ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
ANNUAL REPORT
OCTOBER 31, 1996
LETTER TO SHAREHOLDERS
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
December 12, 1996
Dear Shareholder:
Slow worldwide economic growth, combined with extremely low inflation, have
provided an attractive environment for global bond investments. In the
non-dollar developed markets, fixed income returns have been very strong
throughout the fiscal year. The dollar-denominated markets of Canada and
Australia produced excellent returns, as did the higher yielding European
markets of Italy, Spain and Sweden.
INVESTMENT RESULTS
As shown in the table below, your Fund continued to enjoy solid returns in both
the six- and twelve-month periods ended October 31. We've also shown results
for the short-maturity U.S. government bond market for the same time periods,
represented by the Merrill Lynch 1-3 Year Government Bond Index. As you can
see, your Fund outperformed the unmanaged Merrill Lynch index, as well as the
Lipper Short World Multi-Market Income Funds Average, which is comprised of 34
funds with investment objectives similar to that of the Alliance Short-Term
Multi-Market Trust.
TOTAL RETURN BASED ON NET ASSET VALUE
FOR PERIODS ENDED OCTOBER 31, 1996
6 MONTHS 12 MONTHS
---------------- ----------------
ALLIANCE SHORT-TERM MULTI-MARKET TRUST
Class A 5.87% 13.23%
Class B 5.47 12.34
Class C 5.47 12.35
MERRILL LYNCH 1-3 YEAR GOVERNMENT
BOND INDEX 3.75 5.91
LIPPER SHORT WORLD MULTI-MARKET
INCOME FUNDS AVERAGE 5.20 9.44
MARKET REVIEW
The Japanese economy produced what proved to be an unsustainably large growth
rate of 12.2% in the first quarter of 1996. Growth has since slowed
precipitously, and the Japanese authorities have continued their policy of
leaving official interest rates at the extremely low level of 0.50%. To ensure
that the Japanese economic recovery will be sustainable, authorities are
willing to err on the cautious side, potentially leaving rates too low for too
long. Two consequences have arisen in direct response to this policy of
artificially low rates in Japan. First, the Japanese yen has continued to
weaken, falling by another 8.5% over the past six months. Second, these low
rates have created a large build-up of liquidity which has spilled over into
the global markets, improving investment returns in many different asset
classes.
The strong performance of both the Australian and Canadian markets has been
most impressive given the relatively poor performance of the U.S. Treasury
market. Historically, the Australian and Canadian markets have not performed
well in an environment of low Treasury prices. However, lower growth and
inflation rates combined with drastic fiscal tightening and improvements in
their respective trade accounts have allowed for significant interest rate cuts
in Australia and Canada, even though the U.S. Federal Reserve has not lowered
U.S. rates at all. In fact, official rates in Canada are currently more than
2.0% below rates in the U.S. Given the high unemployment rates and large output
gaps in these markets, we believe inflation will remain controlled. Therefore,
Australian and Canadian securities should continue to outperform U.S. debt.
In Europe, the driving force behind excellent bond market returns has been the
quest for monetary union. This has brought about a period of severe fiscal
retrenchment in Europe, even though many European economies remain sluggish.
With fiscal policy so restrained, monetary
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.
1
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
GEOGRAPHIC DIVERSIFICATION OF PORTFOLIO HOLDINGS
as of October 31, 1996
CZECH REPUBLIC 4.74%
WESTERNEUROPE 41.60%
CANADA 6.63%
MEXICO 4.31%
AUSTRALIA 9.07%
U.S. 33.65%
policy, in the form of lower interest rates, has been the only macroeconomic
tool authorities have to stimulate growth. This combination of tight fiscal
policy and loose monetary policy has led to stronger bond markets and weaker
currencies. The U.S. dollar has performed quite well against the core European
currencies over the last six months and we anticipate a continuation of this
for the foreseeable future.
As European nations get closer and closer to forming a single currency, their
bond yields have begun to converge. We believe that monetary union will, in
fact, take place over the next few years and that this convergence will
continue. From time-to-time, market volatility is likely to lead to short-term
divergence in European yield spreads, and we will look to opportunistically add
to the portfolio's positions during these periods.
The Swiss economy continues to remain very weak. This has been caused, in part,
by the tremendous overvaluation of the Swiss franc. In September, the Swiss
National Bank cut their official discount rate to 1.0% in an attempt to weaken
the franc and relieve the ailing Swiss economy. The interest rate cut has
succeeded in reining in the franc, and the portfolio has benefited from this
move. We have used the Swiss franc as a hedge currency versus our other
European exposure, and will continue to do so as it provides a positive yield
advantage and depreciation potential.
