ALLIANCE SHORT-TERM MULTI-MARKET TRUST
SEMI-ANNUAL REPORT
APRIL 30, 1997
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE SHORT-TERM MULTI-MARKET TRUST
_______________________________________________________________________________
June 12, 1997
Dear Shareholder:
The world's bond markets have entered a period of consolidation. Well-behaved
inflation, steady central bank policies, and a focus on fiscal discipline are
still in place and should keep a lid on yields. We are not bearish, and from
current levels, bonds in most markets are likely to outperform cash over the
next six to twelve months. The "yield convergence" theme is still alive even
though it has run a long way. In what promises to be an essentially stable
interest rate environment during 1997, higher-yielding side markets should
continue to outperform, at least in local currency terms.
INVESTMENT RESULTS
We are pleased to report that Alliance Short-Term Multi-Market Trust posted
solid returns over the most recent period. For comparison, we have shown the
performance for the short maturity U.S. government bond market, represented by
the unmanaged Merrill Lynch 1-3 Year Government Bond Index, and for the Lipper
Short World Multi-Market Income Funds Average, which reflects the performance
of 32 funds. This peer group has generally similar investment objectives to
Short-Term Multi-Market Trust, though investment policies for the various
funds--particularly the average maturities of their portfolios--may differ
significantly.
INVESTMENT RESULTS*
Period Ended April 30, 1997
TOTAL RETURN
6 MONTHS 12 MONTHS
---------- ----------
ALLIANCE SHORT-TERM MULTI-MARKET TRUST
Class A 3.51% 9.58%
Class B 3.13% 8.76%
Class C 3.13% 8.77%
MERRILL LYNCH 1-3 YEAR GOVERNMENT BOND INDEX 2.26% 6.09%
LIPPER SHORT WORLD MULTI-MARKET INCOME FUNDS AVERAGE 1.65% 6.84%
* TOTAL RETURNS ARE BASED ON THE NET ASSET VALUES OF EACH CLASS OF SHARES OF
APRIL 30, 1997. 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 32
FUNDS. BOTH INDICES HAVE GENERALLY SIMILAR INVESTMENT OBJECTIVES TO YOUR FUND,
THOUGH INVESTMENT POLICIES FOR THE VARIOUS FUNDS MAY DIFFER.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 4.
As of April 30, 1997, the Fund's total investments were distributed as follows:
PORTFOLIO DISTRIBUTION BY COUNTRY
COUNTRY PORTFOLIO %
- --------------- -----------
U.S. 41.30%
Australia 10.42%
Denmark 7.76%
Finland 5.56%
Sweden 4.85%
Norway 4.72%
Mexico 4.50%
Italy 4.41%
Spain 4.32%
United Kingdom 3.91%
Germany 3.44%
Czech Republic 2.77%
Poland 2.04%
1
ALLIANCE SHORT-TERM MULTI-MARKET TRUST
_______________________________________________________________________________
ECONOMIC REVIEW
The U.S. economy finished 1996 on a strong note. After moderating in the third
quarter, the economy picked up speed as the year came to a close, led by a
rebound in consumer spending. The annualized gain in retail sales jumped to
4.8% in the fourth quarter, up from only 0.9% in the third quarter. An
unexpected surge in export growth also added to year-end growth. In all, growth
in aggregate output, as measured by Gross Domestic Product (GDP), which dipped
to 2.1% in the third quarter, accelerated to 3.8% during the final three months
of 1996.
The economy continued its strong performance in the first quarter of 1997,
buoyed by continued growth in the labor market. The unemployment rate edged
down to 5.2% and wages continued to climb, with hourly earnings up 4% annually
through March. Retail sales continued their strong pace during the first
quarter and consumer confidence remained elevated. The production side of the
economy also showed considerable strength, with first quarter industrial
production up by 4.9% over levels from a year earlier and total hours worked up
by 3.8% over that same time period. Overall, GDP growth jumped to 5.8% during
the first three months of 1997--its fastest rate of increase in nearly ten
years.
Despite the strong growth, inflation remained well-behaved. After moving
slightly higher late in 1996, consumer and producer price gains both retreated
in early 1997 with consumer prices advancing through April at a 2.5% annual
rate and producer prices up just 0.8% for the same period. The Federal Reserve
raised interest rates 0.25% at the end of March in a pre-emptive strike against
what were seen as mounting inflationary pressures.
