ALLIANCE MULTI-MARKET STRATEGY TRUST
SEMI-ANNUAL REPORT
APRIL 30, 1998
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
June 26, 1998
Dear Shareholder:
We are pleased to report to you on our strategy, performance and outlook of the
Alliance Multi-Market Strategy Trust, for the semi-annual reporting period
ended April 30, 1998. The Fund is designed for investors who seek the highest
level of current income that is available from a portfolio of high-quality,
global short term (0-5 year maturity) debt.
MARKET OVERVIEW
Over the six-month period under review, the U.S. economy continued its healthy
expansion, coupled with low inflation; this in spite of economic turmoil in
East Asia. Fueled by strong domestic demand, first quarter Gross Domestic
Product (GDP) growth, a standard measure of economic growth, grew 4.8%, an
increase from the fourth quarter of 1997. In addition, the Consumer Price Index
(CPI), a measure of inflation, recorded a 10 year low 1.4% increase over the 12
months ended in April, despite the tightest labor market in 28 years. Helped by
strong economic fundamentals and uncertainty overseas, the U.S. dollar
continued to strengthen against the major currencies.
Through December of 1997, the U.S. bond market continued to climb as investors,
concerned about events in the emerging markets, sought the safety of U.S.
Treasuries. When overseas markets stabilized in January and investor focus
shifted to short-term expectations of U.S. monetary policy, the market began
trading within a 30 basis point range until the end of the period. Over the
entire period, two year Treasury yields decreased slightly from 5.61% to 5.57%
and 30-year yields decreased from 6.15% to 5.95%. Sighting low inflation and
slowing demand from Asia, the Federal Reserve left interest rates unchanged.
In most developed countries outside of the U.S., growth remained positive while
inflation declined. European bond markets outperformed all other regions of the
world including the U.S., on a hedged basis. Modestly improving growth
prospects were offset by benign inflation as 11 countries, including Spain and
Italy, were formally recommended for membership in the European Monetary Union.
East Asian bond markets were the worst performing over the period. In Japan,
the already precarious economic recovery was further jeopardized by deepening
economic and financial turmoil in the region. In Australia, economic growth
remained strong but weak consumer surveys, falling commodity prices, and the
government's announcement that it will repurchase more of its debt, moved bond
prices higher.
Despite the temporary sell-off caused by the events in East Asia, emerging
market debt remained the best performing bond market sector over the period,
followed by high yield and fully hedged non-U.S. dollar denominated sovereign
debt. With interest rates trading in a relatively narrow range for much of the
period, investors aggressively pursued yield opportunities.
INVESTMENT STRATEGY
Over the period under review, we underweighted the U.S. bond market in order to
pursue investment opportunities in foreign markets. Within the non-U.S. dollar
sector, we were overweighted in Europe. Most notably, we held positions in
Italy and Spain for much of the period. As European Monetary Union approaches,
debt from both countries has been gaining in value. However, we recently sold
our Spanish holdings after concluding that they had reached their full price
potential. In addition, we maintained positions in Swedish and Australian
government bonds. Both of these countries export heavily to Asia, and their
economies are expected to slow as Asian growth slows, thus driving up the value
of their debt. In the emerging markets, we maintained positions in Poland and
Mexico because both of these countries continue to benefit from strong economic
fundamentals.
INVESTMENT RESULTS
The following table shows how your Fund performed over the past six and
12-month periods. For comparison, we have included the Merrill Lynch 1-3 Year
Government Bond Index, a standard measure of the performance of a basket of
unmanaged debt securities, and the Lipper Short World Multi-Market Income Funds
Average, which reflects the average performance of 27 funds with similar
investment objectives.
