ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
ANNUAL REPORT
OCTOBER 31, 1995
ALLIANCE
MUTUAL FUNDS WITHOUT THE MYSTERY.
LETTER TO SHAREHOLDERS ALLIANCE SHORT-TERM MULTI-MARKET 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 rose sharply 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 Short-Term Multi-Market 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 SHORT-TERM MULTI-MARKET TRUST
Class A -5.74% +5.33%
Class B -6.50% +4.77%
Class C -6.49% +4.78%
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. - 32.7%
New Zealand - 14.4%
Germany - 10.9%
Denmark - 8.7%
Ireland - 5.5%
Canada - 5.0%
Spain - 5.0%
Mexico - 4.7%
U.K. - 4.6%
Finland - 4.5%
Australia - 4.0%
INVESTMENT OUTLOOK
In the following pages is a discussion with Douglas Peebles, your Fund's
portfolio manager. Mr. Peebles pro-
1
ALLIANCE SHORT-TERM MULTI-MARKET 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 SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
Q: THE FUND'S NET ASSET VALUE REMAINED FAIRLY STABLE OVER 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 short maturity policy limited the benefit of these gains
to a degree, but the rally was strong even at the shorter 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 SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF OCTOBER 31, 1995
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
---------------------------
. One Year -5.74% - 9.80%
. Five Years +2.47% +1.58%
. Since Inception* +4.83% +4.13%
. SEC Yield 6.79%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
---------------------------
. One Year -6.50% -9.08%
. Five Years +1.72% +1.72%
. Since Inception* +3.04% +3.04%
. SEC Yield 6.37%
CLASS C SHARES
. One Year -6.49%
. Since Inception* -1.19%
. SEC Yield 6.38%
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: 5/5/89 Class A; 2/5/90 Class B; 5/3/93 Class C.
GROWTH OF A $10,000 INVESTMENT: 5/31/89 TO 10/31/95
$17,000
$15,000
ML 1-3 Year Gov't Index
Short-Term
Multi-Market Trust
Class A: $12,897
$13,000
$11,000
Lipper Short World
Multi-Market Income
Funds Average
$ 9,000
5/31/89 10/31/95
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Short-Term Multi-Market 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 Short-Term Multi-Market Trust, though some
funds included in the average may have somewhat different investment policies.
When comparing Alliance Short-Term Multi-Market 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 Index. The
Lipper average assumes deduction of maximum sales charges where applicable.
4
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $VALUE
- ----------------------------------------------------------------------
AUSTRALIA-4.0%
GOVERNMENT OBLIGATION-4.0%
Commonwealth of Australia
12.50%, 1/15/98
(cost $33,033,196)(a) AU$ 40,800 $33,898,293
CANADA-5.0%
GOVERNMENT OBLIGATION-5.0%
Government of Canada
6.50%, 9/01/98
(cost $41,931,671)(a) CA$ 57,800 42,741,012
DENMARK-8.7%
GOVERNMENT OBLIGATION-8.7%
Kingdom of Denmark
7.00%, 2/15/98
(cost $72,366,147)(a) DKK 397,000 73,970,022
FINLAND-4.5%
GOVERNMENT OBLIGATION-4.5%
Government of Finland
11.00%, 6/15/97
(cost $37,128,364)(a) FIM 150,000 38,128,540
GERMANY-11.0%
GOVERNMENT OBLIGATION-11.0%
Government of Germany
6.38%, 5/20/98
(cost $90,856,645)(a) DEM 126,000 93,182,416
IRELAND-5.5%
GOVERNMENT OBLIGATION-5.5%
Republic of Ireland
9.75%, 6/01/98
(cost $46,413,637)(a) IEP 27,000 46,596,126
MEXICO-6.3%
GOVERNMENT OBLIGATIONS-6.3%
Mexican Treasury Bills
46.50%, 11/01/95(a)(b) MXP 93,500 13,245,170
11.02%, 11/09/95(a)(b) 116,500 16,336,440
38.00%, 1/04/96(a)(b) 15,000 1,961,915
46.50%, 1/18/96(a)(b) MXP 63,973 $8,230,244
44.42%, 2/01/96(b) 104,114 13,262,411