In Japan, continued weakness in the banking sector and the rise in consumption
taxes fostered low confidence and slow growth. The financial sector remains
under pressure and attempts to resolve the banking crisis are intensifying.
The Canadian Government called for General Elections in early June, more than a
year before the Government's term expires, which added to market volatility.
The Australian market underperformed the U.S. in local currency terms. However,
sluggishness in consumer demand, combined with very well-behaved inflation in
Australia, is likely to keep the Reserve Bank of Australia in an easing mode.
In fully hedged U.S. dollar terms, all developed markets, except Australia and
Italy, outperformed the U.S. market.
In Europe, the driving force behind excellent bond market returns has been the
quest for monetary union. However, changes in several European governments
reflect voter unhappiness with long term structural unemployment problems,
particularly in France. Elections in France and Great Britain added to market
volatility, creating speculation and uncertainty in the markets. The run-up to
the election in France has increased market turbulence and European Monetary
Union (EMU) pressures. The U.S. dollar should continue to perform very well
against the core European currencies.
INVESTMENT OUTLOOK
U.S. economic growth has continued into its third consecutive quarter at a pace
considered above the long-term, non-inflationary rate. While continued growth
at the current pace may warrant additional rate increases, we expect the U.S.
economy to gradually slow over the next several quarters to a more sustainable
2% to 2.5% growth rate. We anticipate this slowing will occur before any
substantial inflationary pressures materialize. Given the potential for further
rate increases in the near-term, the market will be particularly vulnerable to
daily economic news which may put upward pressure on yields. In contrast to
recent periods of rising rates, the relative lack of leverage in the U.S.
financial system suggests that interest rates and volatility will be less
substantial than in 1994.
In Europe, we expect that well-behaved inflation will be offset by moderately
improving growth prospects. The commodity oriented economies of New Zealand and
Australia are more closely linked to the U.S., but here also we anticipate that
good inflation performance and sluggish growth should continue to produce
strong fixed-income returns. We continue to believe that Japan offers the
lowest value of any developed bond market over the next six months. Market
expectations of an interest rate increase in the third quarter are certain to
intensify, although the Bank of Japan may delay slightly to ensure economic
recovery.
2
ALLIANCE SHORT-TERM MULTI-MARKET TRUST
_______________________________________________________________________________
The Mexican economy continues to perform strongly, led by strong growth in
investments and exports. Growth is expected to remain strong at around 4% in
1997 and inflation and interest rates should both decline during the upcoming
year. Investor confidence in Mexico's economic policies is growing. The
decision to prepay the remaining $3.5 billion owed to the U.S. for the 1995
peso bailout is another positive step toward restoring Mexico's credibility in
international capital markets. However, Congressional and Gubernatorial
elections are scheduled for the summer and are likely to cause an increase in
market volatility in the months leading up to the elections. This political
uncertainty sounds a cautionary note, therefore we will be monitoring
developments closely.
Thank you for your continued interest and investment in Alliance Short-Term
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 SHORT-TERM MULTI-MARKET TRUST
_______________________________________________________________________________
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 RETURNS AS OF APRIL 30, 1997
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 9.58% 4.90%
Five Years 3.22% 2.33%
Since Inception* 5.99% 5.42%
SEC Yield** 4.67%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 8.76% 5.76%
Five Years 2.47% 2.47%
Since Inception*# 4.68% 4.68%
SEC Yield** 4.14%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
------------ ------------
One Year 8.77% 7.77%
Since Inception* 2.97% 2.97%
SEC Yield** 4.17%
The average annual total returns reflect reinvestment 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);
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.
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 days ended April 30, 1997.