Over the six-month period under review, your Fund outperformed its benchmark
and its peers due to underweighting the U.S. market, which performed poorly
relative to other markets. In addition, holdings in European
1
ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
markets, particularly Italy, Spain and Sweden, three of the top performing
developed bond markets during the period under review, helped performance. As
mentioned above, Italian and Spanish debt have been gaining in value as they
approach European Monetary Union. Swedish debt has appreciated as its economy
slows due to slowing exports to Asia. Also, your Fund's holdings in the
emerging markets, Poland and Mexico, which outperformed the U.S. market,
enhanced performance.
INVESTMENT RESULTS*
Periods Ended April 30, 1998
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE MULTI-MARKET STRATEGY
TRUST
Class A 4.00% 7.89%
Class B 3.69% 7.09%
Class C 3.70% 7.11%
MERRILL LYNCH 1-3 YEAR GOVERNMENT
BOND INDEX 2.90% 7.15%
LIPPER SHORT WORLD MULTI-MARKET
INCOME FUNDS AVERAGE 1.87% 4.99%
* THE FUND'S INVESTMENT RESULTS REPRESENT TOTAL RETURNS AND ARE BASED ON THE
NET ASSET VALUE OF EACH CLASS OF SHARES AS OF APRIL 30, 1998. ALL FEES AND
EXPENSES RELATED TO THE OPERATION OF THE FUND HAVE BEEN DEDUCTED, BUT NO
ADJUSTMENT HAS BEEN MADE FOR SALES CHARGES THAT MAY APPLY WHEN SHARES ARE
PURCHASED OR REDEEMED. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE UNMANAGED MERRILL LYNCH 1-3 YEAR GOVERNMENT BOND INDEX REPRESENTS THE
SHORT MATURITY U.S. GOVERNMENT BOND MARKET. THE UNMANAGED LIPPER SHORT WORLD
MULTI-MARKET INCOME FUNDS AVERAGE REFLECTS THE PERFORMANCE OF 27 FUNDS FOR BOTH
THE SIX AND 12-MONTH PERIODS ENDED APRIL 30, 1998. THE AVERAGE HAS GENERALLY
SIMILAR INVESTMENT OBJECTIVES TO YOUR FUND, ALTHOUGH INVESTMENT POLICIES FOR
THE VARIOUS FUNDS MAY DIFFER. AN INVESTOR CANNOT INVEST DIRECTLY IN THE INDEX
OR AVERAGE.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 4.
As of April 30, 1998, the Fund's total investments based on issuing country
were distributed as follows:
PORTFOLIO DISTRIBUTION BY COUNTRY
FRANCE 4.6%
NORWAY 5.0%
UNITED STATES 19.3%
POLAND 5.5%
MEXICO 6.9%
DENMARK 7.5%
AUSTRALIA 8.9%
GERMANY 19.0%
SWEDEN 9.7%
ITALY 13.6%
ECONOMIC OUTLOOK
We anticipate global growth will be slower, and inflation pressures will
continue to be muted, as Asia exports cheaper goods to the world and imports
less from abroad. With global inflation under control and global growth at
risk, we expect monetary policy to remain substantially unchanged for most of
1998 in the U.S., Germany and Japan. In the U.S., growth is expected to slow
throughout the second quarter and perhaps into the third quarter. U.S. interest
rates will remain in their recent trading range, with the 30 year Treasury
yield centered around 6.0%.
European growth is expected to increase over 1997 levels in most countries,
reaching 2.5% to 3.0%, despite the drag on growth resulting from weakness in
Asia. In Japan, policy inaction and the economic consequences of Asia's
slowdown are damaging investor confidence and further weakening Japan's growth
prospects; Japan's GDP is expected to be negative in 1998. There are concerns
that a deflationary cycle could take hold in Japan. Japanese investors will
focus on the effect of the latest stimulus package on consumers and on the need
for structural reforms to encourage efficient capital flows.
Emerging market debt price volatility remains quite high, as renewed turmoil in
Asia has heightened investor concern about all higher yielding asset classes.