OUTLOOK
Overall, we think the non-dollar bond markets will continue to outperform the
U.S. Treasury market into 1997. Thus, the portfolio currently has significant
exposure to the European bond markets. However, if the Clinton Administration
and Congress pass a credible balanced budget for the next several years, the
domestic fixed income market will be revived. If a balanced budget is passed,
the portfolio's exposure to the U.S. market will be increased accordingly.
The economic fundamentals in the U.S., however, continue to be the strongest of
any country in the developed world. Low unemployment, high capacity utilization
rates, and GDP growth very close to potential are restraining bond market
returns in the U.S. European, Australian, and Canadian fixed income markets
offer greater potential for price appreciation at this time.
As always, we appreciate your interest and investment in the Short-Term
Multi-Market Trust.
Sincerely,
John D. Carifa
Chairman and President
2
INVESTMENT OBJECTIVE AND POLICIES
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
Alliance Short-Term Multi-Market Trust seeks the highest level of current
income consistent with investment in a portfolio of high-quality debt
securities having remaining maturities of not more than three years. It invests
primarily in a non-diversified portfolio of debt securities denominated in the
U.S. dollar and selected foreign currencies. While the Fund normally will
maintain a substantial portion of its assets in debt securities denominated in
foreign currencies, the Fund will invest at least 25% of its net assets in U.S.
dollar-denominated securities.
INVESTMENT RESULTS
_______________________________________________________________________________
AVERAGE ANNUAL TOTAL RETURN AS OF OCTOBER 31, 1996
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +13.23% +8.44%
. Five Years +2.90% +2.01%
. Since Inception* +5.91% +5.30%
. SEC Yield** +5.44%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +12.34% +9.34%
. Five Years +2.13% +2.13%
. Since Inception* +4.50% +4.50%
. SEC Yield** +4.96%
NOTE: Total returns for Class B shares from inception on February 5, 1990,
reflect conversion from Class B to Class A shares in accordance with the
six-year conversion schedule in the Fund's prospectus.
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
. One Year +12.35% +11.35%
. Since Inception* +2.49% +2.49%
. SEC Yield** +4.98%
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 sales charges, but are subject
to a 1 year 1% contingent deferred sales charge for shares purchased on or
after July 1, 1996. 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: 5/5/89 Class A; 2/5/90 Class B; 5/3/93 Class C.
** Yields are for the 30-day period ended October 31, 1996.
++ Assumes conversion of Class B shares into Class A shares after 6 years.
3
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
ALLIANCE SHORT-TERM MULTI-MARKET TRUST
GROWTH OF A $10,000 INVESTMENT:
5/31/89 TO 10/31/96
$17,575
$16,575
$15,575
$14,575
$13,575
$12,575
$11,575
$10,575
$9,575
5/31/89
10/31/96
MERRILL LYNCH 1-3 YEAR GOV'T INDEX
LIPPER SHORT WORLD MULTI-MARKET INCOME FUNDS AVERAGE
SHORT-TERM MULTI-MARKET TRUST CLASS A: $12,897
This chart illustrates the total value of a hypothetical $10,000 investment in
Class A shares. The chart reflects the deduction of the maximum 4.25% sales
charge from an initial $10,000 investment and assumes the reinvestment of
dividends and capital gains. Performance for Class B and 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 gains or
losses in capital value or dividend income.
The unmanaged Merrill Lynch 1-3 Year Government Bond Index is composed of U.S.
Treasury Securities maturing in one to three years.
The Lipper Short World Multi-Market Income Funds Average reflects performance
of 34 funds with investment objectives that are generally similar to that of
Alliance Short-Term Multi-Market Trust.
When comparing Alliance Short-Term Multi-Market Trust to the indices shown
above, remember that sales charges and expenses are not reflected in the
performance of indices.