# Assumes conversion of Class B shares into Class A shares after 6 years.
4
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997 (UNAUDITED) ALLIANCE SHORT-TERM MULTI-MARKET TRUST
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
AUSTRALIA-10.2%
GOVERNMENT OBLIGATION-10.2%
Republic of Australia
12.00%, 7/15/99 (a)
(cost $60,230,326) AU$ 69,737 $60,339,491
CZECH REPUBLIC-2.7%
DEBT OBLIGATIONS-2.7%
ING Capital Holdings
11.50%, 7/08/97 (b) CZK 168,000 5,404,167
International Bank For
Reconstruction & Development
11.50%, 10/09/97 (a) 332,500 10,666,209
Total Czech Republic Securities
(cost $18,613,140) 16,070,376
DENMARK-7.6%
GOVERNMENT OBLIGATION-7.6%
Kingdom of Denmark
9.00%, 11/15/98 (a)
(cost $54,596,699) DKK 277,000 44,963,660
FINLAND-5.4%
GOVERNMENT OBLIGATION-5.4%
Government of Finland
11.00%, 1/15/99 (a)
(cost $39,795,056) FIM 150,000 32,181,383
GERMANY-3.4%
DEBT OBLIGATION-3.4%
Bayerische Landesbank
6.00%, 10/15/98 (a)
(cost $19,978,983) US$ 20,000 19,914,000
ITALY-4.3%
GOVERNMENT OBLIGATION-4.3%
Republic of Italy
6.00%, 2/15/00 (a)
(cost $25,711,619) ITL 44,500,000 25,536,312
MEXICO-4.4%
GOVERNMENT OBLIGATIONS-4.4%
Mexican Treasury Bills
23.30%, 2/04/98 (a)(c) MXP 94,888 10,104,552
23.60%, 10/02/97 (a)(c) 40,555 4,647,883
23.70%, 4/02/98 (c) 97,378 10,369,642
32.50%, 7/31/97 (a)(c) 8,422 1,004,416
Total Mexican Securities
(cost $26,150,500) 26,126,493
NORWAY-4.6%
GOVERNMENT OBLIGATION-4.6%
Kingdom of Norway
9.00%, 1/31/99 (a)
(cost $29,268,034) NOK 180,000 27,336,691
POLAND-2.0%
SOVEREIGN DEBT RELATED-2.0%
Morgan Guaranty Trust
Indexed to Poland Zloty
21.80%, 5/21/97 (c)(d)
(cost $12,034,872) US$ 12,175 11,826,577
SPAIN-4.2%
GOVERNMENT OBLIGATION-4.2%
Government of Spain
7.40%, 7/30/99 (a)
(cost $27,817,228) ESP 3,518,000 25,033,009
SWEDEN-4.7%
GOVERNMENT OBLIGATION-4.7%
Kingdom of Sweden
11.00%, 1/21/99 (a)
(cost $32,845,551) SEK 200,900 28,070,926
UNITED KINGDOM-3.8%
GOVERNMENT OBLIGATION-3.8%
U.K. Treasury Gilts
7.25%, 3/30/98 (a)
(cost $22,313,218) GBP 13,910 22,676,449
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE SHORT-TERM MULTI-MARKET TRUST
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
UNITED STATES-40.2%
GOVERNMENT OBLIGATION-8.3%
U.S. Treasury Note
5.875%, 11/15/99 (a) US$ 50,000 $ 49,406,250
CERTIFICATE OF DEPOSIT-4.0%
Rabobank FRN
6.42%, 2/23/98 (a)(c) 25,000 23,745,750
DEBT OBLIGATION-2.5%
Federal Business Development Bank
6.375%, 5/21/99 (a) 15,000 14,981,310
TIME DEPOSITS-25.4%
Deutsche Bank
5.42%, 6/16/97 30,000 30,000,000
Dresdner Bank
5.34%, 5/12/97 30,000 30,000,000
Rabobank
5.63%, 5/01/97 US$ 30,000 30,000,000
Republic National Bank of New York
5.69%, 5/01/97 30,500 30,500,000
Societe Generale
5.63%, 5/01/97 30,600 30,600,000
-------------
151,100,000
Total United States Securities
(cost $239,665,417) 239,233,310
TOTAL INVESTMENTS-97.5%
(cost $609,020,643) 579,308,677
Other assets less liabilities-2.5% 15,019,675
NET ASSETS-100% $594,328,352
(a) Securities, or portion thereof, with an aggregate market value of
$400,608,291 have been segregated to collateralize forward exchange currency
contracts.
(b) The redemption value of this security is 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) The redemption value of this security is indexed to the spread between the
Polish Zloty and the U.S. Dollar exchange rate.
Glossary:
FRN - Floating rate note.
See notes to financial statements.
