchange gains and losses realized between the trade and settlement dates on
security transactions, and the difference between the amounts of interest
recorded on the Fund's books and the U.S. dollar equivalent amounts actually
received or paid. Net change in unrealized appreciation (depreciation) of
foreign currency denominated assets and liabilities represents net currency
gains and losses from valuing foreign currency denominated assets and
liabilities at period end exchange rates.
3. ORGANIZATION EXPENSES
Organization expenses of approximately $243,000 have been deferred and are
being amortized on a straight-line basis through May 1996.
4. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
5. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Interest income is accrued daily. Security transactions are accounted for on
the date the securities are purchased or sold. Security gains and losses are
determined on the identified cost basis. The Fund accretes discounts as
adjustments to interest income.
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
7. RECLASSIFICATIONS OF NET ASSETS
As of October 31, 1995, differences totalling ($2,375,567) and ($42,270,751)
were reclassified from undistributed net investment income and accumulated net
realized loss
10
ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
on investments to additional paid-in-capital, respectively. These
reclassifications were the result of permanent book to tax differences
resulting from foreign currency losses and tax return of capital distributions.
These reclasses had no effect on net investment income, net realized gains and
losses and net assets.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the 'Adviser'), an advisory fee at an annual rate of
.60 of 1% of the average daily net assets of the Fund. Such fee is accrued
daily and paid monthly.
The Adviser has agreed under the terms of the advisory agreement, to reimburse
the Fund to the extent that its aggregate expenses (exclusive of interest,
taxes, brokerage, distribution fees, and extraordinary expenses) exceed the
limits prescribed by any state in which the Fund's shares are qualified for
sale. The Fund believes that the most restrictive expense ratio limitation
currently imposed by any state is 2 1/2% of the first $30 million of the Fund's
average daily net assets, 2% of the next $70 million of the Fund's average
daily net assets and 1 1/2% of its average daily net assets in excess of $100
million. No reimbursement was required by the Adviser for the year ended
October 31, 1995. Pursuant to the advisory agreement, the Fund also paid
$166,607 to the Adviser representing the costs of certain legal and accounting
services provided to the Fund by the Adviser for the year ended October 31,
1995.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Adviser) under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $476,068 for the year ended October 31, 1995.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $1,754 from the sale of Class A shares and $149,566
in contingent deferred sales charges imposed upon redemptions by shareholders
of Class B shares for the year ended October 31, 1995.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the 'Agreement')
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30 of 1% of the average daily net assets attributable to the
Class A shares and up to 1% of the average daily net assets attributable to
both Class B and Class C shares. Such fee is accrued daily and paid monthly.
The Agreement provides that the Distributor will use such payments in their
entirety for distribution assistance and promotional activities. The
Distributor has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $10,014,626 and $330,171 for Class B
and C shares, respectively; such costs may be recovered from the Fund in future
periods so long as the agreement is in effect. In accordance with the
Agreement, there is no provision for recovery of unreimbursed distribution
costs, incurred by the Distributor, beyond the current fiscal year for Class A
shares. The Agreement also provides that the Adviser may use its own resources
to finance the distribution of the Fund's shares.
11
NOTES TO FINANCIAL STATEMENTS (CONT.)
ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
aggregated $451,029,066 and $418,944,521, respectively, for the year ended
October 31, 1995.
The Fund enters into forward exchange currency contracts for investment
purposes and to hedge its exposure to changes in foreign currency exchange
rates on its foreign portfolio holdings and to hedge certain firm purchase and
sales commitments denominated in foreign currencies. A forward exchange
currency contract is a commitment to purchase or sell a foreign currency at a
future date at a negotiated forward rate. The gain or loss arising from the
difference between the original contracts and the closing of such contracts is
included in realized gains or losses from foreign currency transactions.
Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
The Fund's custodian will place and maintain cash not available for investment
or government securities in a separate account of the Fund having a value equal
to the aggregate amount of the Fund's commitments under forward exchange
currency contracts entered into with respect to position hedges.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The face or contract amount, in U.S.
dollars, as reflected in the following table, reflects the total exposure of
the Fund in that particular currency contract.