Short-Term Multi-Market Trust
ML 1-3 Year Government Index
Lipper Short World Multi-Market Funds Average
4
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
AUSTRALIA-8.9%
GOVERNMENT OBLIGATION-8.9%
Republic of Australia
12.00%, 7/15/99 (a)
(cost $58,978,727) AU$ 66,250 $59,298,538
CANADA-6.5%
GOVERNMENT OBLIGATIONS-6.5%
Government of Canada
6.25%, 9/15/98(a) CA$ 15,000 11,592,155
6.50%, 8/01/99(a) 40,700 31,732,615
Total Canadian Securities
(cost $41,357,473) 43,324,770
CZECH REPUBLIC-4.6%
DEBT OBLIGATIONS-4.6%
ING Baring Securities
11.00%, 5/29/97 (b) CZK 334,125 12,379,138
ING Capital Holdings
11.50%, 7/08/97 (b) 168,000 6,254,270
International Bank For
Reconstruction & Development
11.50%, 10/09/97(a) 332,500 12,374,535
Total Czech Republic Securities
(cost $30,666,659) 31,007,943
DENMARK-7.7%
GOVERNMENT OBLIGATION-7.7%
Kingdom of Denmark
9.00%, 11/15/98(a)
(cost $54,596,699) DKK 277,000 51,784,778
FINLAND-5.6%
GOVERNMENT OBLIGATION-5.6%
Government of Finland
11.00%, 1/15/99(a)
(cost $39,795,056) FIM 150,000 37,869,149
GERMANY-6.1%
GOVERNMENT OBLIGATION-6.1%
Government of Germany
5.75%, 5/28/99(a)
(cost $40,237,575) DEM 60,000 41,237,862
ITALY-4.0%
GOVERNMENT OBLIGATION-4.0%
Republic of Italy
10.50%, 11/01/98(a)
(cost $24,865,649) ITL 38,600,000 27,025,790
MEXICO-4.2%
GOVERNMENT OBLIGATIONS-4.2%
Mexican Treasury Bills
29.00%, 11/28/96(a)(c) MXP 119,664 14,550,165
30.74%, 1/02/97(a)(c) 107,436 12,730,473
32.53%, 7/31/97(a)(c) 8,422 862,099
Total Mexican Securities
(cost $29,058,166) 28,142,737
NORWAY-4.5%
GOVERNMENT OBLIGATION-4.5%
Kingdom of Norway
9.00%, 1/31/99(a)
(cost $30,095,595) NOK 178,400 30,034,725
SPAIN-4.2%
GOVERNMENT OBLIGATION-4.2%
Government of Spain
7.40%, 7/30/99(a)
(cost $27,794,616) ESP 3,518,000 28,040,578
SWEDEN-5.1%
GOVERNMENT OBLIGATION-5.1%
Kingdom of Sweden
11.00% 1/21/99(a)
(cost $32,845,551) SEK 200,900 33,997,562
UNITED KINGDOM-3.3%
GOVERNMENT OBLIGATION-3.3%
U.K. Treasury Gilts
12.25%, 3/26/99
(cost $21,826,916) GBP 12,100 22,012,753
UNITED STATES-32.9%
DEBT OBLIGATIONS-12.0%
Bayerische Landesbank
6.00%, 10/15/98(a) US$ 20,000 20,034,000
Federal Business Development Bank
6.375%, 5/21/99(a) 15,000 15,067,500
5
PORTFOLIO OF INVESTMENTS (CONTINUED)
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
KFW International Finance, Inc.
8.25%, 3/18/98(a) US$ 4,250 $ 4,377,500
SMM Trust Co., Ltd. FRN
7.91%, 1/22/97(a)(d) 41,000 40,877,000
80,356,000
GOVERNMENT OBLIGATION-7.5%
U.S. Treasury Note
6.00%, 8/15/99(a) 50,000 50,156,250
CERTIFICATE OF DEPOSIT-3.5%
Rabobank FRN
6.42%, 2/23/98(a)(c) 25,000 23,190,000
TIME DEPOSIT-9.9%
Societe Generale
5.65%, 11/01/96 US$ 66,300 66,300,000
Total United States Securities
(cost $219,777,433) 220,002,250
TOTAL INVESTMENTS-97.6%
(cost $651,896,115) 653,779,435
Other assets less liabilities-2.4% 15,904,756
NET ASSETS-100% $669,684,191
(a) Securities, or portion thereof, with an aggregate market value of
$535,770,286 have been segregated to collateralize forward exchange currency
contracts.
(b) The redemption value of these securities are indexed to the spread between
the Czech Crown and the U.S. Dollar exchange rate.
(c) Interest rate represents annualized yield to maturity at purchase date.
(d) Stated interest rate in effect at October 31, 1996.
Glossary:
FRN - Floating Rate Note.
See notes to financial statements.