6
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED) ALLIANCE SHORT-TERM MULTI-MARKET TRUST
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $609,020,643) $579,308,677
Cash, at value (cost $73,054) 73,120
Receivable for investment securities sold 101,727,107
Interest receivable 11,679,755
Unrealized appreciation of forward exchange currency contracts 6,480,544
Receivable for capital stock sold 83,399
Other assets 19,243
Total assets 699,371,845
LIABILITIES
Payable for investment securities purchased 101,093,372
Payable for capital stock redeemed 1,639,830
Dividend payable 1,237,274
Advisory fee payable 272,503
Distribution fee payable 261,807
Accrued expenses 538,707
Total liabilities 105,043,493
NET ASSETS $594,328,352
COMPOSITION OF NET ASSETS
Capital stock, at par $ 772,555
Additional paid-in capital 674,396,288
Distributions in excess of net investment income (9,630,092)
Accumulated net realized loss on investments, swaps and
foreign currency transactions (47,543,849)
Net unrealized depreciation of investments and foreign
currency denominated assets and liabilities (23,666,550)
$594,328,352
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($402,165,049/
52,278,915 shares of capital stock issued and outstanding ) $7.69
Sales Charge--4.25% of public offering price .34
Maximum offering price $8.03
CLASS B SHARES
Net asset value and offering price per share ($185,161,411/
24,066,511 shares of capital stock issued and outstanding ) $7.69
CLASS C SHARES
Net asset value and offering price per share ($7,001,892/
910,118 shares of capital stock issued and outstanding ) $7.69
See notes to financial statements.
7
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
ALLIANCE SHORT-TERM MULTI-MARKET TRUST
_______________________________________________________________________________
INVESTMENT INCOME
Interest (net of foreign taxes withheld of $13,706) $25,565,459
EXPENSES
Advisory fee $1,740,677
Distribution fee - Class A 589,848
Distribution fee - Class B 1,151,769
Distribution fee - Class C 46,996
Transfer agency 773,764
Custodian 343,954
Printing 76,079
Administrative 62,906
Audit and legal 62,132
Registration 28,062
Directors' fees 9,508
Miscellaneous 8,820
Total expenses 4,894,515
Net investment income 20,670,944
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
SWAPS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment and swap transactions 2,800,588
Net realized gain on foreign currency transactions 24,644,461
Net change in unrealized appreciation of:
Investment and swap transactions (32,457,943)
Foreign currency denominated assets and liabilities 6,706,631
Net gain on investments, swaps and foreign currency transactions 1,693,737
NET INCREASE IN NET ASSETS FROM OPERATIONS $22,364,681
See notes to financial statements.
8
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE SHORT-TERM MULTI-MARKET TRUST
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31,
(UNAUDITED) 1996
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 20,670,944 $ 55,591,338
Net realized gain on investments, swaps and
foreign currency transactions 27,445,049 11,274,542
Net change in unrealized appreciation
(depreciation) of investments, swaps and
foreign currency denominated assets and
liabilities (25,751,312) 21,264,259
Net increase in net assets from operations 22,364,681 88,130,139
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Class A (15,822,612) (29,452,332)
Class B (8,360,845) (33,967,382)
Class C (342,047) (524,790)
CAPITAL STOCK TRANSACTIONS
Net decrease (73,195,016) (201,779,228)
Total decrease (75,355,839) (177,593,593)
NET ASSETS
Beginning of year 669,684,191 847,277,784
End of period $594,328,352 $669,684,191
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 (UNAUDITED) ALLIANCE SHORT-TERM MULTI-MARKET TRUST
_______________________________________________________________________________
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%
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% 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 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. However, readily marketable portfolio securities may
be valued on the basis of prices provided by a pricing service when such prices
are believed by the adviser to reflect the fair value of such securities.
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 gain 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 an
adjustment 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.
For federal income tax purposes, the Fund's distributions of income and capital
gains are subject to recharacterization, which may include a tax return of
capital, at the end of the year to reflect the final investment results for
that year.
10
ALLIANCE SHORT-TERM MULTI-MARKET TRUST
_______________________________________________________________________________
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 $62,906 to the Adviser
representing the costs of certain legal and accounting services provided to the
Fund by the Adviser for the six months ended April 30, 1997.
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 $446,905 for the six months ended April 30, 1997.
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 $7,981 from the sale of Class A shares and $25,738,
and $2,727 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class A, Class B and Class C shares, respectively for the six
months ended April 30, 1997.
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 $25,671,274, and $1,422,409, 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 $213,535,348 and $297,610,591
respectively, for the six months ended April 30, 1997. There were purchases of
$49,753,906 and sales of $50,156,250 of U.S. government and government agency
obligations for the six months ended April 30, 1997.