At October 31, 1995, the Fund had outstanding forward exchange currency
contracts, as follows:
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
(000) DATE VALUE (DEPRECIATION)
-------- ----------- ----------- --------------
FOREIGN CURRENCY BUY CONTRACTS
Australian Dollars,
expiring 12/18/95 7,137 $ 5,391,206 $ 5,426,339 $ 35,133
British Pounds,
expiring 1/25/96 2,700 4,251,555 4,260,293 8,738
Canadian Dollars,
expiring 11/17/95 14,517 10,646,008 10,803,167 157,159
Deutsche Marks,
expiring 12/04/95-1/22/96 36,420 25,852,968 25,956,017 103,049
Indonesian Rupiah,
expiring 11/13/95 11,650,000 5,000,000 5,113,495 113,495
Japanese Yen,
expiring 1/11/96 500,000 5,110,645 4,945,564 (165,081)
Netherlands Guilder,
expiring 11/01/95 14,573 9,236,825 9,238,880 2,055
New Zealand Dollars,
expiring 11/06/95-11/27/95 37,328 24,652,276 24,627,510 (24,766)
Spanish Pesetas,
expiring 1/25/96 565,452 4,585,239 4,598,781 13,542
12
ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
(000) DATE VALUE (DEPRECIATION)
------- ------------ ----------- --------------
FOREIGN CURRENCY SALE CONTRACTS
British Pounds,
expiring 1/25/96 2,726 $ 4,279,221 $ 4,300,113 $ (20,892)
Canadian Dollars,
expiring 11/17/95 52,586 39,159,933 39,145,242 14,691
Deutsche Marks,
expiring 1/10/96-1/22/96 117,654 80,790,075 83,896,823 (3,106,748)
Finnish Markka,
expiring 11/27/95 35,188 8,195,356 8,290,279 (94,923)
Indonesian Rupiah,
expiring 11/13/95 11,650,000 5,019,388 5,111,659 (92,271)
Japanese Yen,
expiring 1/11/96. 1,220,000 13,788,304 12,063,767 1,724,537
Netherlands Guilder,
expiring 11/01/95-2/01/96 29,146 18,745,073 18,522,580 222,493
New Zealand Dollars,
expiring 11/06/95-11/15/95 33,133 21,794,158 21,853,540 (59,382)
Spanish Pesetas,
expiring 1/25/96 1,398,264 11,147,766 11,368,398 (220,632)
Swiss Francs,
expiring 12/04/95-1/18/96 18,605 16,328,415 16,470,859 (142,444)
$(1,532,247)
For hedging purposes, the Fund purchases and writes (sells) put and call
options on U.S. and foreign government securities and foreign currencies that
are traded on U.S. and foreign 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 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 writing options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from option
transactions. The difference between the premium and the amount paid on
effecting a closing purchase transaction, including brokerage commissions, is
also treated as a realized gain, or if the premium is less than the amount paid
for the closing purchase transaction, as a realized loss. If a call option is
exercised, the premium is added to the proceeds from the sale of the underlying
security or currency in determining whether the Fund has realized a gain or
loss. If a put option is exercised, the premium reduces the cost basis of the
security or currency purchased by the Fund. In writing an option, the Fund
bears the market risk of an unfavorable change in the price of the security or
currency underlying the written option. Exercise of an option written by the
Fund could result in the Fund selling or buying a security or currency at a
price different from the current market value.
13
NOTES TO FINANCIAL STATEMENTS (CONT.)
ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
Transactions in options written for the year ended October 31, 1995 were as
follows:
NUMBER OF
CONTRACTS PREMIUMS
--------- ---------
Options outstanding at beginning of year 1 $ 50,000
Options written 2 29,238
Options terminated in closing purchase transactions (1) (50,000)
Options expired (2) (29,238)
Options outstanding at end of year -0- $ -0-
The Fund enters into currency and interest rate swaps to protect itself from
interest rate fluctuations on the underlying floating rate debt instruments as
well as foreign currency fluctuations. A swap is an agreement that obligates
two parties to exchange a series of cash flows at specified intervals based
upon or calculated by reference to changes in specified prices or rates for a
specified amount of an underlying asset. The payment flows are usually netted
against each other, with the difference being paid by one party to the other.
Risks may arise as a result of the failure of a counterparty to the swap
contract to comply with the terms of the swap contract. The loss incurred by
the failure of a counterparty is generally limited to the net interest payment
to be received by the Fund, and/or the termination value at the end of the
contract. Therefore, the Fund considers the creditworthiness of each
counterparty to a swap contract in evaluating potential credit risk.
Additionally, risks may arise from unanticipated movements in interest rates or
in the value of the foreign securities.
The Fund records a net receivable or payable on a daily basis for the net
interest income or expense expected to be received or paid in the interest
period. Net interest received or paid on these contracts is recorded as
interest income (or as an offset to interest income). Fluctuations in the value
of swap contracts are recorded for financial statement purposes as unrealized
appreciation or depreciation on swap contracts.