Total Mexican Securities
(cost $76,249,052) 53,036,180
NEW ZEALAND-14.4%
DEBT OBLIGATIONS-7.7%
Bank of New Zealand
8.78%, 12/01/95(a)(b) NZ$ 14,000 9,177,634
8.78%, 12/07/95(a)(b) 20,000 13,092,423
National Bank of New Zealand
8.80%, 11/15/95(a)(b) 33,000 21,713,593
WestPac Banking Corporation
8.65%, 1/16/96(a)(b) 33,000 21,408,627
65,392,277
GOVERNMENT OBLIGATIONS-6.7%
Government of New Zealand
8.00%, 11/15/95(a) 30,000 19,797,059
10.00%, 7/15/97(a) 53,900 36,995,449
56,792,508
Total New Zealand Securities
(cost $122,338,352) 122,184,785
SPAIN-5.0%
GOVERNMENT OBLIGATION-5.0%
Government of Spain
11.45%, 8/30/98
(cost $41,067,338)(a) ESP 5,025,000 42,386,469
UNITED KINGDOM-4.6%
GOVERNMENT OBLIGATION-4.6%
United Kingdom Treasury
9.75%, 1/19/98
(cost $38,357,175)(a) GBP 23,200 38,774,436
UNITED STATES-31.7%
DEBT OBLIGATIONS-10.1%
ABN-AMRO
5.56%, 6/05/96 US$ 40,000 39,928,000
SMM Trust Co., Ltd. FRN(c)
6.13%, 5/16/96 5,000 4,998,500
7.91%, 1/22/97 41,000 40,987,700
85,914,200
5
PORTFOLIO OF INVESTMENTS (CONTINUED)
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $VALUE
- ----------------------------------------------------------------------
CERTIFICATES OF DEPOSIT-2.6%
Rabobank Libor Linked
6.42%, 2/23/98(b) US$ 25,000 $ 21,892,500
TIME DEPOSITS-16.6%
Dresdner Bank
6.00%, 11/13/95 5,000 5,000,000
Toronto-Dominion Bank
5.97%, 11/13/95 15,000 15,000,000
Wachovia Bank
5.90%, 11/1/95 112,800 112,800,000
WestDeutsche Landesbank
5.56%, 1/09/96 7,800 7,800,000
140,600,000
COMMERCIAL PAPER-2.4%
Merrill Lynch
6.21%, 11/13/95(b) US$ 20,000 19,957,400
Total United States Securities
(cost $268,117,259) 268,364,100
TOTAL INVESTMENTS-100.7%
(cost $867,858,836) 853,262,379
Other assets less liabilities-(0.7%) (5,984,595)
NET ASSETS-100% $847,277,784
(a) Security, or portion thereof, has been segregated to collateralize forward
exchange currency contracts. This collateral has a total market value of
approximately $516,532,301.
(b) Interest rate represents annualized yield to maturity at purchase date.
(c) Stated interest rate in effect at October 31, 1995.
Glossary:
FRN - Floating Rate Note.
See notes to financial statements.
6
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $867,858,836) $853,262,379
Cash 40,990
Interest receivable 18,845,814
Unrealized appreciation of swap contracts 6,062,395
Receivable for capital stock sold 253,770
Total assets 878,465,348
LIABILITIES
Payable for investment securities purchased 13,262,411
Unrealized depreciation of forward exchange currency contracts 10,836,994
Payable for capital stock redeemed 3,704,332
Dividend payable 2,299,125
Advisory fee payable 403,242
Distribution fee payable 120,346
Accrued expenses 561,114
Total liabilities 31,187,564
NET ASSETS $847,277,784
COMPOSITION OF NET ASSETS
Capital stock, at par $1,133,727
Additional paid-in capital 948,801,915
Distributions in excess of net investment income (2,676,856)
Accumulated net realized loss on investments, options,
swaps, and foreign currency transactions (80,801,505)
Net unrealized depreciation of investments, swaps, and
foreign currency denominated assets and liabilities (19,179,497)
$847,277,784
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($320,332,577/
42,867,441 shares of capital stock issued and outstanding) $7.47
Sales charge-4.25% of public offering price .33
Maximum offering price $7.80
CLASS B SHARES
Net asset value and offering price per share ($523,529,554/
70,048,261 shares of capital stock issued and outstanding) $7.47
CLASS C SHARES
Net asset value, redemption and offering price per share($3,415,653/
456,985 shares of capital stock issued and outstanding) $7.47
See notes to financial statements.