At April 30, 1997, 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 $813,505 and gross unrealized
depreciation of investments was $30,525,471, resulting in net unrealized
depreciation of $29,711,966 (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.
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.
11
NOTES TO FINANCIAL STATEMENTS (CONT.)
ALLIANCE SHORT-TERM MULTI-MARKET TRUST
_______________________________________________________________________________
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 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 April 30, 1997, 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
Deutsche Marks, expiring 5/02/97-7/07/97 25,124 $16,027,012 $14,558,157 $(1,468,855)
Indonesian Rupiah, expiring 1/16/98 40,944,500 16,237,760 16,143,893 (93,867)
Japanese Yen, expiring 5/06/97 1,000,000 8,183,306 7,881,915 (301,391)
Spanish Pesetas, expiring 5/30/97 3,500,000 24,424,285 23,953,909 (470,376)
FOREIGN CURRENCY SALE CONTRACTS
Australian Dollars, expiring 7/10/97 53,012 41,386,703 41,321,763 64,940
British Pounds, expiring 5/07/97 10,000 16,279,500 16,205,036 74,464
Deutsche Marks, expiring 5/21/97-7/28/97 124,701 74,344,005 72,392,910 1,951,095
Finnish Markka, expiring 6/17/97 93,181 18,040,424 17,973,952 66,472
French Francs, expiring 5/30/97 140,281 24,757,650 24,079,585 678,065
Italian Lira, expiring 5/12/97 44,329,418 26,070,761 25,867,928 202,833
Japanese Yen, expiring 5/06/97 1,000,000 8,192,692 7,881,915 310,777
Spanish Pesetas, expiring 5/30/97 3,560,000 24,856,430 24,364,548 491,882
Swedish Krona, expiring 5/28/97 225,599 29,451,530 28,774,204 677,326
Swiss Francs, expiring 7/07/97 59,445 44,922,781 40,625,602 4,297,179
------------
$ 6,480,544
</TABLE>
12
ALLIANCE SHORT-TERM MULTI-MARKET TRUST
_______________________________________________________________________________
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, 1997.
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 gains on investment and swap
transactions. There were no outstanding currency or interest rate swap
contracts at April 30, 1997.
13
ALLIANCE SHORT-TERM MULTI-MARKET TRUST
_______________________________________________________________________________
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
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30,1997 OCTOBER 31, APRIL 30,1997 OCTOBER 31,
(UNAUDITED) 1996 (UNAUDITED) 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 726,771 1,644,560 $ 5,642,586 $ 14,914,054
Shares issued in
reinvestment of
dividends 904,906 1,871,073 7,021,655 14,187,089
Shares converted
from Class B 7,608,587 18,067,959 59,105,340 135,505,124
Shares redeemed (6,998,046) (14,414,336) (54,310,752) (109,253,251)
Net increase 2,242,218 7,169,256 $ 17,458,829 $ 55,353,016
CLASS B
Shares sold 501,020 1,642,627 $ 3,891,659 $ 12,447,906
Shares issued in
reinvestment of
dividends 505,368 1,874,160 3,923,002 14,192,671
Shares converted
to Class A (7,608,587) (18,067,959) (59,105,340) (135,505,124)
Shares redeemed (4,685,080) (20,143,299) (36,364,982) (154,702,486)
Net decrease (11,287,279) (34,694,471) $(87,655,661) $(263,567,033)
CLASS C
Shares sold 95,357 1,298,950 $ 739,956 $ 9,914,742
Shares issued in
reinvestment of
dividends 10,880 25,478 84,439 193,464
Shares redeemed (494,560) (482,972) (3,822,579) (3,673,417)
Net increase(decrease) (388,323) 841,456 $ (2,998,184) $ 6,434,789
14
FINANCIAL HIGHLIGHTS ALLIANCE SHORT-TERM MULTI-MARKET 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 30,1997 --------------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
------------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $7.73 $7.47 $8.71 $9.25 $9.25 $9.94
INCOME FROM INVESTMENT OPERATIONS
Net investment income .26(a) .60(a) .46(a) .93 .92 .91
Net realized and unrealized gain (loss)
on investments, swaps and foreign
currency transactions .01 .35 (.98) (.86) (.32) (.86)
Net increase (decrease) in net asset
value from operations .27 .95 (.52) .07 .60 .05
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.31) (.69) -0- -0- (.60) (.72)
Tax return of capital -0- -0- (.72) (.61) -0- -0-