<TABLE>
<CAPTION>
RATE TYPE
--------------------------------- UNREALIZED
SWAP NOTIONAL TERMINATION PAYMENTS MADE PAYMENTS RECEIVED APPRECIATION
COUNTERPARTY AMOUNT DATE BY THE FUND BY THE FUND (DEPRECIATION)
- -------------- --------------- ----------- -------------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Morgan Stanley THB 245,550,000 5/13/96 Fixed-11.20% $(191,661)
USD 10,000,000 5/13/96 Floating-LIBOR
J.P. Morgan DEM 15,000,000 8/17/97 Fixed-5.225% Floating-LIBOR (119,407)
J.P. Morgan DEM 7,000,000 8/17/00 Floating-LIBOR Fixed-6.33% 95,526
$(215,542)
</TABLE>
Net unrealized depreciation of the outstanding interest rate swap contract at
October 31, 1995 was $215,542.
At October 31, 1995, the cost of investments for federal income tax purposes
was the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $3,186,608 and gross unrealized
depreciation of investments was $2,491,106, resulting in net unrealized
appreciation of $695,502 (excluding foreign currency transactions). At October
31, 1995, the Fund had a capital loss carryforward of $20,333,496 of which
$3,437,491 expires in the year 2000, $2,099,120 in 2001, $8,740,977 in 2002,
and $6,055,908 in the year 2003. In addition, under certain conditions, the
Fund may be able to use up to $7,984,508 of ACM Managed Multi-Market Trust,
Inc.'s capital loss carryforward, which was acquired by the Fund on May5,1995.
14
ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
NOTE E: BANK BORROWING
The Fund entered into a Multi-Currency Credit Agreement with Morgan Guaranty
Trust Company of New York on November 18, 1994, which terminates on November
18, 1997 unless extended for an additional one year period by the Fund. The
maximum credit available is $50,000,000 and requires no collateralization.
There was no loan outstanding during the year. The Fund is obligated to pay
Morgan Guaranty a commitment fee computed at a rate of .1875 of 1% per annum on
the unused daily portion of the revolving credit.
NOTE F: CAPITAL STOCK
There are 9,000,000,000 shares of $.001 par value capital stock authorized,
divided into three classes, designated Class A, Class B and Class C shares.
Each class consists of 3,000,000,000 authorized shares. Transactions in capital
stock were as follows:
SHARES AMOUNT
------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
----------- ------------ ------------- --------------
CLASS A
Shares sold 305,681 382,456 $ 2,874,213 $ 3,275,749
Shares issued in
reinvestment of
dividends 260,742 334,702 1,837,650 2,839,409
Shares issued in
connection with the
acquisition of
ACM Managed
Multi-Market Trust 11,271,799 -0- 76,655,259 -0-
Shares redeemed (7,101,609) (3,480,825) (48,938,183) (29,367,740)
Net increase(decrease) 4,736,613 (2,763,667) $ 32,428,939 $ (23,252,582)
CLASS B
Shares sold 635,644 1,011,425 $ 4,405,832 $ 8,698,652
Shares issued in
reinvestment of
dividends 655,586 1,436,045 4,703,261 12,212,040
Shares redeemed (13,315,785) (21,584,883) (94,453,615) (181,536,799)
Net decrease (12,024,555) (19,137,413) $(85,344,522) $(160,626,107)
CLASS C
Shares sold 56,352 857,043 $ 405,752 $ 7,534,842
Shares issued in
reinvestment of
dividends 5,580 12,291 39,757 104,261
Shares redeemed (102,739) (793,761) (729,817) (6,811,546)
Net increase(decrease) (40,807) 75,573 $ (284,308) $ 827,557
NOTE G: ACQUISITION OF THE ACM MANAGED MULTI-MARKET TRUST, INC.
On May 5, 1995, the Fund acquired all the net assets of the ACM Managed
Multi-Market Trust, Inc. ('AMMF') pursuant to a plan of reorganization approved
by AMMF's shareholders on April 21, 1995. The acquisition was accomplished by a
tax-free exchange of 11,271,799 shares of the Fund for 9,980,238 shares of AMMF
on May 5, 1995. The aggregate net assets of theFund and AMMF immediately before
the acquisition were $176,593,212 and $76,655,259 (including unrealized
depreciation of $1,014,370) respectively. Immediately after the acquisition the
combined net assets of the Fund amounted to $253,248,471.