However, we remain positive in our view on Latin America. Although
2
ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
tougher competition and falling demand from Asia will slow Latin American
economies, we still anticipate healthy growth in the region. In particular, we
favor Mexico. In Eastern Europe, we continue to view Poland positively because
it continues to have strong economic fundamentals and remains committed to
economic reform. Also, Poland will likely be the first Eastern European country
to join the European Union.
Thank you for your continued interest and investment in Alliance Multi-Market
Strategy Trust. We look forward to reporting to you again on market activity
and the Fund's investment results in coming periods.
Sincerely,
John D. Carifa
Chairman and President
Douglas Peebles
Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
3
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
Alliance Multi-Market Strategy Trust seeks the highest level of current income
that is available from a portfolio of high-quality debt securities having
remaining maturities of not more than five years. It invests primarily in a
non-diversified portfolio of debt securities denominated in the U.S. dollar and
selected foreign currencies. The Fund expects to maintain at least 70% of its
assets in debt securities denominated in foreign currencies, but not more than
25% of the Fund's total assets may be invested in debt securities denominated
in a single currency other than the U.S. dollar.
INVESTMENT RESULTS
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF APRIL 30, 1998
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 7.89% 3.28%
Five Years 4.71% 3.80%
Since Inception* 3.93% 3.28%
SEC Yield** 5.27%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 7.09% 4.25%
Five Years 3.87% 3.87%
Since Inception*(a) 3.22% 3.22%
SEC Yield** 4.73%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 7.11% 6.16%
Five Years 3.88% 3.88%
Since Inception* 3.88% 3.88%
SEC Yield** 4.79%
SEC AVERAGE ANNUAL TOTAL RETURNS AS OF THE MOST RECENT QUARTER-END
(MARCH 31, 1998)
CLASS A CLASS B CLASS C
1 Year 3.12% 4.08% 5.84%
5 Years 3.84% 3.95% n/a
Since Inception 3.22% 3.16%(a) 3.82%
The Fund's investment results represent average annual total returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) the effect of
the 4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (3% year 1, 2% year 2, 1% year 3, 0% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000.
SEC average annual total returns for the periods shown reflect reinvestment of
all distributions and deduction of the maximum 4.25% front-end sales charges
and applicable 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.
* Inception: 5/29/91, Class A and Class B; 5/3/93, Class C.
** Yields are for the 30 days ended April 30, 1998.
(a) Assumes conversion of Class B shares into Class A shares after 6 years.
n/a: not applicable.
4
PORTFOLIO OF INVESTMENTS
APRIL 30, 1998 (UNAUDITED) ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
AUSTRALIA-8.5%
DEBT OBLIGATIONS-8.5%
Deutsche Bank AG
6.00%, 7/5/00 (a) AU$ 8,000 $ 5,251,917
State Bank of South Wales
8.63%, 8/20/01 (a) 6,000 4,234,407
Total Australian Securities
(cost $10,449,065) 9,486,324
DENMARK-7.2%
GOVERNMENT OBLIGATION-7.2%
Kingdom of Denmark
9.00%, 11/15/00 (a)
(cost $9,941,782) DKK 50,000 8,041,050
FRANCE-4.5%
GOVERNMENT OBLIGATION-4.5%
Government of France
7.75%, 4/12/00 (a)
(cost $5,007,641) FRF 28,000 4,958,576
GERMANY-18.2%
DEBT OBLIGATIONS-13.4%
Bayerische Landesbank Girozentrale