6
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $651,896,115) $653,779,435
Cash 17,849
Interest receivable 20,252,728
Receivable for capital stock sold 13,663,436
Unrealized appreciation of swap contracts 862,657
Total assets 688,576,105
LIABILITIES
Payable for capital stock redeemed 15,583,470
Dividend payable 1,613,142
Unrealized depreciation of forward exchange currency contracts 752,889
Advisory fee payable 315,251
Distribution fee payable 44,804
Accrued expenses 582,358
Total liabilities 18,891,914
NET ASSETS $669,684,191
COMPOSITION OF NET ASSETS
Capital stock, at par $ 866,889
Additional paid-in capital 747,496,970
Distributions in excess of net investment income (5,775,532)
Accumulated net realized loss on investments, swaps and
foreign currency transactions (74,988,898)
Net unrealized appreciation of investments, swaps and
foreign currency denominated assets and liabilities 2,084,762
$669,684,191
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($386,544,660/
50,036,697 shares of capital stock issued and outstanding) $7.73
Sales charge--4.25% of public offering price .34
Maximum offering price $8.07
CLASS B SHARES
Net asset value and offering price per share ($273,108,736/
35,353,790 shares of capital stock issued and outstanding) $7.73
CLASS C SHARES
Net asset value and offering price per share ($10,030,795/
1,298,441 shares of capital stock issued and outstanding) $7.73
See notes to financial statements.
7
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
INVESTMENT INCOME
Interest(net of foreign taxes withheld of $243,519) $68,095,559
EXPENSES
Advisory fee $4,077,972
Distribution fee - Class A 977,782
Distribution fee - Class B 4,089,969
Distribution fee - Class C 65,381
Transfer agency 1,828,807
Custodian 838,181
Printing 217,952
Administrative 169,691
Audit and legal 160,608
Registration 36,820
Directors' fees 27,304
Miscellaneous 13,754
Total expenses 12,504,221
Net investment income 55,591,338
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
SWAPS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment and swap transactions 12,818,217
Net realized loss on foreign currency transactions (1,543,675)
Net change in unrealized appreciation (depreciation) of:
Investment and swap transactions 11,280,039
Foreign currency denominated assets and liabilities 9,984,220
Net gain on investments, swaps and foreign
currency transactions 32,538,801
NET INCREASE IN NET ASSETS FROM OPERATIONS $88,130,139
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,
1996 1995
------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 55,591,338 $ 76,244,033
Net realized gain (loss) on investments,
swaps and foreign currency transactions 11,274,542 (178,828,835)
Net change in unrealized appreciation
(depreciation) of investments, swaps,
and foreign currency denominated assets
and liabilities 21,264,259 (10,683,058)
Net increase (decrease) in net assets from
operations 88,130,139 (113,267,860)
DIVIDENDSANDDISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (29,452,332) -0-
Class B (33,967,382) -0-
Class C (524,790) -0-
Tax return of capital
Class A -0- (38,284,995)
Class B -0- (58,142,957)
Class C -0- (436,849)
CAPITAL STOCK TRANSACTIONS
Net decrease (201,779,228) (548,036,954)
Total decrease (177,593,593) (758,169,615)
NET ASSETS
Beginning of year 847,277,784 1,605,447,399
End of year $669,684,191 $ 847,277,784
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
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 management 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 purchased on or after July 1,
1996 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
following is a summary of significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Investments are stated at value. Investments for which market quotations are
readily available are valued at the closing price on the day of valuation or,
if no such closing price is available, at the mean of the last bid and ask
price quoted on such day. Options are valued at market value or fair value
using methods determined by the Board of Directors. Securities which mature in
60 days or less are valued at amortized cost, which approximates market value,
unless this method does not represent fair value. Securities for which market
quotations are not readily available and restricted securities are valued in
good faith 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 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 (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 applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Interest income is accrued daily. Investment transactions are accounted for on
the date securities are purchased or sold. Investment 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, 1996, the Fund, reclassed certain components of net assets.
The reclassification resulted in a net decrease to distributions in excess of
net investment income of $5,254,490, and a net increase to accumulated net
realized loss on investments, swaps and foreign currency transactions and
additional paid-in capital of $5,461,935 and $207,445 respectively. These
reclassifications were the result of permanent book to tax differences
resulting primarily from foreign currency gains. Net assets were not effected
by the change.
10
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
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.
Pursuant to the advisory agreement, the Fund paid $169,691 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, 1996.
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 $1,261,242 for the year ended October 31, 1996.
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 $16,307 from the sale of Class A shares and $273,441
in contingent deferred sales charges imposed upon redemptions by shareholders
of Class B shares for the year ended October 31, 1996.