7
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1995 ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
INVESTMENT INCOME
Interest (net of foreign taxes withheld of $378,594) $ 94,671,015
EXPENSES
Advisory fee $6,033,815
Distribution fee - Class A 1,231,853
Distribution fee - Class B 6,812,677
Distribution fee - Class C 51,879
Transfer agency 2,770,482
Custodian 835,117
Printing 215,049
Administrative 177,611
Audit and legal 109,574
Registration 61,917
Directors' fees 21,916
Miscellaneous 105,092
Total expenses 18,426,982
Net investment income 76,244,033
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment and swap transactions (19,803,737)
Net realized loss on foreign currency transactions (141,539,496)
Net realized loss on written options (17,485,602)
Net change in unrealized appreciation (depreciation) of:
Investment and swap transactions (16,286,489)
Foreign currency denominated assets and liabilities 5,603,431
Net loss on investments and foreign currency transactions (189,511,893)
NET DECREASE IN NET ASSETS FROM OPERATIONS $(113,267,860)
See notes to financial statements.
8
STATEMENT OF CHANGES IN NET ASSETS
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1995 1994
------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 76,244,033 $ 144,698,728
Net realized loss on investments, swaps,
options and foreign currency transactions (178,828,835) (162,843,081)
Net change in unrealized appreciation
(depreciation) of investments, swaps,
options, and foreign currency denominated
assets and liabilities (10,683,058) 23,135,437
Net increase (decrease) in net assets from
operations (113,267,860) 4,991,084
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Tax return of capital
Class A (38,284,995) (51,591,578)
Class B (58,142,957) (82,462,553)
Class C (436,849) (524,512)
CAPITAL STOCK TRANSACTIONS
Net decrease (548,036,954) (966,776,583)
Total decrease (758,169,615) (1,096,364,142)
NET ASSETS
Beginning of year 1,605,447,399 2,701,811,541
End of year $ 847,277,784 $1,605,447,399
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Short-Term Multi-Market Trust, Inc. (the 'Fund'), was incorporated in
the State of Maryland on February 17, 1989 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 exchange 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 as 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 loss on foreign currency transactions of $141,539,496 represents
foreign exchange gains and losses from sales and maturities of securities,
holdings of foreign currencies, exchange gains and losses realized between the
trade and settlement dates on security transactions, and the difference between
the amount of interest recorded on the Fund's books and the U.S. dollar
equivalent amounts actually received or paid. Net change in unrealized
appreciation of foreign currency denominated assets and liabilities of
$5,603,431 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 applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
4. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Interest income is accrued daily. Security transactions are accounted for on
the date 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.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
6. RECLASSIFICATION OF NET ASSETS
As of October 31, 1995, amounts totalling $17,943,912 and $183,811,389 were
reclassified from additional paid-in-capital to undistributed net investment
income and
10
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
accumulated net realized loss on investments, 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
.55 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
$177,611 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 $1,889,452 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 $19,677 from the sale of Class A shares and
$1,340,337 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 .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. 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 $28,259,365, and $1,036,535, for Class B and C shares,
respectively; such costs may be recovered from the Fund in future periods so
long as the agreement remains 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 SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
aggregated $1,384,420,855 and $1,214,926,149 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 has 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 24,209 $18,302,714 $18,406,649 $103,935
British Pounds,
expiring 1/25/96 6,720 10,581,648 10,603,395 21,747
Canadian Dollars,
expiring 11/17/95 11,600 8,445,577 8,633,195 187,618
Deutsche Marks,
expiring 12/04/95-1/22/96 182,248 128,112,412 129,962,931 1,850,519
Indonesian Rupiah,
expiring 11/13/95 46,600,000 20,000,000 20,453,982 453,982
Japanese Yen,
expiring 1/11/96 2,275,000 23,253,437 22,502,315 (751,122)
Thailand Baht,
expiring 6/28/96 445,500 17,398,946 17,260,509 (138,437)
12
ALLIANCE SHORT-TERM MULTI-MARKET 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 31,427 $49,339,850 $49,583,737 $(243,887)
Canadian Dollars,
expiring 11/17/95 153,361 114,042,362 114,161,082 (118,720)
Deutsche Marks,
expiring 1/22/96 450,498 305,874,260 321,283,335 (15,409,075)
Indonesian Rupiah,
expiring 11/13/95 46,600,000 20,077,553 20,446,635 (369,082)
Japanese Yen,
expiring 1/11/96 5,989,000 65,613,396 59,201,868 6,411,528
Netherlands Guilder,
expiring 3/28/96 50,400 31,542,187 32,194,601 (652,414)
New Zealand Dollars,
expiring 11/06/95-11/21/95 113,500 74,073,487 74,844,815 (771,328)
Spanish Pesetas,
expiring 1/25/96 4,910,849 39,152,105 39,926,986 (774,881)
Swiss Francs,
expiring 12/04/95-1/18/96. 83,086 72,923,513 73,560,890 (637,377)
$(10,836,994)
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 another party 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 rate swap contracts.