5.75%, 2/28/01 (a) US$ 5,000 4,972,220
Bayerische Vereinsbank
Finansiering
5.25%, 5/17/01 (a) DEM 7,400 4,208,716
Deutsche Hypothekenbank
5.75%, 10/02/01 (a) 10,000 5,773,839
-----------
14,954,775
GOVERNMENT OBLIGATION-4.8%
Government of Germany
8.00%, 7/22/02 (a) 8,500 5,345,957
Total German Securities
(cost $21,834,315) 20,300,732
ITALY-13.1%
GOVERNMENT OBLIGATIONS-13.1%
Republic of Italy
6.00%, 2/15/00 (a) ITL 10,400,000 6,014,957
6.25%, 5/15/02 (a) 14,400,000 8,551,933
Total Italian Securities
(cost $14,054,557) 14,566,890
MEXICO-6.6%
GOVERNMENT OBLIGATION-6.6%
Mexican Treasury Bill
22.85%, 6/04/98 (a)(b)
(cost $7,865,283) MXP 63,787 7,387,150
NORWAY-4.8%
GOVERNMENT OBLIGATION-4.8%
Kingdom of Norway
7.00%, 5/31/01 (a)
(cost $6,198,983) NOK 38,000 5,382,329
POLAND-5.2%
GOVERNMENT OBLIGATION-5.2%
Government of Poland
Treasury Bill
23.05%, 9/30/98 (a)(b)
(cost $5,811,656) PLN 21,600 5,820,839
SWEDEN-9.3%
GOVERNMENT OBLIGATIONS-9.3%
Kingdom of Sweden
5.50%, 4/12/02 (a) SEK 40,000 5,247,040
13.00%, 6/15/01 (a) 32,000 5,064,853
Total Swedish Securities
(cost $11,186,107) 10,311,893
UNITED STATES-18.5%
DEBT OBLIGATION-3.6%
Morgan Guaranty Trust Co.
6.38%, 3/26/01 (a) US$ 4,000 4,037,004
GOVERNMENT AGENCY OBLIGATION-3.8%
FNMA Global
7.25%, 6/20/02 (a) NZ$ 7,850 4,258,199
GOVERNMENT OBLIGATION-5.1%
U.S. Treasury Notes
6.50%, 5/31/02 US$ 5,500 5,663,279
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
TIME DEPOSIT-6.0%
Rabobank
5.44%, 5/01/98 US$ 6,600 $ 6,600,000
Total United States Securities
(cost $21,646,626) 20,558,482
TOTAL INVESTMENTS-95.9%
(cost $113,996,014) $106,814,265
Other assets less liabilities-4.1% 4,610,824
NET ASSETS-100% $111,425,089
(a) Securities, or a portion thereof, with an aggregate market value of
$94,550,986 have been segregated to collateralize forward exchange currency
contracts.
(b) Annualized yield to maturity at purchase date.
Glossary:
FNMA - Federal National Mortgage Association.
See notes to financial statements.
6
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED) ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $113,996,014) $106,814,265
Cash 82,829
Receivable for investment securities sold 9,033,245
Interest receivable 2,941,956
Receivable for capital stock sold 9,783
Prepaid expenses 5,679
Total assets 118,887,757
LIABILITIES
Payable for investment securities purchased 6,600,000
Dividend payable 302,162
Payable for capital stock redeemed 163,081
Unrealized depreciation of forward exchange
currency contracts 155,537
Advisory fee payable 55,838
Distribution fee payable 34,226
Accrued expenses and other liabilities 151,824
Total liabilities 7,462,668
NET ASSETS $111,425,089
COMPOSITION OF NET ASSETS
Capital stock, at par $ 16,408
Additional paid-in capital 139,651,443
Distributions in excess of net investment income (348,303)
Accumulated net realized loss on investments and foreign
currency transactions (20,532,151)
Net unrealized depreciation of investments and foreign
currency denominated assets and liabilities (7,362,308)
$111,425,089
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($100,628,783 / 14,820,573 shares of capital stock
issued and outstanding) $6.79
Sales charge--4.25% of public offering price 0.30
Maximum offering price $7.09
CLASS B SHARES
Net asset value and offering price per share
($9,948,000 / 1,462,726 shares of capital stock
issued and outstanding) $6.80
CLASS C SHARES
Net asset value and offering price per share
($848,306 / 124,783 shares of capital stock
issued and outstanding) $6.80
See notes to financial statements.