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 $26,166,892, and $1,343,129, 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.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. Government obligations) aggregated $1,057,429,421 and $1,094,502,405
respectively, for the year ended October 31, 1996. There were purchases of
$92,456,080 and sales of $41,802,656 of U.S. Government and government agency
obligations for the year ended October 31, 1996.
1. FORWARD EXCHANGE CURRENCY CONTRACTS
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 other liquid high quality debt 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.
11
NOTES TO FINANCIAL STATEMENTS (CONT.)
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
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 the
Fund has in that particular currency contract.
At October 31, 1996, the Fund had outstanding forward exchange currency
contracts, as follows:
<TABLE>
<CAPTION>
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
(000) DATE VALUE (DEPRECIATION)
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS
Canadian Dollars, expiring 11/18/96 30,000 $22,394,745 $22,394,305 $(440)
Polish Zloty, expiring 4/11/97 37,000 12,442,411 12,402,904 (39,507)
FOREIGN CURRENCY SALE CONTRACTS
Australian Dollars, expiring 11/07/96 74,012 58,733,610 58,641,690 91,920
Canadian Dollars, expiring 11/18/96 54,644 39,973,837 40,790,655 (816,818)
Deutsche Marks, expiring 11/25/96-4/11/97 123,206 81,843,660 81,770,406 73,254
Finnish Markka, expiring 1/17/97 171,181 37,482,065 37,950,086 (468,021)
Italian Lira, expiring 11/27/96 42,500,000 27,716,005 27,984,069 (268,064)
Japanese Yen, expiring 11/07/96 3,016,210 27,173,063 26,519,928 653,135
Netherlands Guilder, expiring 12/31/96 50,400 29,716,981 29,818,934 (101,953)
Spanish Pesetas, expiring 11/25/96 3,560,000 27,745,304 27,880,059 (134,755)
Swedish Krona, expiring 11/25/96 225,599 34,104,114 34,344,494 (240,380)
Swiss Francs, expiring 1/06/97 101,486 81,397,014 80,898,274 498,740
$(752,889)
</TABLE>
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.
12
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
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 year ended October 31, 1996.
3. INTEREST RATE SWAP AGREEMENTS
The Fund enters into currency and interest rate swaps to protect itself from
interest rate fluctuations on the underlying 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 of swap contracts. Realized gains and losses from
terminated swaps are included in net realized gain on investment and swap
transactions.
At October 31, 1996, 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 USD 41,000,000 1/22/97 Fixed-7.91% Floating+ $ -0-
J.P. Morgan ITL 30,000,000,000 4/23/99 Floating-LIBOR Fixed-9.25% 862,657
---------
$862,657
</TABLE>
+ Floating is composed of three month LIBOR (London Interbank Offered Rate)
plus a fixed amount of .125%.
13
NOTES TO FINANCIAL STATEMENTS (CONT.)
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
At October 31, 1996, 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 $7,865,896 and gross unrealized
depreciation of investments was $5,982,576, resulting in net unrealized
appreciation of $1,883,320 (excluding foreign currency transactions). At
October 31, 1996, the Fund had a capital loss carryforward of $74,988,898 of
which $35,175,465 expires in the year 2001, $20,009,696 expires in the year
2002, and $19,803,737 expires in the year 2003.