15
FINANCIAL HIGHLIGHTS ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------
YEAR ENDED OCTOBER 31, MAY 29,1991(A)
-------------------------------------------- TO OCTOBER 28,
1995 1994 1993 1992 1991
---------- -------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.04 $8.94 $8.85 $9.91 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .77(f) .85 1.02 1.00 .42
Net realized and unrealized loss on investments
and foreign currency transactions (1.31) (1.08) (.26) (1.23) (.09)
Net increase (decrease) in net asset value
from operations (.54) (.23) .76 (.23) .33
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- (.09) (.67) (.81) (.42)
Distributions from net realized gains -0- -0- -0- (.02) -0-
Tax return of capital (.67) (.58) -0- -0- -0-
Total dividends and distributions (.67) (.67) (.67) (.83) (.42)
Net asset value, end of period $6.83 $8.04 $8.94 $8.85 $ 9.91
TOTAL RETURN
Total investment return based on net asset value(b) (6.47)% (2.64)% 9.01% (2.80)% 3.68%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $76,837 $52,385 $82,977 $141,526 $143,594
Ratio to average net assets of:
Expenses 1.60% 1.41% 1.94% 2.53% 2.81%(c)
Expenses, excluding interest expense(e) 1.55% 1.30% 1.40% 1.33% 1.33%(c)
Net investment income 8.56% 7.17% 9.17% 10.58% 10.17%(c)
Portfolio turnover rate 400% 605% 200% 239% 121%
</TABLE>
See footnote summary on page 18.
16
ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------
YEAR ENDED OCTOBER 31, MAY 29,1991(A)
--------------------------------------------- TO OCTOBER 28,
1995 1994 1993 1992 1991
---------- --------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.04 $8.94 $8.85 $9.91 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .44(f) .88 .92 1.04 .39
Net realized and unrealized loss on investments
and foreign currency transactions (1.05) (1.18) (.22) (1.34) (.09)
Net increase (decrease) in net asset value from
operations (.61) (.30) .70 (.30) .30
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- (.08) (.61) (.74) (.39)
Distributions from net realized gains -0- -0- -0- (.02) -0-
Tax return of capital (.60) (.52) -0- -0- -0-
Total dividends and distributions (.60) (.60) (.61) (.76) (.39)
Net asset value, end of period $6.83 $8.04 $8.94 $8.85 $ 9.91
TOTAL RETURN
Total investment return based on net asset value(b) (7.31)% (3.35)% 8.25% (3.51)% 3.36%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $116,551 $233,896 $431,186 $701,465 $662,981
Ratio to average net assets of:
Expenses 2.29% 2.11% 2.64% 3.24% 3.53%(c)
Expenses, excluding interest expense(e) 2.22% 2.01% 2.11% 2.05% 2.05%(c)
Net investment income 7.53% 6.44% 8.46% 9.83% 9.40%(c)
Portfolio turnover rate 400% 605% 200% 239% 121%
</TABLE>
See footnote summary on page 18.
17
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
-------------------------------
MAY 3,
YEAR ENDED OCT. 31, 1993(D)
------------------ TO OCT.31,
1995 1994 1993
--------- -------- -----------
Net asset value, beginning of period $8.04 $8.94 $8.76
INCOME FROM INVESTMENT OPERATIONS
Net investment income .44(f) .46 .32
Net realized and unrealized gain (loss) on
investments and foreign currency transactions (1.04) (.75) .16
Net increase (decrease) in net asset value
from operations (.60) (.29) .48
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- (.09) (.30)
Distributions from net realized gains -0- -0- -0-
Tax return of capital (.61) (.52) -0-
Total dividends and distributions (.61) (.61) (.30)
Net asset value, end of period $6.83 $8.04 $8.94
TOTAL RETURN
Total investment return based on net asset
value(b) (7.29)% (3.34)% 5.54%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $786 $1,252 $718
Ratio to average net assets of:
Expenses 2.29% 2.08% 2.44%(c)
Expenses, excluding interest expense(e) 2.24% 1.99% 2.11%(c)
Net investment income 7.55% 6.10% 7.17%(c)
Portfolio turnover rate 400% 605% 200%
(a) Commencement of operations.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(c) Annualized.
(d) Commencement of distribution.
(e) Interest expense includes commitment fees paid.
(f) Based on average shares outstanding.
18
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
We have audited the accompanying statement of assets and liabilities of
Alliance Multi-Market Strategy Trust, Inc. (the 'Fund'), including the
portfolio of investments, as of October 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the financial highlights
for each of the periods indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at October
31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Multi-Market Strategy Trust, Inc. as of October 31, 1995, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the indicated periods, in conformity with generally accepted
accounting principles.
Ernst &Young LLP
New York, New York,
December 11, 1995
19
ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
ROBERT C. WHITE (1)
OFFICERS
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
DOUGLAS J. PEEBLES, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
PATRICK J. FARRELL, CONTROLLER
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
(1) Member of the Audit Committee.
20
ALLIANCE MULTI-MARKET STRATEGY TRUST, INC.
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCECAPITAL
MUTUAL FUNDS WITHOUT THE MYSTERY.
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
ASTAR