7
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
INVESTMENT INCOME
Interest $4,841,057
EXPENSES
Advisory fee $ 353,855
Distribution fee - Class A 148,321
Distribution fee - Class B 90,391
Distribution fee - Class C 4,938
Transfer agency 167,565
Custodian 100,571
Administrative 68,255
Audit and legal 54,325
Printing 31,019
Registration 26,721
Directors' fees 12,162
Miscellaneous 2,557
Total expenses 1,060,680
Net investment income 3,780,377
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment transactions (70,848)
Net realized gain on foreign currency transactions 3,187,229
Net change in unrealized depreciation of:
Investments (2,826,650)
Foreign currency denominated assets and liabilities 583,921
Net gain on investments and foreign currency transactions 873,652
NET INCREASE IN NET ASSETS FROM OPERATIONS $4,654,029
See notes to financial statements.
8
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
----------------- -------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 3,780,377 $ 8,855,944
Net realized gain on investments and
foreign currency transactions 3,116,381 8,391,096
Net change in unrealized depreciation
of investments and and foreign
currency denominated assets and
liabilities (2,242,729) (6,614,322)
Net increase in net assets from
operations 4,654,029 10,632,718
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Class A (8,462,776) (4,899,179)
Class B (1,628,862) (3,883,236)
Class C (81,368) (73,529)
Distributions in excess of net
investment income
Class A -0- (2,095,730)
Class B -0- (1,692,062)
Class C -0- (32,833)
CAPITAL STOCK TRANSACTIONS
Net decrease (10,340,798) (28,950,404)
Total decrease (15,859,775) (30,994,255)
NET ASSETS
Beginning of year 127,284,864 158,279,119
End of period (including
undistributed net investment income
of $6,044,326 at October 31, 1997) $111,425,089 $127,284,864
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1998 (UNAUDITED) ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Multi-Market Strategy Trust, Inc. (the "Fund") was incorporated in the
State of Maryland as a non-diversified, open-end management 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% for purchases not exceeding
$1,000,000. With respect to purchases of $1,000,000 or more, Class A shares
redeemed within one year of purchase will be subject to a contingent deferred
sales charge of 1%. Class B shares are sold with a contingent deferred sales
charge which declines from 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
subject to a contingent deferred sales charge of 1.0% on redemptions made
within the first year after purchase. 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
financial statements have been prepared in conformity with generally accepted
accounting principles which require management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities in the
financial statements and amounts of income and expenses during the reporting
period. Actual results could differ from those estimates. The following is a
summary of significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are
generally valued at the last reported sale price, if there was no sale on such
day, the last bid price quoted on such day. If no bid prices are quoted, then
the security is valued at the mean of the bid and asked prices as obtained on
that day from one or more dealers regularly making a market in that security.
Securities traded on the over-the-counter market, securities listed on a
foreign securities exchange whose operations are similar to the United States
over-the-counter market and securities listed on a national securities exchange
whose primary market is believed to be over-the-counter are valued at the mean
of the closing bid and asked price provided by two or more dealers regularly
making a market in such securities. U.S. government securities and other debt
securities which mature in 60 days or less are valued at amortized cost unless
this method does not represent fair value. Securities for which market
quotations are not readily available are valued at fair value as determined in
good faith by, or in accordance with procedures approved by, the Board of
Directors. Fixed income securities may be valued on the basis of prices
provided by a pricing service when such prices are believed to reflect the fair
market value of such securities.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the
mean of the quoted bid and asked price of such currencies against the U.S.
dollar. Purchases and sales of portfolio securities are translated at the rates
of exchange prevailing when such securities were acquired or sold. Income and
expenses are translated at rates of exchange prevailing when earned or accrued.
Net realized gains or losses on foreign currency transactions represent foreign
exchange gains and losses from sales and maturities of securities and forward
exchange currency contracts, holdings of foreign currencies, exchange gains and
losses realized between the trade and settlement dates on investment
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. 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.
10
ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued daily. Investment transactions are accounted for on
the date the securities are purchased or sold. Investment gains and losses are
determined on the identified cost basis. The Fund accretes discounts as an
adjustment to interest income.