Distributions from net realized gain -0- -0- -0- -0- -0- (.02)
Total dividends and distributions (.31) (.69) (.72) (.61) (.60) (.74)
Net asset value, end of period $7.69 $7.73 $7.47 $8.71 $9.25 $9.25
TOTAL RETURN
Total investment return based on net
asset value (b) 3.51% 13.23% (5.74)% .84% 6.67% .49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $402,165 $386,545 $320,333 $593,677 $953,571 $1,596,903
Ratio of expenses to average net assets 1.28%(c) 1.29% 1.23% 1.13% 1.16% 1.10%
Ratio of net investment income to
average net assets 6.82%(c) 7.85% 7.39% 7.28% 8.26% 9.00%
Portfolio turnover rate 143% 208% 230% 109% 182% 133%
</TABLE>
See footnote summary on page 17.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE SHORT-TERM MULTI-MARKET 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 30,1997 --------------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
------------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $7.73 $7.47 $8.71 $9.25 $9.25 $9.94
INCOME FROM INVESTMENT OPERATIONS
Net investment income .23(a) .54(a) .41(a) .94 .87 .84
Net realized and unrealized gain (loss)
on investments, swaps and foreign
currency transactions .01 .35 (.99) (.93) (.34) (.86)
Net increase (decrease) in net asset
value from operations .24 .89 (.58) .01 .53 (.02)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.28) (.63) -0- -0- (.53) (.65)
Tax return of capital -0- -0- (.66) (.55) -0- -0-
Distributions from net realized gain -0- -0- -0- -0- -0- (.02)
Total dividends and distributions (.28) (.63) (.66) (.55) (.53) (.67)
Net asset value, end of period $7.69 $7.73 $7.47 $8.71 $9.25 $9.25
TOTAL RETURN
Total investment return based on net
asset value(b) 3.13% 12.34% (6.50)% .12% 5.91% (.24)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $185,161 $273,109 $523,530 $1,003,633 $1,742,703 $2,966,071
Ratio of expenses to average net assets 1.99%(c) 2.00% 1.95% 1.85% 1.87% 1.81%
Ratio of net investment income to
average net assets 6.05%(c) 7.14% 6.69% 6.58% 7.57% 8.28%
Portfolio turnover rate 143% 208% 230% 109% 182% 133%
</TABLE>
See footnote summary on page 17.
16
ALLIANCE SHORT-TERM MULTI-MARKET TRUST
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------
SIX MONTHS MAY 3,1993(D)
ENDED YEAR ENDED OCTOBER 31, TO
APRIL 30,1997 ------------------------------------- OCTOBER 31,
(UNAUDITED) 1996 1995 1994 1993
------------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.73 $7.47 $8.71 $9.25 $9.18
INCOME FROM INVESTMENT OPERATIONS
Net investment income .24(a) .51(a) .39(a) .58 .28
Net realized and unrealized gain (loss)
on investments, swaps and foreign
currency transactions -0- .38 (.97) (.57) .05
Net increase (decrease) in net asset
value from operations .24 .89 (.58) .01 .33
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.28) (.63) -0- -0- (.26)
Tax return of capital -0- -0- (.66) (.55) -0-
Total dividends and distributions (.28) (.63) (.66) (.55) (.26)
Net asset value, end of period $7.69 $7.73 $7.47 $8.71 $9.25
TOTAL RETURN
Total investment return based on net
asset value(b) 3.13% 12.35% (6.49)% .12% 3.66%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $7,002 $10,031 $3,416 $8,136 $5,538
Ratio of expenses to average net assets 1.97%(c) 1.98% 1.92% 1.83% 1.82%(c)
Ratio of net investment income to
average net assets 6.09%(c) 7.15% 6.66% 6.50% 7.19%(c)
Portfolio turnover rate 143% 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 the total
investment return. Total investment return calculated for a period of less than
one year is not annualized.
(c) Annualized.
(d) Commencement of distribution.
17
ALLIANCE SHORT-TERM MULTI-MARKET TRUST
_______________________________________________________________________________
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.
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 Small Cap 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 Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance International Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
Alliance Global Environment 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 SHORT-TERM MULTI-MARKET 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.
STMSR