NOTE E: CAPITAL STOCK
There are 3,600,000,000 shares of $.01 par value capital stock authorized,
divided 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,
1996 1995 1996 1995
------------ ------------ -------------- --------------
Shares sold 1,644,560 2,011,084 $ 14,914,054 $ 15,716,134
Shares issued in
reinvestment of
dividends 1,871,073 2,981,786 14,187,089 23,083,728
Shares converted
from Class B 18,067,959 -0- 135,505,124 -0-
Shares redeemed (14,414,336) (30,294,790) (109,253,251) (233,197,213)
Net increase
(decrease) 7,169,256 (25,301,920) $ 55,353,016 $(194,397,351)
CLASS B
Shares sold 1,642,627 2,069,111 $ 12,447,906 $ 16,026,464
Shares issued in
reinvestment of
dividends 1,874,160 3,656,313 14,192,671 28,470,965
Shares converted
to Class A (18,067,959) -0- (135,505,124) -0-
Shares redeemed (20,143,299) (50,907,467) (154,702,486) (394,607,766)
Net decrease (34,694,471) (45,182,043) $(263,567,033) $(350,110,337)
CLASS C
Shares sold 1,298,950 646,889 $ 9,914,742 $ 5,398,144
Shares issued in
reinvestment of
dividends 25,478 43,525 193,464 339,247
Shares redeemed (482,972) (1,167,573) (3,673,417) (9,266,657)
Net increase(decrease) 841,456 (477,159) $ 6,434,789 $ (3,529,266)
14
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,
--------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $7.47 $8.71 $9.25 $9.25 $9.94
INCOME FROM INVESTMENT OPERATIONS
Net investment income .60(a) .46(a) .93 .92 .91
Net realized and unrealized gain (loss)
on investments,
swaps and foreign currency transactions .35 (.98) (.86) (.32) (.86)
Net increase (decrease) in net asset
value from operations .95 (.52) .07 .60 .05
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.69) -0- -0- (.60) (.72)
Tax return of capital -0- (.72) (.61) -0- -0-
Distributions from net realized gain -0- -0- -0- -0- (.02)
Total dividends and distributions (.69) (.72) (.61) (.60) (.74)
Net asset value, end of year $7.73 $7.47 $8.71 $9.25 $9.25
TOTAL RETURN
Total investment return based on net
asset value(b) 13.23% (5.74)% .84% 6.67% .49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $386,545 $320,333 $593,677 $953,571 $1,596,903
Ratio of expenses to average net assets 1.29% 1.23% 1.13% 1.16% 1.10%
Ratio of net investment income to
average net assets 7.85% 7.39% 7.28% 8.26% 9.00%
Portfolio turnover rate 208% 230% 109% 182% 133%
</TABLE>
See footnote summary on page 17.
15
FINANCIAL HIGHLIGHTS (CONTINUED)
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,
--------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $7.47 $8.71 $9.25 $9.25 $9.94
INCOME FROM INVESTMENT OPERATIONS
Net investment income .54(a) .41(a) .94 .87 .84
Net realized and unrealized gain (loss)
on investments,
swaps and foreign currency transactions .35 (.99) (.93) (.34) (.86)
Net increase (decrease) in net asset
value from operations .89 (.58) .01 .53 (.02)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.63) -0- -0- (.53) (.65)
Tax return of capital -0- (.66) (.55) -0- -0-
Distributions from net realized gain -0- -0- -0- -0- (.02)
Total dividends and distributions (.63) (.66) (.55) (.53) (.67)
Net asset value, end of year $7.73 $7.47 $8.71 $9.25 $9.25
TOTAL RETURN
Total investment return based on net
asset value(b) 12.34% (6.50)% .12% 5.91% (.24)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $273,109 $523,530 $1,003,633 $1,742,703 $2,966,071
Ratio of expenses to average net assets 2.00% 1.95% 1.85% 1.87% 1.81%
Ratio of net investment income to average
net assets 7.14% 6.69% 6.58% 7.57% 8.28%
Portfolio turnover rate 208% 230% 109% 182% 133%
</TABLE>
See footnote summary on page 17.
16
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------
MAY 3,1993(C)
YEAR ENDED OCTOBER 31, TO
------------------------------------ OCTOBER 31,
1996 1995 1994 1993
----------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $7.47 $8.71 $9.25 $9.18
INCOME FROM INVESTMENT OPERATIONS
Net investment income .51(a) .39(a) .58 .28
Net realized and unrealized gain (loss)
on investments,
swaps and foreign currency transactions .38 (.97) (.57) .05
Net increase (decrease) in net asset
value from operations .89 (.58) .01 .33
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.63) -0- -0- (.26)
Tax return of capital -0- (.66) (.55) -0-
Total dividends and distributions (.63) (.66) (.55) (.26)
Net asset value, end of period $7.73 $7.47 $8.71 $9.25
TOTAL RETURN
Total investment return based on net
asset value(b) 12.35% (6.49)% .12% 3.66%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $10,031 $3,416 $8,136 $5,538
Ratio of expenses to average net assets 1.98% 1.92% 1.83% 1.82%(d)
Ratio of net investment income to
average net assets 7.15% 6.66% 6.50% 7.19%(d)
Portfolio turnover rate 208% 230% 109% 182%
</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 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) Commencement of distribution.
(d) Annualized.
17
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, 1996, 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, 1996, by correspondence with the custodian. 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, 1996, 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.
New York, New York
December 12, 1996
18
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)
DONALD J. ROBINSON (1)
ROBERT C. WHITE (1)
OFFICERS
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
WAYNE D. LYSKI, SENIOR VICE PRESIDENT
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
JUAN J. RODRIGUEZ, 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.
19
ALLIANCE SHORT-TERM MULTI-MARKET TRUST, INC.
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
INVESTING 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