5. INCOME AND EXPENSES
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each settled class of shares, based on the proportionate interest in
the Fund represented by the shares of such class, except that the Fund's Class
B and Class C shares bear higher distribution and transfer agent fees than
Class A shares.
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment; temporary differences do not require such
reclassification.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under 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.
Pursuant to the advisory agreement, the Fund paid $68,255 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the six months ended April 30, 1998.
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 $96,304 for the six months ended April 30, 1998.
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 $1,423 from the sale of Class A shares and $7,468,
and $281 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B and Class C shares, respectively, for the six months
ended April 30, 1998.
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 1% of the average daily net assets attributable to both
Class B and Class C shares. The fees are accrued daily and paid monthly. The
Agreement provides that the Distributor will use such payments in their
entirety for distribution assistance and promotional activities. The
Distributor has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $9,551,576 and $581,063 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
_______________________________________________________________________________
NOTE D: INVESTMENT TRANSACTIONS
Sales of investment securities (excluding short-term investments and U.S.
government obligations) aggregated $13,408,948, for the six months ended April
30, 1998. There were U.S. government and government agency obligations
purchases of $5,689,922 for the six months ended April 30, 1998.
At April 30, 1998, the cost of investments for federal income tax purposes was
substantially the same as the cost for financial reporting purposes.
Accordingly, gross unrealized appreciation of investments was $597,058 and
gross unrealized depreciation of investments was $7,778,807 resulting in net
unrealized depreciation of $7,181,749 (excluding foreign currency transactions).
At October 31, 1997, the Fund had a capital loss carryforward of $23,648,532 of
which $1,488,331 expires in the year 2000, $4,570,679 expires in the year 2001,
$11,533,613 expires in the year 2002, and $6,055,909 expires in the year 2003.
1. FORWARD EXCHANGE CURRENCY CONTRACTS
The Fund enters into forward exchange currency contracts to hedge its exposure
to changes in foreign currency exchange rates on its foreign portfolio
holdings, to hedge certain firm purchase and sales commitments denominated in
foreign currencies and for investment purposes. A forward exchange currency
contract is a commitment to purchase or sell a foreign currency at a future
date at a negotiated forward rate. The gain or loss arising from the difference
between the original contracts and the closing of such contracts is included in
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 other liquid assets in a separate account of the Fund having a value equal
to the aggregate amount of the Fund's commitments under forward exchange
currency contracts entered into with respect to position hedges.
Risks may arise from the potential inability of the 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 April 30, 1998, the Fund had outstanding forward exchange currency
contracts, as follows:
U.S. $
CONTRACT VALUE ON U.S.$ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
(000) DATE VALUE (DEPRECIATION)
----------- -------------- ------- -------------
FORWARD EXCHANGE CURRENCY
BUY CONTRACTS
Deutsche Marks,
settling 6/17/98-8/20/98 17,214 $ 9,570,414 $ 9,637,675 $ 67,261
New Zealand Dollars,
settling 6/17/98 3,600 2,007,720 1,991,866 (15,854)
FORWARD EXCHANGE CURRENCY
SALE CONTRACTS
Australian Dollars,
settling 5/14/98 19,243 12,706,508 12,552,943 153,565
British Pounds,
settling 5/18/98 1,700 2,866,033 2,841,290 24,743
Deutsche Marks,
settling 8/20/98 64,437 36,021,192 36,127,057 (105,865)
12
ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
U.S. $
CONTRACT VALUE ON U.S.$ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
(000) DATE VALUE (DEPRECIATION)
----------- -------------- ------- -------------
French Francs,
settling 7/15/98 26,444 $ 4,354,383 $ 4,417,570 $ (63,187)
Italian Lira,
settling 6/26/98 24,988,933 13,895,478 14,115,908 (220,430)
Japanese Yen,
settling 6/17/98 493,406 3,837,527 3,749,746 87,781
New Zealand Dollar,
settling 6/17/98 11,480 6,291,178 6,351,977 (60,799)
Swedish Krona,
settling 6/16/98 72,664 9,375,938 9,398,690 (22,752)
----------
$(155,537)
2. OPTION TRANSACTIONS
For hedging and investment 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 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 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. There were no transactions in written options for the six months ended
April 30, 1998.