13
NOTES TO FINANCIAL STATEMENTS (CONT.)
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
At October 31, 1995, the Fund had outstanding currency and interest rate swap
contracts with the following terms:
<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>
J.P. Morgan THB 245,500,00 5/13/96 Fixed-10.71% $(216,096)
USD 10,000,000 Floating-3M LIBOR
Swiss Bank THB 246,550,000 5/16/96 Fixed-11.00% (160,534)
USD 10,000,000 Floating-LIBOR
J.P. Morgan USD 41,000,000 1/22/97 Fixed-7.91% Floating+ 12,300
J.P. Morgan ESP 4,880,000,000 5/18/98 Fixed-11.1025%
JPY 3,400,000,000 Fixed-2.27% 6,426,725
$6,062,395
</TABLE>
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.
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 $ 250,000
Options written 2 166,398
Options expired (2) (166,398)
Options terminated in closing purchase transaction (1) (250,000)
Options outstanding at end of year -0- $ -0-
+ Floating is composed of three month LIBOR plus a fixed amount of .125%.
14
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
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 $10,411,326 and gross unrealized
depreciation of investments was $25,007,783, resulting in net unrealized
depreciation of $14,596,457 (excluding foreign currency transactions). At
October 31, 1995, the Fund had a capital loss carryforward of $80,801,505 of
which $40,988,072 expires in the 2001, $20,009,696 in the year 2002, and
$19,803,737 in the year 2003.
NOTE E: CAPITAL STOCK
There are 3,600,000,000 share is $.01 par value capital stock authorized,
dividend into three classes, designated Class A, Class B and Class C shares.
Each Class consists of 1,200,000,000 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 2,011,084 4,612,509 $ 15,716,134 $ 41,449,862
Shares issued in
reinvestment of
dividends and
distributions 2,981,786 3,737,652 23,083,728 33,610,283
Shares redeemed (30,294,790) (43,296,051) (233,197,213) (388,782,956)
Net decrease (25,301,920) (34,945,890) $(194,397,351) $(313,722,811)
CLASS B
Shares sold 2,069,111 2,833,662 $ 16,026,464 $ 25,465,262
Shares issued in
reinvestment of
dividends and
distributions 3,656,313 5,541,971 28,470,965 49,849,081
Shares redeemed (50,907,467) (81,594,355) (394,607,766) (731,549,755)
Net decrease (45,182,043) (73,218,722) $(350,110,337) $(656,235,412)
CLASS C
Shares sold 646,889 1,757,618 $ 5,398,144 $1 5,838,339
Shares issued in
reinvestment of
dividends 43,525 45,138 339,247 403,169
Shares redeemed (1,167,573) (1,467,516) (9,266,657) (13,059,868)
Net increase(decrease) (477,159) 335,240 $ (3,529,266) $ 3,181,640
15
FINANCIAL HIGHLIGHTS ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------
1995 1994 1993 1992 1991
------------ --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $8.71 $9.25 $9.25 $9.94 $9.89
INCOME FROM INVESTMENT OPERATIONS
Net investment income .46(d) .93 .92 .91 .97
Net realized and unrealized gain (loss) on
investments and foreign currency transactions (.98)(d) (.86) (.32) (.86) .06
Net increase (decrease) in net asset value from
operations (.52) .07 .60 .05 1.03
LESS: DISTRIBUTIONS
Dividends from net investment income and other
sources -0- -0- (.60) (.72) (.97)
Tax return of capital (.72) (.61) -0- -0- -0-
Distributions from net realized gain -0- -0- -0- (.02) (.01)
Total dividends and distributions (.72) (.61) (.60) (.74) (.98)
Net asset value, end of year $7.47 $8.71 $9.25 $9.25 $9.94
TOTAL RETURN
Total investment return based on net asset value (b) (5.74)% .84% 6.67% .49% 10.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $320,333 $593,677 $953,571 $1,596,903 $2,199,393
Ratio of expenses to average net assets 1.23% 1.13% 1.16% 1.10% 1.09%
Ratio of net investment income to average net assets 7.39% 7.28% 8.26% 9.00% 9.64%
Portfolio turnover rate 230% 109% 182% 133% 146%
</TABLE>
See footnote summary on page 18.