3. INTEREST RATE SWAP AGREEMENTS
The Fund enters into currency and interest rate swaps to protect itself from
foreign currency and interest rate fluctuations on the underlying debt
instruments. 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 the 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
13
NOTES TO FINANCIAL STATEMENTS (CONT.) ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
in interest rates or in the value of the foreign securities or currencies.
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 investments are recorded for financial statement purposes as unrealized
appreciation or depreciation of investments. Realized gains and losses from
terminated swaps are included in net realized gains on investment transactions.
There were no outstanding currency or interest rate swap contracts at April 30,
1998.
NOTE E: 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
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31, APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
CLASS A
Shares sold 8,446 516,722 $72,176 $3,728,611
Shares issued in
reinvestment of
dividends 270,163 211,609 1,852,956 1,529,106
Shares converted from
Class B 2,684,604 5,542,644 18,549,634 39,662,519
Shares redeemed (1,663,828) (2,268,565) (11,464,637) (16,382,016)
Net increase 1,299,385 4,002,410 $9,010,129 $28,538,220
CLASS B
Shares sold 149,680 509,209 $1,032,983 $3,686,703
Shares issued in
reinvestment of
dividends 79,304 176,547 545,134 1,277,395
Shares converted to
Class A (2,935,401) (5,542,644) (18,549,634) (39,662,519)
Shares redeemed (43,238) (3,169,143) (2,069,820) (22,944,703)
Net decrease (2,749,655) (8,026,031) $(19,041,337) $(57,643,124)
CLASS C
Shares sold 16,423 114,774 $113,072 $838,047
Shares issued in
reinvestment of
dividends 5,562 7,279 38,231 52,557
Shares redeemed (66,433) (101,777) (460,893) (736,104)
Net increase
(decrease) (44,448) 20,276 $(309,590) $154,500
14
FINANCIAL HIGHLIGHTS ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1998 ---------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $7.11 $7.23 $6.83 $8.04 $8.94 $8.85
INCOME FROM INVESTMENT OPERATIONS
Net investment income .23(a) .47(a) .59(a) .77(a) .85 1.02
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .04 .08 .48 (1.31) (1.08) (.26)
Net increase (decrease) in net asset
value from operations .27 .55 1.07 (.54) (.23) .76
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.59) (.47) (.67) -0- (.09) (.67)
Distributions in excess of net investment
income -0- (.20) -0- -0- -0- -0-
Tax return of capital -0- -0- -0- (.67) (.58) -0-
Total dividends and distributions (.59) (.67) (.67) (.67) (.67) (.67)
Net asset value, end of period $6.79 $7.11 $7.23 $6.83 $8.04 $8.94
TOTAL RETURN
Total investment return based on net
asset value (b) 4.00% 7.82% 16.37% (6.47)% (2.64)% 9.01%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $100,629 $96,133 $68,776 $76,837 $52,385 $82,977
Ratio to average net assets of:
Expenses 1.69%(c) 1.58%(d) 1.64% 1.60% 1.41% 1.94%
Expenses, excluding interest
expense 1.69%(c) 1.58% 1.60%(e) 1.55%(e) 1.30%(e) 1.40%(e)
Net investment income 6.55%(c) 6.50% 8.40% 8.56% 7.17% 9.17%
Portfolio turnover rate 12% 173% 215% 400% 605% 200%
</TABLE>
See footnote summary on page 17.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1998 ---------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $7.11 $7.23 $6.83 $8.04 $8.94 $8.85
INCOME FROM INVESTMENT OPERATIONS
Net investment income .18(a) .42(a) .53(a) .44(a) .88 .92
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .07 .06 .47 (1.05) (1.18) (.22)
Net increase (decrease) in net asset
value from operations .25 .48 1.00 (.61) (.30) .70