16
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $8.71 $9.25 $9.25 $9.94 $9.89
INCOME FROM INVESTMENT OPERATIONS
Net investment income .41(d) .94 .87 .84. 89
Net realized and unrealized gain (loss) on
investments and foreign currency transactions (.99)(d) (.93) (.34) (.86) .07
Net increase (decrease) in net asset value from
operations (.58) .01 .53 (.02) .96
LESS: DISTRIBUTIONS
Dividends from net investment income and other
sources -0- -0- (.53) (.65) (.90)
Tax return of capital (.66) (.55) -0- -0- -0-
Distributions from net realized gain -0- -0- -0- (.02) (.01)
Total dividends and distributions (.66) (.55) (.53) (.67) (.91)
Net asset value, end of year $7.47 $8.71 $9.25 $9.25 $9.94
TOTAL RETURN
Total investment return based on net asset value (b) (6.50)% .12% 5.91% (.24)% 10.11%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $523,530 $1,003,633 $1,742,703 $2,966,071 $3,754,033
Ratio of expenses to average net assets 1.95% 1.85% 1.87% 1.81% 1.81%
Ratio of net investment income to average net assets 6.69% 6.58% 7.57% 8.28% 8.87%
Portfolio turnover rate 230% 109% 182% 133% 146%
</TABLE>
See footnote summary on page 18.
17
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
CLASS C
-------------------------------
MAY 3,
YEAR ENDED OCT. 31, 1993(A)
------------------- TO OCT.31,
1995 1994 1993
---------- ------- ----------
Net asset value, beginning of period $8.71 $9.25 $9.18
INCOME FROM INVESTMENT OPERATIONS
Net investment income .39(d) .58 .28
Net realized and unrealized gain (loss) on
investments and foreign currency transactions (.97)(d) (.57) .05
Net increase (decrease) in net asset value
from operations (.58) .01 .33
LESS: DISTRIBUTIONS
Dividends from net investment income and
other sources -0- -0- (.26)
Tax return of capital (.66) (.55) -0-
Distributions from net realized gain -0- -0- -0-
Total dividends and distributions (.66) (.55) (.26)
Net asset value, end of period $7.47 $8.71 $9.25
TOTAL RETURN
Total investment return based on net asset
value (b) (6.49)% .12% 3.66%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($000's omitted) $3,416 $8,136 $5,538
Ratio of expenses to average net assets.... 1.92% 1.83% 1.82%(c)
Ratio of net investment income to average
net assets 6.66% 6.50% 7.19%(c)
Portfolio turnover rate 230% 109% 182%
(a) Commencement of distribution.
(b) Total investment return is calculated assuming an inital 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 a
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) Based on average shares outstanding.
18
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
We have audited the accompanying statement of assets and liabilities of
Alliance Short-Term Multi-Market 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 as of
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 Short-Term Multi-Market Trust, Inc. at 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 SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND PRESIDENT
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JAMES R. GREENE (1)
DR. JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
EUGENE F. O'NEIL (1)
ROBERT C. WHITE (1)
OFFICERS
F. JEANNE GOETZ, VICE PRESIDENT
DOUGLAS J. PEEBLES, VICE PRESIDENT
JOHN J. KELLEY, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER AND CHIEF FINANCIAL OFFICER
PATRICK J. FARRELL, CONTROLLER
CUSTODIAN
BROWN BROTHERS HARRIMAN AND CO.
40 Water Street
Boston, MA 02109
PRINCIPAL UNDERWRITERS
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 SHORT-TERM MULTI-MARKET 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.
STMAR