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.56) (.42) (.60) -0- (.08) (.61)
Distributions in excess of net investment
income -0- (.18) -0- -0- -0- -0-
Tax return of capital -0- -0- -0- (.60) (.52) -0-
Total dividends and distributions (.56) (.60) (.60) (.60) (.60) (.61)
Net asset value, end of period $6.80 $7.11 $7.23 $6.83 $8.04 $8.94
TOTAL RETURN
Total investment return based on net
asset value (b) 3.69% 6.90% 15.35% (7.31)% (3.35)% 8.25%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $9,948 $29,949 $88,427 $116,551 $233,896 $431,186
Ratio to average net assets of:
Expenses 2.37%(c) 2.29%(d) 2.35% 2.29% 2.11% 2.64%
Expenses, excluding interest
expense 2.37%(c) 2.29% 2.31%(e) 2.22%(e) 2.01%(e) .11%(e)
Net investment income 5.67%(c) 5.79% 7.69% 7.53% 6.44% 8.46%
Portfolio turnover rate 12% 173% 215% 400% 605% 200%
</TABLE>
See footnote summary on page 17.
16
ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------------------
SIX MONTHS MAY 3, 1993(F)
ENDED YEAR ENDED OCTOBER 31, TO
APRIL 30, 1998 -------------------------------------------------- OCTOBER 31,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.11 $7.23 $6.83 $8.04 $8.94 $8.76
INCOME FROM INVESTMENT OPERATIONS
Net investment income .20(a) .42(a) .54(a) .44(a) .46 .32
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .05 .07 .47 (1.04) (.75) .16
Net increase (decrease) in net asset
value from operations .25 .49 1.01 (.60) (.29) .48
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.56) (.42) (.61) -0- (.09) (.30)
Distributions in excess of net investment
income -0- (.19) -0- -0- -0- -0-
Tax return of capital -0- -0- -0- (.61) (.52) -0-
Total dividends and distributions (.56) (.61) (.61) (.61) (.61) (.30)
Net asset value, end of period $6.80 $7.11 $7.23 $6.83 $8.04 $8.94
TOTAL RETURN
Total investment return based on net
asset value (b) 3.70% 6.92% 15.36% (7.29)% (3.34)% 5.54%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $848 $1,203 $1,076 $786 $1,252 $718
Ratio to average net assets of:
Expenses 2.37%(c) 2.28%(d) 2.34% 2.29% 2.08% 2.44%(c)
Expenses, excluding interest
expense 2.37%(c) 2.28% 2.30%(e) 2.24%(e) 1.99%(e) .11%(c)(e)
Net investment income 5.80%(c) 5.80% 7.62% 7.55% 6.10% 7.17%(c)
Portfolio turnover rate 12% 173% 215% 400% 605% 200%
</TABLE>
(a) Based on average shares outstanding.
(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 the total
investment return. Total investment return calculated for a period of less than
one year is not annualized.
(c) Annualized.
(d) Ratio reflects expense offset arrangement with the Transfer Agent. For the
year ended October 31, 1997, the net expense ratio was 1.57%, 2.28% and 2.27%
for Class A, B and C shares, respectively.
(e) Interest expense includes commitment fees paid.
(f) Commencement of distribution.
17
ALLIANCE MULTI-MARKET STRATEGY TRUST
_______________________________________________________________________________
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)
DONALD J. ROBINSON (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
JUAN J. RODRIGUEZ, 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.
18
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term Multi-Market Trust
Alliance Short-Term U.S. Government Fund
Alliance World Income Trust
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Environment Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
GROWTH & INCOME
Alliance Strategic Balanced Fund
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Income Builder Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
19
ALLIANCE MULTI-MARKET STRATEGY TRUST
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
ASTSR
